FMCG Nigeria Plc Case Solution

1. Introduction

This case study presents a detailed strategic analysis of FMCG Nigeria Plc. The case analysis covers key managerial and strategic issues that FMCG Nigeria Plc is currently facing due to challenging internal and external environments. The case solution first conducts the strategic analysis by applying the relevant strategic management tools and frameworks, and then presents strategic recommendations based on overall analysis (Hamilton and Webster, 2018).

The case offers a holistic view of FMCG Nigeria Plc business environment. Case findings are relevant for all key stakeholders of FMCG Nigeria Plc. Reader should first read the case on FMCG Nigeria Plc, and then read the analysis.

2. External environmental analysis of FMCG Nigeria Plc

The external business environment comprises political, economic, social, technological, legal and environmental factors that influence the strategic positioning of FMCG Nigeria Plc (Khalid and Rahman, 2019).

Here are key external environment characteristics:

External environmental forces are dynamic and uncontrollable

External environment can directly influence the FMCG Nigeria Plc strategic positioning

External environment requires continuous monitoring to timely identify the potential threats and opportunities (Shtal et al. 2018).

2.1. PESTLE analysis of FMCG Nigeria Plc

2.1.1. Political

The FMCG Nigeria Plc must carefully examine the potential impact of global political unrest on its business operations

The FMCG Nigeria Plc should actively monitor, and respond to the changes to legislation

The FMCG Nigeria Plc should analyze how taxation policies can influence its profitability in different countries where the company is currently present (Khalid and Rahman, 2019).

2.1.2. Economic

Rising GDP and growing consumer spending can help FMCG Nigeria Plc in business expansion

Increasing interest rates can increase the debt cost for FMCG Nigeria Plc.

Reducing inflation can decrease the production cost of FMCG Nigeria Plc and increase profitability by driving up the sales revenue (Begley et al. 2005).

2.1.3. Social

The aging population can affect the FMCG Nigeria Plc brand positioning, as FMCG Nigeria Plc currently targets young people.

Growing preferences for luxury items, and improving lifestyles can create more demand for FMCG Nigeria Plc premium-priced products (Perera, 2017).

2.1.4. Technological

Government is granting more technology incentives to fuel the innovation. It can help FMCG Nigeria Plc achieve its innovation objectives.

Emerging automation trends require FMCG Nigeria Plc to revisit its business model, and enhance process efficiency.

Improving technological infrastructure can enable FMCG Nigeria Plc to resolve its supply chain inefficiencies (Shtal et al. 2018).

2.1.5. Environmental

The stringent environmental regulations require FMCG Nigeria Plc to ensure strict compliance with environmental standards.

Consumers’ growing environmental consciousness provides an opportunity to FMCG Nigeria Plc to launch more green, environment-friendly products.

FMCG Nigeria Plc should incorporate environmental thinking in its strategic decision-making process to position itself as a socially responsible organization (Moser, 2015).

2.1.6. Legal

The FMCG Nigeria Plc should take strict measures to avoid discrimination at the workplace.

The FMCG Nigeria Plc must abide by the consumer data privacy laws to avoid reputation-damaging lawsuits

The FMCG Nigeria Plc must also ensure strict implementation of workplace safety standards to comply with the health and safety regulations (Khalid and Rahman, 2019).

2.2. Porter five forces of FMCG Nigeria Plc

2.2.1. Bargaining power of suppliers

The growing number of suppliers is weakening their bargaining power against FMCG Nigeria Plc (Dobbs, 2014).

FMCG Nigeria Plc has a wide supplier network, which strengthens its negotiation ability.

Low product differentiation further reduces the supplier bargaining power, as FMCG Nigeria Plc can easily switch to suppliers that offer better terms and conditions (Dobbs, 2014).

Overall, the bargaining power of suppliers for FMCG Nigeria Plc is low.

2.2.2. Bargaining power of buyers

There are a small number of buyers that buy in large quantities. It enhances their bargaining power against FMCG Nigeria Plc (Cho et al. 2019).

Buyers are price insensitive, and cannot easily switch to other companies due to economic and psychological switching costs. It reduces their bargaining power against FMCG Nigeria Plc.

High product differentiation further discourages the buyers from switching to competitors (Dobbs, 2014).

