Samco is an American company established in the 1950s as a soft water provider. In 1987 the company was sold to the current owner, and its name changed to CS Kimeric. In 1998, there was a need to integrate the operations and develop a new company that offers services from concept to design, fabrication, start-up, and maintenance services and Samco was born. The company’s core business is water treatment. It provides custom water, process separation, and wastewater and filtration solutions to different industries. The company has an individualized project-based approach that defines its niche market and motivating the employees to deliver efficient, comprehensive solutions that meet the unique needs of the customers. Its industries are in the power, petrochemicals and chemicals, industry, oil and gas, mining and metal, food and beverages and municipal. It has delivered a wide range of processes for the different sectors depending on their needs. Samco has the solution to all the challenges faced by these industries and has received global recognition for offering quality products and services to the sectors. The company anticipates industry needs and responds with forwarding thinking solutions. The company started to focus on industry in 1987. Industrial clients have benefited from working with a partner who is capable of delivering a comprehensive concept to completion solution. This report analyses the eastern African market to determine its viability for future business activities by Samco Technologies (SAMCO Technologies, 2017).
Following its success in the American and global front, the company desires to expand its operations to the Eastern African market. The target market shows an enormous potential for the company in all industries that it specializes. The target market has attracted international attention due to its steady growth and a conducive business environment. The eastern African market serves eight countries that include Ethiopia, Somalia, Kenya, Southern Sudan, Tanzania, Uganda, Rwanda, and Burundi. With the increase in government expenditures on energy and a vibrant manufacturing industry, the market shows high potential for growth and increased profits for the company. The eight countries have different political, social, economic, technological and legal factors that affect the business environment (Gekonge, 2014; Singh & Lewa, 2014).
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For Samco to access the expanded market, it should understand the factors in each country and how they affect the entry strategy. From a comprehensive analysis of the eight states, the company has decided to venture into the market using Kenya as its operating base. The central location of the country and its improved infrastructure makes it the preferred choice for entry. The nation also has an expanding manufacturing industry that will offer a huge market for the products from Samco (SAMCO Technologies, 2017).
Institutional constraints
Kenya has an established framework that encourages investors. The country has continued to eliminate barriers to entry to promote international trade. The economic institutions offer investment opportunities to existing and potential investors. Kenya has expanded its democratic space, and different agencies carry out their responsibilities without political interference. The country has educated and nationalistic leaders both in the opposition and in government. The previous two regimes have tried to boost the business environment for the country despite political instability which is experienced in some parts of the country during the electioneering period. The country is also trying to boost its long-term economic and political environment by creating inclusive institutions (Gekonge, 2014; Singh & Lewa, 2014).
The government of Kenya has put in place measures to accelerate economic development and to eradicate poverty. Kenya has established its vision 2030 which desires to develop the political, social and economic pillars of the country. The political component aims at developing a stable, transparent, secure and accountable political system. The social pillar desires to create a just and cohesive society that can access universal education housing, food, healthcare, water, and sanitation. The economic component aims at boosting the economic growth of the country and to reducing poverty (Gekonge, 2014; Mullins & Walker, 2013; Peng, 2014).
Based on the vision 2030, the country desires to develop different economic zones as potential vehicles of growth in the various parts of the country. The country has a series of five-year plans that aims at promoting investment in the critical economic areas among them manufacturing and environment which are potential areas of investment for Samco. With the current oil exploration activities in the county, the discovery of minerals like coal and titanium, and gas, Samco has a broad market that is still untapped (Gekonge, 2014; Mullins & Walker, 2013; Peng, 2014).
VRIO Analysis
Samco has the required financial resources from its reserves and willing investors who are determined to enter the new market. The company's previous impressive performance and good returns on capital allow it to access needed finances from financial institutions if the need arises. The company will use its reserves to venture into the Eastern African Market and depending on the needs of the market will access additional funds from the local financial institutions which are willing to offer any assistance (SAMCO Technologies, 2017).
The company has a dynamic workforce that has enabled it to operate in the global market. Samco has a lean team that allows each member to perform individually and collectively to achieve the mission of the company. Each organizational unit is determined to perform its duties diligently while exercising professionalism and focusing on meeting the overall goal of the company. The different units conduct healthy competition against each other therefore contributing to a coercive organization. The organization as whole recruits qualified employees for each unit and performs regular training to empower them with the requisite knowledge needed by the company to remain competitive and to counter effects external factors (SAMCO Technologies, 2017).
Samco has adequate access to the materials required to conduct its business. Some of the components are produced in-house while others are acquired from contracted suppliers. Essential parts are manufactured by the company while most of the commodities that can be purchased from the market are outsourced. This business model has enabled the company to concentrate efforts on its core business leading to improved performance and increased innovations (SAMCO Technologies, 2017).
