? Ghana’s natural resources: oil, gold, diamond among

? This brochure gives an in-depth description of how National Express can expand its market to the road transport industry in Ghana. It covers key areas such as macro and micro environmental analysis of Ghana’s road transport industry, international competitor’s strategy (global and local), market entry strategies and recommendations for National Express to succeed in the Ghanaian market. NATIONAL EXPRESS ENTERING THE ROAD TRANSPORT INDUSTRY IN ACCRA, GHANA.

KORANTEMAA OFEI -AGYEKUM(N0820721)QUICK FACTS ABOUT GHANA? Population size: 29,629,338 ? Location: West Africa ? Region: Sub-Saharan Africa ? Targeted region: Accra (Capital) ? Currency: Cedi (GHS) ? Ghana’s natural resources: oil, gold, diamond among others ? 95% of bus transport in Accra is provided by the informal sector: a mix of buses, minibuses (trotro) and taxis. ? The only formal bus transport being provided in Ghana is by the Metro Mass Transit (MMT) Limited. ? National Express Group is a leading public transport operator with bus, coach and rail services in the UK, Continental Europe, North Africa, North America and the Middle East. ? Passengers in 2017, according to National Express, made 882 million journeys on their services. ? National Express’ vision is “to earn the lifetime loyalty of their customers by consistently delivering frequent, high performing public transport services which offer excellent value”. (Nationalexpressgroup.

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com,2018) ? Political stability : Ghana’s political stability is ranked 2 nd in Africa and 26 thglobally in Africa in the 2016 World Press Freedom Index. The index measures pluralism, independence of media, quality of legislative framework and safety of journalist in African countries (Gipcghana.com, 2018) .One key indicator investors look out for before entering a new market is the country’s political stability. Foreign investors are attracted to Ghana because they can freely operate without any political interference in the form of political coups among others. ? Democratic political system : Ghana attracts foreign investors because of its impressive democratic achievements over the years. There has been five free and fair elections in the past 20 years and two peaceful transfers of power with the absence of political coups. This makes Ghana attractive to foreign investors.

? UK -Ghana sign a £20m ($35.5m) trade and investment deal: The UK and Ghana on the 28.08.2018 signed a £20m trade and investment agreement to create jobs and promote economic development in Ghana. Britain’s Minister of State for Africa, Harriet Baldwin, in her speech indicated that the newly signed deal is to focus on some key areas such as policy suggestions to make it easier to do business in Ghana, promoting of opportunities for inward investment into Ghana and creation of jobs for Ghanaians. ( Kwafo, 2018) MACRO ENVIRONMENTAL: PEST ANALYSIS (OPPORTUNITY/THREAT)POLITICALABOUT NATIONAL EXPRESSPOLITICAL ANALYSIS CONTINUED…? Lengthy and complex business registration process. (explained at Porter’s 5 Forces) ? Ghana’s legal system is a mixed system of English common law and customary law.ECONOMIC ? GDP from transport sector: GHS 2198.

14m. (Tradingeconomics.com, 2018) ? According to the World Bank, Ghana is the fastest growing economy in 2018. (McDonnell, 2018) ? Ghana’s urbanisation rate is steadily increasing and is expected to reach 72% by 2035, according to the African Development Fund which makes it a suitable market target for National Express. (Oxford Business Group, 2018) ? Ghana’s economic stability: Ghana gains a significant revenue from oil production: $191.32m in revenue in the first half of 2017.

(Modern Ghana, 2018) ? Cheap available labour: Ghana’s minimum wage which is GHS 10.65 makes employing locals cost effective . SOCIAL? Buses account for 60% of passenger movement in Accra with taxis accounting for only 14.5% and the remaining accounted for by private cars.

SOCIAL ANALYSIS CONTINUED… ? English as a common language in Accra ? Strong sense of national identity and unity: Ghanaians have a strong sense of national identity and unity that supersedes other affiliations such as ethnicity and tribe, arising out of an educational system in which people from different backgrounds tend to mix. (Gipcghana.com, 2018) ? Openness to innovation: An increase in literacy rate in Ghana has made Ghanaians open to innovation since technology and innovation have proven to make life easy and convenient for the populace at large. ? Social movement of already existing drivers in Accra make it difficult for new entrants to operate differently.

