Business论文模板 – Contemporary Issue in Management

Business opportunities in Africa for Global Business.

African is the next big global opportunity with emerging business. In this paper, there will be exposure to Africa opportunities for global business. It will elaborate on the opportunities in the agriculture giving examples of the global companies already existing in the continent. It will also expose the various opportunities in infrastructure of different countries with examples of the companies thriving in the business. Despite many enterprises in the sector, the service industry in the continent has a wide gap for investing. Investment of consumer goods in Africa also requires more business to come in and boost the consumption per person in a number of ways. Lastly, the paper will expose some of the ways global business can use to navigate the challenges in the continent.  

Agriculture

In Africa, there is a rising need to import food to feed its growing population. Despite the vast area it occupies, only forty percent is arable to accommodate farming and other agricultural activities. However, the land cultivated accounts for only ten percent. Therefore, the rest of thirty percent of African land can be an opportunity for global business to invest. In fact, the reason for under cultivation is due to small investments in the respective countries, poor regulation and clear policies governing the usage of the land. Inadequate fertilizer to boost the fertility of the land and a firm supply chain of the cultivating inputs (EIUL, 2012). The gap opens up to private sectors and the government to develop the industry in agriculture. Recently, a country like Ethiopia began investing in the agriculture, and it is reaping a lot.

 Agriculture accounts for more than fifteen percent of the Gross Domestic Product of the continent. The activity is well concentrated in countries such as Nigeria and Egypt contributing one-third of the continent’s agriculture output. The agroecological capability of Africa is larger than its current production. The hindrance of the continent progress is because of fragmentation of land where most production occurs in less than two hectares of land. In other continents, countries such as United States and Brazil have less than eleven percent of farms indulging in such intense fragmentation (World Bank, 2013). Global business need to invest in Africa and size the opportunity to come up with industries that allow small firms to benefit with large scale.

       Agriculture is a complex activity that will require much training to produce maximum. In order for the operation to be fruitful, there should be availability of water, financing, and high-quality seed. It also requires readily available markets for its perishable products. Since the continent has a variety of the agro-processing conditions, it is necessary for the global investors to invest in a variety of farming models (EYGM, 2014). In addition, investors can set foot in the continents since it is now improving on its infrastructure, economic conditions and creation of stable business conditions that promote the agriculture. The continent has more donors committing themselves to developing the sector in the continent such as the World Bank, which targets the grass root farmer. The private sectors are also pouring money to develop the continent’s agriculture.

       In Africa, the investments in agriculture can take many directions. Investors can introduce new technologies such as drought resistant crops. The plants can be cultivated in arid and semi-arid parts of the continent to increase the production of crops such as maize. The drought-resistant plants can have higher investment returns and provide food to the continent’s population thus eradicating poverty (Forbes, 2012). Investors can seize the growing opportunities in Africa by providing ready markets for the continents commodities. They can expand the market by modifying the products and selling them internationally. Lastly, they can also set in the continent and improve the production of high-potentially arable lands. The investors can introduce new models that raise the Africa economic growth. For instance, they can be involved in nuclear farming model that boosts the productivity of small farm holders.

Infrastructure

In the past decades, the continent mismanaged its infrastructure and had little investment in the area. It also leads to low performance in sectors such as roads, railways, and the power. Currently, the continents have approximately 0.5 billion African homesteads with no access to electricity an opportunity gap that global business can use to invest. For instance, Nigeria with its population of 180 million people, only ten million has access to the electricity (EIUL, 2012). Therefore, African requires a considerable portion of investment globally to boost the amount of US$ 100 billion needed each year to cater for power alone in the continent. China has noticed the gap and has been investing in the sectors with activities such as upgrading roads and railways, as well as building new ports. Moreover, the congestion in African airports is in records with a high cost incurred in transportation of short distances. For instance, the cost incurred to transport a crate from Dar airport to Durban airport is the same compared to that of Durban to Singapore airport (Ibp Inc, 2013). Therefore, more opportunities are in African for global business to invest.