Samco has an established information system that helps it to manage its business operations in the country and on the global front. The information system links the contracted suppliers with the company while at the same time helping to manage requests from the customers. Samco uses its information system to develop solutions that potential customers are likely to require in the future. The marketing department then identifies customers who face the challenges as anticipated. Solutions are then administered depending on the needs of the potential client.
Samco has capitalized on knowledge management to help it predict potential problems that are likely to be encountered by potential clients. The administration incorporates such foresight into the strategic plans which will help in anticipating any future changes in demand. This model has enabled the company to remain competitive because clients get customized solutions to their problem in the shortest time possible. Such capabilities have made Samco a preferred business solution provider for companies that are not willing to discontinue their operations due to emerging issues which were not anticipated (Gekonge, 2014; Mullins & Walker, 2013; Peng, 2014).
Political and cultural environment of the target country
Kenya is a relatively stable country in the horn of Africa. It has a democratic system of government that is elected into office after five years. Despite challenges faced during the electioneering period, the country remains stable at other times. The regimes are stable, and any changes happen smoothly. There is a strong trade union movement in the country that fights for the interest of the employees. There are limited numbers of laws that restrict business operations, and the government has recently embarked on an effort to remove any barriers to trade. The freedom of speech and expression are guaranteed by the Kenyan constitution. The country faces challenges of corruption, bureaucracy, and tariffs (Singh & Lewa, 2014).
Kenya faces an increase in the size of its middle class which has the ability and willingness to consume. The middle class recently experienced an increase in their disposable income which will promote consumption of beverages and bottled drinking water. The growing population size calls for urgent measures to counter sporadic water shortage. Therefore, there is a potential for increased investment in municipal water systems (Singh & Lewa, 2014).
The lifestyle of the Kenyan population is gradually changing, and there is an increase in the demand for essential and non basic items. The country has a vibrant social media, and most of the locals have access to mobile phones. Access to the internet has been enabled by the availability of mobile devices that can be used to access the internet. The Kenya culture is one of the most vibrant and welcoming. The population has adequate human capital with different skills that can be harnessed by the company to explore new opportunities (Gekonge, 2014; Mullins & Walker, 2013; Peng, 2014).
Based on the above analysis, Samco should engage in trade in the Eastern Africa. The company should establish an operating base in Kenya which will be used to access the other countries within the region. The country is an economic powerhouse in the area, and the nation will offer an adequate market for the products and services. Before establishing business operation, Samco should conduct a market survey to determine the potential of the market to design a business model that can serve the entire market. The business can start by aggressively marketing its activities in the country using trade magazines, newspapers, and internet. An outlet in the capital Nairobi will serve the entire region as other countries can easily access it due to the improved transport infrastructure (Gekonge, 2014; Mullins & Walker, 2013; Peng, 2014).
Samco should export the products to the target market. Establishing a fully operating office in the capital will help address the needs of the market that lacks companies that provide similar services. Exporting will ensure that Samco maintains customer contact which is vital in the African culture. Similarly, the company does not have to fear about the technological ability of the target market because cheap labor is readily available. By exporting to Kenya, Samco will benefit from increased sales and revenues, enhanced domestic competitiveness. It will also benefit from increased global market share of the untapped Eastern African region. There are also possibilities of diversifying business activities. A decline in the local market calls for the expansion of business operation in the other areas (Gekonge, 2014; Mullins & Walker, 2013; Peng, 2014).
A decision to export products to the Kenyan market might expose the company to financial risks if capital is not adequate or the volumes of sales are low to cater for the costs and profit margins. Samco might be forced to take expensive loans from the financial institution to provide for the expanded operations. Another difficulty that is likely to be faced by the company includes additional costs of managing the new business. Exporting products from the U.S to the port of Mombasa will require increased fiancés. The mater can be complicated by a price sensitive market that considers price at the expense of quality. Lastly, exporting to the new market requires proper planning adequate capital and relevant data for decision making. Reliable information can be difficult to access, and therefore decision making can be constrained (Gekonge, 2014; Mullins & Walker, 2013; Peng, 2014).
References
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.
Mullins, J. W., & Walker, O. C. (2013). Marketing management: a strategic decision-making approach . New York: McGraw-Hill.
Peng, M. W. (2014). Global strategic management . S.l.: South-Western Cengage learning.
SAMCO Technologies | Custom Water, Wastewater, Process separation, and Filtration Solutions. (n.d.). Retrieved November 02, 2017, from https://www.samcotech.com/about/
Singh, S., & Lewa, P. M. (2014). impact of political and cultural factors on online education in africa: the strategies to build capabilities. Organizations and markets in emerging economies, 5 , 1(9)
