Introduction
Babyshop is a renowned manufacturer and retailer of consumer goods. The company was initially established in 1973 in Bahrain and is currently operating in eleven countries globally (Muzaffar 1). Babyshop Company has a headquarter in Dubai since the United Arab Emirates is alleged to be the financial hub for the Middle East regions. Babyshop principally tenders kids’ goods such as trend clothing, infant basics, nursery furnishings and teddy bears along with safety, as well as sanitation products. The company is targeted on parents with young children, namely the newborn babies, toddlers, as well as children up to 16 years. Recently, it has embarked on a growth strategy whereby it opens stores in Kenya, Pakistan and still expects to open more in other countries. This growth strategy is typically aimed at promoting their brand and expanding the customer base.
Choice of overseas market
Babyshop is determined to grow internationally by opening store in North Africa and eventually in supplementary Asian countries such as India, Sri Lanka, and Bangladesh (Muzaffar 1). These regions are duly considered as unexploited markets since both new and old multinational retailers have not set afoot in them. Their populations are growing rapidly due to high birth rates, thus increasing the demand for the available children products. Considering the fact that most of these countries are at the verge of development, their economies are growing fast, and for that reason, the buying power of the consumers increases. Moreover, there is a wide array of cheap and skilled labor within the region that stands a chance of facilitating business operations at minimal costs.
In addition to their closeness to the Middle East, the targeted countries have an advantageous business relationship with the Middle East regions. For instance, Kenya has vibrant business policies with Dubai (Mwakwere 1), whereas Libya continues to be religiously connected to the Middle East. There has been a notable continuous increase in business movement within these regions which accrues to be facilitated by the prominent mutual interest. In fact, the targeted region is in the process of reconstruction after having ended much of the unrest, and now it seems to be a good opportunity for the company. While these countries supremely deal with western companies as expensive to deal with, they are encouraging eastern companies to invest in their economies. Babyshop, in essence, does not need expatriates to succeed in these countries given that scores of well-informed investors from the Middle East are already established in the region.
Market analysis
According to Muzaffar assertions, the North African countries are still young politically because they were at some point forced to be under control of foreign governments (1). There had been a prolonged political unrest, though this appears to have ended in the recent past. It is during this reconstruction period that such countries are trying to align their policies in order to favor economic growth.
The policies are their major investment attraction, and they materialize in favor of Babyshop growth strategy. Regardless of being relatively low, the economy of these countries is expected to grow rapidly due to the vastly ensuing unexploited resources. Kenya, for example, has sufficient agricultural resources, while Libya and Sudan have fuel reserves that can perfectly facilitate the economic growth and increase the spending power of their consumers. Many foreign investors are attracted to businesses related to these resources leaving a wide open door to investors in other fields that are indirectly related to them.
The Middle East is very close to North Africa countries, compared to any other country of interest in the world. Accessing this region is very easy for Babyshop not only because of their closeness, but also because of the favorable business policies that emerge between the regions. Furthermore, Islam is a significant religion in the region, and this made governments to encourage migration into the Middle East. Besides, the geographical location of the region has enabled daily connections through the air, as well as via the sea. The climate in the area also enables business operations during the year, while the scenery appears to be overwhelmingly attracting and more and more people live in the region. The landscape equally favors quick development of infrastructure, such as roads and airports that are deemed essential for the success of any business.
More than any other region in the world, Africa has the highest birth rates and thus, high demand for children products. Despite poor economy of the region, the selected countries have substantial support for the economy, and are expected to continue growing. Children are widely considered as the future of the nation, and thus, they are usually provided with all important necessities. Literacy is relatively high despite the fact that people are aware of these needs. Many young people are skilled laborers, yet employment is very low. Like market rivalry, competition for skilled labor is low making the labor very cheap. Consumers within this region have a taste for foreign products but many retailers of children products are local.
Market entry strategy
For the North African market, the entry strategy should focus on three major components that market segmentation is comprised of, product development and pricing. Unlike most of the developed countries, populations in African countries are well distributed in both rural and urban areas. Most of the poor, as well as uneducated people, are mainly found in the rural regions. Therefore, Babyshop should target on the urban population that is more conscious of new products. This population consists of young people who appear to be more civilized than the older people who are commonly found within the rural settings. Families living in the urban areas should be regarded as potential customers to the children products.
Product development ought to focus on quality given that most of the populations in the targeted regions look for quality. The local competitors have increasingly focused on quality and might threaten the performance of Babyshop. The most effective policy is to develop the products within these countries in order to ensure quality at low cost. The company has better production capabilities and the use of technology can facilitate the development of quality products in comparison to the local manufacturers.
Low price is a major driver of success in any business within any of the African countries. The average income of the consumers is low and forces them to seek for cheap products. Babyshop must have a pricing policy that is low enough to compete with the local products. This could be achieved right from the manufacturing process by lowering the input cost as much as possible.
Conclusion
The economic growth in North Africa is creating new business opportunities for Babyshop. The ensuing opportunities are enhanced by the strategic location, as well as business relation with the Middle East. Such business growth opportunities could be exploited only if Babyshop mainly targets the urban population through quality and cheap products. The best way to achieve this is to integrate technology in its manufacturing processes and similarly utilize cheap labor from the region.
Works Cited
Muzaffar, Rizvi. “Babyshop bucking recession”. Khaleej Times Sunday. 2011. Print.
Mwakwere, Ali. “Kenya: Gateway to Africa. Africa Business Pages”. 2006. Web.