Marketing Plan for Huawei Technologies` Entry into Nigeria

MarketingPlan for HuaweiTechnologies’Entry into Nigeria

MarketingPlan for HuaweiTechnologies’Entry into Nigeria

HuaweiTechnologies is a multinational, Chinese-based company thatspecializes in manufacturing telecommunication equipment andproviding related services. Headquartered in Shenzhen, the company iswidely ranked the world’s largest telecommunications manufacturer(Peilei, 2013). The company’s history traces to 1987, when RenZhengei, a retired engineer in the People’s Liberation Army,founded it. Initially, the company dealt with manufacturing andmarketing phone switches, but its business niche has since expandedto include manufacturing telecommunication gadgets, building networksof communication, providing operational and consulting services(Chang, Cheng &amp Kim, (2013). The company has established variousresearch institutes in different countries, including United Kingdom,Belgium, United States, Turkey, Germany, Sweden, Canada, Colombia,Ireland, Pakistan, France, India, China, and Russia. At the end of2012, Huawei Technologies reported a profit of 5.5 billion USD, whichis attributed to the efforts it has made in expanding to more than140 countries across the world. Huawei prides itself on the successit has achieved through providing top-notch services and products andasserts it is still committed to expanding its market to realizegrowth (Njeri, 2011).

Itis indisputable that Huawei Technologies should keep expanding toexploit the opportunities. However, in most of the businessactivities, Huawei is yet to fully extend and exploit the potentialopportunities in many African countries, in which several emergingeconomies presents opportunities to help Huawei realize its goals.This report endorses Nigeria as Huawei’s most suitable andneglected market choice and recommends a market entry and operationstrategy to help it succeed.

SituationalAnalysis Of Nigeria

Thesituational analysis of Nigeria market environment is guided by thePESTEL analysis, which comprises of six business influential aspectspolitical, economic, social, technology, environmental and legal. Thesituation of Nigeria’s environment and implication on Huawei’sentry is discussed in the following corresponding sections.

Political

Thepolitical situation of Nigeria mainly comprises of a federalstructure with a model borrowed from the United States federalsystem, but with some elements of government borrowed from theBritain, its colonial ruler. The president exercises the executivepowers, yet the form of government is also borrowed from theWestminster System model, manifested by a bicameral legislaturecomprising of the lower and upper houses. In essence, Nigeriapolitics assumes the framework of federal, presidential, andrepresentative democratic republic, which allows the government toexercise the executive powers. Therefore, Huawei will least expectchallenges with the mode of operation of Nigeria’s governmentsystem because it has already experienced such structures withBritain and United States. However, Nigeria fares relatively poorlyregarding democracy, transparency, and peace (TransparencyInternational Corruption Perceptions Index, 2015. These poor scoresmean that Huawei will need to plan for strategies to overcome therelated political risks

Economic

Nigeria’seconomy is one of the vibrant, emerging economies in Africa. Thecountry is a middle income, mixed economy and with rapidly growingfinancial, entertainment communication, service and technologysectors. The economy of Nigeria ranks 21 on the list of world’slarge economies based on GDP, and 20th on the list of world’s mostmajor economies based on purchasing power parity (The World EconomicForum, 2015). In this regard, the Nigeria’s economic environmentpresents itself as an ideal, promising market environment for Huaweito focus and exploit opportunities.

Social

Thetotal population of people living in Nigeria as of 2015 was estimatedto be 182.2 million, which account for as significant as 2.4 percentof the world`s people (Onuah, 2015). Moreover, while the populationcomprises of people with different ethnic backgrounds, the country ishospitable and welcoming to foreigners (Owobi, 2013). This impliesthat Huawei business investments will be welcome. Nigeria’scultural attributes based on Hofstede’s dimensions is summarized inthe table below (Itim International, 2015). It is worth noting thatthe attributes of the United Kingdom, the US, China and Australia areincluded for comparison purpose.

