Power point presentation
Part I: Evaluating Sustainability Business Model Opportunities
Purpose of Sustainability Business Model Opportunities Analysis
Phoenix Technologies is a designer, manufacturer, and distributor of firmware (BIOS or Basic-Input-Output-System and UEFI or Unified Extended Firmware Interface) primarily through licensing of its critically acclaimed software to OEM (original equipment manufacturers) and ODM (original design manufacturers) such as Microsoft, Intel, AMD, Sony, Toshiba, and Tokyo Electrical. The company also designs, manufactures, and distributes consumer software primarily anti-virus, system protection and backup, and system performance improvement software through its wholly owned subsidiary iolo Technologies LLC. Both Phoenix Technologies and iolo Technologies LLC are subsidiaries of the technology-specific venture capital firm Marlin Equity Partners based out of California who have a large portfolio of technology and computer related companies under their management. The company is facing increased competition in their traditional markets of North America, Europe, Latin America, and Asia (China and Japan). However, to continue their growth trajectory and to benefit from fast developing countries, the company is exploring expanding operations to the African region and has selected Nigeria as an entry point into the continent. Nigeria is the continent’s most populous nation and provides the greatest promise for Phoenix Technologies consumer software division on account of the growing middle class in Nigeria who are heavily invested in computers, smartphones, and other consumer electronics. In the following sections, a STEEP analysis covering the major social, technological, economic and political forces affecting the macro environment; a Five Forces Industry Competitiveness analysis; an Blue Ocean Strategy compatibility analysis; and a 9M competitor analysis will be undertaken to determine the attractiveness of expanding into Nigeria, the potential short term and long run profitability of the market, what strategy to employ when entering the market, and through what distribution channels.
STEEP ANALYSIS
Social Factors
Nigeria is Africa’s most populous country with over 180 million people and one of the most important markets for foreign direct investment after South Africa. Since Nigeria is Africa’s largest oil and gas producers it has attracted the most foreign direct investment from international investors in recent years. This has meant that the economy has been growing at a rapid pace and the country’s middle class is growing in tandem. While approximately 90 percent of the population have ‘limited discretionary income’ (Fiorini, Hattingh, Maclaren, Russo, & Sun-Basroum, 2013) the middle and upper middle income group is growing fast and presents an attractive marketing segment. Also, there has been mass movement of the population into urban areas from rural areas and the urban population stands at approximately 50% and growing at a rate of 5% annually. “Nigeria’s rate of urbanization is one of the fastest in the world, with almost half of the population living in the urban areas in 2011… eight Nigerian cities containing 16 percent of the nation’s population will drive 36 percent of its growth…” (Fiorini, Hattingh, Maclaren, Russo, & Sun-Basroum, 2013)
Nigeria is also one of the youngest countries in Africa with an average age of 18. This means that many Nigerians are already very familiar with computers, smartphones, etc.
Technological Factors
Nigeria is the ‘Silicon Valley’ of Africa and the Africa’s largest Information and Communications’ Technology (ICT) market. “Mobile GSM subscribers account for 98.37% of the total number of telecom subscriber. As internet coverage increases, there will be significant opportunities for development of data services.” (Export.gov, 2017) Also, Nigeria is one of the largest markets for second hand computers which means that the Consumer Software products of Phoenix Technology have a sizeable market for anti-virus and system protection software. Also, the Federal Government of Nigeria has acknowledged the importance of the ICT industry and has supported the development of the Abuja Technology Village Science and Technology Park to foster collaboration and innovation in the field of ICT and develop this as a viable long term manufacturing and services industry.
Environmental Factors
Since Nigeria is a country which imports a sizeable amount of second hand computers, there has been a huge problem with the disposal of second hand computers and accessories which is being recognized as contributing to the already existing significant environmental degradation and pollution problems.
Economic Factors
Nigeria is one of Africa’s growth miracles with real GDP growth average between 4 and 6 percent up through 2016. Unfortunately, the recent drop in oil prices where Nigeria generates over 95% of its foreign exchange income has resulted in a drop in GDP which stood at $405 Billion in 2016, down from $576 Billion in 2014. (Euromonitor International , 2017) Inflation has also been growing at an alarming rate up to 17% in 2016 due to rising prices. Nigeria imports a substantial amount of its consumer goods and thus with lower oil prices and a depreciating currency (the country floated its currency in 2016), prices of goods have been rising tremendously. This is not a good thing for Phoenix Technologies because this makes the prices of their products more expensive. Notwithstanding, analysts including PricewaterhouseCoopers forecast that the Nigerian economy will recover because the fundamentals are very strong. They have a young, educated labor force, a high rate of participation of women in work and in government, and a government with an ambitious 2020 economic plan which focuses on developing the necessary infrastructure and invest in key industries such as Information and Communications Technology.
