The development of Africa is lower than that of most of the European countries. However, there are still industries investing in which makes sense. One of them is the cotton industry which can become profitable if properly developed; other businesses, such as automobile tire companies may face difficulties with selling their products in Africa due to the country’s low level of income; compared with such countries as Germany, such business have more chances to succeed if they implement proper strategies
Discussing the article under consideration in terms of comparative advantage, it is worth stating that it makes sense for Dunavant to invest in Africa’s cotton industry, despite possible losses which this may entail. Such a decision will be beneficial for both, the company and Africa’s cotton industry. Concerning the former, the industry’s potential will allow it to obtain large profits if a certain sum of money is invested into the industry’s development. Concerning the latter, Dunavant’s investments will improve the working conditions and increase industry production. Compared with other countries, such as India or Brazil, Africa is more beneficial to invest in because it is less oriented towards suburban or industrial development. The only disadvantage of such investment is that developing the industry may demand investment for subsequent innovations; however, these are likely to pay off with time.
In terms of Potter’s diamond, the potential outcomes of this investment are mostly favorable. Factor conditions of Africa’s cotton industry are promising; the labor is skilled for the Africans have been trained to work hard over the centuries (in those times when slavery still existed). With regards to demand conditions, the outcome is also pleasing; Africa’s home market customers are sophisticated and numerous, let alone the foreign ones. In terms of relating and supporting industries, the investors may lose for there are hardly any. However, this is the only non-contributing factor. Finally, Africa’s cotton industry’s competitiveness is huge; all that is needed is a firm strategy and any company investing in this industry will succeed.
As far as the company selling automobile tires is concerned, it should be careful when deciding to sell its products in Africa. In contrast with more developed developed countries, automobile tires sales may be much lower in Africa. Taking into account the 4 Ps of the marketing mix, the product is right for the country in question and so is the place. However, problems may arise with prices because Africa is a poor country and having an automobile is a luxury there. Suitable promotion may be of no help if prices are inappropriate. In general, the idea of selling tires in Africa makes sense, though the places where automobiles are used often have to be searched for.
In contrast, the opportunities for the same company in Germany are much better. Though the country has numerous local automobile tires manufacturers, the success of the company in question will depend on promotion and prices. Taking into account Germany’s working force availability (the unemployment rates are rather high), the company in question will easily hire the personnel. Thus, the company is likely to be successful in Germany if it can stand the competition.
In sum, the African cotton industry is worth investing in because even the slightest innovations will make it more productive and, therefore, profitable. As far as other industries are concerned, the companies should carefully evaluate Africa’s possibilities before developing businesses there.