Market Analysis For The Falkland Islands & Transnational Strategy For Fast-food Business In Africa

Market Analysis for the Falkland Islands

The Falkland Islands also regarded as the Malvinas Islands or the Spanish Islas Malvinas have been progressing to be developed as one of the self-governing international territories of the United Kingdom (McConnell and Dittmer, 2018). Being a consultant at Accenture’s Denver office, it is necessary to evaluate the market characteristics of the region for identifying the best possible market entry modes in the country. To analyze the marketing opportunities in the country, the CAGE framework has been used.

Cultural Distance- The cultural differences between the host and home countries often becomes impactful for the business establishment process. The most similar distance that is witnessed in international markets is the language and ethnic differences which creates a substantial burden for the organizations to communicate with the local crowd. Considering the official language of the Falkland Islands being English provides a communicative advantage to Accenture (Benwell and Pinkerton, 2020). Simultaneously, given the history of the region, the Falkland Islands have been a part of the British territory for a long time. Given this fact, there is a possibility that the religion of the country is most likely to be Christianity. This is going to be added to the advantage of Accenture to develop a communicative market for the desired coffee shop chain.

Administrative or Political Distance- The second distance in the CAGE framework is the administrative distance which makes the companies consider the political situation related to the governance of the selected country. The stable political conditions of the Falkland Islands provide a significant opportunity to consider the infrastructure of the country. Considering the location of the islands which relies upon the overseas territorial boundaries of Britain it can be regarded as some similar elements in administration to that of the British empire. Since the United States and Britain share a decent political relationship, Accenture might benefit from the in-line values (McConnell and Dittmer, 2018).

Geographic Distance- The third element in the framework is geographic distance. According to Benwell and Pinkerton (2020), the country is known to be located about 300 miles northeast around the southern tip of South America. It also shares a similar distance east of the Strait of Magellan. The estimated distance between the capital Stanley and New York makes them direct neighbours Accenture would not have to be concerned about the associated cost with maintaining the regulations (Worlddata, 2022). The country has also known to be having a decent population growth which has increased around 2.3% within January of 2020-2021 (Datareportal, 2021).

Transnational strategy for fast-food business in Africa

Economic Distance- With such a pleasant geographical positioning, the country can be regarded to be having a strong economic advantage through various businesses from the agriculture and tourism industry. Moreover, the GDP per capita income is quite satisfactory for the islands. Furthermore, considering the annual visit of over 70,000 tourists, Accenture would be able to recognize the economic value of the country. Thus, the fourth element of the CAGE framework brings the economic distance much closer than expected (Davidsen et al. 2021).

From the above analysis, the two selected modes of market entry that could be beneficial for Accenture are- Joint Venture and Franchising. The pros and cons of these two modes have been presented in the below table.

Assessment of pros and cons of two entry modes
Name of the entry mode	Pros	Cons
Joint Venture	· The mode would enable Accenture to avoid tariff barriers based on shared knowledge of the local market (Benwell and Pinkerton, 2020).	· Managing a dual hierarchy network would add up to the prevailing obstacles.
Franchising	· The package franchising mode would provide independence in operating the business and maintain a satisfactory revenue by installing a trademark (Benwell and Pinkerton, 2020).	· Franchising would risk the protection of brand reputation since the operations would not be controlled by the organization (Davidsen et al. 2021).

Table 1: Pros and Cons of two selected market entry modes

(Source: Created by author)

The fast-food industry has been one of the most popular food businesses in countries all over the world. Africa is considered to be one of the most prominent markets to establish food businesses due to the diversity of the market (Kovacic et al. 2019). The recent market valuation of the food business in the continent could be estimated at around $2.7 billion in 2018 which directs towards an assured growth of $4.9 billion by 2026. Besides the recent revenue generation from the industry has been noted to be over $1 million in 2022, hence, the expected CAGR annual growth is expected around 11.57% by 2026 (Statista, 2022). The business is facilitated by the creasing efforts from the digitized segment of food and beverages. The paid app revenue is accounted to be about $10 million in the present year. The fast-food business is likely to be hyped and reach a prominent competitive advantage in such a lucrative economic zone (Statista Research Department, 2021). On the other hand, the client company is concerned about the production cost which cannot be disregarded since the average position of Africa in the global economy is quite low. In such a situation, it is advised to the client to depend on transnational strategy for developing a cost-effective business in the African continent.

 

Figure 1: Revenue of online food delivery in Africa between 2017-2025

(Source: Statista Research Department, 2021)

Implementing a Transnational Strategy to establish a strong business while maintaining the brand name would provide an unsaid advantage to the globalization of the business. Using the elements of the transnational strategy the firm could be able to venture into middle ground to balance the significant desires for facilitating business efficiency whilst adjusting the menu to meet the expectation of the local crowd (Kovacic et al. 2019). For example, well-established fast-food brands like KFC and MacDonald’s have witnessed to depend on the same brand reputation and stick to the core menu. However, the firms also include concessions in some of the flavors to match the local taste. Mostly the firms adjust to the add-ons and pricing of the products to customize the existing menu and present with unique promotional marketing (Walsh, Bhagavatheeswaran and Roma, 2019).  Rather than focusing on innovating the menu, the client could invest in innovating the packaging and pricing of the existing menu. Besides, the best countries to provide profitable growth could be Kenya and Nigeria.