Political Forces
The country has a stable democratically elected government which has recently and peaceably transferred power. The country also has strong trade ties with the United States through bilateral trade and investment framework agreement while the US provided $600 million in development assistance to Nigeria in 2016. (Export.gov, 2017)
MARKET STRUCTURE AND FIVE FORCES ANALYSIS
Industry Rivalry:
Nigeria presents a very attractive export market for Phoenix Technologies since it has one of the fastest growing ICT markets. However, there are already many existing competitors such as McAfee, Norton, Microsoft and a plethora of other anti-virus software programs so the industry rivalry is very high. The company will have to differentiate itself from the competition to gain entry and compete successfully in a market which is most definitely competing on price point.
Bargaining Power of Buyers
The bargaining power of buyers will be low in this case since there the products price is not flexible. There are many buyers in the industry their negotiating power is very limited on a stand-alone basis.
Bargaining Power of Suppliers
Bargaining power of suppliers is very low in this case because Phoenix Technologies is the manufacturer of the software. The company does not have much hardware which is being manufactured and thus they are primarily selling software programs. They are the supplier of their own product and thus are backwards vertically integrated.
Threat of Substitutes
The threat of substitutes for Phoenix’s products is high. First, there are many competitors’ offerings similar products, and in a country such as Nigeria, the greater threat is from pirated software which is rampant in that country. So much so that one of the major obstacles identified by the government for the genuine development, progress, and advancement of the ICT industry is that of piracy and intellectual property violations. Another threat of substitutes comes from the second hand computer repair shops which illegally download the same software on unsuspecting customers instead of selling them the original.
Threat of New Entrants
The threat of new entrants is also high since Nigeria is engaged in a economic diversification plan away from oil and is focusing on attracting top talent to develop nascent industries, one of which is the ICT. This means that through the government’s economics agencies, they are promoting the country by lowering tariffs and easing the cost of doing business in Nigeria. Nigeria does remain high on the corruption index which has prevented companies from entering the market. The government is taking action against corruption and this may not be a barrier to entry in the future. Moreover, software applications are being developed for African countries by many international competitors and these competitors can easily access the African market.
ALTERNATIVE BUSINESS MODELS: BLUE OCEAN STRATEGY
A Blue Ocean Strategy is a unique strategy that is designed to help companies tap nascent markets with a competition crushing strategy of differentiation and low cost. There are four components to the framework: Raise, Create, Eliminate, and Reduce.
Raise
Phoenix Technologies needs to raise the importance of its strategic alliances to beat out the competition. The competition is intense since the industry rivals are very well known brands such as McAfee and Norton. To differentiate, Phoenix needs to market itself as top quality by leveraging its tie ups with the its multinational partners. Moreover, Phoenix is owned by Marlin Equity Partners which have a number of excellent technology companies under their portfolio and can be leveraged to take a competitive advantage in Nigeria – a country where brands are apparently very important to the average consumer.
Create
Phoenix Technologies needs to create the market for legitimate software by educating the population through a marketing program aimed at teaching Nigerians why pirated software is illegal and harmful to society. They need to create a level of trust because computer software is generally required as long as the device is in use and will be purchased on an annual basis.
Eliminate
The company needs to eliminate the image that the company is out of reach for the average Nigerian consumer. This is truly where the Blue Ocean strategy is to be applied by lowering costs and adapting the product to the local market. The current suite of consumer software products may not be affordable to the Nigerian consumer. They need cheaper products and the company needs to eliminate costs by adapting the software to the strict needs of the local market.
Reduce
The company needs to increase marketing and advertising while reducing marketing and advertising costs. Therefore there needs to be less reliance on the way of doing business in the US and adapt the local culture. There are plenty of opportunity to reach the mass market (over 80 million Nigerians have Internet access) by working with the locals and developing a uniquely local marketing strategy.
9M COMPETITOR ANALYSIS
Phoenix Technologies, through its existing partners and licensing arrangements and distributorships already sell their products in over 33 countries. Notwithstanding, there is intense competition in the consumer software industry as well as the UEFI firmware and OEM/OED software components industry. With online reviews, rankings for software can change dramatically. One of the most important customer criteria is customer service and responsiveness on the part of the company. As it stands, some of the main competitors include Norton Anti-virus, Kaspersky Lab, Trend Micro, Intel Security, Webroot, and McAfee. Another key criteria is gaining distributorship to the Nigerian market which some of the existing competitors – McAfee has a local presence in South Africa which covers the African continent, while Kaspersky and Norton have dedicated websites for the African region. Therefore, when analyzing the existing competitor’s business models, it can be seen that they have taken direct action towards entry into the African market.