Country

Power Distance

Individualism

Masculinity

Uncertainty Avoidance&nbsp&nbsp&nbsp

Long Term Orientation &nbsp

Indulgence

Nigeria

80

30

60

55

13

84

UK

35

89

66

35

51

69

China

80

20

66

30

87

24

Australia

54

46

95

92

88

42

USA

40

91

62

46

26

68

Ascan be inferred from the data, Nigeria is a high power distance,collectivist, masculine, highly certainty avoiding, less long-termoriented and highly indulgent society. These characteristics implythat Huawei will need to consider these cultural attributes and alignits operations with these cultural elements. Interestingly, Nigeria’scultural elements are not far removed various cultural dimensionsdifferent countries that Huawei operates. For instance, the powerdistance scores of China and Nigeria are the same, while masculinityscores of Nigeria and the US are more or less comparable. Thiscomparability implies Nigeria’s cultural environment will not beadversely demanding to Huawei activities.

Technology

Nigeria’stechnological environment is a vibrant one, characterized by rapidlygrowing technological capacity. An information technology accountsfor the largest share of the technological development investments.The computer literacy of the Nigeria’s population has alsoincreased significantly, and it is projected to reach levelscomparable to other countries that Huawei operates such as Ukraine,Japan, and Australia in 5 years. In a bid to meet the needs of theknowledge economy, the education systems consider technologicalcapacity as the core of the learning curricula. The government isalso committed to providing support to increase technologicalcapacity, which it considers crucial for sustainable development(Onuah, 2015). Therefore, as a key player in the informationtechnology industry, Huawei’s investments would be particularlywelcome.

Environment

Nigeria’senvironmental situation is not any unique compared to other countriesthat Huawei operates. In general, there is a call for business touphold environmentally sustainable activities by exercising socialresponsibility. The focus of ecologically sustainable activities isenvironmental protection and conservation. The government is callingfor companies to pursue green investments by adopting sustainabletechnologies (Cocks &amp Brock, 2015). In this regard, as a leaderand active player in sustainable technologies, Huawei would fit wellin Nigeria.

Legal

Nigeria’slegal situation is not any unique compared to other countries thatHuawei operates. The legal situation comprises of variousregulations, including those that concern tax, labor laws, unions,environmental protection, intellectual property, and many othereconomic issues. Nevertheless, the most outstanding characteristicsare that the rules are not stringent and only exist as a frameworkfor providing harmony in the society (Cocks &amp Brock, 2015).Therefore, the legal environment presents an environment conducivefor foreign investments to thrive.

MarketEntry Strategy and Rationale

Themarket entry strategy for Huawei into Nigerian market would be theestablishment of a wholly owned subsidiary or opt for a franchise.The decision to adopt either of these strategies arises from variousassociated benefits, strongly contrasting with other market entrystrategies such as partnerships or exporting.

First,the approach increases the capacity to manage risks. The subsidiaryplan creates the allowance for a firm to isolate risks, consideringthe parent company and the subsidiary company are treated as separatelegal entities. Ideally, the losses affecting a subsidiary companywill not be transferred to the parent company. Similarly, the lossesaffecting the parent company will not be moved to the subsidiarycompany. Secondly, a branching approach allows flexibility inmanagement. The subsidiary company can have its governance structureand make independent decisions without having to rely on the parentcompany. The parent company may exercise control because it ownsstock in the subsidiary, but this is often limited. Thirdly, thebranch strategy enables the company to pursue significantdiversification goals and increase efficiency, considering the seniormanagement of the parent company do not have to oversee theoperations of the subsidiary. A subsidiary company can devise itsstrategies to exploit the market opportunities (Lymbersky, 2012).

Besides,franchising also has various benefits. According to Lymbersky (2012),one of these advantages is a franchise reduces the risks of failurebecause the operation of the business is already based on the newidea. The acquiring company only needs to check how potentiallysuccessful the franchises are before committing. Moreover, theproducts will already have established a market share, which meansthe acquirers will not have to perform market testing. Secondly, thebuyers benefit from different legacies created by the dealers such asintellectual properties, competent human resource, and suppliers. Thirdly, the buyers can also benefit by receiving support from thefranchisors, including providing information about the experiencesand manuals crucial for guiding businesses to avoid mistakes and makeinformed strategies in the future. The franchisors can also offerongoing advice. In this regard, the acquirers may not necessarilyneed to have prior experience of running a business under such anenvironment. Fourthly, franchising is also a way of avoiding dealingwith intense competition, which is commonly experienced in the caseof new market entrants. An acquisition of a new franchise gives aleeway for the acquirers to enter the market rapidly and compete. Italso enables the buyers to hold competition because it grants the newowners the exclusive rights to the territory. This is because thefranchisors will not sell other franchises in the same area.Fourthly, it is relatively easy to access financing and fundingbecause banks consider lending money to buy popular franchises lessrisky than lending to start a business from scratch (Lymbersky,2012). In this regard, Huawei will benefit much from eitherestablishing a subsidiary or franchising. To realize the objectives,Huawei will need to consider all relevant factors such as the costsand effectiveness of either strategy and make an informed choice.