This can be a potential treat to National Express’ operation.TECHNOLOGY? ICT for accelerated development(ICT4AD) policy: The vision of the policy “to improve the quality of life of the people of Ghana by significantly enriching their social, economic and cultural well -being through the rapid development and modernization of the economy and society using information and communication technologies as the main engine for accelerated and sustainable economic and social development” (Gipcghana.com, 2018) ? Presence of digital address system in Accra to facilitate movement ? New buses adopting e -ticketing system E.

g. Aayalolo busesMICRO-ENVIRONMENTAL ANALYSIS (PORTER’S 5 FORCES)Threat of new entrants -High (7/10) ? High entry barriers such as financial (significant capital requirements) and legal barriers: Registering a business in Ghana is relatively an easy procedure. However, the process involved in establishing a business is described as complex, lengthy and requires compliance with regulations and procedures of at least five different government agencies which includes Ghana Investment Promotion Centre(GIPC), Registrar General Department, Ghana Revenue Authority (GRA), Ghana Immigration Service, and Social Security and National Insurance Trust (SSNIT). Foreign investments are also subjected to follow a minimum capital requirements which is capped at $200,000 for joint ventures with a Ghanaian partner. (Export.gov, 2018) ? Expected retaliatory actions is high: Existing driver associations.

The Committed Drivers Association of Ghana for example makes it difficult for new entrants to operate differently. ? Power of incumbents is medium to high.Threat of Substitute –Medium (5/10) ? Low service differentiation: Service differentiation in the Accra’s road transport industry is only visible can only be seen in price and comfort between available substitutes. Passengers have no unique value proposition which makes it easy for them to switch at any time. MICRO ENVIRONEMTAL ANALYSIS CONTINUED… ? Low price-performance comparison. Accra passengers rarely undertake a price -performance comparison before making a choice between substitute. This makes switching to substitutes easy for passengers since value for money has low recognition in the transport industry ? There is a relatively large number of alternatives for road transport in Accra: – Direct substitutes for buses in Accra will include minivans (trotro), Uber, taxis, metro mass and car sharing. -Indirect substitute includes WhatsApp call and Facetime as a means of passengers satisfying need to meet.

Purpose of travel mini- bus use .Bargaining Power of Buyers (Passengers) -Low (4/10)? Low or no buyer information availability: Accra passengers do not have enough information to make good cost -benefit trade -offs. Lack of comparison and review pages for various road transport industries erodes their bargaining power. ? Absence of unique value proposition gives passengers bargaining power since competition in the road transport industry is mostly priced based. ? Increased fuel prices by government affects prices for public transport but has zero or little effect on bargaining power of passengers. Bargaining Power of Suppliers – Medium(5/10) ? Barriers to entry for the supply side in Ghana is medium to high as it is difficult to get a contract from government to expand roads or create dedicated bus lanes for a specific company. ? Low cost of labourerodes suppliers bargaining power.

This makes employing localscosteffective fornewentrants. ? In terms of fuel supply, bargaining power of the supply side is medium to l o w. Rivalry Among Existing Competitors -High (7/10) ? Significantly high number of existing rivals: Metro Mass, State Transport Company(STC), Scania Company. ? Increasing number of ride -hailing services in the road transport industry in Ghana, Accra. ? Different market entry strategies amongst new entrants heightens competition in the industry.

COMPETITOR’S INTERNATIONAL STRATEGY ? There is currently no foreign company operating a Bus Rapid Transit (BRT) system in Accra. However, Scania Groupis the only foreign bus company in Ghana that operates as connecting routes between Accra and other parts outside of Accra. ? Scania buses are popularly know as ‘Aayalolo’ buses. ? Scania has 245 connected buses.

These buses have their own driving lanes. This means little or no traffic onbusroutes ? Employs local drivers: Scania tackles its liability to newness in the Ghanaian market by employing local drivers who are already conversant with Ghana’s traffic rules and regulations. ? Operates an electronic cash -free ticketing system.