KEY INSIGHTS
Some of the key points are that Nigeria is a lucrative market although it is experiencing economic difficulties in the short term (high inflation, declining GDP, and rising unemployment due to very low oil prices). The country remains a great prospect due to the high computer literacy and high internet access and usage rates as well as growing urban centers coupled with a rising middle and upper middle income population. The country is heavily invested in ICT and this is a sector that is expected to grow rapidly when the economy is expected to recover by 2020.
Part 2
Purpose of the analyses
The analyses are aimed at analyzing the value, home advantage, growth strategy, acquisition or cooperation strategy of Phenix, as well as additional key insights of Phenix safety helmets. It is through value analyses of the company, that the dynamic capabilities and core competencies of the company can be realized. For example, the analyses establish how the products of Phenix fire fighting helmets competitive in the market and the strategies that can be utilized to increase sales. The value is analyzed while making use of product stream, network exchange approaches, and custom solutions. The home advantage analysis is aimed at establishing the advantages that the company has at the home market. The diamond analysis is used to identify the areas that the company has some advantages in the home market. The growth strategy is analyzed to evaluate the different growth alternatives that are available for Phenix. It is through the analyses of the company that we can select the most appropriate growth strategy that will help in achieving and meeting the objectives set. For example, the company management can decide to choose vertical integration or diversification in the process of achieving growth.
Also, the purpose of the analyses is to establish the risks that are associated with achieving growth in the market targeted. This can be possible through analyzing the different business environment that affects the company when each growth strategy is adopted. The collaboration and acquisition strategy is analyzed to establish the best alternative that is most suitable for Phenix. The risks that are associated with the acquisition and collaboration strategy are established to assess the best alternative based on the risks. Besides, the key insights are provided in the analysis where the different business environments affecting the company performance are analyzed. For example, the role played by the government in providing a good business environment for the company is explained in the analyses to communicate the suitability of the market targeted.
Value Analysis
Phenix develops and distributes innovative and quality safety products and services that are beyond the clients’ expectations. Phenix integrates, reconfigures, and builds external, as well as internal competencies with the core objective of addressing the dynamic ever-changing market and environment. In response to the dynamic market, the company modifies its short-term competitive positions with the intention of building a short, as well as long-term competitive advantage in the Nigerian market. The company has a well-trained workforce that is capable of quickly adapting to the changes in the dynamic market. Phenix integrates new technologically advanced materials, in conjunction with customer feedback into its operations, a strategy that makes it respond to market changes and provide quality safety products to its customer base (Helfat et al. 124). Through its strategies, the organization senses and shapes threats and opportunities that exist in the hard-hat safety market.
There exist various opportunities in the Nigerian firefighting safety helmet market. Phenix has developed different strategies with the purpose of seizing these opportunities. For example, the firm continuously ventures into potential markets with the intention of increasing its sales through the provision of quality s products and services. The organization aims at achieving an edge over its competitors by reconfiguring its intangible and tangible assets. Moreover, the firm ensures that it enhances its production technologies with the intention of maintaining an edge over its several competitors in the durable safety hard-hat and technological market. Due to the fast-changing technological advances, Phenix develops processes that produce innovative and quality products at low costs (Helfat et al. 135). The ability of Phenix to adapt to various market changes enables it to achieve a competitive edge over its numerous competitors. The company has various researchers who play the crucial role in developing strategies that can enable it to respond to customers’ diverse needs. Such strategies enable Phenix to maintain a competitive edge and advantage over its rivals. It is worth mentioning that the company incorporates the use of modern technologies in the development of innovative and quality products that satisfy the customers’ diverse needs.
Home Advantage Analysis
The government is instrumental in encouraging the establishment and development of firms both internationally and domestically. It has a significant role in constructing infrastructure and investing in healthcare and other economic sectors (Porter 78). The Nigerian government has favorable policies that are favorable for investing outside countries. Additionally, the country has geographical economies of scale advantages, and this has proved to be favorable for different manufacturing firms in the country. The country’s level of education on manufacturing has improved in the past, and this has provided a qualified and competent labor force to different manufacturing firms including Phenix. It is for this reason that the country’s workforce is continuously growing and developing. The demand for quality products and other related life saving services has continued to increase and evolve due to the accessibility to different resources (Porter 87). The growing number of persons who require rescue and fire services has grown requiring the need for additional equipment needed.
Due to Nigeria’s high population, there exists a market for various lifesaving related products and services such as fire fighting suits, helmets, as well as other emergency equipment. The Nigerian government has a plan to invest in domestic rescue services and their development, this can prove to be significant for Phenix. Phenix can target the niche market through the continuous development, as well as advancement of durable fire fighting equipment.
