International Business Assignment 2 M
International Business Assignment 2 – Memo for Module 2 Nov 18, 2014
Nigeria: Opportunities at the Bottom of the Pyramid
In Nigeria, 50 percent of population lived on less than one US dollar per day. Of this, 65 percent lived in rural areas. A direct result of this could be seen on the handset ownership among the rural poor (one percent). The absence of a reliable national electricity grid in these areas raised the issue of higher operating costs for the mobile service provider due to running and maintenance of diesel generators needed to power the mobile base station sites. In addition to which, the threats of thefts and vandalism of expensive equipment at these sites were also challenges facing Celtel, the second largest mobile telecommunication company in Nigeria in 2007. The company was unable to raise awareness about their shift using conventional marketing strategies such as billboards as they were stolen, recycled or reused.
Another challenge for the company was the direct marketing and the dangers associated with it. The religious leaders and village chiefs held a lot of power and influence in the place. Even with the approval of the national authorities, the company needed to win the approval of tribal leaders to install signal transmitters and other equipment and to send its employees to tribal areas to maintain the network.
Celtel could mitigate some of these challenges by partnering with local individuals or companies thereby spreading some of its risk exposure associated with going rural. This would also help them focus on their core competencies while allowing their local partners manage the sales using their local market expertise.
In order to further expand and capture a bigger market share, Celtel could offer expansion through a Franchisee model. Partnering with local entrepreneurs with basic business acumen and a willingness to commit to long-term relationships would give them a deep understanding of how to manage the local environment.
Nigeria: Opportunities at the Bottom of the Pyramid
In Nigeria, 50 percent of population lived on less than one US dollar per day. Of this, 65 percent lived in rural areas. A direct result of this could be seen on the handset ownership among the rural poor (one percent). The absence of a reliable national electricity grid in these areas raised the issue of higher operating costs for the mobile service provider due to running and maintenance of diesel generators needed to power the mobile base station sites. In addition to which, the threats of thefts and vandalism of expensive equipment at these sites were also challenges facing Celtel, the second largest mobile telecommunication company in Nigeria in 2007. The company was unable to raise awareness about their shift using conventional marketing strategies such as billboards as they were stolen, recycled or reused.
Another challenge for the company was the direct marketing and the dangers associated with it. The religious leaders and village chiefs held a lot of power and influence in the place. Even with the approval of the national authorities, the company needed to win the approval of tribal leaders to install signal transmitters and other equipment and to send its employees to tribal areas to maintain the network.
Celtel could mitigate some of these challenges by partnering with local individuals or companies thereby spreading some of its risk exposure associated with going rural. This would also help them focus on their core competencies while allowing their local partners manage the sales using their local market expertise.
In order to further expand and capture a bigger market share, Celtel could offer expansion through a Franchisee model. Partnering with local entrepreneurs with basic business acumen and a willingness to commit to long-term relationships would give them a deep understanding of how to manage the local environment.