Understanding critical success factors and the importance of primary market entry location when entering and expanding throughout the African continent

Abstract

As the African market begins to blossom, and the purchasing power of the continent continues to increase, many multinational companies are giving African markets another look. What may have been initially regarded as too complicated and distant, is now a potential source of large growth and future revenue. Researchers have continued to study and evaluate the low-and-middle-income groups, including the bottom of the pyramid, as they begin to desire and seek for more consumer goods. However, given the size and challenges of developing economies and emerging markets, many multinational enterprises are concerned about establishing operations in African economies, in addition to not knowing where they should begin. In this paper, my goal is to uncover what factors influence what location a firm utilizes as its point of entry into an African market. Then taking it a step further, I look at how partnerships, local knowledge, and additional aspects from the firms primary entry support the firms expansion throughout the continent. My research evaluates what it takes for companies to achieve success not only entering but expanding throughout the African market.

I conduct my analysis by developing a detailed case study and taking a closer look at what factors contributed to Coca-Cola’s success across the continent. My research considers what parameters are important for establishing business operations and a regional headquarters in a traditional sense, and how that changes for the African market in terms of infrastructure, connectivity, and relationships. Through conducting a historical analysis, supported by news articles, journals, video news segments, reports, and interviews, I built a narrative case study of what obstacles and creative solutions Coca-Cola implemented to succeed in various African markets.

Understanding why companies chose to pursue business in certain African locations, in conjunction to the investment both in time and resources necessary to achieve success in African markets will be beneficial for future firms seeking new sources of growth. As more firms express interest in carving out their piece of the African market, it is essential to take a look at firms that have been successful, to generate a playbook of what to and not to do.