African markets Essay Example

of expanding into the African market for capital reasons. A detailed study examined Angola and Mozambique to identify key criteria for expansion. It was determined that establishing a manufacturing plant in each location would cost $3 million, covering facilities, equipment, and natural resources for production. Labor costs in African countries were found to be on average ten to twenty times less than in Brazil.

Boost drink company is interested in the regulations they need to follow, particularly because these regulations are similar to those in previous Portuguese colonies where Brazil has historical ties. Because of shared culture, language, and education between Brazil and Angola and Mozambique, Boost drink company plans to build manufacturing facilities in these countries. The drinks produced will be exported to various countries across Africa, Asia, and Europe. After five or three years of operation, it is estimated that Boost drink company will earn approximately $550 million annually from its African operations. To execute this strategy, experts estimate a capital investment of $14 million is needed. It has been determined that establishing a similar operation in Europe would cost three to five times more due to currency exchange rates and a higher standard of living. Company executives plan to invest $5 million from internal funds, $5 million from debt capital, and $4 million from private Brazilian and African investments. The plan includes a six-month period for gathering the necessary investment before construction can begin on the facilities in Africa.

The company assembled a team composed of executive managers, consultants, lawyers, and accountants to develop a business plan for expanding into Africa. This plan would outline the company's African expansion based on relevant economic and

political factors, taking into account studies conducted. Additionally, the plan would include a comprehensive risk analysis to present to investors. The primary focus of the business plan was the advantages of creating new jobs in countries with lower labor costs like Angola and Mozambique. The plan also incorporated a study which demonstrated that opening facilities in Africa would lead to a doubling of annual revenues within five years. Furthermore, it highlighted the potential for an increased market share in viable markets in Asia and Europe. In comparison to establishing manufacturing and sales points in these continents, the company concluded that concentrating bottling and manufacturing operations in Africa would offer the best opportunity to maintain and expand its market share in the global soft drink industry.

The recent incident involving the BOOST drink company demonstrates the challenges faced by large companies when establishing a global presence. In an industry where pricing and manufacturing costs are crucial for market share, strategies must be implemented to strengthen global presence, compete, adapt, and minimize negative impacts on operations. The BOOST drink company successfully identified measures to sustain its national presence and position itself in a diverse global market.

References:
1. Brazil.gov, 2007, Brazil Government Web Portal, available online at http://www.brasil.gov.br/ingles/about_brazil/
2. Dabalen, A., 2003, Labor Markets and Enterprise Training in African Manufacturing, document available at http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALPROTECTION/EXTLM/0,,contentMDK:20295537~pagePK:148956~piPK:216618~theSitePK:390615,00.html
3. Meghan Deichert et al.'s 2006 book "Strategic Management in a Global Context" focuses on industry analysis and soft drinks.