Alpha Response Technology Solutions Strategies Analysis - Case Study Example

INDIVIDUAL AUTHENTIC RESEARCH PORTFOLIO By Name Course Instructor Institution Location Date List of Figures Table 3.1 Pestel Analysis Table 4.1: Five Forces Analysis (ARTS) Table 5.1 Comparisons and contrast in ARTS primary product line with postivo-BGH primary product line. Table 5.1 Table showing the likely returns of producing and selling Titan in the Rwandan local market. Contents 1.0 Introduction 3 2.0 Background to the case study 4 3.0 PESTEL Analysis of the investment situation in Rwanda 5 4.0 The five forces analysis of the ARTS 6 5.0 The ARTS motivation to enter the Rwandan Technology Market 8 6.0 Recommendations 11 7.0 Summary of the findings 11 8.0 Conclusions 11 Reference List 12 ARTS Vs BHG 1.0 Introduction The Rwandan technology market has attracted many foreign investors over the past decades. The move can be attributed to the existence of high political stability, the large customer base and the strong economic growth leading to a strong currency. The main competitors in the Rwandan technology market are the postivo-BGH company and the ARTS company (Adams 2016 pg. 45). The postivo-BGH company which is a joint venture has a long history in Rwanda and therefore attracts a large customer base. These two companies exhibit high competition in their product line and the need for each company to employ market strategies that can generate a competitive advantage. The postivo-BGH made the largest impact in the technology market introducing the first homemade Rwandan computer POSTIVO-BGH. According to Leydesdorff et al (2016 pg. 40) the continued need for the nationwide 4G coverage and smart devices by the government has prompted the highest competition in product innovation. The entrant in technology market especially computer devices innovation by the ARTS company will therefore need massive strategies in order to compete the products by the market leader postivo-BGH. This paper will mainly focus on the analysis of the Alpha Response Technology Solutions strategies that will enable the breakthrough of its computer device, the Titan. 2.0 Background to the case study The case study involves two competing companies, the ARTS company and the postivo-BGH company. The postivo-BGH company is a joint merger of the postivo company and the BGH company in a deal to jointly operate in Rwanda. The company has enjoyed more than 100 years in the manufacture of electronic devices. As postulated by Gagliardone and Gooloba (2016 pg. 26). The long time operations in Rwanda has enabled the company acquire a large customer base and acceptance among the suppliers and end customers. The managing director of ARTS company and the Postivo-BGH happen to have been classmates and therefore have competing and contracting strategies in hitting the Rwandan market. The two companies mostly deal in the same product line i.e. the manufacture of computers and tablets. The ARTS company management have planned to hit the Rwandan economic zone with a portable computer device that can give it a competing edge over the software market leader postivo-BGH. Postivo-BGH enjoys a good customer base because of the local partnerships with the government and other sectors. The company has attained a partnership agreement to supply the laptops and other electronic devices to schools in a one student one laptop program (Adam et al 2016 pg. 90). The Rwandan government has been very cooperative in setting policies and procedures for foreign investment. The country upholds favorable tax rates and hence conducive working environment by the foreign investors as postulated by Huang and Huang (2016 pg. 43). The research by scholars on the technology market of Rwanda shows that entrants can potentially seek market share if they introduce more competitive products than those of IT market leaders like the postivo-BGH company. This research presents higher chances for ARTS company to succeed in the Rwandan competitive market. 3.0 PESTEL Analysis of the investment situation in Rwanda Table 3.1 Pestel Analysis Political i. Rwanda enjoys high political stability. There is conducive environment for investment due to peaceful co-existence among different communities. ii. The country has policies and regulation regarding the operation of foreign investments. This regards laws on registration of companies and laws on the trade mark. The country has regulations on quality assurance and laws on employment which requires that both local and foreign subsidiaries employ mostly the local community rather the expatriates. The country has laws on taxation that requires companies to pay corporates tax normally estimated at 30% of total profit realized. Economic i. The country enjoys a high economic growth rates