Overall, the bargaining power of buyers is moderate-to-low for FMCG Nigeria Plc.

2.2.3. Threat of new entrants

High entry barriers make it difficult for new entrants to enter in the market

The high initial capital expenditure also erects an entry barrier for new firms

FMCG Nigeria Plc has a loyal customer base, which further reduces the risk of customers switching to new entrants (Grundy, 2006).

Overall, threat of new entrants for FMCG Nigeria Plc is low.

2.2.4. Threat of substitutes

The emerging innovative technologies are increasing the threat of substitutes for FMCG Nigeria Plc

Growing threat of substitutes is compelling FMCG Nigeria Plc to continuously improve product quality (Bruijl and Gerard, 2018).

Changing consumer demographics and their growing tech-savvy nature is further increasing the substitute threat for FMCG Nigeria Plc

However, the brand loyalty increases the psychological switching costs, which somehow reduces the substitute threat (Dobbs, 2014).

Overall, the substitute threat for FMCG Nigeria Plc is moderate to high.

2.2.5. Industry rivalry

The competition among existing market players is intense

The market is mature, and is approaching saturation point, which further intensifies the industry rivalry

However, high-quality differences and brand loyalty deters the customers from switching to competitors (Dobbs, 2014).

Overall, the industry rivalry is moderate to high, which makes the business environment challenging for FMCG Nigeria Plc.

3. Company level analysis of FMCG Nigeria Plc

Up till now, the case study presented a holistic environmental and industry-level analysis. This section now presents the FMCG Nigeria Plc level analysis by applying relevant tools and frameworks.

3.1. SWOT of FMCG Nigeria Plc

SWOT is a strategic management framework that helps FMCG Nigeria Plc in understanding its core strengths and weaknesses. Framework also identifies opportunities and threats that reside in FMCG Nigeria Plc’s external business environment (Helms and Nixon, 2010).

3.1.1. Strengths

The FMCG Nigeria Plc holds a market leadership position, and has highest market share.

The FMCG Nigeria Plc has high customer loyalty, which makes it difficult for competitors to attract its customers.

The FMCG Nigeria Plc has strong financial health, which allows the company to spend heavily on R&D, and fuel the innovation (Sarsby, 2016).

The FMCG Nigeria Plc has successfully positioned itself as a responsible corporate citizen.

The FMCG Nigeria Plc has a wide supplier and distribution network, which helps in the business expansion (Valentin, 2001).

3.1.2. Weaknesses

The FMCG Nigeria Plc currently has a high employee turnover rate.

The FMCG Nigeria Plc is facing supply chain inefficiencies, which are lowering the organizational productivity (Madsen, 2016).

The FMCG Nigeria Plc is unable to quickly resolve the customer complaints, which causes customer dissatisfaction (Helms and Nixon, 2010).

The hierarchal structure of FMCG Nigeria Plc causes resistance to change.

3.1.3. Opportunities

FMCG Nigeria Plc can invest on emerging automation and artificial intelligence technologies to improve the process efficiency

FMCG Nigeria Plc can accelerate the green product development, and invest on green marketing efforts to capture the attention of environment-conscious customers (Solaiman et al. 2015).

FMCG Nigeria Plc can invest on an online influence marketing strategy to expand the reach to a young population

FMCG Nigeria Plc can find strategic partners around the globe to achieve its expansion objectives (Sarsby, 2016).

3.1.4. Threats

The growing industry competition among existing players and thinning profit margins has become a major threat for FMCG Nigeria Plc

Global political unrest can negatively affect the FMCG Nigeria Plc performance at the international stage

The expanding grey market and the influx of replica goods can negatively affect the FMCG Nigeria Plc revenue (Davidson et al. 2019).

Aging population can threaten the FMCG Nigeria Plc survival that, primarily focuses on young customers

After presenting the SWOT analysis, the next framework analyzing the FMCG Nigeria Plc’s marketing mix strategies.

3.2. Marketing mix of FMCG Nigeria Plc

3.2.1. Product

FMCG Nigeria Plc offers a wide product variety that meets the needs of diverse customers

FMCG Nigeria Plc has consistently maintained high product quality to justify premium prices

FMCG Nigeria Plc invests heavily on the quality improvement and management to meet the customers’ product quality expectations (Singh, 2012).