Phoenix Technology located in America is an organization involved with production and designing of different technology products as well as safety gears such as helmets. Helmets are mostly used by casual laborers across construction sites hence the target group for phoenix. As a result, this calls for various market dynamics and strategies that will work towards reaching the selected target group. The variety products it produces has led to be a renowned international brand hence the reason behind regional offices across the world. In the recent past, the company has been seeking to penetrate new markets in a bid to attract more customer and gradually increase the number of sales, hence adopting various strategies that will work towards its success.
Growth strategies.
a. Motivation: Market Penetration
The above approach works toward creating a path for small scale organization to gain access to the large-scale market. Penetration into a market involves marketing of their respective products in the same market the organization has been using and has already adopted to its dynamics (Banchuen, Sadler & Shee, 2017). One of the most efficient techniques of market penetration that Phoenix technology should utilize narrows down to lowering the prices of the helmets. As a result, this continually increases the number of customers in the sense that the organization maintains the quality of the helmets as compared to other companies with the same product.
b. Vertical integration
Vertical integration involves the process by which a company expands various business operations into varying steps but still observes the same path of production. Vertical integration means an organization is owning its supplier hence reducing the cost of production by way of reducing the various expenses incurred (Helfat, & Rembado, 2016). As per this context, Phoenix technologies should adopt the forward type of vertical integration as the company is seeking to expand the production of helmets hence distributing products into the various markets with affordable prices. The prices can be altered to realize a profit depending on the cost met in the process of production.
Collaboration
Compared to mergers and acquisitions, collaboration best fits Phoenix technologies due to its size as the global company. Partnerships work towards helping the company to gain access to specific skills and opportunities. As per this context, Phoenix should seek for a collaborator with a wider influence and control over the Nigerian consumers. Collaboration comes in, line with some benefits the main being regarding finances where being part of a network increases domestic sales which in the end helps reach a big number of consumers.
Analysis
In relation to the factors mentioned earlier, there are some risks involved. Market penetration ideally applies lowering of various product prices as a technique to penetrate the market. As a result, lowering of prices of the helmets might fail to meet the cost involved in production hence generating more losses. Vertical integration ideally requires the organization to gain control of more than one stage of the supply chain. The process comes about with some risks since it is expensive and tends to reduce the flexibility of the organization as the company is not in a position to adjust itself to the current consumer trends.
Key insights
In regards to the fact that Phoenix Technologies seeks to penetrate the market more by applying various strategies, the safest would be collaboration. The partnership will help the company the scope of Nigeria faster regarding customer preferences. In comparison, collaboration has less adverse effects towards the organization than the other involved process of penetrating the market deeper. Collaboration introduces a competitive advantage as well as mutual support between the two organizations, conquering the market becomes easier.
Part 3
Implementation execution
Purpose of this section
After using analytics with frameworks from strategic models including of Porters five forces, Blue Ocean Strategy, as well as 9m and STEEP analysis, we were able to assisted in recognize the strengths, competencies, resources and advantages available to us. Once we complete the necessary steps required produce a sensible business plan by assessing our strengths weaknesses internally and externally, we are able to use our attributes to attain positions in global markets with the ultimate goal of adapting and becoming successful outside our current market. Conducting the necessary research, along with allocation of materials and management of these assets must be coordinated in order to reach the target market and globalize.
CAGE Framework and Distances and AAA scenarios implementation
Culture is diverse in Nigeria, it has a population of nearly 2 million people, so there is many ethnicities and languages. In order to use adaptation and to combat this language barrier and to reduce distance in communication, we will employ managers who are native to the area and understand the culture, they will provide a better customer relationship with natives, and will help us better understand our working environment
Administrative differences in Nigeria include a less than efficient government structure. Due to political corruption, the economy has suffered money laundering and uneven distribution of wealth. Moreover, the economy is stabilizing thanks to a new Democratic republic that went into office 20 years ago. With GDP expected to increase rapidly due to the regions growing population and natural resource rich geography, experts suggest that it will be one of the top ten economies in the world by 2050. This economy similar to China and India in population size and potential growth, presents great opportunity for Phenix Technology to provide quality products and services.
Geographic distance from current operations spans nearly 10,000 miles, but this can be reduced thanks to modern logistical technology and efficient supply chain management. In addition, the location of Nigeria makes it the perfect hub for commerce because its directly located next to the Atlantic ocean, shipping operations initially will be costly as we establish trade routes, but we will reduce distance by using aggregation and using cooperation of local trade leaders and market logistic experts in the area, while we focus on product innovation in order to further sharpen internal competencies.
Economic factors will allow us to use Arbitrage to leverage the low costs of raw materials and cheap labor. The rich mineral soil will allow us to experiment with new materials which can allow us to increase quality and still realize healthy profit margins. Local craftsmanship techniques unique to the area may further provide innovation that we can capture and transform into value.
