Dynamic Duo for Developing Business in Africa: SWOT Analysis
Lauri Edwina Elliott
April 27, 2009
Part of building a case for a business is conducting an environmental analysis. In an environmental analysis, you look at the political, social and business context in which your business will operate. This is true also for doing business in Africa, if not even more so. You start with exploring the background of the African country in which you want to do business. Conducting an environmental analysis can be thought of as the background for writing a story. The story is the creation of a successful business in Africa.
Start with a SWOT analysis. You want to be able to identify your strengths, weaknesses, opportunities and threats in the African business environment. There are two dimensions that are explored in the SWOT analysis process – the business potential and your ability to execute. To complete the SWOT analysis, you need to probe various angles. To probe successfully, frame your exploration process with questions that reflect the picture you are trying to understand, but leave it open so as not to constrain developing a full picture. Let´s start building that frame for exploring the case for doing business in Africa. The exploration frame should be peppered with open-ended questions. You can use the following questions to start this frame.
First, what are the opportunities and obstacles to doing business in Africa? It is not very difficult to identify a number of opportunities in Africa. Africa has a large population. It is mostly comprised of developing countries with development as a key priority. There are markets with excessive demand, but severely constrained supply, such as energy. These factors alone create ongoing business opportunities because the market landscape has a low saturation point.
Second, what are the rules of the game for doing business in Africa? Rules of the game include both tangible and intangible rules. Tangible rules include laws, policies and procedures. An intangible rule would be how relationships conclude successful business transactions. The intangible and informal rules of the game heavily impact your success.
Third, what structures enable the business environment? An enabling environment considers the protection of foreign businesses and investors. It streamlines and reduces the bureaucracy to maintain a legal business structure. It also includes factors like infrastructure, e.g., telecommunications and transport.
Beyond these, questions should help uncover market, competition, regulatory, technological and social factors. The questions should help reveal existing systems and structures, which can be used for competitive advantage.
Your exploration should include a variety sources, such as government, business, society, media and research institutions. It should also allow for different forms of data collection – quantitative and qualitative. An example of quantitative data is the procedure for registering a company in Tanzania. An example of a qualitative angle is what did a person experience when he or she registered a business in Tanzania.
While the SWOT analysis is not the only aspect of an environmental analysis, it is a powerful tool. Another tool for the environmental analysis is a customer, or market, profile. Understanding the target market – the customer – is critical. To learn about this part of the dynamic duo team, listen to the radio broadcast, "Business Opportunities in African Consumer Markets," at www.blogtalkradio.com/afribiz.
Start with a SWOT analysis. You want to be able to identify your strengths, weaknesses, opportunities and threats in the African business environment. There are two dimensions that are explored in the SWOT analysis process – the business potential and your ability to execute. To complete the SWOT analysis, you need to probe various angles. To probe successfully, frame your exploration process with questions that reflect the picture you are trying to understand, but leave it open so as not to constrain developing a full picture. Let´s start building that frame for exploring the case for doing business in Africa. The exploration frame should be peppered with open-ended questions. You can use the following questions to start this frame.
First, what are the opportunities and obstacles to doing business in Africa? It is not very difficult to identify a number of opportunities in Africa. Africa has a large population. It is mostly comprised of developing countries with development as a key priority. There are markets with excessive demand, but severely constrained supply, such as energy. These factors alone create ongoing business opportunities because the market landscape has a low saturation point.
Second, what are the rules of the game for doing business in Africa? Rules of the game include both tangible and intangible rules. Tangible rules include laws, policies and procedures. An intangible rule would be how relationships conclude successful business transactions. The intangible and informal rules of the game heavily impact your success.
Third, what structures enable the business environment? An enabling environment considers the protection of foreign businesses and investors. It streamlines and reduces the bureaucracy to maintain a legal business structure. It also includes factors like infrastructure, e.g., telecommunications and transport.
Beyond these, questions should help uncover market, competition, regulatory, technological and social factors. The questions should help reveal existing systems and structures, which can be used for competitive advantage.
Your exploration should include a variety sources, such as government, business, society, media and research institutions. It should also allow for different forms of data collection – quantitative and qualitative. An example of quantitative data is the procedure for registering a company in Tanzania. An example of a qualitative angle is what did a person experience when he or she registered a business in Tanzania.
While the SWOT analysis is not the only aspect of an environmental analysis, it is a powerful tool. Another tool for the environmental analysis is a customer, or market, profile. Understanding the target market – the customer – is critical. To learn about this part of the dynamic duo team, listen to the radio broadcast, "Business Opportunities in African Consumer Markets," at www.blogtalkradio.com/afribiz.
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