Etheopia and New Opportunities- myassignmenthelp.com

Question: Discuss about theEtheopia and New Opportunitiesfor Telecommunications. Answer: After the GDP increased with population growth, Ethiopian government followed the model of state led development. It invested in power, telecommunications and transportation that instigated economic growth. It has taken initiatives to protect its local companies such as media and retail sector and promote manufacturing of pharmaceuticals sector. The government has also reserved financial sectors for domestic investment and state banks have hold most of the bank assets. Ethiopian government has attempted to attract the local manufacturers and encourage export system that substitute import. Tax and customs exemptions have permitted the investors transmute their capital as well as profit into dollar. Pros and cons: despite the fact that Ethiopian government has made policies to attract the private companies and foreign investors, they are facing competitions in the fields of achieving government tenders, custom clearing and navigating government bureaucracy. The problem in transportation and telecommunications still continue. Frequent power cuts have infringed the production (Quelch, Sunru, 2015). In spite the country provides a high supply of workforce, but skilled and trained labors are scarce as well as costly. Limited competition in market has proved to be beneficial for the multinational companies but they do not have brand awareness among the consumers. The governments policy to restrict the imported goods to domestic factories has prevented the way to invest in Ethiopia. Building trust with customers is difficult and public sector corruption has been reported high which may affect investment. CareCo: The company has global recognition in manufacturing personal care products. Initially the company had entered the Ethiopian market through local agent. This method served the company with low-risk and low-cost in production which previously helped the company to increased its profitability. Now the company proposes for capturing the increasing purchase power of Ethiopian consumers utilizing its popularity. ShoeCo. The company used import-only strategies to increase its profitability through local manufacturing as well as local importers. Now the company wants to build an economic zone so that it can utilize the low cost local labor force to get exemption from taxes. MedCo. As the Ethiopian government has taken drive to promote pharmaceutical manufacturing, the company has proposed to establish independent pharmacies (Quelch, Sunru, 2015). Previously, MedCo had no propriety products and provided only the private labeled goods with local packaging. Now with the economic growth, the expenditure on health per capita will also rise, which has made the company to introduce wholly owned subsidiary. CareCo: The company has established its subsidiaries that have enabled it to build local manufacturing facilities and invest its own people to grow the local business. This will help it to reduce the retail prices compared to its local competitors, expand its reach to more people rather than only urban customers. Local manufacturing will take time to start operating fully in the country which may prove to be costly in competitive market. ShoeCo: it had established long term contracts with individual distributors but now it proposes for engaging 2000 local workers as employees. This will enable them to be exempted from corporate taxes for five long years and the company will import all capital equipments duty free. It wants to utilize the low cost labors available in Ethiopia but they will have to invest on training them, properly. MedCo: the company visions to utilize the governments policy of promoting healthcare sector by assisting the pharmaceutical manufacturing. The3refore, the company tries to enter the Ethiopian market by establishing fully owned subsidiary like CareCo. Despite the companys growth has slowed down due to international disturbances and business maturing process, it finds Ethiopia as a promising market which will grow within a decade. The new policies for building new healthcare system, clinics and pharmacies will help the company to introduce its products, know the demands and build needed partnerships (Quelch, Sunru, 2015). Like ShoeCo, this company therefore will be able to import equipments duty free and will be tax free for five years. The competitors of MedCo are china and India based manufacturers therefore, the company may face a tough competition in Ethiopian market. CareCo forecasts growth of 15% in the next year as the income of people are growing and they are willing to spend on personal care products. Therefore, the company can pay back within 5 years approximately. ShoeCos low cost input method will enable it to payback approximately within in 4 years. MedCo will definitely pay back within 10 years because their income is growing 15% to 20% per annum. All the companies have promising future in Ethiopian market. The governments market enter policies must be well utilized and cross-cultural aspects must be recognized by the companies. Reference: Quelch, John A., Sunru Yong. (2015). "Ethiopia: An Emerging Market Opportunity? (Brief Case)." Harvard Business School Teaching Note 915-502.