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Taking our manufacturing plant into the global markets of Nigeria and Ethiopia we will achieve economies of scale. By, going global we will reduce unit cost by producing a large volume of our product. This will also put us into a global marketplace resulting in more efficient production. Our global sales will increase ultimately giving us more bargaining power with suppliers. To achieve this, we will face many challenges. These challenges will not be met by standardization and we will need to adapt to local conditions to be successful.
A major issue we will face in Nigeria is their power sector doesn’t meet the existing demand of the country’s population and businesses. This will cause issues for both our consumer and manufacturing plant. We will not be able to operate and produce products as we our accustomed to doing. To be successful in Nigeria and adapt to this power shortage we are going to have to adapt to the consumer as well as our plant. Kitchen appliances account for a large percent of household energy. For the consumer we will need to continue to provide energy-wise products as well as increase our technology department to come up with even more energy saving appliances. We will also need to provide battery backup power packs to our appliances that can’t afford to lose power such as a refrigerator. As far as our manufacturing plants we will need to equip everything that is essential to having power to backup generators. We can’t not afford to lose power and shut the plant down.
Moving into Ethiopia our biggest challenge to standardization will be language. Unlike Nigeria’s official language being English as is ours. Ethiopia doesn’t have an official language. They have four major languages; Amharic, Oromo, Tigrinya, Somali. Thus, language will not be standard. We will have to adapt by providing translators as well as manuals and training in all four languages.
Adapting to their standards will be an obstacle and won’t be easy but the reward is worth the challenge. Nigeria has the largest population in Africa and second is Ethiopia. Nigeria is a very young country with two thirds of its population under the age of 25. Nigeria has cheap labor. Ethiopia over the last decade is one of the fastest growing economies in the world. We can adapt and will adapt. We will become global!
Global Edge. Your Source For Business Knowledge. Accessed 20, September 2016.
W.G. Manufacturing is pursing international expansion into sub-Saharan Africa. W.G. Manufacturing is scheduled to begin operations on October 14, 2016. W.G. Manufacturing will boost profitability and increase the rate of profit growth over time for both countries. In order to create more value we will save labor costs by choosing between two sub-Saharan countries in Africa, Mauritius and Botswana. The decision to begin manufacturing in one before the other is due to the ease of doing business in Mauritius or Botswana. Mauritius is ranked at number thirty-two for ease of doing business and Botswana is ranked at number seventy-two. (CIA, 2016)
In order to achieve economies of scale, W.G. will reduce production costs by moving major kitchen appliance production to sub-Saharan Africa. Manufacturing has held a steady 10-14% share of the GDP. (The Economist, 2014) The labor force in Botswana was 1,155,963 in 2014, and the country had an estimated unemployment rate of 18.2%. (Global Edge, 2016) In Mauritius, the labor force is much smaller at 592,300, the unemployment rate was a mere 7.7% in 2014 and 29.8% were employed in industry. (Global Edge, 2016) One primary demand driver is the economic health of a country. (Global Edge, 2016) Both of these countries are developing and manufacturing is one of the smallest contributors to the GDP of sub-Saharan Africa. Bringing W.G. Manufacturing to either Botswana or Mauritius would decrease their unemployment and increase the country’s overall GDP.
It would be preferential to locate our manufacturing company in Mauritius as we could bring a greater impact to their small country. We can push their already low unemployment rate of 7.7% even lower. With a larger percentage of human capital in manufacturing, we could begin with a small manufacturing company in Mauritius and then open a second manufacturing company in Botswana. One profitability driver would be to focus on expanding our geographical reach. Our strategy is to limit local adaptation. With cultural and demographic differences in either choice for location, we must accept that certain features and aspects of our kitchen products will not survive through the use of standardization. It simply will not be possible and adaptation to local customs will be essential.
Low taxes and a stable and business friendly environment makes Mauritius and ideal location for our first international manufacturing company. (Marais, 2014) All Mauritian companies are given the opportunity to apply for a grant of up to $170,000. (Marais, 2014) The Botswana Development Corporation promotes industrial development through project identification, joint venture partnerships and site developments for small manufacturers. (MBendi, 2016) BDC can take an equity stake in businesses which can bring significant value to Bostwana. (BDC, 2016) They also provide loan financing for businesses if needed. (BDC, 2016) Support from the BDC will make opening our second manufacturing expansion feasible. Showing we aim for a sustainable development and economic growth in either Mauritius or Botswana will help locals adapt to our presence in either country.