estimated to GDP of 8.16%. The country enjoys high value of currency hence sustainable and consistent product prices by foreign investors. The inflation rate is very low and therefore a possibility of low financial downturns and inflation. Social i. There is drastic change of values among the people. This is attributed to high buying trends by consumers and a change in life style. The citizens have high appetite for quality products. Technological i. The country has well-developed IT systems. The ministry of IT has set laws concerning information transmission and software management. The law on patent rights ensure security of the companies rights and that any company that infringes this rules is punished severely. The country has high appetite for technological advancement and improvement in its software devices. Environmental i. The regulations on environmental conservation requires that all companies work towards keeping a clean environment e.g. proper waste disposal. The country has stringent measures on the perpetrators of this laws. This is done through court fines on the companies that infringe the law. Legal i. The country’s laws stipulate for the registration of all foreign investments. It has laws on the renewal of investment contracts and law on trade mark. 4.0 The five forces analysis of the ARTS Table 4.1: Five Forces Analysis (ARTS) Competitive rivalry i. ARTS faces high competition from companies such as postivo-BGH, and other likely newer entrants in the Rwandan technology market. According to Palvia (2016 pg. 40) Postivo-BGH has a long history of operation in the manufacturing of electronics and a large customer base in Rwanda it being the first company to come up with Rwandan first home made computer. ii. The ARTS company does not hold any fabric or process patent rights hence its products can be easily copied by other companies. Bargaining power of suppliers i. The large supplier base in the field of electronics hinders the bargaining power. The electronics products i.e. portable computers are produced by many companies in Rwanda main competitor being BGH and other companies worldwide such as Samsung, Lenovo and Dell. Bargaining power of customers i. The customers of the ARTS products include both the wholesale customers and the end customers. The bargaining power of end customers is higher as the company is yet to establish product brand recognition as compared to companies like postivo-BGH(Mukama 2016 pg. 89). Threat of new entrants i. The company does not face threat of new entrants because heavy capital requirements for branding, advertising to create product demand which hinders entry of newer players in this technology market. However many investors could enter the sector hence need for creation of more product acceptance by customers. Threat of substitute products i. The continued technological innovations by software companies worldwide poses a challenge to the company. This is because in the future more customer appealing computer will be developed to compete with the company computer products. 5.0 The ARTS motivation to enter the Rwandan Technology Market The main factors that have motivated the ARTS company to enter the Rwandan market incudes; the cost of production, the political stability, economic stability and growth, the strong Rwandan currency and trade openness. According to Smith et al (2016 pg. 40) the cost of production in Rwanda is low as compared to other countries such as US. This therefore means that the cost of compensating employees in Rwanda is preferably lower and therefore the company can easily maximize its profits. The political stability of a country affects the business performance. Rwanda enjoys stable political will and therefore motivates external investors such as postivo-BGH and alpha response technology solutions ARTS. The clear political will ensure peace and conducive working environment. Unlike countries such Somalia and some parts of Nigeria, it is easy for an external investor to work in Rwanda. The economic stability and growth also motivated the company to establish its business in Rwanda says Luo (2016 pg. 15). The high economic growth and stability helps the company in formulating product price strategies which are beneficial to the company. The stable macroeconomic conditions and high sustainable growth rates attracted the ARTS company to operate in Rwanda. The other motivational factor is the strong Rwandan currency and the existence of a large market base. The large market base by both wholesale customer and end customers attracts foreign investors. The existence of many tertiary and secondary institutions with high demand and taste for electronic devices make it easy to enter the technology market and produce products such as the portable