Analysis of the Market Condition That May Hinder or Favor the Entry and Survival of ARTS in Rwanda - Case Study Example

Rwandan Market Course name: Professor’s name: University name: City, State Date of submission: CONTENTS EXECUTIVE SUMMARY 3 INTRODUCTION 3 BACKGROUND TO THE CASE 5 PESTEL TABLE 6 QUANTITATIVE ANALYSIS OF THE CASE 6 SUMMARY OF FINDINGS 7 CONCLUSION 8 EXECUTIVE SUMMARY Rwanda, after the genocide incident in the year 1994, has taken upon itself to encourage development in the country by creating business opportunities locally in the different industries that fuel development through its policies. This paper assesses two major companies that have spearheaded technological advancement in the country from the manufacture of industrial computers, suited for both local and international use. The government through incentives lower tax rates for the local market as compared to that of the international in order to oversee local growth. The paper will do an assessment of Alpha Response Technology Solutions (ART), a Taiwanese technology firm, which aims to enter the Rwandan market of laptop manufacturing, which has been dominate by Positivo BGH, one of the leading computer manufacturer of laptops in the country. A PESTLE analysis will allow firm to know the conditions that favor or deter its entrance and survival in the market INTRODUCTION Technological advancement has extended its reach to all parts of the world with the aid of information dissemination through different the different modes of media communications in the form of sound, images and moving pictures. Rwanda has experienced technological advancement first had with the introduction of foreign firms which offer technical assistance in the local manufacturing process of laptops. One of the dominating manufacturing company in the country, Positivo BGH, will aid in the analysis of the market condition that may hinder or favor the entry and survival of ARTS in Rwanda. ARTS aims to manufacture GT80S Titan SLI, with screen size of 18.4 inches, in general the company wants to manufactures high quality laptops with the following specification: Intel i7 6920HQ CPU, NVIDIA GeForce GTX980M graphics in SLI, 32GB DDR4 memory, Super Raid 4 512GB solid state drive, 1TB hard drive, 18.4in Full HD anti-glare display, Windows 10, Blu-ray writer, Killer Gigabit LAN, Dynaudio 7.1 Audio, Bluetooth 4.2, 1x HDMI, 1x Mini Display Port, 5x USB 3.0 1x USB Super Port Type-C BACKGROUND TO THE CASE The entry of ARTS into the Rwandan market has been fueled by numerous factors key of which is the relationship between the competing firms’ C.E.O.s. Their long standing rivalry and unresolved grudges that started back in their university days fuels their competitive nature, ART’s CEO who is a former classmate of Positivo BGH’s CEO accuses the latter of copying and using his design ideas for an entry level computer to exploit the Rwandan market. This deep seeded grudge fuels the desire for ART’s CEO’s desire to succeed in Rwanda and outdo the competition. Entry into the Rwandan market is a relatively easy endeavor as it receives a boost from the Rwandan government. In recent years, Rwanda has implemented policies that encourage Foreign Direct Investment. Of these moves it is to digitize the market entry process, by doing so the risk of corruption and other costs are reduced significantly so is the time taken to undertake these processes. The creation of Special Economic Zones has helped spur the country’s economy significantly as it encourages foreign firms to invest in the country to enjoy the large economies of scale and reduced cost. In these zones, firms can be able to access services and other resources necessary to establish their businesses easily. These services include those such as land and necessary infrastructure that would be beneficial to their businesses. Rwanda’s economy continues to grow tremendously due to their foreign investment policy that has also gone a step ahead and set up mechanisms that would enable firms looking to set up shop in the country access cheap credit to allow them to expand. Globalization is the main of all companies looking to establish a brand at the global stage that would improve their reputation and customer base. Developing nations are the prime markets that these companies look to expand into due to the benefits that they stand to offer these businesses. These countries are usually characterized by high growth rates and an abundance of resources that have been underutilized. Such incentives are ones that ARTS consider before deciding to move into the country. ARTS stands to benefit also from the country’s growing economy, with a foothold into the country they will be able to expand further into the region. The low level of competition in the industry in which the company is seeking to enter is also a boost. PESTEL TABLE Political Low government interference Stable Government Economic High growth rate Good economic policies Low Interest Rates Social Young Population High literacy rates Technological Improving infrastructure Available distribution channels Environment Favourable business environment Low levels of competition Legal Few legal hurdles during market entry Favourable foreign Investment policy QUANTITATIVE ANALYSIS OF THE CASE Establishing a manufacturing business is a difficult endeavor even in countries that are foreign investment friendly. Before one adapts fully into the market it would take some time especially when one’s product is a specialized one. If ARTS were to launch their product in Rwanda they would have to come up with a plan that would ensure that they are able to fully establish themselves quickly into the market to reap maximum benefits from this venture. The company’s product looks to be a major success due to the current situation in the Rwandan market. Titan would be receive a ready market as the Rwandan government implements their One-Laptop-Per-Child project which seeks to promote computer technology literacy among the younger population to suit the modern world. Compared to the other products, Titan offers more for a lower unit price compared to other competing products, this is due to the lower unit production cost that the company enjoys due to establishing their manufacturing base in Rwanda. Positivo BGH is currently the company’s biggest and only competitor in Rwanda and has enjoyed a monopoly in the computer technology manufacturing business. Since establishing themselves in Rwanda they have been able to improve their profit margins year in year out as they are able to export their products into new markets through Rwanda. Of these new markets, western markets are the most accessible in part due to their guilt over their lack of response during the events of 1994. These Western countries have in part relaxed regulations on Rwandan products and companies that have established themselves in the country can take advantage of this situation to grow their business significantly ARTS being one of them. SUMMARY OF FINDINGS Not many countries can offer the same high level of incentives to foreign companies like Rwanda, the enabling policies and atmosphere can guarantee the success of any business especially manufacturing businesses. These benefits are what ARTS executives should aim for to ensure that their venture becomes a success and be able to grow into a global brand. The country’s stability and business friendly atmosphere means that the business will face minimal hurdles as they undertake their operations. Government support is crucial here as it means the the business needs not worry much over interference in their business. The setting up of a agency to deal with foreign businesses is one move that makes it easier for concerns to be raised and addressed as quickly as possible. Such agencies are created to facilitate good relations and easy access to the government and its services for these businesses. Businesses such as ARTS looking to set up shop here can also contribute very much in nation building by improving the economy of the country. Contributions such as these improve the image of the country and endears the company to the people which is one of the key features of any global brand. CONCLUSION Opportunities for growth should not be ignored by any business whatsoever if they are pursuing global success. Rwanda offers the best opportunities for growth for any company. The growth being experienced in the region is one that companies such as ARTS should be aiming to take advantage off, Rwanda especially seems to have highest growth rate in the region. The recent developments in the country are one that put the country in the fast path to becoming a developed nation that would be able to boast of a good manufacturing sector compared to its regional counterparts. Africa has been known to be the for its instability forcing companies to avoid establishing their base in this continent, Rwanda has been working hard to change this and has put itself forward as a peaceful and stable country anchored on economic and social success. The country’s history has helped it put mechanisms in place to ensure that the events of 1994 do not happen again and that the citizens of the country all work together to make certain of that. ARTS has the opportunity of joining a society and contribute in the continued growth and development of the country by creating jobs and creating economic value for the country’s idle resources. The company stands to gain a lot from the venture and executives should come up with a comprehensive plan that would enable them to take advantage of the many opportunities Rwanda has to offer the company. References BURROW, J. (2009). Marketing. 3rd edition. Mason: South-Western Cengage Learning Read More