PESTEL Analysis of the Rwanda Market
Carefully consider the rubric on page 10 and 11 of the Subject Learning Guide when constructing your answer.You are a strategic analyst working to provide critical data for the Taiwanese technology firm Alpha Response Technology Solutions (ARTS).You are in receipt of twenty pieces of raw field intelligence (linked at the end of this article) describing the entry of Positivo BGH, a major competitor to ARTS, into Rwanda.ARTS exists in in conditions of uncertainty, and is considering an attack on the Rwandan technology market, currently dominated by Positivo BGH.
You need not limit yourself to the source data (below) in creating recommendations for ARTS.
It is your task to provide a quantitative assessment for the establishment of an ARTS venture in the Rwandan Special Economic Zone, specifically a manufacturing plant for portable computer technology.ARTS' main product solution is the GT80S Titan SLI 18.4in Core i7 Notebook, built specifically for the advanced Western business analytics market, retailing at AUD4999 or USD3792.37 (Rwandan Franc3000012.82) with the following specifications:
GT80S Titan SLI 18.4in Core i7 Notebook
Intel i7 6920HQ CPU,
NVIDIA GeForce GTX980M graphics in SLI,
32GB DDR4 memory,
The Chief Executive Officer of ARTS is a former University classmate of Positivo BGH's CEO, and the two share a deep seated and emotional rivalry around CPU designs and ownership, with ARTS CEO claiming his designs were copied by Positivo BGH for an entry level computer now being used to exploit the Rwandan marketplace, cheap manufacturing labour, taxation incentives, Western emotion over failure to intervene in the 1994 Rwandan genocide, and developmental dollars from the World Bank.
The CEO of ARTS has instructed his staff to prepare for the establishment and production of a technology design and manufacture facility in the Rwandan Special Economic Zone, specifically to rival that of Positivo BGH.You will must provide a quantitative analysis of this situation and provide a recommendation based on this to ARTS.
Your written response must:
Organise and categorise the information you have received in tabular form.
1) In a table carry out a PESTEL analysis with attention country information related to Rwanda
2) Provide a written description of the incentives to enter the Rwandan Special Economic Zone
3) Provide a written explanation of current foreign investment in Rwanda.
4) Provide a written explanation of ARTS' motivation to enter Rwanda
5) In a table Create a 5 Forces analysis for ARTS
6) In a table compare and contrast ARTS' primary product line with that of Positivo BGH
7) In a table numerically identify the likely return for producing and releasing the Titan for sale to the Rwanda domestic market versus sale to a Western market.
8) Based on the tabulated numeric data for (7) above make a written recommendation for this venture.
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Political: The relationship between Rwanda and the neighbouring countries has an impact on the country in various ways, which include: economically, politically, and socially. The state borders four countries, namely DRC Congo, Tanzania, Uganda, and Burundi. Its geographical position poses a challenge because it is a landlocked nation. This makes the logistics costs of importing or exporting to be high. As a result, the country heavily relies on the relationship with other nations neighbouring it as well as the stability status of the other countries (Republic of Rwanda n.d). The country is currently politically stable and enjoys democracy. Citizens have equal rights to participate in governance which helps them make important decisions pertaining the running of the government matters.
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Economic: The Rwanda’s economy heavily relies on agriculture. The World Bank estimated the Rwanda's growth in GDP as 8% in 2011 (Republic of Rwanda n.d). This growth is considered as the highest worldwide. The Agricultural sector accounts for an output of 36%. The country’s main export markets include the United States, China, and Germany (Republic of Rwanda n.d). In 2007, the country joined the East African Community which was a big step towards improving business ties with the neighbouring countries (Research Ideas 2017). The refugees who were rendered homeless in the 1995 genocide have been resettled, and security and peace have been revived. Various economic reforms have been made in Rwanda, and these include the creation of an environment that is commercial friendly for investors to come to the country.
