A WAC REPORT ON Nigeria Operations, Larson Inc

Case Analysis
Submitted To: Mr. Sanjay Kumar Gupta Faculty: Business Communication Submitted By: Harsh Gupta Roll No.:20111019

School of Petroleum Management Pandit Deendayal Petroleum University September 14, 2011

LARSON INC.

Nigeria Operations
Larson Inc.
Vikram Rastogi

2004

UNITED STATES

MEMORANDUM
To: David Larson, VP International Operations From: Vikram Rastogi, Executive Assistant Date: January 10, 2004 Subject: Report on Nigeria operations.

This report is regarding the feasibility of Nigeria operations of Larson Inc along with recommendation and action plan.

Contents
Executive Summary....................................................................................................................................... 5 Situation Analysis .......................................................................................................................................... 6 Problem Statement ....................................................................................................................................... 7 Statement of options .................................................................................................................................... 7 Criteria for evaluation ................................................................................................................................... 7 Evaluation of options .................................................................................................................................... 8 Recommendation.......................................................................................................................................... 8 Plan of action ................................................................................................................................................ 9 References .................................................................................................................................................... 9

Executive Summary
The company is facing a lot of issues continuing its operations in Nigeria like Increasing costs Current inactive partner with a 25% stake in the joint venture Current CEO, Nigeria operations has a negative attitude towards the operations in Nigeria Several problems identified by the current CEO in running the operations

There is a need to find a way to continue the operation in Nigeria smoothly because of the great future prospects in the country. The prime concern is to increase revenues, boost morale of the company and its employees, motivate and retain expatriate staff, increase indigenization from 25 % to 51 %. The same has been addressed by suggesting to retain the CEO, Nigeria Operations and appointing an advisor to him so that he can work with an optimistic attitude.

Situation Analysis
Larson Inc.s total revenue in Nigeria was $45 million in the year 2003 where as its total sales revenue worldwide was $936 million. Almost 5% of the total revenue came from Nigeria operations. However, the company is facing a lot of issues continuing its operations in Nigeria like Increasing costs Current inactive partner with a 25% stake in the joint venture Current CEO, Nigeria operations has a negative attitude towards the operations in Nigeria Several problems identified by the current CEO in running the operations

But at the same time we know that Nigeria is a developing country and there is a great demand for our products which is likely to increase in the coming years as well. Mr. Ridleys report focuses on the current problems only but does not foresee the future prospects in the country. Also the report presented by Mr. Ridley does not mention his specific problems related to recruiting and retaining existing employees. He is not motivated to fix the current problems and see the overall picture which can lead to increase in the market share and thus greater revenues. There are close to 59 million people in the country who are below 15 years age. So, there is a huge manpower queued up in the country for the coming years which can be utilized in the operations of our company and hence overall growth of Nigeria as a nation.

Population Percentage
60 50 40 30 20 10 0 Below 15 Above 15 Population Percentage

Chart 1.1

Fig 1.1

Problem Statement
How to continue the operations of Larson Inc in Nigeria?

Statement of options
1. Continue operations in Nigeria by terminating Mr. Ridley and appointing a new CEO to rebuild company operations and its morale in Nigeria. 2. Continue operations in Nigeria by mentoring Mr. Ridley to change his pessimistic attitude and to see the future prospects of the company in Nigeria. The mentor can be a HR manager who can also work for recruiting new local talent.

Criteria for evaluation

1. 2. 3. 4. Company should be able to increase its overall revenue Morale of the company and its employees should be boosted Expatriate staff to be retained and motivated Increase indigenization from 25 % to 51 %

Evaluation of options
1) If Mr. Ridley is terminated from employment and a new CEO is hired the company will have to rebuild its entire operations in Nigeria from the beginning. Initiating things by a new leader will take a lot of time. a) The company can target its growth under the leadership of a new CEO. As there is little competition in Nigeria from other firms this criteria can be easily achieved. Also, as Nigeria is a developing country and has cheap labor compared to other countries in Europe and America, therefore, the products manufactured in Nigeria will be cheaper and hence can be exported in other parts of the world. Please refer Chart 1.1 for countries potential labor force which shows there is a huge percentage of people below 15 years who can be utilized in the future. Fig 1.1 depicts the strategic location of Nigeria having a coastal line. Hence, exports to other countries can be done easily through sea ports. This shows that there is a huge potential for growth in revenue in Nigeria in the coming years. b) Under the leadership of a new CEO, company and employees morale will be boosted but the job for the new CEO will be very challenging as he/she will have to begin everything from scratch. c) Expatriate staff can be motivated by giving incentives for self and family. It can be in the form of travelling expenses, free accommodation, revised daily allowances etc. d) Indigenization to 51 % can be done by including another local partner in the joint venture. In this way the two local partners will have a share of 25 % and 26 % respectively where as Larson Inc will have majority 49 % share. It needs to be ensured that the new local partner being roped in is active. The new partner can help Larson Inc cause by attracting and motivating local labor as well as can help deal with Nigerian government authorities in a better way as it would have a better understanding of the Nigerian culture. 2) If Mr. Ridley is retained in the organization there is a serious need of mentoring him so that he changes his approach of getting things done. He needs to develop a more optimistic approach and for this a personal advisor can be appointed for him. An HR Manager if appointed for this task can also work alongside in recruiting the best talent from the country. a) The criteria of increasing revenue can be fulfilled in the similar approach as mentioned for option 1. However, with a little change in Mr. Ridleys attitude things can be done faster as he already has a good experience in Nigeria operations. b) As Mr. Ridley inculcates a positive attitude, the same would be reflected down the organization as well. c) Expatriate staff can be motivated by giving incentives for self and family. It can be in the form of travelling expenses, free accommodation, revised daily allowances etc. d) Indigenization can be achieved in the same way as mentioned in evaluation of option 1. Here too, Mr. Ridleys experience in Nigeria will help to find a better partner in terms of activeness and linkage with local authorities.

Recommendation
Considering Mr. Ridleys good amount of experience in Nigeria operations, I recommend to go with option 2. It fulfills the four criteria stated above very well. 8

Plan of action
1) Appoint an advisor/mentor for Mr. Ridley who can help him go with a positive attitude. 2) Introduce a new partner with 26% stake in the joint venture. 3) Expand the business operation in Nigeria and start exporting products from Nigeria port to other countries.

References
Google Maps. (n.d.). Retrieved from http://maps.google.co.in/