UNIVERSITY OF ILLINOIS

CHICAGO
I N T E R N AT I O N A L
ENTREPRENEURSHIP

R E L I E F W AT C H
P R O J E C T R E P O RT

G O W T H A M S I VA K U M A R
IMRAN BAIG
JOSEPH LINDBERG
E VA

KO WA L I N S K I

CONTENTS
Tab 1

Report
Notebook

"Africa's Testing Ground." The Economist. The

Economist Newspaper, 23 Aug. 2014. Web. 14
Oct. 2015.
Jadesimi, Amy. "The Changing Face Of Business
In Nigeria." Forbes. Forbes Magazine, 21 May
2015. Web. 14 Oct. 2015.
Noodles in Nigeria. EuroMonitor International.
Web. 11 Oct. 2015.
"What is Sokowatch." Sokowatch. Sokowatch,
n.d. Web. 14 Oct. 2015.
"Boko Haram: A Bloody Nigerian Insurgency CNN.com." CNN. Cable News Network, n.d. Web.
14 Oct. 2015.
XCom Africa: Fast Moving Consumer Goods

ABSTRACT
Daniel Yu and his team at Sokowatch are now looking to expand
abroad, with an emphasis on the consumer goods industry in
Nigeria. Relief Watches brother company, Sokowatch is well
suited for Nigeria for a variety of reasons. Not only is Nigeria
expanding its market size, but its GDP is also growing at a
steady pace. According to the Economist, Nigerias annual GDP
growth is at 4.9%, and the input from FMCG (Fast Moving
Consumer Good) spending towards GDP has increased by 10.3%
("Africa's Testing Ground). In addition to the positive financial
predictions, Nigerias population is set to double in the next 40
years. Another reason Sokowatch should grow in Nigeria is
because the economic sectors are changing with respect
consumer goods. There is a prediction of an annual increase of
8% in consumer goods every year to become the largest sector of
the economy, worth almost $1.4 trillion by 2030
With a proven track record in the medical inventory management
space, Daniel Yu and his team at Relief Watch are now switching
gears and tapping into the international consumer goods market.
In this report, we will outline the focus of Sokowatch, the
potential of expansion into the Nigerian market and finally, we

will identify the target market and potential companies

Sokowatch may want to partner with.

INTRODUCTION
Sokowatch is an inventory management tracking system used for
the developing world. It fills the gap that many third world
countries have when it comes to having the right infrastructure in
place to effectively manage their supply chains. The current
paper-based inventory tracking methods result in inaccuracies,
delays, and repeating stock outs which ultimately lead to profit
declines for these consumer good companies. In comparison, the
Sokowatch system provides inventory management to minimize
shortages, increase transport efficiency, and protect against
demand fluctuations ("What is Sokowatch). The great thing
about Sokowatch is that their service relies on existing mobile
phones distributors which majority of the developing countries
populations have access to. According to Sokowatch, If you can
answer a phone, you can use our system ("What is Sokowatch).

In addition to the easy access which Sokowatch provides, users

are not required to download additional hardware and are not
financially responsible for covering the cost of the phone call.
Once users report the amount of inventory on hand by clicking
the digits on their phones, the data is automatically stored in
Sokowatch's cloud system and companies are better able to
project future consumer demands and eliminate stock shortages.

MARKET ANALYSIS
While there are positive forecasts for the Nigerian market, there
are also significant risks that need to be considered. Poor
infrastructure, as well as political and economic instability run
rampant throughout many parts of Nigeria. According to the
Human Development Index, Nigeria ranks 160th out of 177
countries with the largest amount of poverty. (Poverty In
Nigeria). In addition to the low income earned by much of its
population, Nigeria's religious and ethnic tensions create an

increasing likelihood of volatility, especially in regards to

violence. Boko Haram, an extremist Islamic group active in the
northeast region of Nigeria, desires to impose Sharia law at the
expense of many lives. The militant group has bombed schools,
churches and mosques; kidnapped women and children; and
assassinated politicians and religious leaders alike (CNN). The
violence and bloodshed resulting from the Boko Haram militant
group could create a threatening effect for foreign (especially
western) businesses like Sokowatch who are looking to enter the
Nigerian market.
In addition to the political and social unrest seen in many parts
of Africa, some of Nigerias worst problems stem from the lack of
transport and power infrastructure. With no deep water port,
Nigeria must restrict the entrance of large ships carrying
consumers good imports into the country. Instead, Nigeria only
allows small vessels to deliver goods into the country. Shoprite, a
supermarket chain in Nigeria, said it can take 117 days for
ordered goods to hit shelves in Nigeria. The time spent waiting
for purchases leaves a lot of room for products to expire.
Because of the delay in supply chain operations, its often difficult
for companies to forecast sales. Many of these businesses work
around this issue by keeping large stocks in reserve in order to
accommodate to the lack of efficient distribution.

