Assessing Opportunities In The PINE Emerging Markets For Star Trucks Ltd

PESTLE analysis of Nigerian market

The Task

Until recently BRICS (Brazil, Russia, India, China, and South Africa) have been regarded as the key emerging economies, and have been the targets for companies wanting to expand in international markets. However, there is literature emerging that argues that companies would benefit by looking wider and considering new emerging markets for their investment, exports, and other forms of international business. Such new emerging markets are the PINEs (the Philippines, Indonesia, Nigeria and Ethiopia). (See article attached ‘Forget the BRICs; Meet the PINEs’ by Michael Schuman, Time magazine, March 13, 2014). 

Star Trucks Ltd. is a trucks manufacturing company, with a production plant in Bedford, UK, and Head Office in London, UK. It markets its trucks mainly in the EU (European Union), the Middle Eastern, and other Mediterranean Region markets. Management has realised that these markets are nearly saturated and its new strategy is to go worldwide and get a good foothold in emerging markets. The CEO also noted that many competitors have already flocked to the BRICS emerging markets. He wondered, ‘why not be among the first few to consider the expansion to the new emerging markets of PINEs’? 

Assume you are General Manager of a marketing consulting firm, Market Solutions International Ltd. The CEO of Star Trucks Ltd. has approached you to assess opportunities in these new emerging markets. The following is the Brief you are given by the CEO:

“Considering Star Trucks Ltd. being a medium sized company we want to expand cautiously and step by step. While operating in all the four PINE economies is a long term objective at first we want to identify the most prospective market to enter. We want to know which of these four markets the firm should enter first; therefore we want you to undertake a comparative analysis. In your analysis examine the investment environment, effects of governments’ interventionist policies, the market potential, the impact of regional integration initiatives, if any, and related issues with a clear identification of opportunities and threats in each of these markets. Recommend which country should the firm enter first, explain why, and indicate how it should enter this market with justification. Resource wise, we are confident that we will have no problem to undertake the opportunities your report will identify for us”.

Based on the above Brief prepare a report to the attention of the CEO of Star Trucks Ltd. 

Competitive global context is the overall activity of making the business independent in a worldwide basis, introducing new technologies and new economic blocs. This individual activity creates severe challenges in front of the extremely knowledgeable and skilled managers and operators internationally. The following assignment deals with the new emerging company that manufactures trucks. Thus the company being ‘Star Trucks Ltd.’ is a truck manufacturing company headquartered in London, UK along with its manufacturing plants located at Bedford, UK. Initially it started its business concern in the European Union, Middle Eastern and other Mediterranean Region markets which are now in a position of saturation. Thus the management is highly concerned with the new strategy of taking the business worldwide and accordingly grabbing a good position in the emerging market scenario. Although there was an old concept of BRICS (Brazil, Russia, India, China and South Africa) but as of now the present studies reveals that the concept of PINEs (Philippines, Indonesia, Nigeria and Ethiopia) would be more profitable to take the business internationally. This project report deals with the consideration of this new emerging concept and as a result, the management works on the proposed strategy of getting worldwide by targeting the Nigerian market place to be it emerging location initially.

Political

The assignment deals with the investment environment, political consequences, market potential, impact of regional integration initiatives as well as both the opportunities and threats face by the company in Nigeria. The main purpose of this report is to find out the business’s future position in the Nigerian market as far as its objectives are concerned.

Political:

Nigeria has become politically stable since the year 1999. Although, it is one of the regional political leader in the African continent still there lies many internal conflicts among the country people. Frequent religious and ethnic issue keeps on disturbing the country peace thus by creating huge disturbance (Blythe 2012). The biggest prospect of entering this market environment is to make the company value grow internationally with an international recognition. Massive corruption such as fraud, bribery, nepotism takes place that creates major challenges to the Nigerian market environment by declining the growth as well as development.

Presently, the economic condition of Nigeria is motivated by the growth in the fields of telecommunications, real estate, hotels and restaurants industries. Moreover, the chief sectors of the country are the oil and gas sectors that contribute effectively by raising the price and thus improving the country’s weak inflation as well as the macro-economic outcomes. The fast expansion in 2010 following the global financial and economic meltdown underscored the flexibility of the economy. This country holds a total population of more than 174 million people (July 2013), among which half of them fall under the young educated and entrepreneurial group. Thus for a truck manufacturing company, this country is the best target to act for as there is an existence of numerous prospects. The Nigerian economy experiences a comparatively stable exchange rate thus making it a favorable environment to target upon. This country also possesses a huge infrastructure development. Despite of the above positive discussions that affect any upcoming business, the country is facing severe challenges too (Oigiagbe et al.  2012). Very less data on Nigerian market are available that is required by any business firm to prosper in that particular environment (Dahlstrom 2011). In addition to these, there is an existence of pitiable infrastructure facilities, crime and insecurity as well as sky-scraping youth unemployment over the years.

Since the country owns a huge educated population with cultural and regional diversities hence on this particular context the country can be said to be socially secure. Moreover, there lies an existence of huge tourism as well as cultural potential (Ferrell and Hartline 2011). Other than all these social advantages, the country also experiences the lack of social security system as the main threat.

Economical

The technological fields are getting stronger by the passing years. The country now focuses on the computerization of government and private sector business as well as revolution in the telecom sectors. In addition to these technological factors, it also comes up with the opportunity of e-commerce, e-learning and e-governance (Kotabe and Helsen 2011). Although the above factors make the country technologically stable but the dominance of the foreign IT industries threatens the Nigerian market as a whole.

