Internationalisation is one of the cornerstones of successful business strategy for African companies. Not to be confused with globalisation, internationalisation strategy is about tailoring goods and services for an international market. There are several examples of African global challengers asserting themselves across manufacturing, telecommunications, and aviation. Major African brands that have made themselves recognisable across global markets include SABMiller, Sasol, Dimension Data, Equity Bank of Kenya, and EcoBank. Traditionally, businesses focus on gaining a strong position in their local market before branching into neighbouring countries in their region. The more recent phenomenon of “born globals” has introduced a new pathway to offshore markets with businesses adopting an international expansion strategy from the outset, sometimes headquartering in one country and marketing services in another, or immediately launching in markets both close to and far from home. Increasingly, investors on the continent are only putting their money on startups that have an appetite (and a plan) to internationalise from day one.
As globalisation has made it possible for global markets to embrace made-in-Africa products and services, this trend has paved the way for African businesses, particularly startups, to internationalise much sooner. But the process of internationalising is not a simple one. For startups, they need to fast-track the formalisation of their structures and processes such that they have the capacity to sustain supply for the increasing demand. In addition, businesses need to develop a nuanced understanding of the different market trends within each economy to which they intend to import their products or services. This can be a challenge for smaller companies with limited resources, especially considering that the dynamics in target markets can be vastly different to those in their home market – whether they are looking at other countries in Africa or further afield. As such, the internationalisation of a business often requires significant capital infusion, as well as an intricate market risk analysis before the undertaking.
In light of the increasing importance of internationalisation for African companies, examples of entrepreneurs who have made it offshore are invaluable in our MBA classrooms. Fortunately, we have several in our case collection at the GSB Case Writing Centre to choose from – including multiple award-winners. Here are our top three internationalisation cases.
1. “M-Pesa: An evolution in organisational strategy”
by Dr Linda Ronnie and Mariam Cassim
M-Pesa is a mobile phone-based money transfer service that began as a collaboration between Vodafone and Telkom, launching in Kenya in 2007. The product capitalised on the growing use of mobile phones in Africa, especially among the population without bank accounts. In this teaching case, Hemmanth Singh, the new Managing Executive for Commerce at Vodacom South Africa, explores a strategy to re-launch M-Pesa in the South African market. Although M-Pesa was an astounding success in Kenya and Tanzania, the initial attempt to launch in South Africa achieved an uptake of only 2% – a dismal failure from the perspective of the team previously involved in the project. The case, which was the winner of the 2014-2015 Emerald/AABS Case Competition, highlights the challenges of discerning and responding to the similarities and differences across African markets. We leave Singh as he is left to devise a strategy that will effectively win over the local market.
2. “BOS Brands: Challenges of internationalisation”
by Christopher James Human and Prof Geoff Bick
BOS Brands is a South African fast moving consumer goods (FMCG) startup which developed a range of iced tea beverages containing rooibos tea as the key ingredient. Unlike regular tea, rooibos is a naturally caffeine-free, high-antioxidant plant grown exclusively in the Cederberg region near Cape Town, South Africa. After just three years in the market, BOS Brands expanded into the UK and other European markets. This decision to internationalise, taken by CEO Dave Evans, was spurred by two main factors: the gradual shift towards healthy beverage options globally, and the small size of the South African market for their niche products. But as their brand awareness grows across five markets in Western Europe, Dave is confronted with another decision: should BOS expand into more European countries, and even the US and Canada? The decision hinges on evaluating BOS’s market-entry strategy and how to adapt it to scale their high-touch marketing approach in different settings. At the heart of the case, which was the winner of the 2015-2016 Emerald/AABS Case Competition, is the strategic dilemma of knowing which international market opportunities to accept and when.
3. “First Capital Bank: The internationalisation of a Malawian bank into a regional player in Southern Africa”
by Alexander St Leger Moss, Prof John Luiz, Sarah Boyd
First Capital Bank, Malawi’s first privately-owned indigenous bank, was operating in two other Southern African countries (Zambia and Mozambique) at the start of this teaching case. In this highly regulated sector, founder and chairman Hitesh Anadkat has extensive experience with the challenges of setting up a ground operation in a new country. These challenges extend to finding the right local investors and connections, defusing the grievances of local employees about their international leadership, and deciding which local market segment to focus on. When a gap emerges to expand into Zimbabwe, one of the most unstable economies in Southern Africa, Anadkat can’t help but wonder if this is a once-in-a-lifetime opportunity. The case engages with the dilemma that even successful businesses are faced with: assessing economic and political risk in a new market, convincing cautious international investors, and assessing the strategic tradeoffs between new markets and market development.
Read the cases
by Thabile Bhengu