Presently, businesses have become very competitive in the global. As such, companies are forced to explore the unfamiliar or rather new environment in order to take advantage of a couple of factors. Such factors include the availability of market, affordability of labor, exploitation of untapped resources and low costs of operation. With that in mind, the company under this study aims at expanding its geographical boundaries to maximize on such factors. Therefore, this report analyzes the cultural, financial, economic, political and competitive conditions that the company needs to consider prior to venturing into new markets.
About the Company
The discussions herein will focus on Ford Company. Notably, Ford is an American based company that is extensively known in the manufacture of automobiles (DFEI, 2012) . Its automobiles are marketed under the brand name FORD. Ford has established its production plants in many nations hence rendering this firm a multinational company. Additionally, Ford also invests in industries that manufacture related products such as GAZ and Mazda which are Russia and Japan-based companies respectively. Apparently, Ford Company is the largest brand that sells automobiles in the U.S. Globally Ford is the fifth largest company that is involved in the motor vehicle trade (DFEI, 2012) . Nevertheless, the company has the potential of improving its brand positioning by venturing into new markets such as Mali and Chad. Essentially, Ford Company needs to understand the various risks involved in the new markets it is planning to introduce its production plants.
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Market Evaluation
As aforementioned, the two markets considered in this report are Chad and Mali. These two African countries show some similarities as well as differences in relation to cultural, financial, economic, political and competitive risks. Notably, Ford Company will experience different situations in its quest to explore the two new markets it has identified. That will be explained under the following subheadings;
Cultural Risks
Mali and Chad are Muslim countries. In Mali, 95% of the population comprises of Muslims while in Chad 53.1% of the population is made up of Muslims. This is an indication that the company will face a religious barrier in its operation since its mother plant is located the Christian nation. On the other hand, there is the issue of language barrier. Chad and Mali speak in French. In addition, Chad also uses Arabic as its primary language. The fact that Ford Company is based in an English-speaking nation, it is apparent that trading in a new market will imply the company understands the language of the locals to operate smoothly in the market. Language barrier costs companies volumes of money since poor communication will be characteristic of the company’s operation. Additionally, the company will also not be able to gather market intelligence.
Financial Risks
As at August 1, 2016, the currency exchange rates (USD) in Chad and Mali were 589.154 and 589.643 respectively (WEO, 2016) . The noted trend shows that the company will have to incur a lot of expenses in order to meet its export and import requirement. In the two countries, there is a balance of payment deficit since the values of imports exceed the value of imports. Notably, these two countries are considered as developing nations in the global. As such, they rely on foreign aid for them to meet their developmental needs.
Economic Risks
Chad and Mali are among the counties that have the largest population in the global. Chad has 14 million people, and the country is ranked 73 rd regarding the number of individuals in the country. On the other hand, Mali is ranked 63 rd owing to its 17.6 million inhabitants living in the country. This is an implication that these two nations have a population that would assure the company availability of market. Based on the GINI that measures how income is distributed in the country, Chad is established to have an income inequality of 43.32 % while Mali has an income inequality of 33.02%. Regarding GDP, Chad is ranked 122 nd in the global. The GDP of Chad stands at $13.9 billion. On the other hand, Mali has a GDP of $13.1 billion which make it be ranked 126 th in the Global (Heritage.org, 2016).
Nevertheless, despite the fact that Chad has a higher GDP that Mali, reports indicate that the rate of GDP growth of Mali is greater (7.61%) than that of Chad (1.8%). Mali has the highest rate of unemployment (8.1%) (Heritage.org, 2016a) when compared to Chad (7.0%) (Heritage.org, 2016b). Besides, the rates of inflation are high in Chad (1.68%) than in Mali (0.89%). The data obtained herein shows clearly that both countries are struggling to improve their GDP. The company, therefore, needs to be prepared for the high currency exchange rates as well as the elevated inflation rates that the countries are facing.
Political Risks
Chad and Mali are West African nations that have republican governments. Despite the abundance of resources in these two countries, the issue of political instability limits the productive potential of these nations. A country such as Chad is surrounded by neighbors who regularly engage in fights that often end up harming the economy of the country. On the other hand, Mali has experienced political wrangles over the past few years.
Competitive Conditions
The automobile business in Chad and Mali already has key players in the market. Ford Company should expect competition from other automobile brands in Chad and Mali such as Hyundai, Toyota, Yamaha, Suzuki, and Peugeot.
Infrastructure and Economic Constraints
As mentioned earlier, Mali and Chad are developing nations. As such, they have poorly developed road networks. In addition, the majority of the population live below the poverty line. Notably, 46.7% and 43.6% of the populations in Chad and Mali respectively leave below the poverty threshold. This is an indication few individuals will be able to afford the product from the company due to the poor infrastructure (roads) and the high levels of poverty. Furthermore, most people who can afford their products dwell in urban areas. This accounts for about 22% and 39% of the total urban population in Chad and Mali respectively. On the other hand, there are high rates of unemployment in both countries. In other words, the company will expect a narrow market base in both countries.
In conclusion, Chad and Mali provide the company with an excellent opportunity to expand. However, Ford Company needs to ready itself to the cultural, political, economic and competitive elements that are apparent in the country. If it can manage to overcome such challenges, it will be in good position to capitalize on the infinite merits that are available in the market.
References
Daniels Fund Ethics Initiative (DFEI). (2012). Ford Motor Company Manages Ethics and Social Responsibility . Daniels Fund Ethics Initiative, University of New Mexico. Retrieved from http://danielsethics.mgt.unm.edu.
Heritage.org. (2016a). Mali: 2016 Index of Economic freedom. The heritage foundation . Retrieved from http://www.heritage.org/index/country/mali.
Heritage.org. (2016b). Chad: 2016 Index of Economic freedom. The heritage foundation . Retrieved from http://www.heritage.org/index/country/chad.
World Economic Outlook (WEO). (2016). Chad vs. Mali. Findthedata -IMF . Retrieved from http://country-facts.findthedata.com/compare/45-89/Chad-vs-Mali.
