ARTS Market Entry Strategy in Rwanda

This assignment analyzes ARTS' potential market entry strategy in Rwanda. It examines the advantages and disadvantages of entering the Rwandan market, identifies key competitors (like Positivo BGH), and assesses the impact of factors like purchasing power and government initiatives on ARTS' success. Porter's Five Forces analysis is used to evaluate the competitive landscape and strategic issues requiring attention before ARTS launches its venture in Rwanda.

Running head: REPORT
Strategic management Case Study
Name of the Student
Name of the University
Author’s Note

1REPORT
Executive Summary
This report is the case study of the ARTS and its proposed venture in the market of Rwanda.
PESTEL and five force model are analysed in the report to gain knowledge of the target market.
Moreover, the numerical comparative analysis between the Rwandan market and Australian
market is carried out. These analyses show some potential and disadvantages that the company
might come across in their new ventures. It shows the incompetency of the product line offered
by ARTS in Rwanda. The modification required in the strategy is recommended

2REPORT
Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
PESTEL analysis.............................................................................................................................3
Tax Incentives of Rwanda...............................................................................................................4
FDI Policy in Rwanda.....................................................................................................................5
ARTS’ Motivation to enter Rwanda................................................................................................5
Porter’s Five Force analyses............................................................................................................5
Product Line Comparison................................................................................................................7
Numeric Analysis (Rwandan market Vs. Western Market especially Australia)............................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
Table No. 1......................................................................................................................................4
Table No. 2......................................................................................................................................6
Table No. 3......................................................................................................................................8
Table No. 4......................................................................................................................................8

3REPORT
Introduction
The Taiwanese technological firm Alpha Response Technology Solution is planning to
expand their venture in Rwandan market. The purpose of the report is to provide a quantitative
assessment to the company that will help in strategy formulation in the specific given market. A
PESTEL analysis of Rwanda focusing on their newly build Special Economic Zone is presented
in to identify the market situation (intracen.org. 2017). Porter’s five force analysis is conducted
to identify potential threats that might work as an obstacle in company’s operation. Foreign
investment policy, tax incentive and company’s motivation is highlighted in the following,
followed by a product comparison is given with their primary competitor that is Positivo BGH.
The report concludes with numerical analysis between Rwandan market and western market and
the recommendation that will help the company to minimize the issues that might arise.
PESTEL analysis
Political  The country is politically stable
 Zero tolerance of corruption rules
 Government’s interest in technological development
Economic  Represents rapid growth in GDP
 Low exchange rate for foreign investors
 Industrial contribution on overall GDP is 14.3% that reflects minimum
competition
 World Bank report 2016 shows GDP growth rate of 5.9%
 GDP per capita as in 2016 is $702.84 USD
Socio-cultural  Total population of the country is 11 million
 Unified social body

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 Introduction of ICT in every level of schooling
 Government’s encouragement for education in the society
 Rapid growth in the number of middle-class people in the country
Technological  Fastest broadband service in Africa
 Hydro-electricity for supplying electricity all over the country.
 Government’s vision to transform into ICT park before 2020
 Proper transport facility that connects railroads and airport to the special
economic zone
Environmenta
l
 The country has a hilly topology
 Recently build Special Economic zone to support the industrialization
 Sustainable energy source that can facilitate in maintaining sustainable
production process
Legal  Favorable tax incentive policies for foreign industries
 Lucrative FDI policies to attract the western investors
 Anti-corruption policy to eradicate corruption
Table No. 1
(Source: Author’s creation)
Tax Incentives of Rwanda
The tax incentive policy of Rwanda has created unfair competition among the foreign and
domestic business. The government of Rwanda revised the investment code last year where the
preferential corporate income tax has been decreased to 15% in the industries of energy,
transport, financial services, affordable housing and logistics. This also declared seven years of

5REPORT
tax holidays to the projects investing an amount more than $50 million in energy, tourism,
manufacturing, health and information and communication technology (newtimes.co.rw. 2017).
FDI Policy in Rwanda
Serious modifications were made in the Rwandan FDI policy to attract the investors from
western market, especially from US to invest in their market. The policy was made keeping in
mind to bring development in the industries such as agriculture, tourism, energy, infrastructure,
mining and information and communication technology. The current FDI policy of Rwanda has
no statutory limitations on foreign ownership or control and removed the discriminating official
economic or industrial strategy. There is no restriction on exchange of fund transfer to the
foreign country to stabilize their venture in that market or to obtain foreign exchange in Rwanda.
Government has declared the market outside the capital as free trade zone to for the foreign
investors (newtimes.co.rw. 2017).
ARTS’ Motivation to enter Rwanda
Some important motivational factors are playing important role as stated by the CEO of
ARTS. FDI policy and the tax incentive policy are the two major factors among them. The
primary motivation is the rivalry between the CEO of ARTS and the CEO of Positivo BGH. As
per the CEO of ARTS, Positivo’s CEO was his classmate and has copied his business model and
utilized it for the development of the company. Other than that, Rwanda is still an untapped
marketing on the grounds of information and communication technology where the chances of
success are high (newtimes.co.rw. 2017).
Porter’s Five Force analyses
Less competition in the market leaves the customers with less
purchasing power. However, the low income leaves the company

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Bargaining Power of the
Buyer
to place the price in accessible position
Bargaining Power of the
Seller
Similarly, the bargaining power of the seller is high due to low
competition. Whereas, the low income level of the target
population leave the company with to set it in a accessible range
Threat of New Entrants Government’s lucrative policy FDI policy attracts the entrants.
Hence, this threat remains high for the company
Threat of Substitution Positivo BGH’s 11 CLE2-R is the primary substitution of ARTS’
GT80S Titan SLI Notebook
Intensity of Competition Positivo is the primary competition in the market.
Table No. 2
(Source: Author’s creation)
The analysis reflects a low bargain power of the consumers compared to that of the seller.
However, the company has to keep the price low for the product compared to the other markets
due to low income and low purchasing power (Magretta, 2011; David, 2011). The primary
competitor of ARTS in the given market is the Positivo BGH that has recently expanded their
business to the subject market. The primary substitute of the product line of ARTS is the product
of Positivo that is priced considerably lower; however, the technology provided by Positivo is
also old (E. Dobbs, 2014). Besides of these factors, the FDI and tax incentive policy attracts
many competitors in the market which can be of potential threat. However, ARTS expect to gain
customer loyalty by the time the other companies gain access to the market (newtimes.co.rw.
2017).

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Product Line Comparison
Variables Positivo BGH ARTS
Product Name Schoolmate 15-R GT80S Titan SLI 18.4in Core
i7 Notebook
Processor Intel Celeron N2808 Intel i7 6920HQ CPU
RAM Memory 2GB/4GB 32 GB DDR4
Storage 320GB/500GB 1 TB
LAN Ethernet 10.100mbps,
conector RJ-45
Killer Gigabit LAN
Screen 10.1” LED 10 18.4” Full HD Anti-glare
Camera 1 Mpx HD 1Mpx
Graphics Intel HD graphics NVIDIA GeForce GTX980M
Graphics in SLI
Audio Realtek ALC283-CG Dynaudio 7.1 Audio
Ports 1x HDMI
1x USB 2.0
1x USB 3.0
1x HDMI
1x Mini Display Port
5x USB 3.0
1x USB Super Port Type-C
Bluetooth IEEE 802.11b/g/n 4.2
Security Kensigston blockage port and
TPM system
-
Operating System Windows 8.1 and Linux Windows 10, Blu-ray writer
Pricing @1189 USD $3792.37 USD

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Target Market Class room Advanced Western Business
analytics market
Table No. 3
(Source: Author’s creation)
Numeric Analysis (Rwandan market Vs. Western Market especially Australia)
Variables Rwanda Domestic Market Western Market (Australia)
Purchasing Power (GDP) $1773.8 USD $ 48899 USD
GDP per capita $ 874.12 AUD $ 62095.23 AUD
Government Debt (GDP) 37.6% 41.1%
Average Annual Wage $18283 AUD $81,947 AUD
Estimate Inflation 1.9% 7.4%
Size of target Population 11.92 million 24.13 million
Table No. 4
(Source: Author’s Creation)
Recommendation
The numeric analysis reflects a huge gap between Rwandan market and the western
market. The per capita GDP of Rwanda is lagging far behind Australian GDP (worldbank.org.
2017). Moreover, the annual wage and purchasing power also shows similar gap with a huge
number gap. Hence, ARTS should produce a separate product for the Rwandan market to gaining
loyalty. The high priced product should be produced for the western market where as the low end
product shall be delivered to the Rwandan market. the company will gain access to cheap labour
force which is facilitate in increasing the profit margin for the similar product built elsewhere in

9REPORT
the globe. Their primary competitor in the Rwandan market is Positivo who is selling
comparative low priced laptops (databank.worldbank.org. 2017; oecd.org. 2017). Hence, it is
important for the company to reduce their specification to build a low end system especially for
the Rwandan market. However, the target populations in Rwandan market for the companies are
different from each other. The positivo’s laptops are built for the younger generation and for
educational purpose, whereas, the ARTS is targeting the corporate market in the country
(positivobgh.com. 2017). The special economy zone built in Rwanda for the purpose of
industrial development which will facilitate the company’s venture in the Rwandan market.
However, the low educational qualification of the work force seems to be challenging for the
company. However, the government’s initiative for educating the population and introducing
ICT from lower primary education will speed up the process to generate educated workforce to
meet the demands of in industry.
Conclusion
The potential advantages for ARTS in Rwandan market are higher compared to the
disadvantages or threats that can be identified. However, the modifications recommended in the
report needs to be addressed before entering the target market for extracting the maximum profit
out of it. Porter’s five force analysis identifies Positivo BGH as the primary and potential
competitor in the target market and the possible threat in their business. Also the purchasing
power of the target population is considerably low for the pricing of the product line offered by
ARTS. These strategic issues need to be readdressed before starting their venture in Rwanda.

10REPORT
References
databank.worldbank.org. (2017). Purchasing power parity. [online] Available at:
http://databank.worldbank.org/data/download/GNIPC.pdf [Accessed 17 Sep. 2017].
David, F. R. (2011). Strategic management: Concepts and cases. Peaeson/Prentice Hall.
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), 32-45.
intracen.org. (2017). special economic zone. [online] Available at:
http://www.intracen.org/uploadedFiles/intracenorg/Content/Trade_Support_Institutions/
Major_events/World_Export_Development_Forum/_WEDF_2013/KSEZ
%20brochure.pdf [Accessed 17 Sep. 2017].
newtimes.co.rw. (2017). Positivo Chief. [online] Available at:
http://www.newtimes.co.rw/section/article/2014-11-26/183436/ [Accessed 17 Sep. 2017].
Magretta, J. (2011). Understanding Michael Porter: The essential guide to competition and
strategy. Harvard business press.
newtimes.co.rw. (2017). tax incentive. [online] Available at:
http://www.newtimes.co.rw/section/article/2016-06-08/200591/ [Accessed 17 Sep. 2017].
oecd.org. (2017). Rwanda OECD. [online] Available at:
https://www.oecd.org/dac/effectiveness/Rwanda%205.pdf [Accessed 17 Sep. 2017].
positivobgh.com. (2017). Schoolmate 15-R . [online] Available at:
http://www.positivobgh.com/africa/education/Products/view/2 [Accessed 17 Sep. 2017].

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worldbank.org. (2017). overview. [online] Available at:
http://www.worldbank.org/en/country/rwanda/overview [Accessed 17 Sep. 2017].
worldbank.org. (2017). Australian GDP. [online] Available at:
https://data.worldbank.org/country/australia [Accessed 17 Sep. 2017].