In addition to the lack of transportation infrastructure, a shortage

of electricity hurts businesses as power cuts are frequent.
According to the World Banks Doing Business survey, Nigeria
is 185th out of 189 countries for easiness of getting electricity
(Africa's Testing Ground). Because of these risks, Sokowatch
needs to prioritize and help train store owners on how to best
anticipate the amount of stock they need.
Table 1: SWOT Analysis of Nigeria
Strengths

Weaknesses

resources

Abundant supply

of natural

High economic
growth factors
Largest African Economy

Opportunities

High levels of corr

Dependance on oil
Lack of transport a

Threats

Improved infrastructure

Young labor
Security
force
More advancement in terms

of:
Healthcare
Education
Technology

Disturbances of Po

Boko Haram Grou

TARGET MARKET
Continuing to operate as a B2B (Business to Business) company,
Sokowatch will introduce their efficient inventory management
systems to existing and well-established consumer goods
companies. In particular, we advise that Sokowatch enter in the
The fast-moving consumer goods (FMCG) sector. The FMCG
sector comprises a large variety of products, with some of the
most important categories being food, beverages, personal care
products, and home care products. Some of the most well-known
FMCG companies in the world include Unilever, The Coca-Cola
Company and Johnson & Johnson. While companies like Coca
Cola sell hundreds of thousands worth of product each day, they
face an alarming issue as they lack adequate inventory
management systems in the developing countries in which they
do business. As referenced in the figure below, many of these big
players who do business in developing countries operate out of
small kiosks or corner stores where inventory is recorded by
hand.

Figure 1: Nigeria FMCG trade Structure

This lack of existing inventory tracking systems in countries such

as Nigeria provides an incredible opportunity for Sokowatch as
they strive to be the first movers in providing sufficient systems
for fast moving consumer goods.

As we research the FMCG sector within Nigeria, we see

continuous growth. According to XCOM Africa, Nigeria has the
highest demand for fast moving consumer goods in comparison to
any other african country (Zander 2). In fact, in just one decade
(2012-2020), Nigerias FMCG sector grew by 10% (Zander 2 - see

image comparison below).

Figure 2:FMCG Country potential in Africa

As a result of this growth, key players like Nestle, Unilver,
Procter & Gamble and SAB Miller have each developed strategies
for expansion into Nigeria. Nestl plans to triple sales over the
next decade, Procter & Gamble has just completed a factory near
Lagos

and SABMiller recently built an expensive brewery in Onitsha, a

developing city in Nigeria. As we see these large corporations
expand into the foreign market, we take a look at the potential
partnerships that Sokowatch can undertake. Outlined below are
several companies in various FMCG sectors who we believe
would be viable business partners for Sokowatch:
Soft Drinks: Coca-Cola remains the dominant producer of
carbonates and bottled water in Nigeria due its long established
history in the country, strong distribution network, and
aggressive marketing techniques. Its price is generally cheap so
that it can be bought by even the lowest income earners. In

addition to the increasing popularity of Coca Cola, the quality of

tap water in Africa is generally so bad that people will opt to buy
soft drinks when they can afford to do so. As a result, the soft
drinks industry in Africa has access to a massive market and we
see Coca Cola taking advantage in various ways. With innovative
distribution approaches, Coca Cola hopes to reach consumers in
different ways. In developing countries, the company is shifting
from formal retail locations to providing individual vendors,
kiosks and cyclists with refrigerators and coolers. While
consumers may have access to more of the product this way, Coca
Cola takes a large hit on the consistent inventory tracking it
would normally see if it were to distribute to large brick and
mortar locations. Vendors who work at these kiosks typically lack
the adequate technology to appropriately track inventory so by
using Sokowatch, Coca Cola is not only able to consistently
record the amount of inventory on hand, but they are also able to
do so using existing technology (the vendors cellphones).

