Mali and Chad have similarities with some of the risk factors that are likely to affect a business success while entering the markets. In this case, the two countries significantly rely on agriculture as their main economic activities though it is important to indicate that Chad engages in the oil business as well. Additionally, the two countries are faced with security problem which in turn affect their economic well -being and development. Lastly, the two nations have also been faced with corruption problems which bring about poverty in the two states. Bearing in mind of these risk factors, franchising is viewed as the best market entry strategy to venture into these two markets.
Entry Strategy
Franchising is a market entry strategy that involves a firm using another company's business model as well as its brand for the agree period (Tielmann, 2010). In this case, delivering Ford products into the Chad and Mali market will require the company to use the brand and models of firms that deal with the same product line. The Ford products are also unique products in the two markets as agricultural related economic activities dominate the markets. Literature indicates that franchising is one of the most effective strategies to introduce a unique product into the international market; therefore, the strategy is best for the Ford products (Tielmann, 2010).
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Secondly, due to the security crises experienced in the Mali and Chad, it is important for the company to use franchising as it will enable it to enjoy the customer loyalty as it stabilizes in the two countries. Franchising is a strategic approach that allows the company to use the other company's business model as well as its brands, therefore, enjoying the benefits of a ready market (Tielmann, 2010). Additionally, using the company's brand enables the new business to the market to benefit from product recognition, which in turn helps the new company to make considerable sales when compared with other companies entering the market in a directly such as in the case of greenfield investment.
Lastly, as a new business dealing with new products in the foreign markets, franchising provides the company with the opportunity to understand the nature of the market (Tielmann, 2010). Understanding the nature of the market in matters such as culture as well as customer's taste and preference is an important strategy for a company aiming to succeed in entering an international market. In this case, the company uses the other company's brand and business model for a given period in which the company can learn the people's way of life, as well as their demand and supply patterns, hence, developing products that meet their need adequately.
Contingency Plans
In the previous section some of the problems that hinder foreign investors into Mali and Chad have been identified which include, corruption, political instability, insecurity, over dependency of one or two economic activities, currency differences as well as the cultural difference between the nations (Gekonge, 2014). It is, therefore, important for the venturing company to take into consideration these factors and develop an appropriate plan on how to go about the problems as well as preventing future crisis arising from these problems.
Firstly, the company should build a partnership with an already existing business in the two countries to enable it to provide goods and services that meet the customers' needs regarding cultural values (Gekonge, 2014). Cultural differences play a significant role in shaping the success of business in a foreign market. In this case, partnering with the countries companies will enable the Ford Company to learn the people's way of life and consumption patterns while still in partnership.
Secondly, as a result of securing the business from political instabilities in the two countries which are as a result of insecurity problems, the company can take a political risk insurance policy (Gekonge, 2014). The insurance will cover the company for any loss that it might incur as a result of political problems. The political insurance strategy is a risk management strategy that ensures that the company does not suffer losses arising from the insured policy (Gekonge, 2014). In this case, the company will be insured for financial losses will be brought about by political instabilities.
Additionally, continues business monitoring is an important element that can help to determine the position of the firm while faced with a political or economic crisis. In this case, business monitoring will provide the business manager with adequate information regarding the political and economic climates and how they can affect the day to day business operation (Gekonge, 2014). With such a strategy, the business managers will be in a position to provide an informed decision regarding the crisis, hence, reducing the possible effects that the business would suffer.
Exit Strategy
If the company does to succeed in its operations in the two countries, an exit plan will enable the company to successfully exit the markets so as to reduce the risks of the company suffering from losses. Firstly the company should break down its system into small manageable branches, and this will enable the company to easily monitor the company's activities at a relatively low cost which will, in turn, lead to the business efficiency. Secondly, as a result of unfavorable business environment, a strategic acquisition approach is a practical approach that can help a business successfully exit a market (Armstrong, 2012). In this case, the other interested company purchases the exiting company either in the form of liquid cash or stock. The acquirer has the authority to either retain or bring a new operational staff as well as change or maintain a business line (Armstrong, 2012). In this approach, the existing business managers lose control over the business while the acquirer fully owns and manages the business. Therefore, the exiting managers will be in a position to successfully exit the market by changing the company's ownership (Armstrong, 2012).
References
Armstrong, K. (2012). Exit strategy . Toronto: Random House Canada.
Gekonge, C. O. (2014). Emerging business opportunities in Africa: Market entry, competitive strategy, and the promotion of foreign direct investments . Hershey, PA: Business Science Reference.
Tielmann, V. (2010). Market Entry Strategies: International Marketing Management . München: GRIN-Verl.
