Nigeria Market Entry Strategy Somebody's Mother's Chocolate Essay

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Nigeria Market Entry Strategy Somebody's Mother's Chocolate Sauce, LLC

Export opportunity for ginger and cocoa

Somebody's Mother's Chocolate Sauce, LLC is manufacturer and processor of cocoa located in Houston, TX with gross annual sales of approximately $700,000 per year (Manta, 2010). The fluctuating costs of cocoa and the introduction of a new ginger-based product have prompted the company to seek export opportunities in Nigeria to vertically integrate its sources of cocoa and for ginger to expansion of its chocolate sauce sales. The company also plans to sell some of the cocoa beans and ginger wholesale for a profit to other chocolate processors in its local and regional market. In the long-term the Company may explore producing its chocolate sauce in Nigeria for export to European markets.

B. Entry Mode

Somebody's Mother's Chocolate Sauce, LLC (the "Company") is new to the international market and believes the most successful avenue to begin exporting is hiring a local agent in Nigeria to negotiate with local producers. This is advantageous because an agent in Nigeria who knows the local customs, regulations, and producers has the contacts and can create the agreements necessary to obtain the sources of cocoa beans and ginger. The Company has selected His Mercy Exporters & Investment operating out of Lagos, Nigeria to facilitate the export process (Alibaba, 2010). Lagos is located on a port making it easier for the transportation of the products to the United States.
As a developing country, personal ties and patience are important for successful business activity in Nigeria (ICON, 2007). The Nigerian market offers significant opportunities for U.S. exporters but a clear road map and a well thought-out business strategy are required (ICON, 2007. Nigeria is the largest market in Sub-Saharan Africa, but has a cash-based economy (ICON, 2007). In Nigeria, most transactions are paid for in (Naira) cash and credit instruments, such as credit cards are in their early stages of use (ICON, 2007). The Company will need to set up a bank account in Nigeria to trade in cash with its agent.

The government in Nigeria is working to improve the economy, but the downside to operating through an agent and in Nigeria is the political unrest prominent in the region and the possibility of a supply interruption ("Thousands," 2010).

The forecasts for cocoa production are excellent with a 26% growth expected through 2014, driven by increased government investment, greater commercialization, strong global cocoa prices and efforts to develop the cocoa processing sector ("Research and Markets," 2010).

Ginger is a more stable market then cocoa and produced mainly for export. Nigeria's production of ginger in 2005 was estimated at 110,000 metric tons with 10% for local consumption as fresh ginger and 90% dried primarily for the export markets (Nigerian Embassy, n.d.).

C. Pricing

Cocoa bean prices.....

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