Establishment of an Alpha Response Technology Solutions Venture in the Rwandan Special Economic Zone - Case Study Example

Table of Contents 1.0.Introduction 2 2.0.Background Information 2 3.0.Quantitative Analysis of the Case 3 Political Environment 3 Economic Environment 3 Social Environment 4 Technological Environment 4 Legal Environment 4 4.0.Summary of Findings 4 5.0.Conclusion 6 References 7 1.0. Introduction Establishment of an Alpha Response Technology Solutions (ARTS) venture in the Rwandan Special Economic Zone needs to theoretically ascertain both internal and external factors for business operations in Rwanda. For a manufacturing plant for portable computer technology we critically assesses ARTS’ framework the organization can use to determine its competitive advantage; a method that helps it dictate its operations in the already competitive environment. The examination of strategic management approach that influences ARTS competitiveness amidst competition from Positivo BGH are framed in terms of resources, capabilities, core competencies, value chain activities, current strategies and objectives. We address the organisation’s approach to competitiveness with regard to economic, socio-cultural, political, technological and natural environment conditions in Rwanda in the recent decade, and the future forecast for the organisation. 2.0. Background Information Known as the Republic of Rwanda, Rwanda is one Africa’s smallest countries. It is a sovereign state located in East and Central Africa . In terms of strategic economic position and affect it would have on ARTS operation, we begin by acknowledging that Rwanda has been transforming, recognizing its challenges and opportunities on equal measure (Dove 2016). In the last few years, Rwanda has moved from its traditional business model to embrace digital approach in its logistics. Contrary to general belief that the country, and in particular, areas around Rwandan Special Economic Zone might not offer economic competitiveness in terms of business operations, recent studies have established that Rwanda has developed technological supply chain as well as transport asset based structure to compete favourably against other countries in the region (Dove 2016). 3.0. Quantitative Analysis of the Case Political Environment ARTS will be is enjoying relatively fair political environment with government on deregulations as the key political issue affecting the Company. Rwanda offers a liberal-capitalistic democracy, it has been noted that the government has been substantially interfering with her economy through adoption of a number of roles (Kodongo et al. 2015). For instance, a political decision where Rwanda decided to set up importation taxes that were aimed at protecting the national economy may substantially affect Rwanda and this fact can be accentuated by the entry of Positivo BGH, a major competitor to ARTS. Economic Environment Unlike other markets where ARTS has performed considerably poor, economic environment in Rwanda is different. First, this is a country with strongest economy especially Kigali Special Economic Zone. Again, this is a country with a major regional financial power especially after the merger of Kigali Special Economic Zone and Rwanda Special Economic Zone (Bijaoui 2017). That is, while the share market is exactly what ARTS wants, that is what Rwanda economic environment provides. Social Environment Background in formation provides that ARTS exists in in conditions of uncertainty, and is considering an attack on the Rwandan technology market, currently dominated by Positivo BGH. Coupled with the situation in socio-economic background in Rwanda, it is apparent that the company will enjoy favourable social environment where as the country is committed to racial and ethnic inclusiveness. Additionally, by culture and social orientation, Rwandans prefer technology as a tool that advances their day to day activities (Uwamariya et al. 2015). It is indeed for this reason that ARTS will enjoy the pace of fiscal consolidation which balances the need for structural fiscal repair with the shorter term impact on the economy. Technological Environment Based on this analysis, it is apparent that ARTS will be positively affected by continued technological advancement and companies intending to explore the market will likely succeed here especially when they come with new technology which is export focused. Legal Environment Rwandan market is giving priority to the enforcement of law, transport security, intelligence cooperation, countering terrorist financing and strong legal frameworks for any breach of business practices since Kagame came to power. For ARTS, this is a favourable market since one can trust legal regime due to strong and transparent governance system which is also coupled with business oriented insolvency regimes and regulations. 