Situation analysis

You are required to use appropriate academic models and approaches to critically analyse the external and internal environments in ONE country where the MNE operates. This will comprise:
An external analysis of the organisation in relation to the selected country, followed by analysis of competitors. What makes this country an attractive destination for the MNE vis–à–vis its competitors? Identification of pertinent issues (threats and opportunities) essential for growing the business in the chosen country.
An internal analysis of the business leading to identifying strengths / weaknesses and its readiness for addressing any opportunity and threat.

  1. Strategy choice
    Building upon the previous section identify and critically analyse the strategies adopted by the MNE in the chosen country.
    Please evaluate both static and dynamic strategies if needed.
  2. Challenges and mitigation

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Sample Answer

 

 

 

 

A Case Study of an MNE in Kenya:

This analysis will examine the case of [Insert Name of MNE operating in Kenya – e.g., Coca-Cola, Unilever, Safaricom].

1. External and Internal Analysis

  • External Analysis:

    • PESTEL Analysis:

      • Political: Stable democracy, but political uncertainty can arise during election cycles. Government regulations on foreign investment and local content requirements.
      • Economic: Growing economy with a young and dynamic population. Rising middle class, but high unemployment and income inequality persist.

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      • Social: Diverse population with varying cultural and religious beliefs. Youthful population with increasing internet and mobile phone penetration.
      • Technological: Rapidly growing mobile phone and internet penetration. Development of fintech and e-commerce.
      • Environmental: Climate change impacts, including droughts and floods, pose significant challenges.  
      • Legal: Legal framework is improving, but challenges with enforcement and corruption remain.
    • Competitive Analysis:

      • Direct Competitors: Identify key competitors within the specific industry (e.g., other beverage companies, telecommunications providers). Analyze their market share, pricing strategies, product offerings, and competitive advantages.
      • Porter’s Five Forces:
        • Threat of new entrants: Analyze barriers to entry, such as government regulations, capital requirements, and access to distribution channels.
        • Bargaining power of suppliers: Assess the bargaining power of suppliers of raw materials, components, and other inputs.
        • Bargaining power of buyers: Analyze the bargaining power of customers, considering factors such as price sensitivity and switching costs.
        • Threat of substitute products or services: Identify potential substitutes for the MNE’s products or services and assess their competitive threat.
        • Competitive rivalry: Analyze the intensity of competition among existing players in the market.
    • Attractiveness of Kenya:

      • Large and growing consumer market: Kenya has a large and young population with increasing disposable income.  
      • Strategic location: Kenya serves as a regional hub for East Africa, providing access to a wider market.  
      • Favorable government policies: The Kenyan government has implemented various policies to encourage foreign investment.  
    • Opportunities:

      • Growing middle class: Tap into the growing middle class and their increasing demand for consumer goods and services.
      • Technological advancements: Leverage digital technologies to improve efficiency, reach new customers, and develop innovative products.
      • Regional expansion: Utilize Kenya as a base for regional expansion into other East African markets.
    • Threats:

      • Political instability: Potential for political unrest and policy changes could create uncertainty and disrupt business operations.
      • Economic volatility: Global economic fluctuations and potential currency devaluations could impact profitability.
      • Competition: Intense competition from both local and international players.
      • Environmental challenges: Climate change and environmental degradation could impact operations and supply chains.
  • Internal Analysis:

    • SWOT Analysis:
      • Strengths: Identify the MNE’s core competencies, competitive advantages (e.g., strong brand recognition, innovative products, efficient distribution network), and financial resources.
      • Weaknesses: Identify areas for improvement, such as weaknesses in local market knowledge, limited local partnerships, and potential vulnerabilities in the supply chain.

2. Strategy Choice

  • Static Strategies:

    • Cost Leadership: Focus on achieving cost advantages through economies of scale, efficient operations, and low-cost sourcing.
    • Differentiation: Differentiate products or services through superior quality, innovation, and brand building.
    • Focus: Concentrate on a specific niche market or segment within the Kenyan market.
  • Dynamic Strategies:

    • Innovation: Continuously invest in research and development to develop new products and services that meet the evolving needs of Kenyan consumers.
    • Strategic Alliances: Form partnerships with local companies to enhance market access, leverage local knowledge, and improve brand awareness.
    • Acquisition: Acquire local companies to gain market share, access local talent, and expand market reach.

3. Challenges and Mitigation

  • Political and Economic Uncertainty:
    • Mitigation: Diversify operations across different regions within Kenya and explore opportunities in other East African countries. Build strong relationships with government officials and industry associations.
  • Competition:
    • Mitigation: Develop strong brand loyalty, invest in innovation, and offer superior customer service.
  • Supply Chain Disruptions:
    • Mitigation: Diversify supply chains, build strong relationships with local suppliers, and implement robust risk management strategies.
  • Talent Management:
    • Mitigation: Invest in employee training and development programs to build a skilled local workforce.

 

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