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Agribusiness’ Global Expanding to Tanzania Research Paper

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Updated: Dec 11th, 2020

Introduction

Expanding into a new market is a natural stage in the development of an organization that is willing to grow and attract new customers. New markets provide a wide array of possibilities for growth, which makes them a lucrative area for global companies to explore. The significance of new markets is particularly high for organizations operating in the agribusiness sector, where improving the efficacy of food production and delivery is of particularly high importance.

Due to the need to maintain the quality of the final product high, global agribusiness organizations such as Agribusiness Global have to seek cheaper transportation and production options. With a plethora of untapped potential for increasing crop quality and a comparatively low level of competition, Tanzania is a perfect choice for Agribusiness Global’ expansion into the African market.

Agribusiness Global has established itself as a global corporation functioning in the agribusiness sector by advancing the quality of products, improving the growth of crops, and offering tools for managing issues such as pests (“Advancing the global crop protection and plant health industries,” n.d.).

Due to the need to expand, Agribusiness Global will have to seek cheaper options for expanding to eastern Africa. The identified goal is quite challenging since Agribusiness Global should maintain the quality of its product at the required level, at the same time looking for opportunities to attract new customers. Herein lies the necessity to expand to the Tanzanian market, where local markets and food producers are growing.

Growth Strategy Analysis: Opportunities for Expansion

The Tanzanian agribusiness market represents the untapped potential that needs to be explored thoroughly. According to the recent data, the conditions for growing a vast number of crops, as well as producing poultry, are perfect, with local businesses blooming with opportunities for producing high-quality food (USAID, 2018b).

Therefore, promoting change in the target market by encouraging the target demographic to use more effective tools for maintaining the quality of the crops and food delivered to the local buyers high should be seen as an important opportunity. Furthermore, commercial farming in Tanzania requires support to meet the local demand, which Agribusiness Global will be able to provide (Krone, Dannenberg, & Nduru, 2016). The specified issue is particularly important for local businesses that attempt at expanding into the global market by partnering with larger corporations.

Ansoff Matrix.
Figure 1. Ansoff Matrix.

As Figure 1 shown above indicates, Agribusiness Global will have to implement the quality- and change-oriented growth strategy to enter the Tanzanian market and partner with a local company. Agribusiness Global will have to diversify its product to meet the demand of the Tanzanian market and ensure that the provided pesticides meet the needs of local farmers. The price issue can be managed by using local supplies, including technology and crops (USAID, 2018a). Thus, Agribusiness Global will be able to expand into the Tanzanian market and grab the attention of local citizens by emphasizing the healthiness and cheapness of the product.

Macro and Competitive Environment: Other Agribusiness Companies

The Tanzanian agribusiness market cannot be deemed as aggressively competitive at present, although local entrepreneurs have been attempting at creating agribusiness ventures. Due to financial constraints and technological issues, these businesses have not succeeded in delivering the product of the required quality so far (USAID, 2018a). Therefore, Agribusiness Global is unlikely to face strong competition in the selected area (USAID, 2018b).

Furthermore, the lack of non-traditional competition makes the target market even more attractive to Agribusiness Global. Thus, the competitive environment of the Tanzanian market does not contain any major challenges.

The foreign market is also quite similar to the headquarter market since both are dominated by small companies (Martínez Valle, 2017). The described environment is quite similar to other agribusiness market settings, yet the lack of resources hampers the development of the market. By designing a competitive advantage that will make Agribusiness Global look particularly attractive to Tanzanian buyers, one will be able to reach the top of the local market rather fast.

Marketing Mix and Extended/Service Marketing Mix: Agribusiness Global’ Potential

Using the 4Ps principle will allow Agribusiness Global to gain confidence in the Tanzanian market quite quickly and analyze the opportunities that can be pursued in the designated environment. A global company such as Agribusiness Global must establish a strategy that will allow it to integrate into the Tanzanian market flawlessly. By determining the unique aspects of the brand product, the characteristics of the target population, the placement technique, and the approach toward promotion, one will make Agribusiness Global’s entry to the Tanzanian agribusiness setting fully successful.

Table 1. Marketing Mix: 4Ps.

Product Pesticides and other products improving the quality of crops and food
Place Local agribusiness companies (farming, poultry production, and similar organizations)
Price Lower pricing options for local organizations
Promotion Emphasis placed on the combination of quality, opportunities for healthy food production, and low prices

As Table 1 above shows, Agribusiness Global needs to position itself as a cheap and available option for consuming healthy food compared to the fast-food options that currently dominate the Tanzanian market. By emphasizing the necessity to transition to a different approach toward food production and focus on health, Agribusiness Global will necessitate the increase in the agribusiness activity within the state, thus boosting local businesses and creating opportunities or the rapid progress of the industry.

Furthermore, the prices set for the proposed products should be comparatively low so that the target population could be able to consider Agribusiness Global’ production as a possible choice. Since the significance of agribusiness has risen in the Tanzanian setting over the past few years, local farmers are likely to engage in entrepreneurship and the related business activities, which means that they will define prices within the target market (Mariyono et al., 2017). With their products being sold at a very low price, Agribusiness Global will have to combine a low pricing strategy with an elaborate promotion campaign.

Speaking of the promotion, the identified aspect of the marketing mix will need to emphasize the high quality of provided pesticides and the reasonable price that the company sets for its products. The promotion of tools for creating healthy food options along with the focus on high quality will help to gain the trust of Tanzanian companies, inviting them to try the products offered by Agribusiness Global.

The organization needs to target both the local population and organizations that distribute products. For instance, Agribusiness Global will need the support of local retail organizations. Also, it will be critical to use the support of local suppliers for Agribusiness Global to maintain the quality of its product consistent.