4.0. Summary of Findings Economically, Rwanda has an attractive environment for business as a result of the reforms that carried out in the beginning of 2000. This is clearly articulated by the high rankings of the international business indicators which ranked Rwanda 2nd at Sub Sahara and 32nd globally on the World Bank’s Ease of Doing Business indicator (Uwamariya et al. 2015). Economically speaking however, Rwanda harbours some weaknesses in that they over rely on foreign aid, Rwanda is dependent on commodity price, the country itself is isolated and thus exposed to geopolitical tensions and democratic pressure. Special Economic Zone (SEZ) is a term which means an area that is physically secured and geographically specified which is administered by a single body (Bijaoui 2017). There are certain incentives that encourage businesses to operate in the Special Economic zones, firstly, operating in the Special Economic Zone allows for liberal and friendly economic regulations so that a business can easily physically operate and locate within. Secondly, they are specifically implemented to meet social, fiscal and infrastructure policy rationales. Another incentive it that Social Economic Zones facilitates better economic growth by the use of reduced tariffs as well as better efficient customs controls. Rwanda’s market can be described as small market; it has a population of about 11.5 million people and a GDP of 7.890 billion US dollars. From 2002 - 2012, Rwanda’s economy improved by about 8 percent annually in the average before it started slowing to about 4.6% in 2013, when they experienced donor suspensions and aid cuts . Since then, the economy has improved by 6.9% in 2015. In the overall there exists a big picture of future great economic signs. ART will have to analyse the supplier power. The existence of Positivo BGH in the market means their supplier power will be increased thus suppliers will increase their prices. Secondly, buyer power will also be affected by Positivo BGH because ART will already be offering a product which is not so new to the market. This would force them to reduce their prices and create laptops with different and better specifications. Threat of substitution is another force. If Positivo BGH offers alternative cheaper laptops then ART would have fewer buyers hence their laptops should be built in such a way that they are unique and offer no space for other alternatives. Next is competitive rivalry, ART will have less power since it is rivalled by Positivo BGH and lastly is the threat of new entry that is Positivo BGH whose existence is a real threat hence ART must go an extra mile to produce superior laptops. ARTS' main product solution is the GT80S Titan SLI 18.4in Core i7 Notebook which has a cheap manufacturing labour, taxation incentives, Western emotion over failure to intervene in the 1994 Rwandan genocide, and developmental dollars from the World Bank this is very similar to the one produced by Positivo BGH. 5.0. Conclusion Firstly, ARTS should continue venturing in trade in Rwanda because of the favourable policies for foreign investments. Secondly, ART should consider venturing into business in surrounding countries like Ethiopia, South Sudan, and Kenya amongst other countries before their competitor enters there. This would strengthen their brand on the overall. Thirdly, they should work on the creation of very unique computers with unique specifications instead of focusing on how their brands were stolen. Next, they should work on building a strong consumer base so that they don’t lose their consumers to their rivals. In addition to this, I also strongly recommend that ART should invest on public relations officer who would work on building positive attitudes on the Rwandese concerning their products; the public relations officer should also work on doing media outreach so that the company brand is known. References Bijaoui, I., 2017. Economic Involvement of International Organizations, MNCs and Local Business Leaders and Groups. In Multinational Interest & Development in Africa (pp. 29-65). Springer International Publishing. Dove, M., 2016. The entrepreneurial brew investigating the reflexive duality of drivers and determinants to antrepreneurship–a comparative analysis of the Ethiopian and Rwandan coffee markets (Doctoral dissertation, University of Reading). Kodongo, O., Natto, D. and Biekpe, N., 2015. Explaining cross-border bank expansion in East Africa. Journal of International Financial Markets, Institutions and Money, 36, pp.71-84. Uwamariya, M., Cremer, S. and Loebbecke, C., 2015. ICT for Economic Development in Rwanda: Fostering E-Commerce Adoption in Tourism SMEs. In Proceedings of the SIG GlobalDev Eighth Annual Workshop. Read More