        Opportunities in the continent are also dependent on the time spent in research and development. The continent needs investors to take a long-term view and develop the infrastructure. When new global business indulges in the continent, they do not have to be in a hurry in benefitting from the venture. However, with time the business can be very profitable. For instance, Julius Berger Company in Nigeria began more than a century ago investing in the country (Akil et al, 2014). Even today, the business still reaps more benefits because of its experience in the environment. Likewise, the Mota-Engil industry conglomerate of Angola began its investment in 1946. The company continues to benefit from infrastructure in the country. Africa can also host more investors interested in taking an extended term view in developing the infrastructure of different countries.

       Investors such as multinational companies can also use the opportunities of sharing operations with the local firms to get access to the regional markets. They can build a strong relationship with politicians, business and gain expertise in managing the various countries regulations and labor (Schwab, 2013). For instance, the DP World and APM Terminals run most of the ports in Africa by sharing operations with the local partners. Opportunities thus, lie in African continent as long as a global business follows the right means of access to the market. The investors can also diversify their portfolios to minimize the risks encountered in the infrastructure industry. For instance, the APM terminal runs seven ports in different African countries. Julius Berger Company also has diversified its portfolio and now offers construction services, building of residential and commercials property, gas, oil and port industries across Nigeria. Lastly, Odebracht Company in Angola joined the market to construct the Capanda hydroelectric dam. However, with time it expanded its portfolio and now builds both commercial and residential property, partnered with the diamond exploration venture and involves itself in the mining projects.

Service industry

Retail and commercial outlets need massive services such as financial to thrive. Africa has its outlets mostly with an estimation of nine out of ten falling in the category. With the growth of the economies in Africa, its consumers will need banking services. The gap is open for the global business to invest. In Kenya, for example, the M-Pesa mode of payment has mostly boosted the service industry in the country. The continent is now allowing foreign banking to take place in the various countries (EIUL, 2012). Currently, four out of five African does not have a bank account to cater for their financial services. It also needs more innovative payments mode such as M-Pesa to enable completion that boost the services required by the consumers and minimize the instance of monopoly in the industries.

In addition, communication needs improvement, and global investors can come in to supply more mobile phones markets and provide an internet service more into the continents. Lastly, there is a massive need for the continent for better hospital services and education. The health healthcare offered in some regions of the continents is hazardous and global business can employ the opportunity to improve the situation in Africa (United Nations Habitat, 2013). Investors can take advantage of the geographical expansion in the continent. For instance, the pan-African Eco-bank Transnational incorporates over thirty countries in its operation. The success of the investment results from the interconnection among the independent subsidiaries. It also benefits from the sharing of the personnel and financial resources. They can also enter the continent to provide a new segment in the banking sectors such as the South Africa’s Capital Bank that introduced a model with low cost in business. It targeted the unbanked customers in South African region thus, can spread the same services to the rest of the continent. The pillars of the model were provision of personal, simple, accessible and affordable services to the people of the region.

Global business can also thrive to bridge the gap between microlenders and traditional banks. They can follow the lead of the African Bank that provides innovative savings and credit products to middle and low salaried income earners (Adekeye, 2004). They can offer faster assessment of loan application by incorporating sophisticated credit engines and simplified process of loan application. For instance, innovators can introduce newer technologies in the field such as the use of biometric scanners to monitor the loans. Investors can also increase the products they are offering to their customers due to the involving needs. For instance, the investors’ banks can provide overdraft and credit cards facilities to cater for the transactional products in the continents. Lastly, investors can also expand their business along the value chain. For example, they can follow the lead of the Guaranty Trust Bank in Nigeria and provide services such as building houses for the clients. They can exploit the synergies that are with the business unit.

Consumer goods

There is a need to increase the private consumption in the continent. However, credit facilities curtail the consumption reducing the opportunities for shopping among the Africans. Despite the rising growth of Shopping Malls in the mainland, they are not capturing the larger consumer markets (EIUL, 2012). The continent also requires an increase in manufacturing industry such as Unilever, which is currently operating in the continent. Investment in the market will provide more jobs that are another rising opportunity of readily available labor in Africa.