Personal Care Products: This FMCG consumer good segment

includes products such as shampoo, toothpaste, soap, deodorants
and make-up. The Nigerian personal care sector is dominated by
key players such as Unilever, PZ Cussons, House of Tara

International and Procter & Gamble. One important issue in

the personal care sector is the adaptation of Western products to
the specific needs of African consumers. Some international
companies have recognized this, and have either adapted their
global products to suit African needs, or launched new product
ranges. Unilever recently developed its Motions range of
shampoos and conditioners aimed specifically at ethnic hair. In
addition to introducing darker range make up shades, Procter &
Gamble continues to position itself well through successful sales
of its Gillette products.
Food: Nigeria has become an increasingly attractive frontier for
the consumer goods food industry. The most important
supermarkets in Nigeria are Artee Groups Park n Shop and
Shoprite. Shoprite entered the Nigerian market in 2005
(Shoprite), and is currently in the process of adding 37 stores in
Nigeria which gives Sokowatch an advantageous opportunity. In
addition to the local grocers in Nigeria, Sokowatch may also want
to consider a possible partnerships with De-United Foods. As
the noodles category continues to increase in Nigeria, De-United
foods holds a 71% market share. (EuroMonitor International).
Their first mover status and constant introduction of new flavors
have made them the go-to purchase for many of Nigerias locals.

In addition to partnering with existing corporations who

operate within Nigeria, Sokowatch should adopt a similar
strategy as they did with Reliefwatch, and should focus on
targeting store/kiosk owners as they are the ones who will have
direct

contact with the inventory on hand. The store/kiosk owners that

Sokowatch should target will be located in rural areas of Africa as
the less developed areas have a greater need for Sokowatchs
product and where access to cellphones is predominantly high
compared to the rest of sub-saharan africa [See chart below Source: termolux.com]

Figure 3: The upward curve for mobile subscribers

While many of these companies are seeing increasing profits

when doing business in the developing world, a closer look into
their inventory tracking systems would likely reveal inconsistent
results. With the help of Sokowatch, the companies mentioned
above would see more consistency and would be able to better
run their international operations as a result of more detailed
inventory information. As with any business partnerships,
Sokowatch should aim to develop and build long lasting
relationships in Nigeria while being mindful of the legal and
cultural factors that may take precedence.

COMPETITION
Currently, there are no any direct competitors in Nigeria that
offer the same advanced infrastructure of supply chain
management. Sokowatch is going to be the first to provide this
type of technology and efficiency to the Nigerian market.
However, there are some indirect competitors in this market that
might prove to be helpful in the long run. For example, some of
the current competitors serving the foreign market might be the
businesses themselves that Sokowatch will partner with. Coca
Cola is one of these companies that currently might have their

own inventory tracking system. If that is the case it is unlikely

that their supply chains will prove to be sufficient in comparison
with the infrastructure of Sokowatch. Furthermore, Coca Cola is
one of the companies that is looking to help Sokowatch in order
to better its international business operations. There are
however different solutions available and used for inventory
management that fall under the category of competition. The top
rated inventory management systems in 2015 include, Fishbowl
Inventory, Inform ERP, Bright pearl, Wasp inventory control.
These inventory management systems are all operated through
the cloud and businesses in Nigeria could decide to use these
systems instead. It is important for Sokowatch to differentiate
themselves and attract business partners by promotion and
setting themselves apart from other inventory management
services. In conclusion, there is an open market in Nigeria for
this technology and Sokowatch has the ability to tap into it.

ENTRY MODE
Growth is essential for companies in order to compete more
effectively, satisfy their stakeholders and attract top talents.

Companies can grow through identifying and selecting market

opportunities, and then develop strategies to capture these
identified opportunities. Market entries are a chance for
companies to grow by leveraging their core business. Expanding
into a new market and to develop a market entry strategy
involves a great deal of market research, a thorough analysis
and it takes an appropriate process to correctly assess the
potential of the growth opportunity. When considering entering a
tricky market like Nigeria, it is essential to do the research
correctly, since the success of such markets are driven partially
by factors outside of ones control. It is important to investigate
the appropriate level of resources in market analysis, selection
and entry method to create a foundation of success in the chosen
market.

Figure 4: % contribution of services firms to GDP

Service firms in an age of globalization: According to World

Bank statistics, the global service industry occupied around 50%
of Nigerian GDP. This report reflects the phenomenon that
service firms have the most development potential in the future
trend of globalization in developing countries.
Although entry strategies (say., FDI) of multinational
enterprises could be applied to multinational service firms, it
must be done with extreme caution due to the distinctive
characteristics of hard services such as inventory management.
Therefore, it is necessary for us to consider the service
characteristics of supply chain management systems when
discussing entry strategies. A number of factors that affect the
market and region should also be taken into account, for
example government policies, regulations, competition, cultural
differences, infrastructure, external relationships, legal systems
and financial situations. These factors together with theoretical
frameworks and models (a business plan, a PESTEL framework,
a CAGE framework, distribution selecting criteria and a SWOT
framework) should be collaborated in the framework to
strategize market entry.

