Laptop Manufacturing Strategy for Rwanda

This assignment delves into developing a comprehensive laptop manufacturing strategy. It emphasizes targeting both the Rwandan market with a low-specification model and western countries like Australia with a high-specification model. The analysis considers factors such as purchasing power parity, labor costs, tax incentives in Rwanda, and potential for profit maximization through these differentiated approaches.

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

1REPORT
Executive Summary
Rwanda is a developing country and the policies for the foreign investment and tax incentives
are attractive the foreign investors, mainly the U.S. based companies to extend their venture to
Rwanda. The purpose of providing such advantage in FDI and tax incentive is to speed up the
developing process of the country and attain high GDP in a short period. A case study of ARTS
and Positivo is presented in the report with a detailed analysis of the market and the possible
advantages for the company to start its venture.

2REPORT
Contents
Executive Summary...................................................................................................................................1
Introduction...............................................................................................................................................3
Background of the Case............................................................................................................................3
PESTEL.................................................................................................................................................3
Five Forces Analysis..............................................................................................................................6
Current Foreign Investment in Rwanda..............................................................................................7
Incentives to enter the market..............................................................................................................8
ARTS’ Motivation.................................................................................................................................8
Quantitative analysis of the Case.............................................................................................................9
Product Line Comparison and Contrast..............................................................................................9
Numeric Analysis in domestic market versus Western Market (Australia)....................................10
Summary of Findings..............................................................................................................................11
Conclusion................................................................................................................................................12
References................................................................................................................................................14

3REPORT
Introduction
Alpha Response Technology Solutions is a Taiwanese technological firm. Its main
product line is the GT80S titan SLI 18.4in Core i7 notebook. They are recently willing to enter
the Rwandan market to extract the benefit out of it as the demand of the portable computer has
recently increased. This report will present a quantitative report for the company to extend their
operation in the Rwandan Special Economic Zone (intracen.org. 2017). A product line
comparison is provided between ARTS and in the Positivo report with a numerical comparison
with the western market. The company for the market will give the focus on manufacturing of
the portable computer technology. The primary competitor of ARTS in the given market is
positive BGH who is currently operating (worldbank.org. 2017). A PESTEL analysis of Rwanda
along with five forces analysis is included in the report. Foreign investment policies in Rwanda,
incentives and motivation of the company are presented in the report. A detailed
recommendation and a finding summary is provided in the final part of the study.
Background of the Case
PESTEL
Political  Regardless of the mass genocide in the year 1994, the country is
currently politically stable.
 Foreign direct investment is made favorable for the investors as there are
no statutory limits on foreign ownership or control and abolishing
discriminating official economic or industrial strategy.
 The tax incentive policies of the country are excessively favorable for the
companies to enter the market.

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 Export and import policies of the country is lucrative for the investors
 The government is showing interest to develop the country
 They have rules and law for zero tolerance of corruption. It makes the
country a suitable place to grow their business. Moreover, zero
corruption brings work atmosphere
Economic  The GDP estimated per capita as in 2013 is $1592.
 Country’s main economy is based on natural resources and agriculture.
 Coffee and tea are the two major production
 Tourism is rapidly growing in the country with high return
 Industrial contribution as on 2010 was 14.3% of the total GDP
 GDP growth rate is 8% as mentioned in the World Bank report 2011
 Exchange rate is low that attracts the foreign investors.
 The country represents one of the highest GDP growth rate among he
African economy and the neighboring countries
Social  The target market is comprised of 11 million people with a rapid growing
middle class
 The potential market is of over 125 million
 Rwanda has a unified social body from the pre-colonial era
 The number of the middle class people is rapidly growing
 The government’s encouragement in education shows clear response.
People are sending their children to school after the education system is
made free. However, the lowest segment is still reluctant to send their

5REPORT
children to schools as they can even afford the uniforms for their children
 Incorporation of ICT into the educational sector in Rwanda provides
ample scopes for the industry under study to do a profitable business in
the country.
Technological  The country has the fastest broadband internet in Africa
 The electricity of the country is completely generated from methane gas
and hydro-electricity.
 The vision of the government is to build develop ICT park before 2020
 The country have reliable utilities like water, sanitation and power
 Proper transport facility developed to connect to the airport through
railroads and highways.
 The skilled resources of the country are accountably low. With the help
of private companies, the government seeks to train its citizens and speed
up the development process
Environmental  The country has underwent serious changes to present it as a business
friendly environment
 The hilly topology of the country might impose hurdle in transportation
of goods around the country.
 Main energy source of the country is the hydro-electricity, which enables
the investors to maintain their sustainability approach in business.
Legal  The government policies or Rwanda is favorable for doing business in
the country.
 Their FDI policies is made such a way to attract the foreign investors for

6REPORT
the development of the country
 The constitution has much flexibility for the foreign companies to operate
within the boundaries of Rwanda without facing any kind of issue.
 Entering the market is easy as the tax incentives are made favourable for
the investors. For example, Positivo BGH is one of the company that
entered the market in last few years ease without facing any trouble.
 Their anti corruption policy provides an work environment for the
investors
Five Forces Analysis
Power of Supplier The power of the supplier is comparatively high than the power of the
power of the buyers. It is due to the low competition in the market. There
is only a major challenge in the market that is Positivo BGH. Apart from
Positivo, there is no as such threat for the company. However, the low-
income rate of the target customers might play a significant negative role
for the company and might lose the bargain power to sustain in the
market.
Power of Buyers The power of the buyers is low as there is not much competition in the
market. However, low income of the population will play as a positive
role for the customers to bargain over the price to make it affordable.
Threat of New
Entrants
Threat of new entrants remain high as the FDI policy and incentive
policy offered by the country is attractive and will surely lure many

7REPORT
competitors to seek profit out of the situation.
Threat of
Substitution
Substitution chances are considerably low as their sole competition in the
market will be Positivo BGH.
Intensity of
Competition
The intensity of the competition is considered low, as there is not much
of ICT development took place in the country. However, the primary
rival of ARTS, which is Positivo BGH has already entered the market
which makes them an important competition in Rwanda
Current Foreign Investment in Rwanda
The government of Rwanda has undertaken reforms in a series of pro-investment policies
over the past decade for rapid economic growth. According to the Word Bank’s business report,
the country enjoys a strong and stable economic growth. Rwanda opened up a number of
opportunities for the U.S. and other foreign direct investments that includes energy, agriculture,
infrastructure, tourism, mining and information and communication technology. The government
made suitable environment for the investors by lifting statutory limits on foreign ownership or
control and abolishing discriminating official economic or industrial strategy. The investors face
no difficulties in obtaining foreign exchange in Rwanda or transferring funds associated to the
investment into a usable currency (newtimes.co.rw. 2017). However, the companies face skilled
labour shortage in the sites due to the low standard education in the country. However the
education system of the country is rapidly developing. The country has also established a free
trade zone outside the capital that has a current and planned future communication infrastructure.
Despite the friendly FDI policies, Rwanda lags well behind the neighboring countries as the

8REPORT
investors face trouble visa renewals and the skilled employees fail to enter the market for
potential growth (state.gov. 2017).
Incentives to enter the market
The tax incentive policies of the country are excessively favorable for the companies to
enter the market. According to civil society organization the countries tax incentive policies will
eventually lead to inclusive development and curb unfair competition among the business and
suggested to reform their policies and only the multinationals in key priority areas should taken
into consideration. There is no clear monitoring mechanism to hold accountable multinationals to
the term under which the incentives are being offered by the government. It is leading the local
competitors to bankruptcy, as the exemptions are unclear and unequal for the investors. Butare is
the head of the programs and policy at ActionAid Rwanda. He has expressed concern regarding
the current tax incentive policies of the country. According to him, government should take a
strategic incentive policy for the long-term solution. He mentioned that, not all the incentives are
harmful, however the government should have reasonable incentives and in priority areas which
have multiplier effects and leading to inclusive department (newtimes.co.rw. 2017).
ARTS’ Motivation
The motivational factor that is playing an important role for ARTS to enter the market is
to compete with the Positivo BGH. CEO of ARTS claims that, the CEO of Positivo BGH has
copied his design and doing business in the market of Rwanda. This is a case of rivalry between
the companies, which is the primary motivational factor for ARTS to enter the market.
Moreover, the ICT market of Rwanda is still now untapped and there is not much of competition,
which is also a motivational factor for the company to consider the entry (newtimes.co.rw.

9REPORT
2017). The FDI policies and incentive policies of the country can also be an important player for
the motivation.
Quantitative analysis of the Case
Product Line Comparison and Contrast
Variables ARTS Positivo BGH
Product Name GT80S Titan SLI 18.4in Core
i7 Notebook
11 CLE2-R
Processor Intel i7 6920HQ CPU Intel Celeron N2840
Platform Inter i7 Bay Trail
RAM Memory 3 GB DDR4 2 GB
Storage 1 TB 320 GB
Screen Size 18.4” 11.6”
Camera 1Mpx 1Mpx HD
Graphics NVIDIA GeForce GTX980M
Graphics in SLI
Intel HD Graphics; DirectX 11
Audio Dynaudio 7.1 Audio High Definition
Ports 1x HDMI
1x Mini Display Port
5x USB 3.0
1x USB Super Port Type-C
VGA y HDMI
Memory Reader 9-in-1 memory multi reader 9-in-1 memory multi reader
Security - Kensington port

10REPORT
Operating System Windows 10 Windows 8.1 Pro
Above comparison of the products shows that the laptop offered ARTS is far greater than
the one offered by Positivo BGH. Positivo BGH lags in the specifications of the laptops offered
in Rwanda. However, this can also be concluded that the product price of ARTS will be much
greater than the products of Positivo BGH. The production cost of ARTS is far greater than
Positivo, which will not fulfill the market demand. The next table shows the purchasing power of
the countries, which is well below the product, price of ARTS (positivobgh.com. 2017).
Numeric Analysis in domestic market versus Western Market (Australia)
Variables Rwanda Domestic Market Western Market (Australia)
Purchasing power $2216.90 AUD $44,743 AUD
GDP per Capita $700 USD $54,480.82 USD
Government Debt (GDP) 37.6% 73.70%
Average annual wage (gross) $22980.06 AUD $ 81,624 AUD
Estimate Inflation 7.2% 1.9%
Size of the target population 11.92 million 24.13 million
The market analysis of both the countries shows a clear gap between GDP. It can be
considered from the analysis that Rwanda is still developing country whereas Australia has
obtained the level of optimum development (worldbank.org. 2017; data.oecd.org. 2017). The
purchasing power of the target market is lower than western market. It also indicates that the
products made in Rwanda will cost much lower than any western market, which can increase the

11REPORT
margin of profit for the company (databank.worldbank.org. 2017; oecd.org. 2017). It will also
contribute in the development of the country, as the labors will be trained accordingly to fulfill
the criteria. It will increase the GDP and per capita income of the country (worldbank.org. 2017).
Summary of Findings
Rwanda is a rapidly developing country and probably growing faster than any other
neighboring countries in Africa. They have overcome the mass genocide that took place in the
year 1994 and presenting potential growth. The political power of the country is focusing on the
development in industrial sector, for which they are also considering their educational system as
it is necessary. They are now providing free education in the primary school level for the
students. The government also seeks to incorporate the information and communication
technology in their primary school. For the above purposes, the government follows strict zero
corruption policy that reflects in their rapid growth in the past decade. The special economic
zone of the country that they developed in recent years to support the industrial development of
the country is well structured and planned (intracen.org. 2017). The country’s electricity is
mainly generated from hydroelectric plants that are environment friendly. It will supplement in
the process of sustainable development. The country’s Foreign Direct Investment policy made
lucrative to attract the foreign industries specially the U.S. industries to start their venture is
Rwanda. The government set no as such statutory limits for the investors, which is an advantage
for the industries to extract maximum profit. The work force required for the production has to
be taken from the country itself, but the qualification of the people lacks considerably. For this,
the companies are allowed to use their own experienced work force for the startup and train the
local people to later fill the ranks of the factory. The tax incentive policy gives excess advantage
to the investors that might impose serious threat to the country.

12REPORT
However, concerns remain for ARTS for extending their venture in Rwanda. They can be
considered as primary threat for the company in carrying out operation in the country. Positivo
BGH is the first visible threat for the company as they are the direct competitors in the given
market. Positivo has already started their venture in the given market and started their production
and distribution. On the other hand, it will take time for ARTS to acquire their license and
establish their business in Rwanda (theeastafrican.co.ke. 2017). Hence, it can be challenging
them to compete with Positivo BGH. Moreover, the product line proposed by ARTS is quite
expensive compared to the product of Positivo BGH. The competitor company is providing
cheap computers to the school market that is affordable for the consumers. Purchase power of the
people of Rwanda is poor comparing to the western countries such as Australia. Hence, the
product line proposed by RTS will likely fail to mark any impression in the market. However,
they will provide a much better product with high configuration, the purchasing power of the
people will restrict the company from making profit out of it. It is because of the annual wage of
the average citizens that is considerably low compared to the western countries. Though their
GDP is rapidly increasing, there is a lot of ground for Rwanda to catch up. On the other hand, the
company will enjoy the bargaining power to some extent as there are few companies operating in
the country.
Conclusion
In the conclusion, it can be stated that there is ample amount of opportunity for ARTS to
initiate their venture in Rwanda. The infrastructure of the country is under development, which
makes it a perfect market for them to do business. They will get cheap labour force that can
increase the profit margin of the product line considerably. The FDI and the tax incentive policy
of Rwanda shows considerable advantage for the company to expand and utilize the resources of

13REPORT
the country. However, the purchasing power of the country comparatively low which will be a
challenge for the company to make profit out of the market. The pricing of the product is
relatively high while compared to the purchasing power of the target population. In order to
expand their business in Rwandan market and make considerable profit competing the rival
company Positivo BGH, they will have to price their product near somewhere to Positivo. They
can reduce the specification of the product, but the product has to be available for the target
population. However, they can manufacture two types of product in the target market to balance
their profit. It will be rise for them to manufacture two-product line under the same name. The
cheaper one with low specification should be for the Rwandan target market and the mentioned
one for the western countries like Australia where the purchasing power of the population is high
enough to attract the customers. This way, the company can utilize the cheaper work force and
make maximum profit out of it.

14REPORT
References
databank.worldbank.org. 2017. Purchasing power parity. [online] Available at:
http://databank.worldbank.org/data/download/GNIPC.pdf [Accessed 17 Sep. 2017].
data.oecd.org. 2017. Australia OECD. [online] Available at: https://data.oecd.org/australia.htm
[Accessed 17 Sep. 2017].
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].
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. 11 CLE2-R. [online] Available at:
http://www.positivobgh.com/africa/education/Products/view/2 [Accessed 17 Sep. 2017].
state.gov. 2017. 2015 investment climate Rwanda. [online] Available at:
https://www.state.gov/e/eb/rls/othr/ics/2015/241716.htm [Accessed 17 Sep. 2017].