A business analysis of Tuffstuff, producer and seller of cement, is provided, with focus on its Strengths, Weaknesses, Opportunities and Threats (SWOT) the company faces as it goes into a new venture in sub-Sahara Rwanda.
Tuffstuff strength include its position in global cement market across all business segments. It is an organisation that has invested intensively on in the UK and Europe market. And is looking to expanding to new adventure beyond its current market scopes in Europe. With its extensive knowledge on cement manufacturing and distribution, it has decided to venture into cement industry in sub-Sahara Africa with emphasis in Rwanda, an emerging African economy.
Rwanda is a landlocked African country with population of 10.2 million people (2012 census) and shares borders with Tanzania, Burundi and Uganda.
The current political climate in Rwanda has been improving, after its genocidal war of the late 1994 and some decisions has been made by the government in liberalising the cement industries which has been under its control and subsidies. Currently there is a cement manufacturing company, called Ciments Du Rwanda Limited (CIMERWA), with production capacity of 100,000 to 270,000 tonnes per year, and has monopoly of cement, from production to distribution, in that part of Africa. This company is partially owned by the Rwandan government (ten percent) while China and members of the public owns the remaining ninety percent. This firm has been expanding its global outreach with more emphasis in conquering the regional market.
The present political climate has had some negative impact on international scene for Rwanda, but analyst has predicated some stability after the election which will determine the next president of the country. There is currently political tug of war among politicians and how much effect that situation will affect the economy is still uncertain.
After the genocidal war of 1994 the country has gradually been growing, with sound economic policies with approval from IMF. It recently implemented a development programme with emphasis on reducing the level of poverty, (just like most part of Africa), large employment market with more young people who are willing to work. As an emerging economy Rwanda’s private sector, which is still largely informal, will have to play a bigger role in ensuring economic growth. Poor infrastructure and lack of access to electricity are some of the major constraints to private investment. (World bank, 2015).
Socially, Rwanda is an ethnically divided nation with three tribes of Hutu, Tutsi and Twa which has generation of conflicts and mistrust. Only in recent years has there been some kind reconciliation among the three ethnic groups. but experts believe a lot still has to be done. The government of Rwanda has implemented some regulation outlawing some degrees of tribalism in the larger society and any investor in the country has to be seen not to favour any particular tribal group. The key strength in doing that is understanding each cultural needs and difference. To achieve this the target for employment should be the younger generation. (Brown, 2015).
Technologically, Rwandan government has focused its development policies on the economic infrastructure. The technological sector has seen a rapid increase as internet and mobile sectors has seen an increase in its subscription and usage. There has been an increase on mobile phone usage with a projected estimate for 2015 to be around 6million users of which will be the younger generation of Rwandans. This technological innovation is having effect, directly and in indirectly, on almost all aspect of life in Rwanda. (Tafirenyika, 2011).
What are the strengths, weaknesses, opportunities and threats Tuffstuff is likely to face as it ventures into sub-Sahara Rwanda cement industries? We will look at it on step by step basis.
Strength: what is Tuffstuff strength likely to be? The strength lies mostly on its proven track record in the cement industries, as well its financial and human management, in Europe. With its financial strength Tuffstuff is able to make sound investment in Rwanda, after the government liberalised the industries which has encouraged foreign investors.
Weakness: the cement industries are dependent on construction works for them to make profits hence Tuffstuff will likely not have such problem in Rwanda. This is as a result of rapid economic development which has is taking place in the country and the neighbouring countries. The company has to also look into making compensation for the lands it tends to acquire as natives tend to have cultural ties to their ancestral land. There is a land lease Rwanda which is subject to renewal every 49 years, except if the land is in Special Economic Zones, a foreigner (company) will be treated as a Rwandan national and may be granted a free hold title. (RWANDA NATURAL RESOURCE AUTHORITY, 2012).
Opportunities for investment in the cement industries in Rwanda has been presented by the environment within which the industry operates from with the liberalisation of the market by the government. Tuffstuff can take benefit of this conditions in Rwanda to plan and execute strategies that will enable it to become more profitable in that region. Tuffstuff can gain competitive advantage by making use of this opportunities. Tuffstuff should be careful and recognize the opportunities and grasp them whenever they arise in Rwanda.
Selecting the targets that will best serve the clients while getting desired results is a difficult task. Opportunities may arise from market, competition, industry/government and technology. Increase in building demand, accompanied by deregulation of cement market in Rwanda, has presented a great opportunity for new firms to enter cement sector and compete with existing firms for revenue.
Though there are good opportunities to invest in Rwanda we should also bear in mind the threats Tuffstuff is likely to face as it steps into the sub-Sahara Rwanda. These threats come in different forms and sizes. Transparency International (2014) has rated Rwanda 55th position of least corrupt countries and territories in the world. Other threats include competitions from other manufacturers, such as CIMERWA and Dangote Cement which has along and good track record of investing in in African cement market.
Rwanda is a country ripe and ready for investment. Though a little country in term of its geography, it still offers large potential in term of investment opportunities for both foreign and local investors. This has resulted from the determination of the people, after the civil conflict of 1994 to move on with their lives. Though there are some fester of civil unrest, it should have a minimal effect on long time investment. The world Bank has estimated that from the year preceding 1994 genocide about one million people has been able to move away from extreme poverty. (Financial Times, 2015)
As the cement market expands due to growth in construction industries it will not be surprising that an upcoming economy like Rwanda will offer a good opportunity to investors with its present climate for investors, Tuffstuff stands to gain as there are little competitions from other manufacturers since there are lots of man power and a large market for the growth of the industry.