Figure 5: The growth of service industries as PCI increases

Factors affecting Entry mode for Sokowatch: Globalization
means service firms like Sokowatch have great opportunities to
conduct their business in foreign markets like Nigeria.
Therefore, the primary consideration and the most critical issue
in an international market entry strategy is the selection of an
appropriate entry mode (Terpstra and Sarathy, 1994). Entry
mode selection is interpreted to mean a suitable way for
enterprises to enter foreign markets so as to operate their
international businesses by exploiting their advantages (Root,
1994). As to the entry strategy of Sokowatch, it could be
characterized by considerable diversity which includes:
i. Cultural factors: Cultural distance (differences between
national cultures) and the home country culture of a firm (i.e.,

uncertainty avoidance) have frequently claimed to influence the

entry mode selection (Kogut and Singh, 1988). However,
Hennart and Lariomo (1998) conclude that culture distance
between the home base of the investor and the target market
exerts a powerful influence on ownership of subsidiaries, but
cultural characteristics of the home base (i.e., power distance
and uncertainty avoidance) do not. Cultural distance is a widely
used construct in international business, and entry mode is one
of its applied concerns (Shenkar, 2001). Scholars (Brouthers and
Brouthers, 2001; Tihany et al., 2005) point out that it is apparent
to see that the conflict between a firms culture and the
inconsistency toward a firms cognition all result from
discrepancies in national cultures, which also result in a highly
uncertain environment for investors when considering the mode
of entry.
Synthesizing the above discussions, we assume that cultural
distance is an important factor needed to be considered which
influences the entry mode selection of service firms, but cultural
characteristics of the home base do not conclude the same
result. These issues inspired us to look at a service firms entry
mode selection from the viewpoint of the host countrys
characteristics and the impact of the host countrys culture on
entry mode selection This focus allowed us to see the main
effects of service firms specific characteristics on entry mode

selection as well as the moderating effects of two types of

culture (cultural distance versus host countrys culture
characteristics) on entry mode selection.
ii. Characteristics of services: Examining the characteristics
of services: intangibility, perishability, heterogeneity, and
inseparability provided us with more insights on the entry mode
strategy. It is our belief that intangibility is one of the important
factors that is responsible for distinguishing entry behaviour
since the other factors are of no relevance to Sokowatch as such.
Service intangibility could be a major factor in driving the
entry behavior for Sokowatch. Compared to purchasing a
physical product, customers encounter and perceive an extreme
degree of risk and uncertainty when purchasing a service
product due to service intangibility. This is the major threat to
service quality and customer acceptance sequentially
(Parasuraman, et al., 1988). The intangibility of services
apparently increases customers risk, anxiety and uncertain
perception in various stages of the decision-making process. This
may consequently result in a negative attitude toward the
services. Sokowatch will need to consider how their providing
services will be received or perceived by customers, which will
influence how they would like to operate their business in

Nigeria through an appropriate entry strategy.

iii. Individualism/collectivism: Individualism refers to a loose

social framework wherein members are concerned primarily
with themselves and their immediate families/relatives.
Oppositely, a collectivist society indicates a social preference
for a tightly knit social framework in which individuals expect
their relatives, clans, or other groups to look after them with
unquestioning loyalty. The different level on IND/COL in the
host country leads to a distinctive necessity for entry mode
selection. Nigeria is considered a collectivistic society. This
manifests in a close long-term commitment to the member
'group', be that a family, extended family, or extended
relationships. Loyalty in a collectivist culture is paramount, and
over-rides most other societal rules and regulations. The society
fosters strong relationships where everyone takes responsibility
for fellow members of their group. In collectivist societies
offence leads to shame and loss of face, employer/employee
relationships are perceived in moral terms (like a family link),
hiring and promotion decisions take account of the employees
in-group, management is the management of groups. Hence,
Sokowatch need entry modes that are effective in keeping closer
contact with the clients or that are familiar with local customers.

Based on this idea, we would suggest Sokowatch to employ

highly-involved entry modes such as a management contract, a
joint venture, or a sole ownership in order to get closer to the
Nigerian market.
iv. Uncertainty avoidance : The dimension Uncertainty
Avoidance has to do with the way that a society deals with the
fact that the future can never be known: should we try to control
the future or just let it happen? This ambiguity brings with it
anxiety and different cultures have learnt to deal with this
anxiety in different ways.
The extent to which the members of a culture feel
threatened by ambiguous or unknown situations and have
created beliefs and institutions that try to avoid
these. Therefore, it may be reasonable to infer that
international service firms, under a high UA culture, tend to
select lowly-involved entry modes such as licensing/franchising
or exporting, whereas those in a low UA culture prefer to choose
highly-involved modes, such as a management contract, joint
venture, or sole ownership. Nigeria has an intermediate UA
score and hence does not show a clear preference. Firms in
high-tech industries favor selecting entry modes that involve
intensive control over the ownership in foreign markets, Entry,

Expansion and Operations Abroad. The primary reason is that,

for high-tech industries, high-technology intensity and R&D
expenditure make firms suffer from uncertainty, and the tacit
knowledge and chaotic environment force the firms to meet an
intangible condition. To ease the sense of uncertainty and
intangibility, Sokowatch should consider selecting a highlyinvolved entry mode in the host markets in order to raise their
controllability.
v. Power Distance: Power distance (PD) is defined as the extent
to which the members of a society accept inequality of power
across the hierarchy/level within institutions and organizations.
In a high PD culture like Nigeria, people are likely to accept an
uneven distribution of power without much consideration for
justification. Employees in high PD cultures are more likely to
feel nervous and worried about expressing their own opinions to
their superiors. Therefore, people in high PD cultures are more
obedient to and are easily controlled by their supervisors than
those in low PD cultures. It is reasonable to link PD and entry
mode selection with the
perspective of obedience and control. Sokowatch should prefer
to adopt a joint venture or sole ownership when they expect to
hold control of the market. Since high centralization and

standardization are basic requirements for a supply chain

management firm, they should look for accompanying partners
with good discipline and high consistency.
Solution: Due to complexity and variety in the international
business environment, Sokowatch should have its own
circumstances to consider with regard to entering a foreign
market to its best advantage. In other words, each mode of entry
is taken into account by Sokowatch in light of their own
resources and capabilities in the changeable environment and
fluctuating conditions of Nigeria. It has to stress the differences
in the international environment when instituting globally
competitive strategies so as to exhibit their overall power to
obtain competitive advantages. Consequently, Sokowatch needs
to consider which modes and styles of operation they are going
to adopt before they conduct any foreign market investment.
They could consider licensing and equity dilution for low
involvement entry mode selection or a management contract,
joint venture, or sole ownership for high involvement entry
mode selection
The primary purpose for them to select a joint venture is to
pacify the pressure emanating from unfamiliar local laws, and
the selection of licensing/franchising is due to the need to ease
risk from the host market conditions, Services need more

adaptation and localization, and they are more highly culturedriven than tangible goods.

MARKETING
Product: As discussed in Part 1 of our report, Sokowatch is a
consumer goods inventory tracking system for developing
countries. The Sokowatch system provides inventory
management to minimize shortages, increase transport efficiency,
and protect against demand fluctuations. This service relies on
existing mobile phone distributors which majority of the
developing countries populations have access to. Users are not
required to download additional hardware and are not financially
responsible for covering the cost of the calls, or the phone. Data
is automatically stored in Sokowatchs cloud system and
companies are better able to project future consumer demands
and eliminate stock shortages.
Promotion: To effectively implement their system throughout
Nigeria, Sokowatch has to market in a way that is both effective
and efficient. One of the fastest growing marketing methods in
Nigeria is the utilization of a website known as jidaw.com. This
heavy traffic site will advertise Sokowatchs services on a larger

scale and will help drive customer acquisition. While jidaw.com

can serve as a great means for promotion, rural areas in Nigeria,
may not have access to the internet. Considering we are
targeting these undeveloped areas, our promotion strategy needs
to be implemented strategically. One way in which Sokowatch
can attain new customers is by attending Nigerian trade shows.
These trade shows can serve as promotional opportunities as
many companies who attend have existing influences in the fast
moving consumer good market within Nigeria. Making business
connections with these companies is a great start and a helpful
way to gain familiarity with the market.

Price: Considering this is the first of this technology being

introduced into Nigeria and considering the cost of living and
income of most Nigerians, it is critical that our prices be low
enough for consumers and businesses to afford while
simultaneously allowing Sokowatch to remain profitable.
Sokowatch should charge businesses fifty dollars a month to use
their technology and access their product. Fifty U.S. dollars is
equivalent to 9961.5 Nigerian Naira. This will be the starting
price and depending on the income of the area in which the
business is located the price can be adjusted.

Place: Our marketing strategy will focus on targeting

underdeveloped communities within Nigeria. In particular, we
believe the following area would be most viable for entry:
1. Lokoja is a rural area in Nigeria showing continuing promise
for companies like Sokowatch who are looking to expand
operations overseas. Not only is the educational level of the
province rising continuously, but as is the size of each household
[see figure to the left]. The increases in household sizes will likely
have a direct affect on Sokowatch as larger households will
purchase more consumer goods, leading to greater need for
proper inventory tracking. In addition to increasing household
sizes and education levels, Lokoja is the only province in Nigeria
to experience relatively constant weather patterns. According to
Weathernations.org, Lokoja has the lowest annual precipitation
rate out of any other province within the country (Luther 2). These
low levels of precipitation can serve as great benefits to
Sokowatch as fluctuations in weather could lead to losses in cell
phone coverage, making Sokowatchs system unable to use. As
Sokowatch aims to expand into Nigeria, it
should highly consider entering Lokoja and building customer
relationships with the experienced individuals residing in the
province.

Table 2: Zonal characteristics of Nigeria

Expected Challenges & Barriers: The biggest marketing
challenge Sokowatch will likely face is reaching the vast amount
of people residing in Nigeria. The Nigerian market has over five
hundred languages that are spoken by its people. Furthermore,
there are thirty-six states and one federal territory, meaning each
market Sokowatch enters will likely speak a different language. A
second challenge that Sokowatch may face when looking to
expand into Nigeria is building the confidence and trust of its
consumers. In markets like Nigeria, culture and language can
vary greatly and it is critical to continue upholding local cultural
standards to avoid offending consumers.

Proposed Solutions: In regards to to conquering the first

challenge of promoting and reaching consumers in Nigeria it is
important to start in one area and follow by expanding into
additional territories and regions where it's most suitable. With
regards to the various languages spoken within the Nigerian
market, connecting with a native speaker who can act as a
translator is a vital effort to undertake.

FINANCING
In order to successfully expand overseas, Sokowatch will need to
consider various methods of financing and consider potential
challenges that may arise. While Sokowatchs business model is
evidently valuable, financing decisions are critical and if dealt
without care, can severely impact the success of the startup. In
order to finance their expansion into Nigeria, Sokowatch should
focus on two methods of financing: Bootstrapping and venture
capital funding. Bootstrapping refers to the means in which a
startup supports itself financially while maintaining a significant
stake of ownership in their company. In some cases, becoming a
self-sustaining business while holding onto the equity of the
company can be challenging. If this occurs, it might be wise to
raise capital through angel investors or family and friends in
return for a smaller sum of equity. In comparison, Venture
Capital Funding would require Sokowatchs willingness to give
up more equity in return for larger amount of capital (relative to
bootstrapping). In addition to aligning the financial structure with

Sokowatchs capital needs, some of the more particular financing

considerations include:
The need for Sokowatchs services in Nigeria
Is there a need? If so, how big is it?
The importance of maintaining control of the company?
What level of control and ownership are necessary
for the team to successfully implement their strategic vision?
How much control is the team willing to give up?
Scalability
How important is it for Sokowatch to scale rapidly?
Since Sokowatch is the first to the market in
Nigeria, they may want to consider consuming as much
market territory in the least amount of time in case
competitors enhance their efforts.
Financing is undoubtedly a necessary hurdle to cross in any
entrepreneurial effort. To better structure their business model in
Nigeria, Sokowatch will have to decide between debt financing or
equity financing. With debt financing, Sokowatch will not be
required to share their earnings with investors. However, the
startup will gain a financial obligation, or a required cash outflow
which will need to be made at a specific time to satisfy the
contractual terms in the obligation. If the payment is not made,
creditors will require assets from Reliefwatch to pay off their
debts. Under equity financing, Sokowatch will be required to
sell shares of their company to the public in order to raise funds

for their expansion. While selling shares may limit the amount of
control Sokowatch has, equity financing can also provide
significant benefits as its comes with guidance from not only
wealthy, but also knowledgeable investors willing to help the
startup succeed.
While many financing options exist, we believe that equity
financing has the most aggregate benefit for Sokowatch. While it
risks giving up larger amount of control, equity financing
provides substantial benefits as the board of directors and
business advisors provide significant input and do everything in
their power to better the business. Before making the ultimate
decision with regards to financing, Sokowatch should carefully
consider the various options available and select the one that
best suits the company in both the short and long term.

STAFFING
As with many start-ups, human capital is a necessity. While
Sokowatchs inventory tracking system allows store owners to be
self-sufficient, various factors may increase the likelihood of local

employees needing to be based in Nigeria. According to

Internations.org, Nigerians place a higher value on facial
expressions than words, and tend to relate more closely with
individuals from their own culture (Zimmer 1). Knowing this,
Sokowatch should strongly consider hiring locals as they would
likely have a better advantage in pursuing particular clients
compared to US employees coming overseas. In addition to hiring
locals based on Nigerias cultural preferences, local employees
could also help train new store owners and respond quicker to
client needs. If a certain client in Nigeria needs urgent help,
having US employees walk through instructions over the phone
may not be the most effective way to remedy the situation. For
example, some store owners in Nigeria may want help knowing
how they can best utilize the business analytics that are a part of
Sokowatchs service. This can be difficult for a US based
employee to explain, where as a local can meet with the store
owner to discuss possible uses. In order to maximize cost and
human capital, Sokowatch should continue majority of staffing in
the U.S. but should place great consideration on hiring two to
three employees in Nigeria to help fuel international business
operations.

FUTURE CHALLENGES
Before Sokowatch commits its resources to Nigeria, it should
consider the potential challenges of expanding abroad. Listed
below are six key challenges the company may face as they look
to expand operations overseas:
1.Predicting Consumer Needs
A key to success in business is offering products and services for
which customers have a compelling need. Identifying the true
needs of large numbers of people in a foreign country is not
always an easy task and often leads companies to realize that
expectations in one country may not be the same as that of
others. Customers leveraging Reliefwatches medical inventory
tracking system will likely not have much use for a consumer
goods tracking system and vice versa. In order to succeed in
Nigeria, Sokowatch must carefully determine which businesses
can truly benefit from their service and focus on building strong
customer relationships with those businesses.
2.Client Dependence
Diversification is not just important for investors. Start up
companies like Sokowatch also need to make sure they diversify

their client bases as reliance on one single client like Coca Cola
can prove incredibly risky. While Coca Cola may be a large
corporation, fluctuations in the soft drink industry may cause the
company to discontinue its product offerings in the given market,
leaving Sokowatch with no business. By attaining more than one
client, Sokowatch will be able to position themselves better and
mitigate potential risk.

To achieve such a position, Sokowatch should attempt to attain

some of the following client companies to do business with*:
i.
ii.
iii.
iv.

Heineken
Unilever
Procter & Gamble
House of Tara International

*For more information on potential clients, please see Part 1 of

the market report.

3.Communication Style
Besides obvious language differences, Sokowatch may experience
several challenges with regards to speed of doing business. As
discussed in class, Americans typically like to negotiate and close

business deals in a fairly quick timeframe. When looking to enter

a foreign market like Nigeria, Sokowatch must consider the
countries speed of doing business. According to Businessweek,
Nigeria places heavy emphasis on building relationships before
seriously considering a business deal (Leventhal 2). Based on this
information, Sokowatch may need to develop solid relationships
with potential clients before actually moving forward with
business negotiations and as mentioned above, the startup may
want to think about hiring locals to help fuel business activities.
Having a solid understanding of proper Nigerian business
etiquette can contribute greatly to the success of many
international relationships Sokowatches hopes to form with
Nigerian clientele.

4.Distance & Time

While technology is proving incredibly useful in helping
businesses connect and operate overseas, certain countries
(especially those in the developing world), may prefer to establish
relationships on a more personal level. For a start up company
like Sokowatch this can mean significant investment in terms of
travel and having employees out of office for extended periods of
time. Time zone differences can make it difficult to coordinate
projects where collaboration is required and employees may be

difficult to contact due to the changes in timing across the world.

By understanding these challenges, Sokowatch can better assess
the importance of expanding abroad and decide whether entering
the Nigerian market will prove beneficial to the overall success of
the business.
5.Finding Reliable Partners
In addition to distance barriers, Sokowatch may face additional
challenges when it comes to finding trustworthy and competent
people to help develop business operations in foreign markets.
Finding employees in a foreign market with the right skill set can
often be a daunting task. Language barriers as well as
educational experiences vary greatly in countries like Nigeria.
According to the Nigerian embassy, academic staffing shortages
run rampant in various areas of the country leaving many
students without proper education levels (Nigerian Embassy 1).
For those who are fortunate enough to receive an exemplary
education from one of Nigerias universities, the lack of existing
infrastructure in the given market may prevent individuals from
having knowledge and experience with a given system (i.e
inventory management system). In order to find the best possible
employees in a foreign market like Nigeria,

Sokowatch should leverage its existing connections and find local

sales reps to source suitable candidates capable of supporting the
company's agenda.
6.Legal & Governmental Barriers
As they plan to expand into new markets, Sokowatch will need to
consider legal and governmental barriers. Both Legal and
governmental provisions can have severe implications on how a
business can operate in a given country:
a. Legal Barriers: Nigerias legislation may not be
conducive to the establishment of certain types of business
operations. Tax laws and import restrictions may place a great
deal of pressure on Sokowatch to perform and meet
expectations.
b. Government barriers: Nigerias government may not
be receptive to foreign investment. High tariffs and currency
fluctuations may be the deciding factor for whether or not
Sokowatch decides to expand overseas.
7. Service intangibility
Compared to purchasing a physical product, customers encounter
and perceive an extreme degree of risk and uncertainty when
purchasing a service. This very intangibility increases the
uncertainty that consumers may have with regards to purchasing
Sokowatchs service. As a result, this lack of confident purchasing

power may result in growing challenges for the startup. To

remedy this potential challenge, Sokowatch will want to drive its
sales force to introduce local clients to the start ups service. In
addition, Sokowatch may want to consider working with an
external consulting company to better understand the needs of
nigerian store owners and better help acclimate them to the
Sokowatchs system.

8. Reliance on Weather
The last challenge the startup may face is the inconsistency with
regards to weather. Seeing as Sokowatchs inventory tracking
system is heavily reliant on technology, fluctuations in weather
forecasts can impact the speed at which the data arrives to the
cloud or worse, can prohibit store owners from receiving
automated voice calls.

CONCLUSION
The market opportunity for a product that can adequately track
consumer goods inventory in developing countries has never
been stronger. Today, many corporations aim to reach the
greatest amount of customers possible. Companies like Coca
Cola, Heinz and Unilever are expanding into some of the most
rural communities known to mankind, only to discover the
immense lack of reliable inventory tracking systems available.
Here lies an opportunity for a growing company like Sokowatch,
which aims to fill the gap and help consumer goods companies
better position themselves in foreign markets. With a proven

track record in the domestic market, Sokowatch is now focusing

on expanding its operations globally. In particular, the startup is
focusing heavily on the Nigerian market as purchases of
consumer goods in various provinces within Nigeria are
continuously soaring. In the second part of this report, we will
outline suitable entry modes, sources of funding, and marketing
strategies - specifically focusing on the product, price, place and
promotion methodology. To conclude, we will highlight six key
challenges that Sokowatch will need to overcome in order to
replicate its proven success in the Nigerian Market
To mitigate risk and increase chances of succeeding abroad,
Sokowatch will need to consider the various challenges listed
above and in addition, will need to implement a strategic mode of
entry to achieve market dominance and form long lasting
relationships with Nigerian clientele. We hope the information
listed above can contribute to Sokowatchs business operations.
For any questions, please do not hesitate to contact the authors
of this report.

Potential Contacts:
Amanor Dodoo
Head of Consumer markets

West Africa
T: +233302770454
E: [email protected]

Daria Kowalinski
Supply Chain Management
PepsiCo International
E: [email protected]
T: 847-304-2324
"Africa's Testing Ground." The Economist. The Economist
Newspaper, 23 Aug. 2014. Web. 14 Oct. 2015.
Jadesimi, Amy. "The Changing Face Of Business In Nigeria."
Forbes. Forbes Magazine, 21 May 2015. Web. 14 Oct. 2015.
Noodles in Nigeria. EuroMonitor International. Web. 11 Oct.
2015.
"What is Sokowatch." Sokowatch. Sokowatch, n.d. Web. 14
Oct. 2015.

Works Cited

"Boko Haram: A Bloody Nigerian Insurgency - CNN.com."

Citatio
CNN. Cable News Network, n.d. Web. 14 Oct. 2015.

ns:

XCom Africa: Fast Moving Consumer Goods within Nigeria,

n.d. Web 21 Nov, 2015.

Tab 1

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Growth of the Service Sector. (n.d.). Retrieved 2015, from

World Bank.
Hofstede. (2010). Hofstede Cultural Dimensions. Retrieved
2015, from http://geert-hofstede.com/nigeria.html
Leventhal. (n.d.). Nigeria places heavy emphasis on building
relationships before seriously considering a business deal.
Retrieved from Internations:
http://www.internations.org/nigeria-expats/guide/working-innigeria-15535/business-etiquette-in-nigeria-3
Services, etc., value added (% of GDP). (n.d.). Retrieved 2015,
from World Bank:
http://data.worldbank.org/indicator/NV.SRV.TETC.ZS
Stark, K. &. (2013). 5 Step primer to entering new markets.
Retrieved from inc.com: http://www.inc.com/karl-andbill/5-stepprimer-to-entering-newmarkets.html
Types and Sources of Financing for Start-up Businesses. (n.d.).
Retrieved 2015, from Iowa State University:
http://photos.state.gov/libraries/nigeria/487468/pdfs/JanuaryEd
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Tab 2