FMCG Nigeria Plc invests on innovative marketing and communication strategies to set a clear product positioning, and communicate how its products are different from competitors.

FMCG Nigeria Plc offers warranties and after-sale services that enhances the overall customer experience (Ferrell et al. 2021).

3.2.2. Price

FMCG Nigeria Plc adopts a premium pricing strategy, which is aligned with the company’s premium brand image.

FMCG Nigeria Plc avoids offering price discounts to maintain brand exclusivity (Baines et al. 2017).

FMCG Nigeria Plc does not charge any hidden prices, and has integrated transparency in its pricing model

FMCG Nigeria Plc also offers value-added elements, and adopts a bundle pricing strategy to boost the sales (Giri et al. 2020).

FMCG Nigeria Plc offers credit payment options for the customer convenience.

Key factors that FMCG Nigeria Plc considers while setting the prices include- brand image, customers’ expectations and purchase capacity, and on-going competition.

3.2.3. Place

FMCG Nigeria Plc adopts a selective distribution strategy to reach the target market

The FMCG Nigeria Plc chooses distributors who are located in urban areas, and can preserve the premium brand image

Currently, FMCG Nigeria Plc has a distribution network that is spread in more than 50 countries

FMCG Nigeria Plc has adopted Omni-channel strategy, and sells its products through multiple online and offline channels, including- official outlets, authorized distributors, the company website and mobile application (Palmatier et al. 2016).

Well-integrated Omni-channel strategy offers a seamless experience to the FMCG Nigeria Plc customers.

3.2.4. Promotion

FMCG Nigeria Plc avoids offering promotional discounts to preserve the brand exclusivity.

FMCG Nigeria Plc invests heavily on the celebrity endorsement strategies to promote the brand among the target market.

FMCG Nigeria Plc also have a strong social media presence, and specifically focuses on the online influencer marketing strategy to create brand awareness (Varadarajan et al. 2010).

FMCG Nigeria Plc uses both- online and offline marketing and communication channels to promote the brand.

FMCG Nigeria Plc’s promotional strategy is well-aligned with other marketing mix components to develop a clear brand positioning (Palmatier et al. 2016).

3.3. VRIO of FMCG Nigeria Plc

3.3.1. Valuable

The FMCG Nigeria Plc has a wide distribution network that is spread across the globe.

The FMCG Nigeria Plc has extensive research and development capabilities that fuel the innovation process.

The FMCG Nigeria Plc offers a seamless customer experience through a well-integrated marketing mix.

The FMCG Nigeria Plc has strong financial health, and free cash flow that it can invest on innovative projects.

The FMCG Nigeria Plc has a strong presence over social media that drives the customer engagement, and increases the company’s reach to the target market.

The FMCG Nigeria Plc has successfully attracted and retained highly skilled staff that drives the overall organizational productivity, and helps the company in achieving its innovation objectives (Cardeal and Antonio, 2012).

3.3.2. Rare

FMCG Nigeria Plc has built strong relationships with suppliers that enable the company to achieve production objectives even when there is a material shortage in the market

FMCG Nigeria Plc has access to the rare and hard-to-reach raw material that is used to produce top-quality products (Cardeal and Antonio, 2012).

FMCG Nigeria Plc has successfully developed a strong brand reputation that keeps customers hooked with the brand

FMCG Nigeria Plc shares a strong emotional connection with its customers, which increases the psychological switching costs for them (Hernández and Garcia, 2018).

FMCG Nigeria Plc has developed its image as an environment-friendly, sustainable, and responsible brand that takes care of all stakeholders.

3.3.3. Inimitable

FMCG Nigeria Plc has developed an in-depth knowledge of customers’ intrinsic motivational needs, and has developed its brand image in a way that shares close relatedness with customers’ desired self-image (Liu et al. 2012).

FMCG Nigeria Plc has secured exclusive agreements with the suppliers to get access to unique raw materials. The exclusive agreement makes this resource inimitable for FMCG Nigeria Plc

FMCG Nigeria Plc has strong transformational and charismatic top leadership that has always successfully led the organization through a crisis (Nusari et al. 2018).