InternationalMarketing Goals

Theinternational marketing goals should be focused on expanding themarket share, increasing profit shares and growth. Huawei should bebroad and inclusive of diverse consumer needs, including individuals,and small, medium and large businesses.

Mostimportantly, the marketing goals will need to be underpinned byrelevant consumer theories. The Expectation and confirmation theoryis perhaps the best theoretical framework that should underpin themarketing goals (Oliver, 2012). The Expectation confirmation theoryconsiders consumers as rational agents who exercise consciousdecisions when buying a service or a product. Expectationconfirmation method proceeds to posit that consumer, therefore,always have expectations about products they intend to buy. Ideally,the initial purchase is always about experimentations, in which auser gives a product the benefit of the doubt. In this case,satisfaction is a component of expectations and perceivedperformance. If a product conforms or satisfies their expectations,they will continue purchasing it. Conversely, if a product fails tomeet the user expectations, they will stop buying it (Oliver, 2012).Therefore, Huawei placement in the market should focus on satisfyingconsumer expectations.

Themost reliable means of meeting the customer expectations will be toallow user participation and involvement. According to Taylor andThornton (2012), the concepts of user participation and userinvolvement may be used interchangeably, although they have slightdifferences. User involvement characterized by a set of activities orbehaviors exhibited by consumers on the course of development ofproducts, which can then be used to inform decisions of developingthe products and tailoring them to the users (Oliver 2013). In thecontrast, consumer involvement refers to considerations that abusiness gives to psychological conditions or individual relevance ofusers in developing products. Therefore, user participation andinvolvement are well placed to enable Huawei to identify themarketing needs.

Nevertheless,it will also be important for Huawei to uphold corporate socialresponsibility. Indeed, according to Dinsmore,(2015), corporatesocial responsibility is crucial because it does not only enable afirm earn a good reputation, but also avoids conflicts with society.Forms of corporate social responsibility include abiding by the lawsand regulations, engaging in charitable activities, providing valuefor money and supporting environmental protections. Corporate socialresponsibility initiatives will need to be tied to Huawei’s goals,while the financial viability of all practices should be assessed anddetermined. The economic and feasibility aspects of projects have tobe evaluated since they mostly determine if the project will be asuccess or a failure. Huawei can accomplish this step by carrying outa cost-benefit analysis of financial viability and feasibility of theprojects. The importance of the cost-benefit analysis is that itallows the management to compare the benefits of a course of actionand make an appropriate decision, thereby.

Anotherkey area of focus Huawei would be technological governance.Technology is considered as a vital aspect of organizationalmanagement and describes organization engagement in steeringtechnological through creativity and innovativeness. To achieve this,managers should deploy the technology-related informs and establishsupportive norms to align the technological adoption withorganization goals. The technologies must be actively designed to notonly yield results of specific isolated processes and areas such assteering committee and service level agreements but also aim atincreasing the capacity of organizations to achieve their respectivemain goals. Indeed, the research conducted by Taylor and Thornton(2012) shows that organizations that embrace active technologicalgovernance make higher profits Research revealed that, of threehundred organizations investigated across the globe, onlythirty-eight percent senior managers practiced effectivetechnological governance within their respective organization, andthis was to blame for the general, poor performances. In retrospect,Huawei is particularly placed to succeed in Nigeria’s market if itputs these into practice.

OperationModel

Theoperation model will be hinged on the 4Ps marketing mix framework.The elements underpinning the 4Ps model include product, pricing,placement and promotion. The proposed Huawei operation model isdiscussed in the following corresponding sections.

