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Expanding to a New International Market Report


Introduction

East Africa is one of the fastest growing regions of Africa, with cities like Nairobi, Kigali and Kampala developing into prosperous and reputable trading centres in the world. Nairobi, for example, is home to Africa’s largest and one of the world’s best airlines, Kenya Airways.

It is also home to Safaricom, Africa’s biggest mobile phone service provider with close to 20 million subscribers (Global Village Encyclopedia, 2009). MTN Africa, Africa’s largest telecommunication company, has been operating in Tanzania and Uganda for over ten years now.

This paper examines how Teejays, a customer care training and consultancy firm, can expand into the east African market. It takes a look at two strategies that the company can adopt in its effort to break into the new market: the SMART matrix strategy and the competitive strategy.

Background information

According to most economic analysts, Africa is going to be the globe’s future economic powerhouse (Smith & Donovan, 2006). Most of the continent’s resources are yet to be utilized, the continent’s population is still quite low – only 15% of the world’s population (United Nations, 2009) – and there is heavy investment going on all over the continent on infrastructure.

Although the continent is still cynically referred to as the Dark Continent, the potential it has is enormous. South Africa is already part of the BRIC community (renamed BRICS after the entry of Africa’s largest economy), a group of the world’s fastest growing economies (Brazil, Russia, India and China) (Hervieu, 2011 ).

Just like the rest of the continent, East Africa has enormous potential for economic growth. Apart from Somalia, the region is politically stable and has economies that have all registered positive economic growth in the last ten years.

The region’s member states are Kenya, Uganda, Tanzania, Rwanda and Burundi, with the newly formed Republic of Southern Sudan set to join the community. All these countries’ capital cities are huge financial hubs, with Nairobi a leading trading centre not only in the region but across the entire continent (Koech, 2009).

SMART Matrix Strategy[1]

The SMART analysis carried out in this report focuses on internal and external strategic dimensions of the business’ ability to enter the East African market.

The internal strategic dimensions used are

  • Financial Strength (FS)
  • Competitive advantage (CA)

The external strategic dimensions used are

  • Environmental stability (ES)
  • Industry strength (IS)

Competitive advantage (CA) and environmental stability (ES) are rated using rating scale from -6 (worst) to -1 (best) while industry strength (IS) and financial strength (FS) are rated using rating scale from +1 (worst) to +6 (best).

The parameters used to measure CA will be product quality, market share, brand & image and product life cycle. The parameters used to measure FS will be ROA, leverage, liquidity and cash flow. The parameters used to measure IS will be barriers to entry, growth potential, access to financing and consolidation. The parameters used to measure ES will be inflation, technology, demand elasticity and taxation.

Table 1: Table showing parameter values

Internal Strategic Position External Strategic Position
X axis CA IS
-2

-4

-3

-1

Product Quality

Market Share

Brand and Image

Product Life Cycle

+6

+4

+3

+3

Barriers to Entry

Potential Growth

Access to Financing

Consolidation

Average = -2.5 Average = +4
Total x-axis score = +1.5
Y axis FS ES
+4

+3

+5

+5

ROA

Leverage

Liquidity

Cash Flow

-4

-5

-4

-6

Inflation

Technology

Demand Elasticity

Taxation

Average = +4.25 Average = -4.75
Total x-axis score = -0.5
Our Space Matrix.

Figure 1: Our Space Matrix

The space matrix tells us that the company should pursue a competitive strategy.

Competitive Strategy

Competitors

Customer care training and consultancy is a relatively new idea in the East African market because, as mentioned in Sec. 2, the economies in the region are still relatively poor compared with the rest of the world’s economies. Compared to the UK and other developed countries, the market for these important services in the business industry is still very lucrative.

There are a number of large corporations in the region that have adopted the ‘modern’ way of doing business – where customer service forms the core of the business’ operational strategy as opposed to impersonal and mechanical business models. All these corporations, particularly those with stiff competition, have to improve services like customer care training and consultancy and therefore have the need to import some of these services.

If Teejays is to enter this market, the main competition shall come from established firms like Dolphins Training and Consultants, a leading training and consultancy firm based in Nairobi, Kenya. They have consultancy and customer care training services not only in Nairobi, but in other cities like Kampala (Uganda), Kigali (Rwanda), Juba (Southern Sudan) and Dar-es-Salaam (Tanzania).

Their commitment is to ‘conduct comprehensive training needs analysis, prepare and execute the most exciting, educative and transformational training/consultancy programs’ (Dolphins Training and Consultants Ltd, 2011).