       African market is diverse with over fifty countries engaging in different market structures. In each country, there is a different consumer behavior and spending power making the market heterogeneous in structure. Investors can enter the markets with little spending power and improve the infrastructure in the markets thus making accessibility to the market easier (Fick, 2002). The investors can build an active partnership in distributing the production to the wider markets to increase the consumption. They can also invest in production of products in smaller packets that are affordable by the local people of the regions. In addition, investors can also concentrate the expenditure in the African markets at the point of sale to attract a domestic consumption. In wealthier areas, the investors can employ the technics of direct sales and distribution.

       In Africa, most of the population has low affordability of products. The investors can come with new models that deliver the needed products to the African population that is necessary at the right time. They can tailor their design of their products to attract and cater for the people thus boosting their consumption of the commodity. Therefore, the global business can invest in Africa and ensure they learn the strategies of the local entrepreneurs who have different cost structure in their operations. In addition, investors can fill the gap in modern trading that is still new to the continent (Conference Board, 2013). The continents currently comprise of open market, umbrella vendor, and the traditional pop-and-mom shops in the retail operations. The investors can leverage an active networking of the third parties that consists of the distributors and wholesalers to distribute the products to the grass root consumers.

       Lastly, investors can thoroughly research on consumption of some essential commodities and determine the best to invest in the African continent. For instance, use of toothpaste per capita is lower in comparison to other continents like Asia. Therefore, investors can aim to boost its consumption and provide the products to the people at affordable prices (Cook, 2013). Moreover, investors can ensure they increase the reception of consumer feedback and train the masses to create a product mindset. They can achieve this by employing non-traditional techniques and educating the consumers on the need to use the commodities. There is also a shortage of talents in Africa, and an investor can be at an advantage when he is in a position to bridge the gap. They can mix the local employee with the international to boost their knowledge.

Overcome the challenges and issues associated with operating in Africa

       Global business can come up with innovative ways of navigating through the African inadequate infrastructure and reduce their operation cost. Thy can build water tanks in order to have a constant supply of water. They can also purchase power generators to have a steady supply of electricity and occasionally they can make the roads passable (Nwankwo, 2014). They can also innovate products that have longer shelf life to avoid perishing before it reaches its consumers. For instance, Promasidor Company in Africa manufactures daily products in powder form to reduce the loss of the slow supply chain.

       In African, consumers rely on the informal retailers and street vendors who only manage to provide a portion of the customers. Global business can also develop better models that can take their products to the largest share of clients by collaborating with trustworthy distributors. The can then ensure that the sales force is constantly controlling the markets by reaching the customers at affordable prices (Gulde, 2006). They can also personalize the working of a shopkeeper by collaborating with traditional outlets. For example, the Brewer SABMiller in South Africa facilitated conversion of the illegal taverns into licensed outlets. Therefore, a proactive global business can win in the arena of the African markets if they employ the integrated supply chain, category management and joint shopper research.

       Global business can also overcome the challenges in Africa if they compile their findings of the trade landscape. Thriving business in Africa do not rely on the limited and unreliable research results published by the research firms (Sims, 2007). For example, Olam Company in West Africa is heavily researching to analyze the difference in the consumers of the region. The company aims to identify different categories of the new growth and tailor its products to the local needs.

       In addition, global business can overcome Africa challenges of operating in the local markets by collaborating with the local firms. It can also work with other stakeholders such at the government and communities to acquire credibility that is essential to the progress of the global business (Egan, 2011). In order to cope with the harsh business environment full of ever-changing regulations, bureaucracy, and corruption, a local network is recommendable. They can also appoint the local business people to the board of directors to earn influence of local agendas. They can also invest in the local communities in such activities as school development.

       Global business can also raise their corporate reputation by establishing a rich pipeline of talents. They can recruit, retain and develop the local talents minimizing the troubling brain drains affecting most of the countries. They can introduce programs to train graduate and offer clear paths in career developments thus increasing the capacity of retaining the employee (Lauri, 2011). The companies can also provide salaries that match those of the competitors to ensure the employee do not change their jobs for better pay.

Conclusion

In summary, Africa is the next big opportunity for the global business. Variety of examples of industries and firms have exposed the underlying opportunities for global business to take invest. The continent has opportunities in infrastructure, agriculture; consumer goods and service industry to mention a few. Global companies can also employ the outlined strategies to cope with the challenges in the continents.

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