Market Entry Into Kenya for a Food Franchise
BNU5013 – International Management Strategies
Post-Module Assignment for Prof. Minyuan Zhao
The topic for our team presentation was the expansion of Global Franchise Architects (GFA) into Kenya. The group selected this company as we had just completed a communication strategy for them on how to expand in India, and one of our colleagues who is from Kenya thought that it might be a viable option for GFA to expand into Kenya.
This paper will attempt not to repeat any facts stated already in the presentation, unless required to highlight a specific point. At a high level the group agreed, by a democratic process, to the consensus that GFA should not expand into Kenya, but I would like to disagree with that assessment after further research and analysis on my own.
The key strengths of GFA are: 1) Operational excellence: This helps the investor to get a high Return on Investment (ROI) 2) Portfolio of 9 brands: Having multiple brands provides the investor to open combined stores with different brands or pick and choose the brands that they want to focus on.
The main highlights that make Kenya an attractive market are: • Positive GDP growth • Lower interest rates- cheaper credit access • Inflation down (< 5%) • Market: 4 major cities opportunity – Nairobi (4M), Mombasa (1.5M), Nakuru (1M), Eldoret (.8M) – Majority Western style taste, entrenched “eating out” culture – High proportion of young and out-going population. • Competition – 2 international (South African) food franchisers + local brands. – All have limited menus, not well managed and expensive.
While risks entering Kenya are: • High oil prices • Exchange rate fluctuation • Political stability
The first thing that one needs to look at while deciding to enter a market is whether there is a demand for the product being sold and the spending capacity of the consumers. In the last
Post-Module Assignment for Prof. Minyuan Zhao
The topic for our team presentation was the expansion of Global Franchise Architects (GFA) into Kenya. The group selected this company as we had just completed a communication strategy for them on how to expand in India, and one of our colleagues who is from Kenya thought that it might be a viable option for GFA to expand into Kenya.
This paper will attempt not to repeat any facts stated already in the presentation, unless required to highlight a specific point. At a high level the group agreed, by a democratic process, to the consensus that GFA should not expand into Kenya, but I would like to disagree with that assessment after further research and analysis on my own.
The key strengths of GFA are: 1) Operational excellence: This helps the investor to get a high Return on Investment (ROI) 2) Portfolio of 9 brands: Having multiple brands provides the investor to open combined stores with different brands or pick and choose the brands that they want to focus on.
The main highlights that make Kenya an attractive market are: • Positive GDP growth • Lower interest rates- cheaper credit access • Inflation down (< 5%) • Market: 4 major cities opportunity – Nairobi (4M), Mombasa (1.5M), Nakuru (1M), Eldoret (.8M) – Majority Western style taste, entrenched “eating out” culture – High proportion of young and out-going population. • Competition – 2 international (South African) food franchisers + local brands. – All have limited menus, not well managed and expensive.
While risks entering Kenya are: • High oil prices • Exchange rate fluctuation • Political stability
The first thing that one needs to look at while deciding to enter a market is whether there is a demand for the product being sold and the spending capacity of the consumers. In the last
References: 1:http://www.businessdailyafrica.com/Corporate+News/Food+businesses+record+growth+on+improved+buying+power/-/539550/1039392/-/item/0/-/rjqcn9z/-/index.html 2:http://www.tegemeo.org/documents/other/Regoverning_Kenya2007_information_sheet.pdf 3:http://dialadeliverykenya.co.ke/about_us.html 4:http://allafrica.com/stories/200402100125.html Class material and group presentation