Capacity Building Interventions Entreprenurship Essay

Question:

Discuss about the Capacity Building Interventions Entreprenurship.

Answer:

Introduction

The following report is based on quantitative assessment of proposed marketing positions of ARTS in Rwanda. ARTS is a successful company that provides the technology-based products. The major products of ARTS are Mackbook Pro, Spy Camera, Notebookpad, computer, projector and many more. However, the due to the dynamic market situation, the company in the recent time, faces some market challenges and it is determined to Rwandan market. The company ARTS claims that Positive BGH copies the design of ARTS’ products. The entry-level computer is designed by Positive BGH to exploit the Rwandan market. Even though, ARTS has tremendous marketing strategies BGH has a large market share in Rwandan technology market. Thus, to evaluate the current position of the market, an industry analysis has been conducted with the strategic tool like PESTLE. Likewise, the potential factors that drive the market have also been conducted with Porter’s five forces tool. Based on the outcome, appropriate recommendation has been provided to ARTS to regain the market position in Rwanda.

Political- It has been observed that the president of Rwanda is the head of the state and hold a wide array of powers including formulating policies in conjunction with the Cabinet (Booth and Golooba?Mutebi 2014). The major political decisions are taken and controlled by the president of Rwanda. Thus, it can be mentioned that establishment of business in Rwanda market is largely depended on the stability of the political environment. ARTS largely need to contribute to the development of Information technology in Rwanda. However, as there are other competitors like Positive BGH and Netsys Computer Solutions, the government has developed certain IT polices as well as employment norms in the country (Uwamariya, Cremer and Loebbecke 2015). Thus, to run in such small market, the company must have to comply with the rules and regulations developed by the country’s government.

Economical- The economy of the nation is mostly based on subsistence agriculture. It is also identified that tourism as well as rapidly growing sector remains as country’s leading foreign exchange earner. The industry sector is comparatively small and it only contributes 14.3% of GDP in 2010 (Farole 2011). However, due to the continuous economic downturn, ARTS might observe a slow growth in the production in the initial stage of the operation. The disposable income of families is not high; thus, the sales margin did not reach desire line. Moreover, the cheap products of Positive BGH could also be a major reason for slow growth of ARTS.

Social-The government of the country is highly concerned about the environmental sustainability as it prioritizes the funding for water supply. As the government of the country put emphasis on the education, the people are aware of new trends and technology (Lee 2012). People adopt new western culture; therefore, youth show special interest towards the technology. Thereby, the technology-based products of ARTS are highly demanded by people.

Technology –Rwandan government provides free IT education in state run School and college; thus, besides the private organizations, the technology-based products are highly demanded by government organizations (Booth and Golooba-Mutebi 2012). This remains as the opportunity for ARTS to sell their developed products.

Legal –The private organizations in Rwanda are controlled by some regulations developed by the government (Adongo 2012). Mostly importantly, the political environment of the country is changeable; thereby, taxation and trade policies often change, which has strong impact on the operation of ARTS.

Environmental- According to the governmental regulations, the organizations in the corporate sector must develop some sustainability approaches for the environmental sustainability. The organization from industry has to contribute to the environmental sustainability. Thus, to build a strong presence beating the competitors, it is necessary for ARTS to contribute to the sustainability programs.

Description of the incentives to enter the Rwandan Special Economic Zone

The case study indicates that current marketing position of ARTS is deteriorating due to the presence of Positive BGH and their products. Therefore, ARTS need to develop its products and add some value added services to differentiate itself from the competitors. Firstly, the company needs to work on its pricing strategies as the competitors are selling the same products at much cheap price. In addition, as the economy of the country is not stable it is wise to choose the low-cost pricing strategies. ARTS need to contribute to GDP growth of the country to get into Rwandan Special Economic Zone. Following are the incentives the organization could develop.