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Social: Rwanda has remained united since pre-colonial period. The country’s population is comprised of one ethnic group known as the Banyarwanda who speak Kinyarwanda as the principal language of the nation. French is the official language of Rwanda, but English and Germany are also spoken. Rwanda’s population is comprised of majorly young people who make up 43% of the total population (Under 14 years), and therefore considered as one of the youngest in Africa (Research Ideas 2017). This presents an opportunity since the youth are vibrant and undergoing education, implying that the country’s future will have skilled labour. With the rapid urbanization, the country needs to provide more housing and facilities to enable its citizens to access such basic needs as water and shelter. |
Technological: Rwanda has been improving in terms of technology. The government has further shown interest in technology by providing free laptops to pupils across the nation. The technological trends currently ongoing in Rwanda include Cloud data Centre, Cyber Security, Big data, Green ICT and Wireless Network (Republic of Rwanda n.d). The country's vision 2020, dubbed ‘SMART RWANDA Master Plan includes several initiatives aimed at improving the technology sector.
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Environmental: Rwanda is a great nation and very strict when it comes to environmental protection. The country has stopped the production of polyethene bags in a bid to prevent pollution (Research Ideas 2017). The nation is situated in the Great Lakes region of Africa, and mountainous region. Mountains mainly cover its geography. The various lakes in the nation provide sites for tourist attraction. The country’s climate is mainly subtropical and temperate (Research Ideas 2017). The country experiences two rainy seasons and two dry seasons every year.
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Legal: The state's legal structure is majorly based on Belgian and German laws (Research Ideas 2017). The nation has an independent judiciary from the executive branch. The president and the Senate are responsible for appointing the supreme judges (Research Ideas 2017). The current system can be viewed as fair. International Human Rights groups have praised the government for working towards ensuring that the nation has a just and equitable legal system after the abolition of the death penalty (Research Ideas 2017). However, due to political differences in the country, some supreme court judges are politically appointed and not on the basis of merits. At times judges are forced to make particular decisions in favour of certain parties. |
The government of Rwanda developed the Specialized Economic Zone with the aim of addressing domestic private sector constraints, mainly the access to resources such as land, energy, transport and market. The government has provided incentives for potential investors in various forms: Fiscal incentives, Infrastructure and services, and Regulatory reliefs (Government of Rwanda 2010). The government has proposed a flat corporate tax rate of 15% for investors in the SEZ. This flat tax rate is lower than the average corporate tax, thus making the SEZ more competitive even in its neighbouring countries such as Kenya, Uganda, and Tanzania (Government of Rwanda 2010).
This is a benefit for investors since there is a reduced cost of tax compliance. There is a guaranteed infrastructure improvement that is funded by both the government and the private sector. Private developers have been given the opportunity to develop infrastructure on behalf of the government for the success of the SEZs. The private developers have an obligation to respond to special needs of the users. Investors also enjoy a regulation relief when joining the Rwanda’s Specialized Economic Zone. This implies that companies can easily obtain permits, licences, registration, customs inspections and tax administrations. Investors in the SEZ are treated in a special way. Their applications take a short time before approval.
The Rwandan economy relies heavily on foreign investments. The biggest part is from the European Union which accounts for 32%, and the East African Community which accounts for 14% (Twahirwa 2017). The rapid indicates the effort that the country has made in attracting foreign investors. In the year 2012, the Rwanda's economic report showed that the investment was mainly from South Africa, Kenya, the UK and Germany (Twahirwa 2017). According to the most recent foreign private capital census conducted by the central bank, the overseas investment in Rwanda increased by 78.1% (Tabaro 2016). By 2014, the foreign investments in the country increased to US$ 458.7 million up from us$ 257.6 million in 2013.
This increase was attributed to the confidence that the country has gained from foreign investors. Mauritius is the leading investor with $ 113.5 million followed closely by Switzerland with $106.2 million (Tabaro 2016). The third and fourth are the U.S.A and Luxembourg with $70 and $52.6 million respectively. Of all the investment sectors, the ICT industry came third with a total investment of US $ 116.1 million (Tabaro 2016). By 2014, the investment in the ICT sector reached USD 453.4 million (Tabaro 2016). The investment in the ICT is mainly attributed to technology companies which include Olleh Rwanda Network, a company that is from Korea which provides the internet in the country (Tabaro 2016).
