RECOMMENDATION BY STEPHEN DEKU

1. I would recommend Parle Products to consider penetrating the African market as its first choice in
the internationalization process. Africa has a growing population and a rising middle class, which
presents a great opportunity for Parle to expand its market share. Additionally, the demand for
affordable and quality biscuits is high in Africa, making it a favorable region for Parle's products.
As the world’s 2nd largest continent by area and population, Africa is a diverse place full of national
and regional differences. As a result, we will be giving you more and more guides on specific
situations across Africa in the future. This guide will be a basic intro to developing trends across the
continent so you can make informed decisions.
The future potential of a region is often the first thing you might consider when thinking about
business expansion. Africa has been seeing robust economic growth in recent years, with many
countries achieving high GDP growth rates perfect for new investment. Africa’s youthful population,
increasing urban growth, and improved infrastructure have all added to this economic upswing.
Over the past decade, Africa has seen large economic growth, driven by factors such as natural
resource mining, infrastructure development, and a growing middle class. According to the African
Development Bank (AfDB), Africa’s GDP growth averaged around 3.4% from 2011 to 2020, with
some regions seeing even higher rates.
Of course, the pandemic affected Africa badly and continues to have negative effects. However, this
should stabilize and return to growth of 4.8% by the end of 2023 and into 2024, according to experts.

2. The most appropriate market entry mode for Parle's situation would be through strategic
partnerships or joint ventures with local companies in the target market.
This involves partnering with a local company in the African market to share the risks and rewards of
the business. This approach allows Parle to leverage the local partner's knowledge, resources, and
distribution networks, which can help overcome cultural and regulatory barriers. It also enables Parle
to establish a strong presence and build brand awareness in the new market. Joint Venture is a popular
entry strategy through which foreign firms gain market entry into Africa (Boateng 2004). It is an entry
strategy where two or more legally separate bodies (one a foreign entity) form a separate jointly-
owned entity in which they invest and engage in various decision-making activities.
A joint venture presents a number of advantages for a foreign entrant. It eliminates the need to start
over from scratch in a new territory which could be a risky and a capital-intensive endeavor. The local
company’s distribution, manufacturing, and retailing facilities are also leveraged to produce service to
the foreign entrant.
Licensing
This involves allowing a foreign company to use the company's intellectual property, such as
trademarks or patents, in exchange for royalties or fees. In the current African market, KFC has been
able to expand by creating and licensing affiliates to operate on their behalf. Examples of companies
applying this are Dominos, Peter Pan, Total Energy and Digestive Buscuits.
3. To conduct a systematic screening of potential distributors or agents in foreign markets, Parle
Products should consider factors such as their experience in the food industry, their distribution
capabilities, their understanding of the local market, and their reputation. Parle can also conduct
background checks, review their financial stability, and seek recommendations from other companies
in the industry.
To conduct a systematic screening of the potential distributors and the agents in the foreign market,
they need to build up more relationships with them. First, the Parle products will have to know on the
size of the market in which their distributors will be dealing with. Also, they will need to know the
population of this areas. By having a clear insight into the market area in which their different
distributors will cover then they will be able to make manufacturing decision to meet the needs of all
their customers.

4. Before finalizing the contract with a potential distributor or agent, Parle Products should discuss
key issues such as the distributor's exclusivity rights, sales targets, marketing support, pricing and
payment terms, logistics and distribution arrangements, and after-sales service. It is important to
ensure alignment on these aspects to establish a mutually beneficial and successful partnership.
Parle should discuss with the potential distributor about the amount, prices of their product and the
terms of the delivery. This helps in strategizing on the levels of production depending on the market
size and with the aim of meeting the needs of the customers.
The appointment of a distributor should enable a supplier to avoid a significant amount of direct
administrative, marketing and establishment costs in addition to minimising business responsibilities
and risks associated with entering new markets by passing those to the distributor. These may include
such matters as setting up a permanent place of business overseas; dealing with regulatory licenses,
consents and quality standards, local customs and legal issues; organising and controlling logistics
from order handling, stock control and storage, to packing, despatch and delivery of goods; marketing
and brand awareness in the distribution territory; and currency risk. However, it is important for a
supplier to be aware that starting and maintaining a distribution relationship or network of distribution
relationships is likely to involve a significant amount of administrative time and financial outlay,
particularly at the outset, and is unlikely to absolve the supplier from all risks (for example, product
liability).
Identifying short, medium and long term objectives and specifying a series of goals of Parle to
increase their prospects of achieving those objectives will help them to focus on their reasons for
entering the relevant market and appointing a distributor; put the distribution arrangement in a proper
working perspective enabling Parle to detach emotional issues from business ones and increase the
likelihood of an outcome that can be considered to be successful. It is worthwhile making the point
that it is rare to achieve all of your goals as there is likely to be a conflict of interest between a
supplier and a distributor on some key issues and you may have to compromise on some issues in
order to complete the distribution agreement with your preferred distributor.
 REFERENCES

 BUSINESS EXPANSION INTO AFRICA: 5 GREAT REASONS FOR PROS – INS

GLOBAL(SEPT 2023)
 Study Smarter: https://www.studysmarter.co.uk/explanations/marketing/international-
marketing/market-entry-strategy/
 Market Entry into Africa: Acquisitions and International Joint Ventures
 Appointing a distributor - Key preliminary steps prior to entering into a distribution
agreement – Orrlitchfield Solicitors and Business Lawyers