International Business Expansion: Risual's Nigeria Strategy Report

This report details the country-based business opportunity for Risual, a UK-based IT company, aiming to expand into Nigeria. It provides an executive summary, analyzing Risual's expansion strategy, and a general description of Nigeria, including a PESTLE analysis covering political, economic, social, technological, legal, and environmental factors. The report assesses Nigeria's status in international trade and finance, identifies opportunities and risks, and evaluates Risual's internationalization potential. It also addresses issues such as corruption and intellectual property rights, offering recommendations for overcoming these challenges. The analysis concludes that Nigeria presents a suitable market for Risual, especially considering the increasing demand for IT services and a growing educated population. The report emphasizes the importance of considering Nigeria's unique business environment and financial system before expansion.

Running head: INTERNATIONAL BUSINESS
International Business
Name of the Student:
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Author’s Note:

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Executive summary
This report introduces about the country based business opportunity for Risual, a UK based IT
company that aim towards expanding its business internationally in Nigeria. In order to do so,
the report analyses the company, its proposed expansion strategy, general description of Nigeria
including PESTLE analysis, international trading and financial status followed by opportunities,
issues and suitable recommendations of expanding and conducting business in Nigeria. After
thorough analysis, Risual has decided to expand their business globally to Nigeria. Nigeria is
considered as the business hub of Africa with an estimated population of 22.5 million people.
The company has conducted a thorough analysis of the macro environment of Nigeria thereby,
analyzing the political, economic, social, technological and environmental aspect and confirmed
that international expansion in Nigeria is suitable. This is because of the increasing demand of
the IT in Nigeria along with increased educated and entrepreneurial population that is facilitating
business opportunities for international business organizations. However, Risual needs to
consider the potential issues of doing business in Nigeria that includes corruption, poverty,
violation of intellectual property rights law and foreign exchange restrictions. Post identification
of the potential issues of carrying out business in Nigeria, Risual needs to find suitable
recommendations for overcoming them effectively.

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Table of Contents
Table of Contents
Assessment Task 3: Country-based Business Opportunity.............................................................3
Introduction......................................................................................................................................3
Overview of the company................................................................................................................4
Describing the proposed expansion.................................................................................................4
General description of the chosen country......................................................................................5
PESTLE analysis of Nigeria............................................................................................................5
Status of Nigeria in the international trading and financial system.................................................9
Opportunities and risks offered by Nigeria...................................................................................11
Internationalization potential of the Risaul....................................................................................13
Issues found in doing business in Nigeria.....................................................................................14
Suitable recommendations for overcoming the issues in Nigeria.................................................16
Conclusion.....................................................................................................................................17
References......................................................................................................................................19

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Assessment Task 3: Country-based Business Opportunity
Introduction
Increased number of similar business organizations in the market gives rise to tough and
competitive business environment. As the business organizations have similar products and
services to offer to the customers, attracting them becomes comparatively difficult. This gives
rise to saturated business environment where the business organizations faces issues in terms of
attracting new customers and increasing the customer base as well as earning increased revenue
for the company (Beamish 2013). As a result, the business organizations aim towards global or
international expansion, as this provides an opportunity for the business organizations to
penetrate new markets and increase the customer base and business profit. Global expansion also
helps the business organizations to gain competitive advantage and sustain in the competitive
market (Cavusgil et al. 2014). However, the business organizations have to verify and validate
various factors before aiming for global expansion. The business environment, need of the
service or product in the host country, foreign policy and international trade are some of the
factors that the business organization need to analyze before international expansion.
This report introduces about the country based business opportunity for Risual, a UK
based IT company that aim towards expanding its business internationally in Nigeria. In order to
do so, the report analyses the company, its proposed expansion strategy, general description of
Nigeria including PESTLE analysis, international trading and financial status followed by
opportunities, issues and suitable recommendations of expanding and conducting business in
Nigeria.

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Overview of the company
Risual is a UK based business organization that was established in the year 2005. Richard
Proud and Alun Rogers founded the business organization. Risual provides IT based services in
collaboration with the aligned consultancy. The sole business operating strategy of Risual is
Microsoft platform. Over the past 12 years, the business has been able to achieve necessary
success. This is because the business organization aimed towards discovering new technologies
by understanding the new challenges. In addition to, the business organization also aimed
towards finding new solutions for the identified challenges thereby, overcoming them. This
highlighted the major reason for the huge success the company achieved over the past 12 years
(Bird and Mendenhall 2016).
Based on the existing business strategy and operations, the company has invested hugely
in order to expand the business in respect to technology by taking required guidance from the
available experts. Based on the current IT market scenario in the UK, the company is planning
for international business expansion in Nigeria. The international business expansion provides an
opportunity for Risual to gain competitive advantage by penetrating new markets and increasing
the customer base. As the UK market is saturated by IT business organization, international
expansion to Nigeria provides better business and market opportunities for the company (Penrose
2013).
Describing the proposed expansion
Risaul is planning to expand internationally to Nigeria based on the current demand IT
demand of the country. The business organization is proposing its expansion in Lagos, one of the
largest cities in Africa. Lagos is the business hub of the country featuring different business

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organizations from different business market. The business organization need to consider the
cultural differences of both the countries that exists distinctively. Thus, the human resource
management of the company needs to describe the product or service that they aim towards
providing to the Nigerian customers along with analyzing the existing market followed by
developing and implementing marketing strategy (Zander, McDougall-Covin and Rose 2015).
General description of the chosen country
Nigeria is a federal republic in West Africa and is officially a democratic secular country.
Nigeria has 36 cities out of which the five largest cities are Lagos, Kano, Ibadan, Abuja and Port
Harcourt with an estimated population of 22.5 million people. The GDP per capita of the country
is USD 3,000. It has been seen that the collective buying power of household earnings is USD
1,000 to USD 5,000. Compared to the rest of Africa, the most significant factor for the Nigerians
is price. Around 61% of the Nigerian population is literate and English is the official language of
the country (Watts 2013).
PESTLE analysis of Nigeria
The PESTLE analysis of Nigeria includes:
PESTLE Factors
Political  Politically stable since 1999
 Regional political leader in Africa
 Federalism system of the operating
government
 People’s Democratic Party is the largest

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political party of Nigeria
Economic  Nigeria’s economy has risen from $170
billion to $451 billion
 74 million people comprises of
Nigeria’s labor force
 Gross Domestic Product is risen to
6.1%
 Oil sector is the dominant sector in
Nigeria
Social  Culture and society highly influenced
by politics
 Most populous and well-developed
country in Africa
 Estimated population is 200 million
people
 Christianity and Islam are the two
major religions in the country.
Technological  Fastest growing mobile technology
 Technology hub of Africa
 Nigeria hosts 1400 internet with an
estimated 45 million internet users
 Foreign investors have targeted Nigeria
due to its enormous growth potential

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Legal  Company and Allied matters Act is the
primary law that governs business in
Nigeria
 The needs to have minimum 2 and
maximum 50 employees
 Founding members needs to be above
18
 Minimum share capital of the company
registered in Nigeria is 50 Euros.
Environmental  Daunting environmental challenges
 Increased air pollution in Lagos
 Other environmental issues include
deforestation, biodiversity damage and
drainage blockage
 Oil spillage, agricultural waste and
excessive mineral exploitation and
mining
Analysis
Political: From the above table, it can be said that Nigeria is the regional political leader of
Africa and has achieved political stability since 1999. The country gained independence in 1960
and in 1999 the country chose it first President democratically. The People’s Democratic Party is

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the largest political party in Africa until March 2015 when All Progressive Congress came to
power (Joseph 2014).
Economic: Nigeria has gained the status of economic freedom and ranks 116th at global
platform. The Nigerian’s economy has risen from $170 billion to $451 billion. The country’s
gross GDP has risen to 6.1%. Among the Sub-Saharan Africa region, Nigeria has the 20th
position. In 2016, the economic freedom score of Nigeria was 57.5 that shows 1.9 points
increment. The country also has relatively stable exchange rate (Eze 2013).
Social: Nigeria is one of most populated country in Africa with an estimated population of 200
million people. The Nigerian society is highly influenced by culture and politics. Christianity and
Islam are the two major religions that the society follows. The country has highly active working
class with a total dependency ratio of 87.7. Nigeria has the history of going through longest
period of civilian rule and democracy in the history (Raimi et al. 2014).
Technological: Nigeria is considered as the technology hub of Africa and has the fastest growing
mobile technology. Nigeria has approximately 45 million internet users. Due to such
technological advancements, foreign investors from Europe, Asia and the US chose Africa for
business expansion (Adebayo, Ugiomoh and AbdulMalik 2013).
Legal: According to the legal structure of the country, the business organization needs to have
minimum 2 and maximum 50 employees and needs to be registered under Company and Allied
Matters Act. The funding members need to be above 18 years with a minimum share capital of
50 Euros (Baba et al. 2013).

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Environmental: Nigeria has huge environmental impacts such as oil spillage, drain blockage,
deforestation, mineral exploitation and mining. The capital of Nigeria, Lagos has the highest air
pollution (Iwegbue 2014).
From the above PESTLE analysis, it can be said that Nigeria is a suitable country for
international business expansion for foreign business organization. Thus, Nigeria is suited
country for Risual to expand internationally.
Status of Nigeria in the international trading and financial system
Nigeria has the largest economy within Africa, as it is considered the business hub of the
African subcontinent. Nigeria is the leading oil exporter and has the largest natural gas reservoir
in the African continent. Industries such as trade, agriculture, telecommunications and
manufacturing are the major market sectors that run the economy of Nigeria. The main
international trading partners of Nigeria are European Union, China, Brazil, India, US and Japan
(Adeyinka 2014).
The Nigeria financial system comprises of the financial markets, that is, the money and
the capital markets, financial institutions and supervisory and regulatory bodies. The different
financial institutions include Urban Development Bank, Nigerian Agricultural and Rural
Cooperatives Bank. Other than these financial institutions, the non-governmental financial
bodies of Nigeria include Primary Mortgage Institutions, Bureau de change, pension funds and
finance companies. It is evident that the Nigerian financial system has undergone drastic change
ranging from the length and breadth of the regulatory and supervisory body to the structure of the
ownership. The Nigerian financial system also shows relationships between individuals and the
regulatory bodies that make up the economy of the country. In Nigeria, the Commercial Banks

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are the most relevant financial institutions that mobilize and encourage savings along with
channeling the savings into productive investment units (Claessens, Ghosh and Mihet 2013).
Figure 1: Nigerian Financial System
(Source: Mbutor and Uba 2013)
The above figure suggest that the Nigerian financial system is divided namely into formal
and informal financial systems. The formal financial system consists of the non-bank and bank
financial institutions whereas the informal financial systems include the loan associations,
savings and the moneylenders. Central Bank of Nigeria, Federal Mortgage bank of Nigeria,
Federal Ministry of Finance, Securities and Exchange Commission and Nigeria Deposit
Insurance Corporation regulate the aforementioned financial institutions. However, the informal

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financial sector of Nigeria lacks formal regulation and proper organization (Muritala and
Fasanya 2013).
As commented by Obamuyi (2013), the financial system of Nigeria plays a crucial role
for the economic growth of Nigeria. This is because the financial system of Nigeria helps in
improving the existing economic performance of the country. The stable financial structure of
Nigeria establishes a platform for the national and international business organizations to allocate
the financial resources appropriately thereby, ensuring productivity. In addition to, the financial
system also strikes a balance between the parties willing to invest funds and parties who requires
funds. Thus, Risual, the IT based UK business organization needs to consider the international
status and financial system of Nigeria before expanding to Nigeria internationally.
Opportunities and risks offered by Nigeria
Nigeria is the business hub in Africa that is considered as the most preferred location for
establishing and conducting business compared to the rest of the Africa. One of major
opportunities in Nigeria is its large population and low labor cost. Nigeria has an estimated 22.5
million population thereby, ensuring high availability of labor force. As a result, the international
business organization has the opportunity of availing huge labor force at minimal labor cost. In
addition to, the growing middle class and the rate of literacy also provides an opportunity for the
business organizations to establish their business in Nigeria successfully (Adeusi et al. 2014).
Thus, one of the major opportunities that Nigeria will provide to Risual is maximum labor force
availability at minimal cost.
Availability of young, educated and entrepreneurial population are another potential
opportunity that Nigeria provides for the international business organizations. Nigeria has