13 October 2016 Presentation Document. Gaining a competitive edge in Africa Jorge Camarate

Transcription

1 13 October 2016 Presentation Document Gaining a competitive edge in Africa Jorge Camarate

2 Africa shows that conventional strategies often don t work Nestle cuts 15% of jobs in 21 African countries! Albanese resigns over Mozambican write-down! MTN Nigeria future 'uncertain' over $5.2bn fine! Glencore mothballs mines in Zambia and DRC! Tiger Brands impairs R1bn on Nigerian acquisition! Tourism and retail hit by Westgate attack! Coca Cola Ghana plants closed by power outage! Griffiths to pay millions in Chad bribery case! 1

3 We believe strategies that work are based on capabilities Refocusing on Capabilities-Driven Strategy Market opportunities Differentiating capabilities CDS Research and Publications CDS Academic Partners 2

4 A firm s capabilities work together to distinguish it from peers Key Capabilities Concepts Knowledge, skills and behaviors Processes Example Capability System: Apple Technology Transfer Capability Organization Tools and systems Retail Marketing & Sales Product Design 3

5 Our study tested the importance of capabilities in Africa Capabilities in Africa expansion Study Methodology Sub-Saharan M&A Transactions 82 deals of significant value (> 10 percent of buyer market cap) Acquirers listed on Johannesburg, Nairobi or Lagos stock exchange Capability Leverage (46%) Capability Enhancement (22%) Acquirer takes advantage of its current capabilities system by applying it to incoming products and services Acquirer adds new capabilities to fill in gaps in system or respond to new market requirements Deal close from 2007 to Limited Capability Fit (32%) Transaction does not improve or apply the acquirer s capabilities system 4

6 Capability enhancement delivered the most value Enhancement does best in Africa Top Quartile TSR vs. Benchmark 6.9% unlike markets like the U.S. Africa and U.S. TSR vs. Limited Fit 18.3% 5.5% 12.2% 13.0% 9.5% -3.7% Enhance Leverage Limited Fit Enhance Leverage Africa U.S. Source: MacGregor Company Data, The Capabilities Premium in M&A, strategy+business, Strategy& analysis 5

7 Beneath Africa s diversity, we see six broad market types Broad market types in Africa Last Frontier Emerging Wealthy Strong Institutions Pioneers Dieting Sophisticates Global Sophisticates Ethiopia Kenya South Africa Weak Institutions Commandos Community Leaders Indestructible Salesmen DRC Cameroon Nigeria 6

8 To expand beyond your home type, capability enhancement is needed Capability Enhancement Requirements Last Frontier Emerging Wealthy Pioneers Dieting Sophisticates Global Sophisticates Strong Institutions CAPITAL PROJECT MGT SELF-SUFFICIENT OPERATIONS SUPPLY CHAIN RESILIENCE COST LEADERSHIP SIMPLICITY QUALITY TECHNOLOGY INNOVATION TECHNOLOGY LEADERSHIP QUALITY SALES & BRANDING RELATIONSHIP MANAGEMENT Weak Institutions REPUTATION MANAGEMENT RISK / SECURITY / CRISIS MGT Commandos Community Leaders Indestructible Salesmen 7

9 Togo Benin Expansion is easiest within a single market type Market Types Map Morocco Tunisia Western Sahara (Morocco) Algeria Libya Egypt Global Sophisticates Mauritania Mali Niger Sudan Senegal Eritrea Gambia Chad Guinea Burkina Guinea Bissau Ivory Nigeria Central South Sierra African Ethiopia Liberia Coast Republic Sudan Leone Ghana Cameroon Equatorial Uganda Guinea Gabon Congo Rwanda Kenya Democratic Republic of Burundi the Congo Tanzania Djibouti Somalia Indestructible Salesmen Dieting Sophisticates Community Leaders Angola Malawi Zambia Zimbabwe Mozambique Namibia Madagascar Botswana Pioneers South Africa Swaziland Lesotho Commandos Source: World Bank Doing Business 2015, World Bank GDP per capita, Strategy& analysis 8

10 Skill development, partnering and coordination are key to make it real How to deploy capabilities on the ground How do I operationalize capabilities abroad? Develop local human capital Start by embedding the right expats Invest to accelerate skills transfer Do what you must to retain staff How do I add the new capabilities needed? Partner with locals Know what you want from a partner and evaluate candidates carefully Build personal relationships and align interests How do I coordinate a pan-african business? Balance central control with local entrepreneurialism Set your company s risk tolerance and manage against it Ensure full local accountability Source: Strategy& analysis 9

11 Key Takeaways 1 2 Drive your Africa expansion strategy from your differentiating capabilities You will find it easiest to expand to countries of the same market type 3 To enter other market types, you must enhance your capability set 4 To deploy capabilities, you should develop local staff, partner and balance control with entrepreneurialism 10

12 Strategy Impact Confid ential 19 O 1 1