computers and other electronic devices such as hard discs and tablets (Behuria 2017 pg. 23). Table 5.1 Comparisons and contrast in ARTS primary product line with postivo-BGH primary product line. Company Comparison Contrast ARTS and postivo-BGH Both companies have invested highly in pc and tablet production. The main product for ARTS is the GT80S Titan whereas the main product for postivo-BGH are widows10, tablets and powerful processors. Postivo mainly sells its products locally through a partnership with the ministry of IT and youths to schools and colleges. The current foreign investment in Rwanda. The largest foreign investment percentage comes from the European union at approximately 32%, African union follows at about 14% as per the 2010 and 2011 research findings. Most investments come from south Africa, Germany and Kenya this is according to Leydesdorff et al (2016 pg49). As per the finding Rwanda has been enjoying high foreign investments as a result of existence of good microeconomic environment which is averaged at the real GDP growth of 8.16%. this can also be attributed to the good governance systems as postulated by the world bank report of 2012. Table 5.1 Table showing the likely returns of producing and selling Titan in the Rwandan local market. Product Sell in local market Sell in western markets Laptop RWF 280,OOO RWF 295000 Tablet RWF 100,000 RWF 12000 Memory cards RWF 2000 RWF 2100 Modems RWF 19000 RWF 19200 6.0 Recommendations Based on the prices of products in the local market it is recommendable for the software companies in Rwanda to partner with the government sectors such education and forge programs such as one student one laptop in order to create ready and sustainable markets for their products. The cost of selling products a broad involves lengthy procedures and high taxation and therefore the ARTS company should consider selling its products locally to avoid these added costs. 7.0 Summary of the findings The government of Rwanda has established policies and laws that favors the operations foreign companies. The postivo-BGH company is a market leader in the area electronic devices in Rwanda. The research on the analysis of ARTS company’s shows that the company is likely to hit the technology market of Rwanda due to its broader finance base that will significantly ensure adequate advertisement and product branding. According to Behuria (2017 pg. 10) the Rwandan market and its political stability has been the main attraction to many foreign investors mostly from the European union and south Africa. The country’s ever growing GDP has attracted companies like ARTS to invest in this economic zone. 8.0 Conclusions The Rwandan technology market is heavily controlled by the postivo-BGH company. This company has established itself as a market leader in the manufacture of electronic devices. The company enjoys government support through various local partnerships. The company’s brand is marketable for it was the first company to manufacture Rwanda’s first home made computer POSTIVO-BGH. For ARTS new product to hit the market the company has to ensure greater quality and high government support. Reference List Adam, T., Haßler, B. and Cruickshank, H., 2016. One laptop per child rwanda: enabling factors and barriers. Empowering the 21st Century Learner Behuria, P., 2017. The political economy of import substitution in the 21st century: the challenge of recapturing the domestic market in Rwanda. Gagliardone, I. and Golooba-Mutebi, F., 2016. The Evolution of the Internet in Ethiopia and Rwanda: Towards a “Developmental” Model? Stability: International Journal of Security and Development, 5(1). . Huang, Y.Y. and Huang, D.S., 2016. Technology Advantage and Home-Market Effect: A Poisson Quasi Maximum Likelihood Estimation. Taiwan Economic Forecast and Policy, 46(2), p.1. Leydesdorff, L., Heimeriks, G. and Rotolo, D., 2016. Journal portfolio analysis for countries, cities, and organizations: Maps and comparisons. Journal of the Association for Information Science and Technology, 67(3), pp.741-748. Luo, H., 2016. Report on the Development of Africa’s Special Economic Zones. In Annual Report on the Development of China's Special Economic Zones (2016) (pp. 281-306). Springer Singapore. Mukama, E., 2016. Baseline Study on the Status of Open and Distance Learning in Rwanda. Smith, E.K., Bird, C. and Zimmermann, T., 2016, May. Beliefs, practices, and personalities of software engineers: a survey in a large software company. In Proceedings of the 9th International Workshop on Cooperative and Human Aspects of Software Engineering (pp. 15-18). ACM. Palvia, S.C.J., 2016. Global Sourcing of Services: A Two Stage Model for Selecting a Vendor. Global Sourcing of Services: Strategies, Issues and Challenges, p.407. Read More