Selecting the place as the fourth component of the 4Ps framework, Agribusiness Global will need to focus on local retail companies. Thus, owners of small businesses will gain full access to the products and services offered by the organization and experience the high quality of the provided products. It is important to ensure that the target population has the access to Agribusiness Global’ product and can enjoy the relevant services, including discounts and a wide range of product types. Furthermore, the focus on keeping crops healthy as the key competitive advantage of the company may make a difference within the Tanzanian society by shaping people’s values and convincing them to switch to healthy eating.

Also, the 4Ps approach will have to be considered. Particularly, factors such as physical evidence, process, productivity, and people will have to be added to the analysis. Thus, more elaborate customer segmentation and the tools for enhancing the production process will become possible. Specifically, Agribusiness Global will have to consider hiring a local labor force to reduce costs and maintain product quality levels high. Moreover, incentives for increasing employees’ motivation will need to be introduced. Thus, the company will benefit in the selected market and introduce a gradual change to it.

Market Size Opportunity: A Serviceable Obtainable Market

While the Tanzanian market has only recently started being viewed as a potential business target due to its comparatively small size, it can be described as fairly promising in terms of its resources and opportunities. For instance, with mostly local family entrepreneurship representing the agribusiness sector, competition rates are comparatively low. The market has not reached the stage of saturation yet, which opens a plethora of opportunities for Agribusiness Global to gain a strong presence in it and build a reputation for itself. Thus, the company will gain the support of loyal customers and business partners, cementing its position as a leader in the selected market.

At present, the Tanzanian agribusiness market can be seen as serviceable and obtainable since it has only started devolving into a viable economic environment. The specified market size is quite small since it includes only the portion of the Tanzanian agribusiness market that targets people and retail companies that purchase poultry. The specified segment is also narrowed down significantly by targeting the customers that are willing to focus on maintaining good health and consuming healthy food. The current Tanzanian agribusiness market is, therefore, at the inception stage, yet it is likely to develop into a booming economic environment for several companies, ranging from small and medium businesses to large corporations.

Potential Risks: Natural Causes of Low Crop Production

One should keep in mind that there are significant challenges to overcome in the specified market. Since Agribusiness Global will depend on the local agribusiness organizations, natural causes of a drop in crop production should be regarded as a risk factor. According to a report by Tirivangasi (2018), occasional floods and droughts pose a tangible threat to the crops grown in Tanzania. Therefore, Agribusiness Global must design an exit strategy that will help it to minimize possible losses in case of a setback caused by a natural disaster.

Also, residents may feel unwilling to transition to new products for improving the crop growth provided by Agribusiness Global. With the current propensity toward unhealthy food, people may fail to recognize the importance of healthy dieting. Finally, it would be unrealistic to expect that all local agribusinesses will be eager to cooperate with Agribusiness Global. Since agribusiness has started to be viewed as a potential opportunity for local entrepreneurs, most Tanzanian businesses are likely to view Agribusiness Global primarily as a rival and not a partner. Therefore, Agribusiness Global will have to make an extra effort to ensure that it does not plan to disrupt the functioning of local businesses but, instead, aims at collaborating with them to meet citizens’ needs.

Conclusion: Agribusiness Global in Tanzania. Opportunities, Risks, and Recommendations

The economic setting of Tanzania has only recently started to become the focus of global companies’ attention. While other areas such as telecommunication and mining have already been explored extensively and occupied by a range of large entities, agribusiness remains the untapped potential that contains a wide range of options for a global corporation. Agribusiness Global is a perfect candidate for exploring the Tanzanian agribusiness market since the firm can study the wide array of resources that the Tanzanian setting has to offer.

For instance, the current focus on agribusiness among local entrepreneurs and Tanzanian organizations will help Agribusiness Global to develop strong ties with local suppliers, at the same time gaining the competitive advantage that home firms in Tanzania cannot boast. Specifically, the combination of reasonable prices and high-quality pesticides allowing farmers to keep the crops healthy should be regarded as the key selling point of Agribusiness Global.

By marketing its products using the word of the mouth and other techniques, Agribusiness Global will attract the attention of local buyers, suppliers, and retailers, thus cementing its position as a leader in the agribusiness industry.

The process of entering the Tanzanian market is fraught with several challenges, natural causes being the key ones. However, by designing a marketing campaign that will appeal to the target organizations with the offer of opportunities for advancing their development, Agribusiness Global will strive in the Tanzanian agribusiness market. Therefore, it is highly recommended for the firm to expand into the specified environment. Thus, Agribusiness Global will have a chance to diversify its products and cater to the needs of an even larger number of customers.

References

. (n.d.). Web.

Krone, M., Dannenberg, P., & Nduru, G. (2016). The use of modern information and communication technologies in smallholder agriculture: Examples from Kenya and Tanzania. Information Development, 32(5), 1503-1512.

Mariyono, J., Kuntariningsih, A., Dewi, H. A., Latifah, E., Daroini, P. B., Negoro, A. A.,… Luther, G. (2017). Pathway analysis of vegetable farming commercialization. Economic Journal of Emerging Markets, 9(2), 115-124.

Martínez Valle, L. (2017). Agribusiness, peasant agriculture and labour markets: Ecuador in comparative perspective. Journal of Agrarian Change, 17(4), 680-693.

Tirivangasi, H. M. (2018). Regional disaster risk management strategies for food security: Probing Southern African Development Community channels for influencing national policy. Jàmbá: Journal of Disaster Risk Studies, 10(1), 1-7. Web.

USAID. (2018a). . Web.

USAID. (2018b). Tanzania: Nutrition profile. Web.

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