The ICT sector in the country is still not fully exploited. The country has the vision to ensure that all citizens have access to computers. The government launched a One Laptop per Child (OLPC) program which is aimed at ensuring that students have access to information technology and encourage critical thinking in schools (Tashobya 2015). This presents an opportunity for laptop manufacturers to invest in the country which relies heavily on imports.
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Industry Competition |
Buyers’ Bargaining Power |
Supplier’s Bargaining Power |
Threat of Substitutes |
Threat of entrants to the Market |
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Strong force: ARTS faces stiff competition from its rivals such as POSITIVO and PC world |
Strong force: Due to the presence of alternative brands, the bargaining power of buyers presence a strong force |
Weak Force: There are several suppliers available across the world; therefore ARTS will not face challenges in switching suppliers |
Weak force: The existing brands are not that high tech. With the advanced features of ARTS devices, it is likely to face weak force once it launches its products. |
Moderate force: The establishment of a laptop manufacturing company requires a lot of capital; thus ARTS faces weak force on this aspect. It is also costly to develop a highly competitive brand; thus ARTS faces weak force on this issue. However, it faces strong force on the capacity of potential new entrants. Since Rwanda is a competitive country and there other large companies exist, they may choose to invest in Rwanda. |
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ARTS |
Positivo BGH |
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· The ARTS GT80S Titan SLI 18 Notebook uses the ‘I’ series of processors · All the laptops use the I series processors · They have a few variety of products · Relatively higher prices · Laptops have greater storage · Most of them have Bluetooth |
· The Positivo BGH 11 Cle2-R Notebooks still use the Intel Celeron processors · All devices use the Intel Celeron processors · Positivo BGH enjoys a variety of the brands such the Notebook, Mini Notebook, 2IN I notebooks, among others (Positivo BGH 2015) · Relatively low prices- US$265 on average (Republic of Rwanda 2015) · Laptops have relatively small storage · Most of them do not have Bluetooth |
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Rwanda Domestic Market |
Western Market |
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The possible daily production is 50, 000 units per month for a start At the retail price for the product, it will take about three years to break even |
The production is likely to be 80,000 units per month due to the availability of skilled labour and energy. It will take about two years to break even |
ARTS should look for means on how to make their product line cheaper in Rwanda. This would increase demand for their products due to the fact that their laptops have a high technology capacity compared to their competitors. It is also recommended to study the market first and understand the trend in technology in the Rwandan market.
List of References
Government of Rwanda. 2010. Rwanda Special Economic Zone Policy [Online]. Available at: https://www.minicom.gov.rw/fileadmin/minicom_publications/policies/SEZ_Policy_Cleaned_.pdf
Positivo BGH, 2015. Positivo BGH. [Onine]. Available at: https://www.positivobgh.com/africa/
Republic of Rwanda, 2015. Positivo, made in Rwanda computer to increase country’s export [Online]. Available at: https://www.minicom.gov.rw/index.php?id=24&tx_ttnews%5Btt_news%5D=1010&cHash=edd69331bdbe03c21c0517365967bb46
Republic of Rwanda. N.d. [Online]. SMART Rwanda Master Plan 2015~ 2020: A prosperous and knowledgeable society through SMART ICT. Available at: https://www.myict.gov.rw/fileadmin/Documents/Strategy/SMART_Rwanda_Master_Plan_v2.5.pdf
Research Ideas. 2017. Pest Analysis of Rwanda Republic [Online]. Available at: https://www.sachdevajk.in/2016/12/19/pest-analysis-of-rwanda-republic/
Tabaro, J.C., 2016. Foreign Owned Investments in Rwanda Increase by 78%. KTPress [Online]. Available at: https://ktpress.rw/2016/06/foreign-owned-investments-in-rwanda-increase-by-78/
Tashobya, A., 2015. Government to revamp One Laptop per Child programme. Newtimes.[Online]. Available at: https://www.newtimes.co.rw/section/article/2015-03-19/187049/
Twahirwa, A., 2017. Rwandan Foreign investments increased over last two years. National Institute of Statistics of Rwanda [Online]. Available at: https://statistics.gov.rw/node/813
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