Competitor’s objectives

In general, the competitor’s main objective in this relatively new market is to capture the largest market share possible, particularly firms willing and able to pay well for these services. Their other main objectives these firms have is to make sure businesses know exactly what they offer and how these services can help improve their profit margins.

Capturing a large market share involves aggressive marketing and active development of a reputation. It is not enough to just get customers, it is also vital that the company keeps these customers on a long term basis. Businesses now understand that taking good care of customers is very important since it enables the business to exist in a sustainable business environment. Teejays must ensure that they position themselves in a strategic place where it becomes easy to meet the demand for top-class customer care training.

Competitor’s strategies

Most firms in the region – spearheaded by Dolphins Training and Consultants – use a combination of the waterfall strategy and the sprinkler strategy. Mobile phone service providers are a particularly lucrative because they target customers directly and therefore require a high level of good customer relations.

When other competitors first entered the market, they targeted companies like Safaricom and MTN Africa[2]. Seeing the success of these companies, other companies have joined in and are now trying their best to ensure they are not outcompeted as a result of avoidable problems like poor customer care.

Competitor’s strengths and weaknesses

Competitors in the region have two main strengths. First, having operated in the region for a long time, they have a better understanding of the businesses in the region operate and the kind of services they require. Secondly, they are better positioned to understand the local cultures of the people and how to best appeal to their tastes.

In Uganda’s capital Kampala, for example, the local culture requires business people to socialize and ‘get to know the other person better’ before business is conducted (Kizito, 2008). Equipped with such knowledge, the competitors have an edge since they can model their training packages to best suit certain markets.

Their main weakness is their lack of experience in providing cutting-edge customer care training and consultancy. Operating in an area that is relatively new in modern business, most firms we are to compete with cannot match the level of experience and expertise we have attained after working in a dynamic business city like London, which is ranked as one of the world’s leading international business hub (London Business School, 2011).

Conclusion

Teejays is well able to expand into the East African market and with time, become a leading customer care training firm in the region. We have an advantage over the competition in terms of finance and experience. With the vast amount of work we have done in the UK, we have the capability to expand into this lucrative market with relative ease and develop training and consultancy packages that could boost our company as a whole. In order to achieve this, we must adopt a competitive style of expansion into the market.

References

Dolphins Training and Consultants Ltd, 2011. Web.

Global Village Encyclopedia, 2009. Superlative Safaricom’s Outgoing CEO Speaks On Great Success Story. Web.

Karani, P. & Saki, W., 2010. Safaricom Beating them all. The Standard, 5 June. p.23 and 25.

Kizito, P., 2008. Introduction. In Dealing in Kampala; Tapping into the resources of a sleeping giant. 2nd ed. Kampala: Longhorn Publishers. pp.12-15.

Koech, P., 2009. Enjoying the benefits of economic growth. The Daily Nation, 10 December. pp.16-18.

London Business School, 2011. Top MBA ranking for London Business School in the FT MBA ranking. Web.

Oloo, P.O., 2008. Kenya needs to pull out of third world status. The Daily Nation , 23 July. p.26.

Omwenga, W., 2006. Safaricom causing ripples in Africa. Bachelors Dissertation. Nairobi: University of Nairobi Press Nairobi University.

Smith, L. & Donovan, V., 2006. The Future Belongs to Africa. Weekly Review, 14(8), pp.77-85.

United Nations, 2009. World Population Prospects: The 2008 Revision Population Database. Web.

Footnotes

  1. Since ‘Teejays’, a customer care training and consultancy firm is theoretical, the figures used in the SMART matrix strategy are also theoretical. The theoretical figures will be derived based on reasonable assumptions based on the facts that Teejays is a financially sound and stable company and the East African market is one hard to get into but with great growth potential. The purpose of this is to demonstrate an understanding of how the SMART matrix works.
  2. Safaricom and MTN Africa are the leading mobile phone service providers in East Africa. Safaricom, for example, started in Kenya but can now be used by customers in Uganda, Tanzania, Burundi, Rwanda, Southern Sudan and the Democratic Republic of Congo (in central Africa) (Karani & Saki, 2010).
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IvyPanda. "Expanding to a New International Market." July 31, 2019. https://ivypanda.com/essays/expanding-to-a-new-international-market/.

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IvyPanda. 2019. "Expanding to a New International Market." July 31, 2019. https://ivypanda.com/essays/expanding-to-a-new-international-market/.

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IvyPanda. (2019) 'Expanding to a New International Market'. 31 July.

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