In the year 1999, the country Nigeria changed to a new democratic nation with the reformation of the Nigeria legal system constitution. Nigerian legal system is constituted on English Common Law, ‘the Doctrine of Equity and Common law’ being the source (Ikejiofor  and Ali 2014). It also constitutes the judicial precedent, Customary Law such as the Sharia and Islamic Law (Winer and Dhar 2011). Moreover, to create a scope for the foreign companies, Nigeria acts upon making the laws easier to perform on so that the economic condition gets urbanized thus by influencing the country’s overall growth.

The environmental factor mainly includes the natural resources that are available in the particular country. The country is known for its natural resources abundance such as petroleum, natural gas, iron ore (as far as the truck manufacturing country is concerned) and many others. The country also experiences a major electricity issue which is a major drawback for the foreign investments in the nation (Kotler and Keller 2011). Frequent catastrophes occurs in the Nigerian environment that includes floods, tidal waves, oil spillage, landslides, sand-storms, coastal erosion, drought, insect infestation and many other man made catastrophes which was responsible for destroying human lives as well as rendering some people homeless (Baba-Musami et al. 2015). Since the economy of Nigeria is quite weak with an under protected environment, this scenario makes the Nigerian environment quite unsafe. Moreover, an international agreement based on environmental solution is also signed which includes biodiversity, ozone layer protection, pollution control, marine life conservation and many others. But as of now, no work has been yet conducted in response to the above agreement. Not all these above discussions have a vast effect on any truck manufacturing industry (Sheehan 2011). Thus, as far as the project objectives are concerned, these natural disasters have very low impact in the market entry.

The SWOT analysis of this company is done to find out the status of the company’s entrance in the Nigerian market place. This is used to discover the Strengths, Weaknesses, Opportunities and Threats that are experienced by this particular company.

Social

Since Nigeria is oil producing land so there lays huge scope for this company to prosper in Nigerian market place. The population scenario shows that the country has huge influence of young generation people which shows this company a way to enter (Lancaster & Massingham 2011). Moreover the presence of cultural as well as religious diversities acts as an important strength to the company (Olamade  and Abu-Bakr  2014, pp. 39). The country has also formed an effective technological aspect that would further help this company to prosper well.

The previous study says that Nigeria has huge ethnic and religious restlessness that is responsible for this type of truck manufacturing country (Chamberlain and Ede 2013). Since the literacy level of Nigerian population is extremely low, so the company may experience huge suffering while convincing its Nigerian prospects. In addition to these above weaknesses, the infrastructure is also unfriendly and huge amount of capital is needed to be invested to make a startup this business in the Nigerian market (Shaw 2011).

Nigeria is looking forward to the advancement of their infrastructures and legal laws are made in favour of the foreign industries as to attract them more thus by providing compensation to the Nigerian economy (Dumitrescu and Unit 2013). Moreover, Nigeria is getting into the list of cultural as well as tourism potentials thus by creating a remarkable opportunity for Star trucks ltd. Nigeria also has an issue of huge unemployment so it is very normal that they want foreign companies to enter so that the employment rate can rise further. The concept of e-commerce, e learning, and e-governance also flourished the Nigerian environment (Peter and Donnelly 2011). This also acts as a great opening for this company. Thus it can be suggested that there lies a huge number of opportunities for this company to target the Nigerian market.

It is well-known that where there is opportunity, the concept of threat comes hand in hand. Although the political structures are made comfortable for the foreign companies to enter in, this cannot be avoided that there lies huge sudden political changes too (Oigiagbe et al.  2012, pp. 225). Since, Nigeria experiences massive crime and insecurity so it becomes a threat for this company to get set up in the country.

Conclusion

From the above study, it is easy to gather reliable information on PINE economies. Research analysts are of opinion that BRICs loss existence and there is recent adoption of PINE. In the emerging market scenario, most of the developing nations are widening activities based on new countries in an overall manner. In case of BRIC economies, it includes countries like Brazil, Russia, China and India. These four countries are posing dominance in the American world. From the prospect of Russia, it hampers the future aggressive moves and imposition of economic sanctions in an overall manner. In case of China, it relates with the admirable growth opportunity. It deals with the rising debt as well as distorted financial system in an overall manner. China Exports boom mainly suggests with the economic recovery global investors in the most of the emerging markets for the same. PINE Economies include Philippines, Indonesia, Nigeria and Ethiopia. In the present study, Nigeria country is explained because of its strong performance. Nigeria has the potential economic heavyweight as well as stable government for the same. It is noticed that investors flocked easily in the nation for poverty, strong economic management as well as poverty activities. Addition to that, International Monetary Fund notices 7% growth in and around the nation. There is various political corruptions prevailing in the current market economy that needs urgent consideration by the government. PINE Economy deals in the investment and expansion in accordance with finding new customers. Combined population includes around 600 million in dismissing with the emerging markets in an overall manner.

Technological

There are ample of possibilities and opportunities present in the African market such as the distribution model, acquisitions, joint ventures and the green field strategy. The distribution is the most recommended model due to lower overhead cost and the wide coverage of the products. To establish the presence of the firms it is recommended there should be an agent or distributor relationship with a locally registered company.  Many of the foreign suppliers and manufacturers appoint a distributor so that he can accommodate the ethnic diversity and the vast geographical size of Nigeria. In the complicated environment of Nigeria, the supportive terms and conditions of this type of arrangements needs to be negotiated carefully. It is strongly recommended by CS Nigeria the usage of experienced commercial attorneys for crafting the mutually beneficial agreements. The company when entering the market should not think of adopting the direct marketing techniques for expanding business in Nigeria. The main reason is due to the lack of proper infrastructure like the logistics, transportation, trade facilitation services. However, such form of marketing can be made significant through improvement of the communication and information system of the country.  There should be better-connected road in the entire country with special focus on the semi urban regions and rural communities. In this type of market, there is a requirement of excellent customer services and after sales support for the buyers. The companies entering in the market should support the local representatives and respond to the consumer complains effectively.

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