  • Develop the high quality of technology-based products with the enhanced software applications
  • Sell the products with skimming price to attract the customers to penetrate in the market at the initial stage of business in the new market
  • Free after sale services

Explanation of current foreign investment in Rwanda

It is observed that Foreign Direct Investment to Rwanda has increased by 78.1% according to the data provided by latest Foreign Private Capital Census (2015)( Henderson, Storeygard and Weil 2012). The report indicates that investment by foreign investors increased to US$450.9 million in 2015 from US$257.6 million recorded in 2014 (Binagwaho et al. 2014). This growth has been observed as the foreign investors are optimistic about the future growth in the country. In addition to this, country’s trade as well as taxation policies attract the foreign investors. Moreover, it is also identified that Mauritius investment in the country leads with $113.5 million. As put forward by Tekin (2012), the investment of tourism sector was around $71.8 million, whereas the ICT sector investment recorded USD 116.1 million. This scenario indicates that almost Information technology sector in Rwanda has the excellent record of growth.

ARTS’ current position of the market is weakening; thus, to strengthen the business, the organization is focused on expanding the market. Moreover, the firm observed market saturation in the existing market, thus, it is wise to get into a new market. Foreign investment in IT sector of Rwanda (USD 116.1 million) is attracting the ARTS to get into the market. Such growth in the industry indicates that organizations both new and existing have a significant market opportunity. The industrial analysis confirms the Rwandan market has growing demand of technology-based products. Moreover, the industry sustained high growth, as the GDP increase is around 8.8%, which indicates a stable inflation and exchange rate (Henderson, Storeygard and Weil 2012). The government of the country has developed a clear vision through private investment. It is also observed that the country is politically stable from last 5 years with effective institutions. The government has developed rule of law as well as Zero Tolerance policy for corruption. These records and initiatives have motivated ARTS to get into Rwanda for their further expansion.

5 Forces analysis for ARTS

Threats of new entrants-

· Threats of new entrants are low. The investor friendly climate of Rwanda attracts the new investors in the country (Gathani, Santini and Stoelinga 2013).

· Rwanda is second best global reformer in the world.

· politically stable environment reduces the risk of external environmental barriers of new entrants in Rwanda

Competitive rivalry-

· As Rwanda is small market, the existing competitors hold a large share of the market. Positive BGH and NetSys have the highest market share in technology based products like computer , Notbook, Hard-drive and many more (Ntale, Yamanaka, and Nkurikiyimfura 2013)

· ARTS’ products are already copied by Positive BGH

Bargaining power of buyers-

· The bargaining powers of buyers are moderate in Rwandan Technology market. This happens because the market size is small and the number of existing firms is less (Musahara, Akorli and Rukamba 2014).

Bargaining power of suppliers-

· The bargaining power of suppliers is low as due to the less number of competitors in the market, the suppliers do not have other alternatives.

· Existing developed organizations manufacture their own products and import technology from the home country.

Threats of substitutes products-

· Threats of substitutes are low as the technology-based products like computers, Notebook, hard-drive are not available in other industry in Rwanda (Safari 2013).

Table 1: Five forces analysis for ARTS

(Source: Ntale, Yamanaka, and Nkurikiyimfura 2013)

Comparing and contrasting ARTS’ primary production line with that of Positive BGH

Even though, Positive BHG is an Argentina-based company, it has captured a wide area of the market in Rwanda. The company has confirmed the kick-off production of computers, laptops as its major strategies to supply digital devices to the market. The company Positive BGH developed the plan of assembling 75000 laptops by the end of the present year (Positivobgh.com, 2017). The production line of BHG indicates that the major products of the company are computers, PCs, internal Hard-Drive, and some others. However, ARTS has large varieties of products including the personal computers, laptops, GT80S Titan SLI 18.4in Core i7 Notebook, Intel i7 6920HQ CPU, Hard drive, Super Raid 4 512GB solid state drive, 1TB Hard Drive and Full HD Display and many more. Comparatively, ARTS have large variety of products to dominate BGH in the new market. However, BGH sells the same quality of product at low price but ARTS’ products are little expensive.

Likely return for the sale of Titan

Rwanda Domestic Market

Western Market

The overall return for producing and releasing the Titan for sale in the domestic market of Rwanda will be around US$ 3 Million (9% of overall production). This is because Rwandan market is comparatively small than the western market. Many European nations have growing demand of computer-based technology.

