Case Study

Date: 06-09-2012

Larson in Nigeria
Business communication 1
Submitted to Mr. Sanjay Kumar Gupta

Kinnari Pandya PGP 12 20121026 School of Petroleum Management Pandit Deendayal Petroleum University.

DECISION REPORT ON FUTURE action PLAN OF Larson INC., NIGERIA

ADDRESSED TO: DAVID LARSON

PREPARED BY: XYZ

DATE OF SUBMISSION: 10/03/2004

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CONTENTS
Memo Executive summary Situation Analysis Problem Statement Statement of Options Criteria of evaluation Evaluation of Options Recommendation Plan of Action 3 4 5 7 7 7 7 8 8

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To: Mr. David Larson From: XYZ Date: 10th March 2004 Subject: Decision on Nigerian plant Operation for further improvement. The report deals with the current scenario in Nigeria and the various problems faced by our company in Nigeria. It also highlights the opportunities that lie therein. The company has to expand its operations there in spite of existing issues like indigenization requests from the government, less participation by local public etc. Four options have been evaluated Two options have been discussed and evaluated, Collaboration with a Nigerian firm and providing shares of the company to the employees. Out of these the former has been recommended. The report is meant to aid you in taking the decisions and revise few strategies that can help company to get long term benefits. Regards XYZ

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Executive Summary
The basic concern is to achieve a trade off between the problems and the future opportunities in Nigeria. Uninspiring attitude of government towards foreign companies and the internal problems faced by the company needs to be fixed with immediate effect. Three possible options have been suggested and critically evaluated, partnership with local firm, appointing a local manager and joint venture with government. Among these, Joint venture with a Nigerian firm is recommended as it addresses more number of issues of Mr. Ridleys report. Word count: 83

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Situation Analysis
George Ridley has reported a very bleak position of the market in Nigerian working conditions. He has lost his motivation which resulted in taking the company on a back foot along with some governmental policies spoiling the condition further. The company is not able to attract good talent from the market and is facing some financial constraints due to inflation and low cash inflows. The federal government elections were held in Nigeria in 2003 which was a significant change after the 33 years of military rule which ended in 1999. So it can be inferred that the scope of development is very high. The unemployment rate in Nigeria is 4.5%, with majority employed in the agriculture sector. The population is growing at the rate of 2.5% per annum with 44% below the age of 15 years. The upcoming generation can be major workforce driving development in Nigeria. Company has a lot of scope of expansion in Nigeria as our business is related to power, communication, construction and control cables. From the data of SWOT Analysis, we can conclude that Larson has a greater chance of development if it continues its business operations in Nigeria. Exhibit 1 GDP Growth Regional Comparison

Nigeria recorded its highest GDP growth in 2003 with 10.3% which was the highest for that region.

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Exhibit 2 Population Growth Rate in Nigeria

Exhibit 3 SWOT Analysis

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Problem Statement
To improve the operations in Nigeria by handling issues like indigenization in Nigeria by increasing local equity participation, recruitment and retention of competent employees and also capitalize the increasing opportunities therein.

Statement of Options
1. To collaborate with a successful Nigerian Company giving it 26% stake in Larson. 2. Appoint a person who can handle the union diplomatically. Also identify people who can get internal information of the union. 3. Joint venture with the Nigerian government.

Criteria of evaluation
1. 2. 3. 4. 5. Profitable future prospects of the company in Nigeria. Increased involvement from the local people. Increase in stake in Nigeria up to 51% within 5 years. To minimize the impact of negativity of Mr. Ridley. Problems related to doing business in Nigeria as stated in Ridleys report.

Evaluation of options
Option 1: Our partner (the advocate) in Nigeria is concerned with quick paybacks. The support from local pubic and firms will help in growth of our stake. If we collaborate with a local firm, we can have a greater hold on the Nigerian market. We can cap the increasing opportunities because of this advantage. Local public will be encouraged to join us as a result of this collaboration. We can address the indigenization in Nigeria from this joint venture (with 26% stake of our new partner). It will also help company to understand and capture the markets more strongly. Support of local companies will also help to attract and retain good local employees. Option 2: We can appoint a joint manager under Ridley who will help in handling the operations and will be point of contact to the people thereby reducing the problem of unions. He can be used to prevent the negativity of Ridley affect the employees. The manager can be promoted to CEO after Mr. Ridley retires. Secondly, a local person would have proper knowledge of the system and its methods. By getting an influential local executive some problems related to work permits, entry visas for expatriates, obtaining payments from state government etc will also be addressed and the issues related to dependency on government officials can also be dealt with more ease. It will also resolve the issue of negative mindset that Ridley has developed about working in Nigeria as he can be shifted to some other place of his choice. With more knowledge of local markets, the efficiency can be increased thus increasing the profit margins to 20 %.

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Option 3: Joint venture with government will automatically result in compliance with the government norms of indigenization and it can attract more number of local public for joining the company for job security in the time of unrest amongst the job scenario in Nigeria. Further, support from government would result in future benefits such as easy and quick renewal of expatriate visas, work permits for them and also will tackle the issue of delay in obtaining payments from the government.

Recommendation
After considering all the options, option 1 is more credible and succeeds in addressing major issues of Ridleys report (Annexure 1). Also having a Nigerian person in the higher authority will help to tackle the local crowd along with the government officials. We can also have the advantage of a local firm after this venture. (Refer Annexure 1)

Plan of Action
1. Send our Proposals for partnership to major companies. 2. Schedule the responses and arrange for negotiations before finalizing the deal. 3. Deciding the strategies & business plan with the new partners and looking for new contracts & customers 4. The joint manager takes control of operation at Larson under the guidance of Mr. Ridley. 5. Control the operation of Larson in Nigeria under guidance of Mr. Ridley.

Total Words: 1064

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