MARKET OPPORTUNITIES FOR WATER TREATMENT CHEMICALS IN THE NIGERIA MARKET (CASE: KEMIRA)

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ABSTRACT
The challenges of safe drinking water are of major concern in the Nigerian economy. In the context of developing countries, we can see that water related diseases are the basic cause of several illness, and death. The sub-Saharan Africa sees Nigeria as its largest market, with over 160 million people, and the population growth rate’s estimated at 3% annually.

Despite the existence of several government agencies whose role is to enhance official water supply and distribute water to all citizens in Nigeria, current access to improve drinking water in Nigeria is still low. Nigeria is among the African countries which aren’t on track in terms of meeting the MDG i.e. Millennium Development Goals, whereby the safe drinking water coverage targets have been specified at 75%. Nigeria water coverage rate are among the lowest in the world. It’s at third rank after China and India in terms of nations with significantly large populaces and no real access to safe drinking water.

The aims of this thesis is to study the market opportunity for Kemira water treatment chemical products in the Nigerian market in order to eliminate poor quality of water that causes deadly diseases such as cholera, dysentery, typhoid and poliomyelitis in the country .
The research problem addressed in the study was divided into two parts. The first part was to determine the suitable market entry strategy for Kemira to enter into the Nigerian market and also, the second part was to determine the factors that influence the mode of entry in Nigeria market. The study at hand was conducted on the given areas of significance through related literature. Studies from within the literature helped in creating a questionnaire to check the opinions and experience of managers in Nigeria in terms of risks, decisions, along with methods of entry into the market.


Based on the research study, the empirical results obtained in the first part of the study shows that the most suitable mode of entry into the Nigerian market is through exporting duly because of the risk in the market environment and also, exporting is the most common modes used by multinational companies to enter into a foreign country. Secondly, the other part of the research study shows that two major factors influencing the modes of entering into the Nigeria market are political factors and environmental factors mainly because recently Nigeria environment is not conducive duly because of political and corrupt leaders representing in the country.


TABLE OF CONTENTS

ABSTRACT
LIST OF FUGURE

1. INTRODUCTION
1.2 Objective of the Study
1.3 Problem Formulation
1.4 Research Questions and Structure
1.5 The Research Structure

2. REVIEW OF RELATED LITERATURE
2.1 Issues of Drinking Water in Nigeria (West Africa)
2.2 West Africa Continent
2.3 Nigeria Market Overview
2.4 Nigeria and Finland Trade Relationship
2.5 Nigeria Business Operating Environment (PESTEL Analysis)
2.5.1 Political Factors
2.5.1.1 Political Environment
2.5.1.2 Taxation Policy in Nigeria
2.5.1.3 Import, Export Regulation and Policy in Nigeria
2.5.2 Economic Factors
2.5.2.1 Economic Growth and Stability in Nigeria
2.5.2.2 Inflation Rate
2.5.2.3 Unemployment Rate
2.5.2.4 Taxation and Value Added Tax (VAT)
2.5.3 Socio-Cultural Factors
2.5.3.1 Nigeria Business Culture
2.5.3.2 Nigeria Cultural Dimensions
2.5.3.3 Income Level
2.5.3.4 Education Level
2.5.4 Technological Factors
2.5.4.1 Internet/ broadband
2.5.4.2 Mobile telecommunication
2.5.4.3 E-Commerce
2.5.5 Environmental Factors
2.5.5.1 Environmental policy and its Enforcement in Nigeria
2.5.5.2 Waste Disposal
2.5.5.3 Energy Consumption and power (Electricity)
2.5.6 Legal Factors
2.5.6.1 Employment Legal Requirement
2.5.6.1 Occupational Safety and Health
2.6 Market Entry Strategies
2.6.1 Indirect Exporting
2.6.1.1 Casual Exporting
2.6.1.2 International Trading Companies
2.6.1.3 Export Management Company
2.6.2 Direct Exporting
2.6.3 Foreign Production
2.6.3.1 Contract Manufacturing
2.6.3.2 International Licensing
2.6.3.4 Joint Venture
2.6.3.5 Foreign Direct Investment