Assessment of pros and cons of two entry modes

Critical Assessment of Africa’s potential market
Parameters	Nigeria	Kenya
Political	· The Federal Republic consisting 36 states and one Federal Capital Territory (Ofosu-Boateng and Jiping, 2020). ·  Founder of the African Union and member of the Organization of the Petroleum Exporting Countries (OPEC) and Commonwealth of Nations.	· The tax system is progressive with a pay as you earn strata. · The VAT rates are high (Walsh, Bhagavatheeswaran and Roma, 2019). · US is a key donor of Kenya under the African Growth and Opportunity Act (AGOA)
Economic	· The net GDP is about $4448.10 billion on average as calculated in 2019 (Kowo, Akinrinola and Sabitu, 2018). · Abundance in the availability of cheap labour, low corporate tax rate.	· A regional trading hub for East Africa. · Tourism is a major economic source for the country (Anno and Elenica, 2021).
Cultural	· It is a multinational state consisting of over 250 ethnic groups providing an unrivaled cultural significance (Anno and Elenica, 2021).	· The business culture in the country is guided by the concept of Harambee.
Competitive Rivalry	· Low · Absence of major competitor brands due to the inadequate supply chain.	· Low

Table 2: Assessment of Nigeria and Kenya on business parameters

(Source: Created by author)

Brexit is known to be continuing to dominate the headlines of state affairs. It has been learned to be standing at the sixth rank in the list of the concerning areas for the UK consumer market. According to Bloom et al. (2018), it has significantly changed the outlook of the economy and trading relationship of the United Kingdom. The performance of the country has been considered unsatisfactory compared to the EU economies in tackling the dual pressure of the pandemic as well as the Brexit strategy. The uncertainty in the clear picture of the strategy can be considered to be an impending risk to evaluate the investment nature of the companies. The volatility of the uncertain business opportunities due to loss of trade has impacted several firms to develop a pessimistic attitude harming the business standards of the country (Brexit, 2022).

 

Figure 2: The proportion of firms considering Brexit as a source of uncertainty

(Source: Brexit, 2022)

The influence over the financial conditions is likely to reduce the rate of productivity and supply growth for the country. In the initial months of the Brexit, the UK economy has been observed to have contracted by 2.9%. Additionally, the value of exported goods has also significantly dropped by 6.6 billion whilst the import dropped by 5.6 billion British pounds to the European Union (Clark, 2021). Considering the falling share of GDP, it is important that the country focus on transforming the existing trade patterns. However, the size and proximity of the EU could be a challenge in limiting UK’s ambitions for global dominance. 

References

Anno, E.F. and Elenica, P.B., 2021. Impact of Traders Competitive Rivalry on Supply and Demand Relations in Livestock Markets in the Drylands of Kenya. International Journal of Business and Economics Research, 10(3), p.99.

Benwell, M.C. and Pinkerton, A., 2020. Everyday invasions: Fuckland, geopolitics, and the (re) production of insecurity in the Falkland Islands. Environment and Planning C: Politics and Space, 38(6), pp.998-1016.

Bloom, N., Bunn, P., Chen, S., Mizen, P., Smietanka, P., Thwaites, G. and Young, G., 2018. Brexit and uncertainty: insights from the Decision Maker Panel. Fiscal Studies, 39(4), pp.555-580.

Brexit, I., 2022. In focus – Uncertainty and Brexit. [online] Bankofengland.co.uk. Available at:

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Datareportal, 2021. Digital in the Falkland Islands: All the Statistics You Need in 2021 — DataReportal – Global Digital Insights. [online] DataReportal – Global Digital Insights. Available at: <https://datareportal.com/reports/digital-2021-falkland-islands-malvinas> [Accessed 13 March 2022].

Davidsen, J.G., Bordeleau, X., Eldøy, S.H., Whoriskey, F., Power, M., Crossin, G.T., Buhariwalla, C. and Gaudin, P., 2021. Marine habitat use and feeding ecology of introduced anadromous brown trout at the colonization front of the sub-Antarctic Kerguelen archipelago. Scientific reports, 11(1), pp.1-13.

Kovacic, Z., Musango, J.K., Ambole, L.A., Buyana, K., Smit, S., Anditi, C., Mwau, B., Ogot, M., Lwasa, S., Brent, A.C. and Nsangi, G., 2019. Interrogating differences: A comparative analysis of Africa’s informal settlements. World Development, 122, pp.614-627.

Kowo, S., Akinrinola, O. and Sabitu, O., 2018. Macro environment and performance of multinational agricultural enterprises: a case from Nigeria. Agricultural and Resource Economics: International Scientific E-Journal, 4(1868-2019-382), pp.31-40.

Kowo, S., Sabitu, O. and Adegbite, G., 2018. Influence of competitive strategies on corporate performance of small and medium enterprises: a case from Nigeria. Agricultural and Resource Economics: International Scientific E-Journal, (4,? 3), pp.14-33.

McConnell, F. and Dittmer, J., 2018. Liminality and the diplomacy of the British Overseas Territories: An assemblage approach. Environment and Planning D: Society and Space, 36(1), pp.139-158.

Ofosu-Boateng, C.N.R.L. and Jiping, Z., 2020. A Pestle Analysis of Maritime Piracy and Maritime Security in the Gulf of Guinea. Advances in Social Sciences Research Journal, 7(1), pp.472-482.

Statista Research Department, 2021. Africa: food and delivery market segment revenue | Statista. [online] Statista. Available at: <https://www.statista.com/forecasts/1259805/revenue-online-food-delivery-selected-african-countries-segment> [Accessed 13 March 2022].

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<https://www.statista.com/outlook/dmo/app/food-drink/africa> [Accessed 13 March 2022].

Walsh, K., Bhagavatheeswaran, L. and Roma, E., 2019. E-learning in healthcare professional education: an analysis of political, economic, social, technological, legal and environmental (PESTLE) factors. MedEdPublish, 8.

Worlddata, 2022. Falkland Islands: country data and statistics. [online] Worlddata.info. Available at:

<https://www.worlddata.info/america/falkland-islands/index.php> [Accessed 13 March 2022].