The market in Africa is unsafe for political reasons.
Other markets would dump large amounts of worthless products causing customers to lose faith. So competitors are selling low quality stuff at very low prices. Access to customers is limited.
1. The company should plan for establishing a production facility at one of the African countries whose government is stable. 2. The company should increase awareness amongst customers and clarify the differences in quality between their products and fake products in the market. 3. The company should consider improving access to customers by contracting more stores that sells to end users. Offering some dealers promotions would lure some of the dealers to show their merchandise. 4. Sign that contract which adds 4 million to total sales. Analysis:
1. The first option would help the company with the production process. It would decrease costs of manufacturing. It will also provide more certainty about the company’s future production plans. However, the company would need to invest large amounts of money to get it done. 2. Increasing awareness will also help the company preserve customers and also increase the perceived value of its products. However, this will also cost money. 3. Contracting more customers through establishing more retail stores and offering dealer promotions would help increasing the number of customers. It will also cost time and money. Having the product offered in a lot of places will make it lose some of its authenticity and exclusivity reputation. 4. This contract would boost the income by 4 million a year. However, it will damage the company’s reputation and will put extra weight on the production process. The company is making 24 million a year. Tripling that for an extra 4 million would not be very efficient. Recommendations:
I would recommend a combination of the first three alternatives. Investing money in...