3. RESEARCH METHODLOGY
3.1 questionnaire
3.2 The Research Response
3.3 Section A. Biographical Data Result
3.4 Qualitative Analysis of Result of Section B of the research

4. MARKET ENTRY STRATEGY
4.1 The most Suitable Market Entry to the Nigerian Market
4.2 Exporting
4.3 Export Distribution Channels
4.4 Steps in Export Order Process
4.5 Incoterms
4.6 Transport and Documentation
4.6.1  Shipping  Documents  Required  for  Exporting  Chemical  to  Nigeria Market
4.7 Labelling, Packing and Storage
4.7.1 Packing
4.7.2 Storage
4.8 Insurance Documents
4.9 Methods of Payment

5. MARKET RISK ANALYSIS
5.1 Factors Affecting Mode of Entry into the Nigerian Market
5.1.1 Political Factors
5.1.2 Environmental Factors
5.2 Conclusion and Recommendation
REFERENCES
APPENDICES


INTRODUCTION:

The supply of safe water for drinking and appropriately treated waste water is a fundamental requirement for human life. West Africa is faced with a serious health concern because of lack of access to clean water (Akpor B and Muchie M, 2011:1). For example, Nigeria is the largest market for water in sub-Saharan Africa with population of more than 160 million people, and “population growth rate estimated at 3% annually” (World Bank, 2012).

Despite the existence of several government agencies whose role is to enhance official water supply and distribute water to all citizens in Nigeria, current access to improve drinking water in Nigeria is still low. “Nigeria is currently not on track to reach the MDG targets of 75% coverage of safe drinking water and the proportion of the urban population with access to improve sources of drinking water in Nigeria decreased by 15% from 80% in 1990 to 65% in 2006. The rural areas recorded as decrease of 4% from 34% in 1990 to 30% in 2006.” (Unicef, 2008).

The lack of safe drinking water is the root cause of hunger, diseases and poverty throughout Africa. Nigeria faces mounting challenges in providing enough safe water for its growing population, especially for the huge numbers of people migrating to urban areas where municipal water service are often non- existent.

West African economy is growing every year and the inflation rate is reducing on yearly basis. In Nigeria, within the last eight years the government had undertaken a trade liberalization policy whereby they’ve made the operational environment for businesses friendlier to foreign investors, and less rigid in general. Therefore, it a good opportunity for Kemira, a Finland based company, to seize growth opportunities in West Africa.


“The companies that successfully gain competitive advantage in one environment are those that move early and aggressively to exploit a new market or technology” said Hibbert (1997: 5). The process for export decisions requires that several fundamental questions be resolved. It is a fairly complex process. Every firm of any size faces the question of where to expand to increase their sales; if exporting, which market; and in what way that is, the distribution channels, the pricing method, the level of promotion and so on (Beamish, Morrison & Resonzweig, 1997: 8). Global trends that have a direct influence over businesses on a global scale have gained advantages by transferring resources and materials over country borders. This transfer includes natural resources, management experts, and also labours

The choice of Kemira to enter the Nigeria market has to be motivated by the evaluation of growth and profit potential over a long term period. The research it will help Kemira to identify what they want to gain from exporting, are the expected benefits worth the cost’s, or would company resources be better used for developing new domestic business.

1.2 Objective of the Study
The aim of this thesis is to study the market opportunities for Kemira water treatment chemical products in the Nigerian market in order to eliminate poor quality of water in the economy. “A market opportunity is a newly identified need, want, or demand trend that a company can exploit because it is not being addressed by the competitors” (WebFinance, 2012).

Kemira is an international water chemistry company, with headquarters’ in Helsinki, Finland. It has approximately 4900 employees in 40 different countries, more than two third of which are outside of Finland. The company’s growth areas are pulp and paper, municipal and industrial water treatment, oil, gas and mining industry and feed, leather, chemical and detergent. Kemira comprises of group management, administration and others services.

Despite the fact that the company is one of the leading water chemistry companies in Europe, yet Kemira has not expand its products to Africa market, except in the late 2010, where they signed a contractual agreement with one of the largest mines industry in South Africa.

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