International Business Management: Hemavicaciorea Wine in Kenya

Answer

International Business Management: Hemavicaciorea Wine in Kenya

1. Political Environment Analysis of Kenya

1. Political System and Structure

• Kenya experiences politics from one election to another
• The Political moments are characterized with disruptions to businesses and labour unrests
• The structure has a cumbersome bureaucracy that often cause costly delays
• Trade restrictions are partially applied based on a business’ owners’ nationality

1. Stability of Government

• Political situation is both stable and predictable
• There’s relatively high level of security in the country
• Kenya has: high domestic demand, geostrategic location, strong financial status, well-educated labour force, and a liberalized economic system
• The country has a population of 50+ million, offering a large market for goods
• Western and European cultures are highly cherished, making it a favourable environment for foreign investment

1. Future Political Risks

• Kenya is vulnerable to more political risks; elections occur every five years
• Being a viable ground for foreign investment, Kenya attracts both western and eastern countries; political risks are likely to ensue between the western and eastern countries for the market

1. Bribery and Corruption Risk/Index

• Kenya is the most corrupt-prone country in East Africa region, with its public sector being the worst hit by corruption

2. Economic and Business Environment Analysis

• Kenya has a population of about 53, 527, 936 million people
• Average life expectancy for both sexes combined = 67.5 years: Men’s = 69.9% average; and women’s =65.0 %.
• Kenya’s GDP per capita was $ 1,816 in 2019 (The World Bank)
• Its Wealth distribution is extreme: Less than 0.1 % of the population estimated to own more health than the other 99.9 % of the population.
• Kenya is the 103^rd exporter in the world with an estimated total of 6.63 Billion in export
• It ranks 79^th as a trade destination and one of its main trading partners for imports is China
• The Kenyan economy is favorable both to small and large as well as both international and local businesses.
• Challenges in the economy include: high unemployment rate, low R&D, current account deficit, high human population growth, rampant corruption, and inflation

3. Market Opportunity and Analysis

• The Kenyan wine market has increased by 124%, and it is expected to continue growing due to the changing lifestyles among Kenyans and the growing middle-class (Wine East Africa)
• Western lifestyles, social media, marketing, all are playing a role in the change and popularity of wine in Kenya
• The middle-class growth has led to more disposable income, leading to a higher customer spending and indulgence on many things including wine.
• Popularity of wine at social events and corporate gatherings has set a tone for softer yet high class functions. Restaurants incorporate wine in their menus, pairing it with meals, thus, reaching a broader audience
• Rival brands, like Gin, Vodka, Cognac, Beer, among others, are widely common in the market. Accessibility and affordability must be considered
• There are multiple channels for wine. These would enhance delivery of distributors the Hemavicaciorea wine
• Kenyans have a great like for imported wines, especially those France, Spain, and Argentina
• Despite Kenya having its local brands, the brands have been labeled low grade, allowing for imported wines

5. Market Entry Mode

• The demand for wine within Kenya is heavily dependent upon the economic and political climate which is too vulnerable; wine consumption depends largely on the health of an economy and levels of disposable income
• Kenyan wines are sweeter due to the climate and cultural palate of Kenyan cuisine, providing it a competitive advantage that differentiates it from the rest of its competitors
• Long-term, global success would be best executed by taking advantage of low labor costs and a distinct climate to export a particular wine, or wines
• Franchising has proved to be the most effective way to drive growth for the most popular MNC’s in the food industry.

Summary

• Kenya is home to more than 50 million people, a population that is growing exceptionally
• Wine is a delicate product that may be unpopular in certain parts of Kenya; however, the industry is promising
• The political environment is prone to many disagreements within the system, usually resulting in protests or riots. Corruption is high and political risks may be apparent.
• Kenya has the largest GDP within Central and Eastern Africa, making it viable for a wine venture
• The government has given some leeway with new regulations that have decreased taxes for corporations
• Generally, Hemavicaciorea may grow into a large profitable company due to the large market, favourable terms and conditions of trade, the high love for imported products, and cheap available skilled labour.
• This paper, therefore, recommends that Hemavicaciorea wine should enter the Kenyan economy