International Nutrition - Essay Example

International Nutrition Business International Nutrition Company manufactures an assorted sample of animal feeds that include poultry, cow, and pork feeds. The company has ensured that it provides quality feed for animals and maintains this at all times, regardless of the country of its operation. It combines an inventory of over 350 ingredients that are critical for animal health and growth. Moreover, it uses professionalism and expertise in producing medicated, nutritional and specialty premixes. Not only is the company concerned with high quality products but it also ensures that they are handled with great care. It is a fully approved company by the Food and Drug Administration, holding ISO registration number ISO 9001:2008. Being in the local business for over 40 years, the company has been operating global offices for the last 20 years, with its head office in the United States. Among the services that the company offers to its customers are being an excellent animal health distributor, feed manufacturer, and a producer. The company first went global, and out of United States, in 2005 when it first opened its doors in Ho Chi Minh City in Vietnam. Currently, the company has offices in all regions of the world. Due to the high growth of the Southeast Asian market, International Nutrition located professionals in the city to help its customers realize their full potential in their livestock and poultry farming. Its biggest market, however, remains the United States, although the new markets have registered an increased demand for its products. Uniquely though, in some regions, it provides certain products and leaves others. Global Business Expansion for International Nutrition There are a number of factors that lead to either a high or low entry of international companies in a country. First, a heavy tax system that is highly regulated is one of these factors. While many people hold the belief that strict tax laws require a review to allow for foreign investors, others argue that they are adequate to cater for the needs of the citizens of the state as well as protect the local companies. The reality is, however, not true. Because of strict laws in many countries, many companies find it difficult to start up business in these countries. However, the market is open to allow competition to take place. Trading in a free and fair market, International Nutrition Company enjoys the laws of competition. Its products perform well in such regions due to their high quality. Although priced higher than some of the local commodities, the market still highly regards quality feeds from International Nutrition. The reduction in the level of market regulations and international tariffs by countries is a result of globalization. This has also contributed to the decrease in the level of market control. As countries increase the level of doing business with one another, the result is open markets free to compete with one another. For healthy competition to take place, many governments allow their markets to operate freely, offering companies freedom of entry into and exit from the country. This allows both local and international investors to battle out in the market arena with the products or services being the top of their priorities. In most countries in the African continent, regulation takes place at one level, i.e., the national government. Africa provides a number of fast growing markets for any company to invest in, and especially agricultural companies such as International Nutrition. In Africa, emerging markets such as Sub-Saharan Africa offer a great opportunity for the company to exploit. Countries such as Zimbabwe, Congo, Rwanda, Uganda and Kenya act as an investment destiny in Sub-Saharan Africa. In West Africa, countries such as Ghana and Nigeria are an example of the markets where the company has business and records increased growth. Nigeria relies mostly on its oil, while Ghana highly relies on agriculture. Increasingly though, the Nigerian government has encouraged people to invest in agriculture. Policy changes in this country are the main reason why more people rear animals for economic purposes. In Sub-Saharan Africa, countries such as Zimbabwe and Ethiopia provide increased opportunities for the company to exploit. Zimbabwe, for instance, faced post-election violence in the last election. However, there is an increase in investor confidence, which contributes to a higher growth of the company’s sales. Current policies adapted in Ethiopia seek to increase the level of agricultural production. The country’s population, therefore, rear more animals, and this creates more business for the company. Haiti also offers the company a growing market for its products. Since it was recently hit by the earthquake, many people practice agriculture as the government struggles to rebuild the economy. As a result, more people rear animals, opening up more opportunities for the company. Many of these countries strive hard to produce sufficient food for their people. Even in countries whose climate is unfavorable for farming, the governments are investing heavily in the agricultural sector. Countries in the African region present a rather big opportunity for International Nutrition to market its brand. These markets are still new and young. Previously, they were non-agricultural regions. However, people increasingly rear animals in the current world. Therefore, the company enjoys limited competition. The company needs to assess the African continent for its growth potential. For any company that hopes to have increased revenues in future, Africa is the place to invest in. Economies of the African nations are in their growth stages. Therefore, focusing