One of the most appealing ways for many companies to enter African markets is through forming partnerships with local businesses. This not only reduces their risk, but also provides on-the-ground expertise.
At the GIL 2011: Africa event, held in Cape Town on 25 August 2011, CEOs and senior managers mentioned that a key strategy for penetration into Africa is identifying the right local partners and aligning with them to ensure they take the product to market and reflect the image of the company. Frost & Sullivan Africa has seen this as a fundamental strategy, which companies need to implement within their organisations and have, as such, developed a number of competencies and methodologies to identify key partnerships for companies in Africa.
"One of the key aspects in identifying the right partner is to ensure that the company is clear on the type of partnership they want to enter into," says Frost & Sullivan Consulting Manager Chantel Lindeman. "Furthermore, a number of companies outside of Africa are looking to enter the region, resulting in fierce competition and local companies becoming more selective on who they want to affiliate themselves with. First movers have a definite advantage over later entrants."
Recently, Frost & Sullivan completed a partnership study for the chemicals division of AECI to identify market opportunities and key partners within Nigeria. Considering AECI's growth in Africa, outside of South Africa was traditionally driven by AEL Mining Services. The overall expansion of the business into Africa has been based on mining opportunities.
However, as Nigeria was identified as a key growth market, AECI took a proactive approach to expanding its presence and diversifying the range of its portfolio companies serving that country.
"AECI is currently evaluating the various options available and will make a decision in the near future on how to enter the country," Lindeman says.
The telecommunications sector has seen a number of partnerships being formed throughout Africa. Frost & Sullivan completed a study for a global telecommunications service provider to identify the ideal partner within Africa. "The main challenge for companies in this sector is that a number of global companies are looking to invest in the region, but are not prepared to build infrastructure, which is what is needed in Africa," added Lindeman. As a result, the local companies are hesitant to form partnerships with global operators, as they are overwhelmed with partnership requests, and are penalised by the stringent SLAs drawn up by the global companies. These SLAs are based on US or European standards and does not take into consideration the connectivity difficulties faced by companies in Africa.
Currently, the global telecommunications company is deciding whether to open an office in South Africa at the beginning of 2012 in order to build more strategic partnerships with local companies.
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Frost & Sullivan (frost.com), the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEOs Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents.