Fan Milk Case Study: West African Market Analysis and Strategy

This case study examines Fan Milk, a refrigerated beverage and dairy product manufacturer and retailer operating in West Africa. The analysis explores Fan Milk's unique business model, which includes a microfranchise distribution system, and evaluates the challenges it faces, such as political instability, economic inequalities, and social issues like child labor. The study utilizes frameworks like CAGE and PEST to analyze the external environment. It also examines the opportunities for growth, including experimental marketing and product development. Furthermore, it discusses Danone's management strategies for future growth, emphasizing profitable growth, cost savings, and responsible business stewardship. Recommendations include targeting rural markets and implementing social marketing campaigns to address ethical concerns. The conclusion summarizes the key findings and the scope of growth and development.

Running head: FAN MILK: CASE STUDY
FAN MILK: CASE STUDY
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Table of Contents
Introduction.................................................................................................................................................2
Introduction to Fan Milk..........................................................................................................................2
Business Model of Fan Milk.....................................................................................................................2
Challenges faced by Fan Milk......................................................................................................................5
Danone’s management on future growth...................................................................................................5
Conclusion...................................................................................................................................................7

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Introduction
The respective paper is an examination, analysis and evaluation of the case study of
refrigerated beverage and dairy product manufacturing and retailing enterprise called Fan Milk
that operates in the countries of West Africa. The case study report has examined the
opportunities and challenges the company might face in terms of carrying out its business and
internationalization. The case study report understands the scope of growth and development of
the company with the help of Danone’s management of future growth model and other theories
respectively.
Business Model of Fan Milk
The business model of Fan Milk is based on certain principles across the markets on
which the company operates. Fan Milk company has a unique business model where it has a
neighborhood sales and distribution platform working with 31,000 independent vendors.
Therefore, the business model of Fan Milk can be Manufacturer and Distributor. The another
business model that can be incorporated in Fan Milk is “Micro-franchise Distributor” as it
incorporates principles of traditional franchise to small businesses in developing or
underdeveloped nations (Diochon, Anderson and Ghore 2017).
CAGE Framework analysis of Fan Milk
Cultural: West African countries are known to be culturally backward due to poverty, economic
downpour, political instability and lack of scientific temperament (Hopkins 2019). Lack of trust
in products is already present in such countries. Social evils such as child labor have increased in
the countries such as Burkina Faso and Congo. To make business advances, such issues need to
be tackled by Fan Milk.

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Administrative: Political instability and hostility is common in countries like Togo, Benin and
Burkina Faso with burning statistics of terrorism and warfare. Doing business in such countries
might be challenging for Fan milk
Geographic distance: As the countries like Burkina Faso and Benin are landlocked and does not
have sea or river access, therefore, carrying out business in such countries might prove difficult.
The rugged terrain and scanty vegetation of these areas give rise to little resources. Therefore,
Fan Milk needs to make strategies to survive and thrive in these countries.
Economic distance: economic inequalities are common in West African countries. The countries
are inherently poor and lack of funds in entrepreneurial works makes situation even worse. Fan
Milk has to tackle such issues while internationalization (Beugelsdijk, Ambos and Nell 2018).
Opportunities
Experimental marketing
The company Fan Milk carries out experimental marketing, which can also be termed as
“on- ground marketing” or “engagement marketing” where the company has carried out different
experimental activities in terms of their “product making” and “business models”. The company
has experimented with the “distribution channels” by adding and updating the business with
new mechanisms of distributorship to keep updated with the modifying scenario of business. Fan
Milk, for example, has added unique technologies such as bikes and solar power kiosk
technologies to it. The addition of mobile kiosks in Nigerian nation by the enterprise has been
getting outstanding response to growth in a more sophisticated retail infrastructure. Another
initiative, which was partnership of Fan Milk with Lagos City government on traffic initiatives,
as well as an effort to combine sales of Fan Milk products with related collection of refuse and

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litters have been relatively famous all over West Africa. Product development has also
benefitted from the experiments in the markets of the company. The developmental activities
carried out by the respective company involve collaboration of the Fan Milk outlets that operate
locally along with the suppliers and laboratories of international standards (especially Denmark),
also with technical wing of the same foreign country (Denmark). With the utilization of raw
materials from Denmark, the products produced by the company Fan Milk is premium in
quality compared to the other products of other diary companies in countries like West Africa
which has also subsequently attracted different types of customers and also retained them “happy
and satisfied”. This is the reason behind the overt popularity of Fan Milk.
PEST Analysis of Fan Milk
Political
1. West African countries are low
income countries and borrowers from
whole world (Hopkins, A.G., 2019).
2. Lack of resources
3. Political instability and poor economy
Environmental
1. Sub- Saharan landlocked countries of
West Africa have limited natural and
other resources.
2. Unskilled and uneducated labor force
Social
1. West African countries are poor with
problems such as unemployment and
violence in the society.
Technological
1. Underdeveloped countries, so less
chances of technological

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2. Child labor is common due to
unprecedented rate of poverty and
hunger (Sasson, A., 2012).
advancement.
2. Low infrastructural development
3. Lack of innovation due to acute fund
shortage in technological area.
Economic
1. West African countries are poorer
with rampant poverty.
2. Borrowers from the whole world.
3. Economic inequality and disparity.
Legal
1. Legal and statutory restrictions in
international trade and business.
2. Legal formalities due to political
instability.
Challenges faced by Fan Milk
Case of loss
There have been cases of losses and mislaying in the history of business of Fan Milk in
the early 2000s where the losses were mainly incurred due to lack of proper agent placement or
utilization. The main task carried out by them is to represent the producer to the final user in
selling a product. Therefore, while the agents do not sell the products directly, they take
possession of the product in the process of distribution. Nevertheless, the company had faced
“ethical issues” in the process of marketing through agents. As it is known that the West African
countries have certain social backwardness and socio-economic issues which gives birth to social
evils such as child labor, there have been instances where the agent companies (or agents
independently) utilized little children and children below age 14 to sell the products in streets

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and shops. However, even though the company has faced backlashes due to such evil tradition of
child labor, the company has blatantly said that the agents have recruited the children as laborers
and not them.
Behavioral Practices affecting Business
When companies source, produce and/or market products in national or foreign countries, they
encounter various cultural and behavioral environments that have direct and indirect impact on
the business. Cultural factors affecting international business operations are: Political factors,
cultural dynamics, economic forces and geographical influences (Hamilton and Webster 2018).
West African countries are unfortunately inherently poor (Sasson, 2012). As it is known that the
West African countries are land locked with less resources, scarcity of necessities such as food
and water and an uncontrollable uneducated population, therefore, they have certain social
backwardness which gives birth to social evils such as child labor, there have been instances
where the agent companies (or agents independently) utilized little children and children below
age 14 to sell the products in streets and shops. As the economic condition of a nation falls
directly under behavioral elements of the demography, therefore, customers who are rural seem
disinterested to buy the products due to its premium branding and pricing where the rural
population cannot relate their lifestyle with the product (Theghanareport.com. 2019). These
behavioral factors have affected the company considerably.

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Danone’s management on future growth
According to Danone’s management of future growth, the company Fan Milk can take up
certain managerial strategies that would enable the company to internationalize their business
successfully.
1. Profitable growth strategy
According to Danone’s management for future growth, profitable growth strategy includes
having a strong brand portfolio, strong and robust execution capabilities in terms of innovation
of the products and marketing schemes, brand activation and development of new and better
distribution channels. In the case of Fan Milk, the company, which is already leading for its
product development, can also incorporate certain innovative strategies to handle their
distribution channel and make sure that the scandals the company has already incurred, such as
child labor, is systematically overshadowed with the help of different social marketing
campaigns (Block et al. 2015). The company can carry out such tasks in order to be a leading
diary company not only in the African countries, but also on a global platform (Rothaermel
2016).
2. Cost savings and efficiency
Cost savings through judicial resource allocation and cost optimization can lead the company
into a position of cost leadership which would in turn, help the company to fuel its growth and
profitability in a better way. Cost savings can be brought about by the company if it carries out
its marketing through proper agents judiciously. Marketing agents might carry out certain
malpractices in business and certain corporate misconduct which can affect the reputation of the
business, thereby, affecting its sales. Nevertheless, the company might also try to carry out its

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business in the rural areas of West Africa in order to increase its sales (Kaliappen & Abdullah
2016).
Responsible business stewardship
The company can also carry out certain “corporate social responsibility” to create value for its
customers, shareholders and society. The company can promote social well being and
sustainability as their CSR objectives that would also overshadow the ethical issues it has faced
and enhance its reputation (Teeratansirikool et al. 2013).
Recommendations
1. Rural markets to be targeted: The company can now target the rural population of West
Africa apart from the cosmopolitan population. If the company can penetrate into rural
markets, it might gain more monetary profit as rural crowd is flexible and always
enthusiastic about trying new food and beverages.
2. The company should carry out its CSR responsibly to create value for its customers,
shareholders and society. West African countries are poor and disadvantaged. The
companies can take up certain social tasks for greater well being and sustainability that
will overshadow its stained reputation.
3. Social marketing: Fan Milk, which is already leading for its product development, can
also incorporate certain innovative strategies to handle their distribution channel and
make sure that the scandals the company has already incurred, such as child labor, is
systematically overshadowed with the help of different social marketing campaigns.

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Conclusion
The respective paper concludes to be an examination, analysis and evaluation of the case
study of refrigerated beverage and dairy product manufacturing and retailing enterprise called
Fan Milk that operates in the countries of West Africa. The case study report has concluded by
examining the opportunities and challenges the company might face in terms of carrying out its
business and internationalization. The case study report has also tried to understand the scope of
growth and development of the company with the help of Danone’s management of future
growth model and other theories respectively.

10FAN MILK: CASE STUDY
References:
Beugelsdijk, S., Ambos, B. and Nell, P.C., 2018. Conceptualizing and measuring distance in
international business research: Recurring questions and best practice guidelines.
Block, J.H., Kohn, K., Miller, D. and Ullrich, K., 2015. Necessity entrepreneurship and
competitive strategy. Small Business Economics, 44(1), pp.37-54.
Dairyreporter.com.(2013). Available at: https://www.dairyreporter.com/Article/2013/10/25/Fan-
Milk-takeover-a-major-step-in-African-expansion-Danone
Diochon, M.C., Anderson, A.R. and Ghore, Y., 2017. Microfranchise emergence and its impact
on entrepreneurship. International Entrepreneurship and Management Journal, 13(2), pp.553-
574.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hopkins, A.G., 2019. An economic history of West Africa. Routledge.
Kaliappen, N., & Abdullah, H. H. (2016). Strategic match of cost leadership, competitor
orientation and process innovation on performance. International Journal of Organizational &
Business Exellence, 1(1), 1-13.
Rothaermel, F.T., 2016. Strategic management: concepts (Vol. 2). McGraw-Hill Education.
Sasson, A., 2012. Food security for Africa: an urgent global challenge. Agriculture & Food
Security, 1(1), p.2.

11FAN MILK: CASE STUDY
Teeratansirikool, L., Siengthai, S., Badir, Y. and Charoenngam, C., 2013. Competitive strategies
and firm performance: the mediating role of performance measurement. International Journal of
Productivity and Performance Management.
Theghanareport.com.(2019). Available at: https://www.theghanareport.com/know-the-new-
prices-of-fan-milk-products/