on this region would be the best strategy for any company. They import most of their consumer goods. Additionally, the rising population growth in the African continent presents a ready market for the commodities. With many of these countries changing their policy structures to focus on agriculture, US export companies such as International Nutrition stand to gain from these changes. Rwanda’s imports increased from $1.368 billion in 2011 to 1.414 billion in 2012, Uganda’s grew from $5.002 billion in 2011 to $5.528 billion in 2012, and Gambia’s rose to $354.1 million. Increase in imports means that countries increasingly open up markets for more businesses. It is also a sign of good business environment, which translates to high revenues. This is an example of a freely operating market from Africa. The country imposes fewer tariffs on its imports. The market is liberal enough, with its regulations and laws permitting external companies to enter. It embraces agriculture, with many people engaging themselves in farming. As such, the company faces fewer problems and hardships in its operations in the country. The livestock market in the country of Rwanda is highly competitive. With many people rearing domestic animals, International Nutrition makes high returns from the country. Despite the openness of the market, the country’s tax policy hurts businesses. The population of a country also determines the level of success of any company that seeks to invest in that particular country. Countries with a high population give companies high opportunities for growth and expansion. However, the people should also have the purchasing power to buy consumer goods and pay for the services. Emerging markets provide the best opportunity for companies such as International Nutrition. Rwanda’s population growth is at 2.75%, as 2012 statistics indicated. The growth in the population translates to an increase in the demand for consumer goods and services. If International Nutrition was to invest in the country, it would register increasing revenues over a long period of time. Through properly planned policies and development agenda by the Rwandese government, the wealth of the people is likely to increase. As their wealth increases, so will their purchasing power and capacity. Additionally, the country’s polices focus on increasing agricultural production. Moreover, while most of the other African nations fight over power and political control, Rwanda is coming from genocide. Many political analysts argue that there is no possibility of the country falling into a political turmoil again. Due to the favorable political climate, International Nutrition stands to gain if it was to invest in Rwanda in contrary to the rest of the African countries. International Business Partner Rwanda being a landlocked country requires an imports and export company to ship in products to the country from a country served with a coastline. Shipping goods from one country to another in the East African region is easy due to the formation of the East African community. Recently, Rwanda joined other countries in the community which eased the movement of goods from and to the country. Extrol Logistics (Rwanda) proves to be the best and most reliable company to engage with in the imports business. With a huge network of companies in the two inland countries of east Africa, Kenya and Tanzania, it would be reasonable enough for International Nutrition to contract this company. Having links in the two countries, the company could opt to use the Tanzanian port in case the Kenyan fails. Despite the reliability of the Kenyan port and its high capacity to handle huge cargo volumes, the country faces an uncertain political climate due to the recently held elections. Therefore, there is a need for International Nutrition to consider an alternative route of getting its products into Rwanda in case the Kenyan political climate worsens. Contact Information Exrol Logistics (Rwanda) SARL Level 2, Delta Towers Av de la Justice P.O.Box 2987 Kigali Rwanda Tel: +250-22-286-3770 Fax: +250-41-231-9721 Email: rwanda@exrol.com (Extrol Logistics, 2013) Entry Strategy Although the Rwandese government is keen enough on bringing in new investors into the country, setting up a whole new company would prove a rather expensive affair for International Nutrition. Thus, to minimize its costs of doing business is getting into a joint venture with another company. There are labor laws in Rwanda that protect the wages of people. The country also has strict tax laws, all of which would constrain the smooth operations of a new company. Assessment of Strategic Benefits, Costs, Risks and Contingency Strategies Investing in Rwanda strategically places the company into the heart of the east African community, arguably one of the fastest rising economic regions in Africa. The region has a lot of growth potential. From Rwanda, it could consider extending its operations to Malawi, Uganda, Tanzania, Zimbabwe, Burundi, and the Democratic Republic of Congo. The costs involved in this plan include setting up in an entirely new region, one that has the potential of growth. This would be an expensive affair for the company. The risks involved are minimal. The only risk that the company faces is cross-border issues and taxation laws. Finally, in its contingency strategy, the company requires to station a few professionals in the country to offer farmers the best animal planning knowledge and advice. The rest of the personnel should be local Rwandese people. It, however, should invest an adequate budget for the entire plan. References Extrol Logistics. (2013). Extrol Logistic, Rwanda. Retrieved from http://www.exrol.com/countryprofiles/rwanda.htm. Read More