The overall return of for producing as well as releasing the Titan for Sale in Rwanda domestic market will be around US$11million (19%) of the overall production. As discussed earlier Western market provides large opportunities to spread the products across the market.

Providing recommendation

It is evident that even though Rwandan has significant market opportunities and governmental support, the operation of ARTS initially will bring a large amount of profits, as the market is unknown. Thus, the company needs to implement certain strategies to understand and acquire the market.

Skimming pricing strategies-, It is essential for ARTS to focus on the quality of the products. To gain the identity in the market, the firm could deliver high quality of technology-based product at high price. In a new market, the company cannot strengthen its position in the market selling the products at low price. It has to develop a unique of design of GT80S Titan SLI 18.4in Core i7 Notebook and set skimming price. When the competitors bring in the same technology, ARTS could decrease the price of its products. However, ARTS should develop new products before the competitors could bring in the same technology.

References and Bibliography

Adongo, J., 2012. The Impact of the Legal Environment on Venture Capital & Private Equity in Africa: Empirical Evidence.”.

Binagwaho, A., Farmer, P.E., Nsanzimana, S., Karema, C., Gasana, M., de Dieu Ngirabega, J., Ngabo, F., Wagner, C.M., Nutt, C.T., Nyatanyi, T. and Gatera, M., 2014. Rwanda 20 years on: investing in life. The Lancet, 384(9940), pp.371-375.

Booth, D. and Golooba-Mutebi, F., 2012. Developmental patrimonialism? The case of Rwanda. African Affairs, 111(444), pp.379-403.

Booth, D. and Golooba?Mutebi, F., 2014. Policy for agriculture and horticulture in Rwanda: a different political economy?. Development Policy Review, 32(s2), pp.s173-s196.

Crisafulli, P. and Redmond, A., 2012. Rwanda, Inc.: how a devastated nation became an economic model for the developing world. Macmillan.

Farole, T., 2011. Special economic zones in Africa: comparing performance and learning from global experiences. World Bank Publications.

Gathani, S., Santini, M. and Stoelinga, D., 2013. Innovative Techniques to Evaluate the Impacts of Private Sector Developments Reforms: An Application to Rwanda and 11 other Countries. The World Bank.

Goodfellow, T. and Smith, A., 2013. From urban catastrophe to ‘model’city? Politics, security and development in post-conflict Kigali. Urban studies, 50(15), pp.3185-3202.

Henderson, J.V., Storeygard, A. and Weil, D.N., 2012. Measuring economic growth from outer space. The American Economic Review, 102(2), pp.994-1028.

Henderson, J.V., Storeygard, A. and Weil, D.N., 2012. Measuring economic growth from outer space. The American Economic Review, 102(2), pp.994-1028.

Lee, L.M., 2012. Youths navigating social networks and social support systems in settings of chronic crisis: the case of youth-headed households in Rwanda. African Journal of AIDS Research, 11(3), pp.165-175.

Musahara, H., Akorli, F. and Rukamba, S., 2014. Capacity building interventions, entreprenurship, promotion of SMEs in Rwanda. College of Business and Economics.

Ntale, A.L.E.X., Yamanaka, A. and Nkurikiyimfura, D., 2013. The metamorphosis to a knowledge-based society: Rwanda. The global information technology report.

Positivobgh.com. (2017). PositivoBGH Rwanda - Info. [online] Available at: [Accessed 28 Apr. 2017].

Rwirahira, R., 2012. Rwanda: Special economic zone to be operational this year. Rwanda Focus.

Safari, V., 2013. Inventory management practices and financial performance of selected manufacturing companies in Rwanda: a case study of Inyange industries LTD. and Bralirwa LTD (Doctoral dissertation, Mount Kenya University).

Tekin, R.B., 2012. Economic growth, exports and foreign direct investment in Least Developed Countries: A panel Granger causality analysis. Economic Modelling, 29(3), pp.868-878.

Uwamariya, M., Cremer, S. and Loebbecke, C., 2015. ICT for Economic Development in Rwanda: Fostering E-Commerce Adoption in Tourism SMEs. In Proceedings of the SIG GlobalDev Eighth Annual Workshop.

How to cite this essay: