The
Strategy& Associate Director, PricewaterhouseCoopers(PwC),
strategy consulting capability based in Africa, Peter Hoijtink, has said that
to determine a performing market one should study a market’s wealth measured by
Gross Domestic Product (GDP) per capitaand institutional quality measured by
the World Bank Doing Business Index, ITRealms reports
These
are some of the highlights of a new study, ‘Creating value in Africa,’ released
recently by Strategy&, PwC’s strategy consulting.
“Companies
are faced with a complex dilemma when determining which markets they should
enter, and the capabilities required in each market to ensure success. Although
detailed on-the-ground study of each market is ultimately necessary, our
experience suggests that a good way to start is by studying a market’s wealth
(measured by GDP per capita) and institutional quality (measured by the World
Bank Doing Business Index). Based on these criteria and how the two are
combined, African countries fall into six market types: high, medium and low
income, with either strong or weak institutions. Each of these types requires
companies to have different capabilities to succeed.
.
Executives that follow capabilities - driven strategy will make their companies
more coherent and gain a competitive advantage in the African markets where
they have decided to expand their operations. The right strategy can transform
a company and its industry, delivering substantially superior shareholder
returns in the long-term. These are some of the highlights of the new study.
Strategy&
Partner, Jorge Camarate said, “Worldwide, multinational companies are including
plans to expand across Africa in their growth strategies. CEOs throughout
Africa have unanimously confirmed that they see high growth potential on the
continent, according to research conducted by PwC.
“This confidence is an indication of the positive long-term trajectory we have
seen in general economic prospects, availability of finance, and the increasing
presence of potential local and international partners attracted by the African
continent’s potential.”
Traditionally, firms formulate a strategy by looking for market opportunities,
but all too often it does not work, particularly in the African context. The
problem is that such strategies rarely acknowledge the capabilities a company
needs to capture those opportunities. As a result, many of these companies have
destroyed value in the process instead of benefitting from growth
opportunities. “We approach strategy the other way round with an approach that
we call a ‘capabilities-driven strategy,” comments Camarate.
Cyriacus Nnaji/GEE
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