? The buses are also adapted to suit passengers with disabilities. ? Scania offers high value. proposition for passengers: USD port to charge phones, small dustbin behind seats and has a lot room space. ? Working hours: 5am to 10pmSUBSTITUTE’S INTERNATIONAL STRATEGY (UBER & TAXIFY ANAYLSIS) ? Technological innovation: Both ride -hailing companies use phone applications which makes ride requesting convenient for both for passengers and drivers. ? Both use promo codes for free rides.

? Both employs local drivers as a way of tackling the company’s issue of liability of newness. However, these drivers must have their own vehicles to work with and these vehicles must comply with Uber or Taxify’s vehicle requirements. ? High commissions which is attractive for drivers. MARKET ENTRY STRATEGY AND RECOMMENDATIONS ? A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. ( Investopedia, 2018) PROS? Sharing of risks and costs with a local partner: The environment is said to be turbulent, ever changing and difficult to predict. It is therefore prudent that National Express in penetrating the Accra’s road transport industry for the first time partner with an existing company. ? JV will also allow easy access to new markets and market knowledge which will be advantageous for National Express. ? JV contracts are usually temporary and as a result National Express will be able to compete as an independent organization or entity in the market in future.

It will no longer have to share its profits nor loses. ? An effective market entry strategy by National Express would reduce the threat of early failure which is also known “liability of newness “. This term was coined by A .L.

Stinchcombe , who laid the theoretical framework for organizational mortality. ( ShangPharmaInnovation, 2018) ? National Express’ “liabilities of newness” in the Accra market can however be reduced through a Joint-Venture or by Acquisition asamarket entrys t rat e g y. JOINT-VENTURE (JV) ? Ghana’s economy is fast growing and urbanisation rate is increasing hence, first -mover advantage is recommended . This would enable National Express establish strong a brand recognition as well as customer loyalty before other local or global competitors enter the road transport industry.? Nationalexpressgroup.com.

(2018).Our Vision and Va l u es -National Express Group PLC . online Available at: https://www.nationalexpressgroup.com/our -way/our -vision -and -values/ Accessed 24 Oct. 2018. ? McDonnell, T. (2018).

What’s the World’s Fastest-Growing Economy? Ghana Contends for the Crown. online Nytimes.com. Available at: https://www.nytimes.com/2018/03/10/world/africa/ghana- worlds-fastest -growing -economy.html Accessed 23 Oct. 2018.

? Gipcghana.com. (2018).

Political Stability -Ghana Investment Promotion Centre (GIPC) . online Available at: http://www.gipcghana.com/invest- in-ghana/why- ghana/political -stability.html Accessed 22 Oct. 2018. ? Kwafo , E.

(2018). Ghana Signs New Trade Deal With The UK. online Modern Ghana. Available at: https://www.

modernghana.com/news/878571/ghana -signs -new -trade -deal -with -the -uk.html Accessed 25 Oct. 2018. ? Gipcghana.com.

(2018). ICT Infrastructure -Ghana Investment Promotion Centre (GIPC) . online Available at: http://www.

gipcghana.com/invest- in-ghana/why- ghana/infrastructure/ict -infrastructure.html Accessed 31 Oct. 2018. ? Export.gov.

(2018). Ghana -1-Openness to and Restriction on Foreign Investment | export.gov .

online Available at: https://www.export.gov/article?id=Ghana -openness -to -foreign -investment Accessed 28 Oct. 2018.

REFERENCESCONS ? Sharing intellectual property can be detrimental for National Express in the near future. ? Difficulty in finding a partner who shares similar or the same vision as National Express. Finding a company who shares in National Express’ interest is crucial for the success of both the business and establishing a healthy relationship among the two parties. ? Different cultures and management styles can result in poor integration and co -operation which can affect productivity.ACQUSITIONPROS ? Acquiring an already existing company in the road transport industry reduces barriers to enter the Ghanaian market. ? It also reduces training cost as acquiring a company also means acquiring its already existing staff.

? There is easy access to market knowledge and existing customers. CONS ? Creates a clash of different cultures which could affect productivity . The culture and values that the other company established may clash with the culture and values of your existing business . ? Investopedia. (2018). Joint Venture – JV. online Available at: https://www.investopedia.

com/terms/j/jointventure.asp Accessed 28 Oct. 2018. REFERENCES


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