Product

Theproduct attribute concerns itself with what the customer wants fromthe product or service, or what the product must satisfy, and how abusiness can differentiate itself from competitors. To succeed in theNigerian market, Huawei operation model will need to be orientedtowards providing value for money. Huawei will need to targetproducing quality products that satisfy Nigerian consumers.Considering the call for sustainability, Huawei will also need to aimat producing products with sustainable attributes such as powersaving, less pollutant and efficiency. In its branding, Huawei shouldlay emphasis on quality, affordability, and environmentalfriendliness to differentiate itself from the competitors

Place

Theplace attribute defines the areas or locations that buyers will haveto look to find a product and differentiate from competitors. SinceHuawei has various goods and services that it offers, it will need toconsider where and when to place its products so that the targetedconsumers can easily access them. To be successful, for instance,Huawei will need to open outlets in different major cities to reachcountries across the country. Moreover, Huawei will also need tostation its office branches in various locations so that they can beeasily accessed. Moreover, considering the available technologicalopportunities, Huawei may also opt to render or sell many of theservices and goods online. This combined placement is an exploitationof weakness of the competitors who are yet to embrace them, yet it isalso particularly suitable to reach many customers. Therefore, themode of distribution of its products and services should combinedirect and indirect channels.

Price

ThePrice aspect is concerned about how much a business should sell aproduct and differentiate itself from competitors. Since Huawei willbe a new entrant into Nigeria’s market, it would be crucial toorient its pricing strategy towards attracting customers andpenetrating the market, rather than making profitability. Even asthis is done, Huawei pricing strategy should optimize to avoid lossesthat can compromise the capacity of the firm to grow. On the overall,Huawei entry pricing should be to sell its products at the least costabout the competitors. This pricing strategy may also be complementedby discounting strategies to attract and retain customers.

Promotion

Advertisingis primarily concerned about how a business can communicate itsmarketing messages to the targeted market and differentiate itselffrom competitors. For Huawei to successful enter the Nigeria’smarket, its choice of marketing strategy should be diverse. Inessence, Huawei should employ different communication channels suchas social media, television, radio, magazines, newspapers, andbanners to advertise its presence. According to Lymbersky (2012), theessence of using different marketing channels is to reach a diversetarget audience such as Generation Y, the baby-boomers and theelderly population, which is suited to different communicationchannels. Since competitors have not been vibrant in exploiting allthese communication channels, Huawei market entry will be successful.

Conclusion

Inconclusion, the aim of this report has been to propose a marketingplan and entry strategy for Huawei into Nigeria. The suitability ofNigeria arises from the fact that, in most of its businessactivities, Huawei is yet to fully extend and exploit the potentialopportunities in many African countries, in which several emergingeconomies such as Nigeria present opportunities for Huawei to tap.The situational analysis of Nigeria market environment is guided bythe PESTEL analysis, which considers political, economic, social,technology, environmental and legal. This has shown that while thereare a few risks, the Nigeria market provides numerous opportunities.

Themarket entry strategy for Huawei’s into Nigeria market would be theestablishment of a wholly owned subsidiary or opt for a franchise.The decision to adopt either of these strategies arises from variousassociated benefits, strongly contrasting with other market entrystrategies such as partnerships or exporting. The internationalmarketing goals should be focused on expanding the market share,increasing profit shares and growth. The target market Huawei shouldbe broad and inclusive of diverse consumer needs, includingindividuals, and small, medium and large businesses. Mostimportantly, the marketing goals will need to be underpinned by onrelevant consumer theories.

Themost reliable means of meeting the consumer expectations will be toallow user participation and involvement. Nevertheless, it will alsobe important for Huawei to uphold corporate social responsibility.Corporate social responsibility is crucial because it does not onlyenable a firm earn a good reputation, but also avoids conflicts withsociety. Forms of corporate social responsibility include abiding bythe laws and regulations, engaging in charitable activities,providing value for money and supporting environmental protections.The operation model will be hinged on the 4Ps marketing mixframework. The elements underpinning the 4Ps model include product,pricing, placement and promotion, implying that the operation modelwith inherently an integrated marketing strategy.

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