FMCG Nigeria Plc has developed a robust organizational culture that promotes cohesion, and strengthens the employees’ affective commitment with the organization.

3.3.4. Organized

FMCG Nigeria Plc has secured the access to human capital (skills and expertise) that is needed to exploit the above-mentioned resources.

FMCG Nigeria Plc has a well-developed technical infrastructure that supports the business operations, and fuels the innovation process.

FMCG Nigeria Plc has built extensive expertise, and gained years of experience that helps the company in leveraging its core strengths to exploit the available opportunities.

FMCG Nigeria Plc has built strategic partnerships that help the company in pooling the resources together to gain a strong competitive edge over rivals (Cardeal and Antonio, 2012).

3.4. BCG of FMCG Nigeria Plc

3.4.1. Stars

The core products of the FMCG Nigeria Plc fall in the star category. FMCG Nigeria Plc has secured market leadership in these categories

FMCG Nigeria Plc’s market share in these product categories is growing due to high market growth potential

FMCG Nigeria Plc should pay specific attention to these product categories, and should try to preserve the market share

The intensifying competition imposes a threat to the FMCG Nigeria Plc’s market leadership in the ‘Star’ category

Overall, FMCG Nigeria Plc should increase investment on the star category to maintain leadership in the growing market (Mohajan, 2017).

3.4.2. Cash cows

FMCG Nigeria Plc has several product categories in which the firm has attained the market leadership position.

However, the market growth in these product categories has become slowed with time, as the market has become mature.

FMCG Nigeria Plc should ‘milk’ these product categories as they are an important source of cash flow.

However, FMCG Nigeria Plc should avoid increasing investment due to slowed market growth, and should bring innovation to keep adding new features.

Overall, FMCG Nigeria Plc should aim to maintain the current market position, but avoid increasing the investment due to slow market growth (Kader and Hossain, 2020).

3.4.3. Question marks

FMCG Nigeria Plc has some product categories that are in a growing market segment. Despite high market growth, FMCG Nigeria Plc is unable to increase the market share in these segments.

The products under this category have the potential to become stars, as they operate in a high-growth market.

But, extensive investment is needed to understand the reasons behind the low market share, and it can affect the cash flow of FMCG Nigeria Plc.

Therefore, FMCG Nigeria Plc needs to evaluate if it is feasible to increase the investment to drive the market share, or it is wise to divest from this market segment (Mohajan, 2017).

3.4.4. Dogs

FMCG Nigeria Plc has one product that operates in a market with low growth potential

FMCG Nigeria Plc has only a marginal share in this market.

As growth in this market is stagnant, and market share is also marginal, FMCG Nigeria Plc may consider divesting from this market segment.

It will be unwise to invest in this segment, as this product has turned into ‘dog’, which means the product is aged and waning.

Here, two options are available to FMCG Nigeria Plc:

o First, FMCG Nigeria Plc may entirely refresh the dying product.

o Alternatively, FMCG Nigeria Plc may divest this product from the portfolio.

Considering the current business environment, and competitive dynamics, FMCG Nigeria Plc is recommended to get rid of this product by taking divestment decisions (Torquati et al. 2018).

3.5. Ansoff matrix of FMCG Nigeria Plc

FMCG Nigeria Plc aims to expand its business operations to strengthen the competitive positioning in the market. Ansoff matrix here can help FMCG Nigeria Plc in taking the right business expansion decision.

Four business expansion strategies available to FMCG Nigeria Plc are- market penetration, market expansion, product development, and diversification (Loredana, 2016).

Choosing the right expansion strategy is important for FMCG Nigeria Plc to achieve its expansion objectives.

3.5.1. Market penetration

FMCG Nigeria Plc can penetrate into existing markets by expanding the market reach. This strategy is recommended when the market has high growth potential.

FMCG Nigeria Plc can expand the market reach by increasing the customer loyalty, and encouraging them to increase the spending.

FMCG Nigeria Plc can use the influencer marketing strategy as a tool to create e-WOM. It will create brand awareness, spread the brand message, and enable FMCG Nigeria Plc to penetrate deeper into the market.

Some other ways through which FMCG Nigeria Plc can penetrate into the market is- to increase the marketing and promotional budget, making price adjustments, and improving the product quality to gain a larger share from the existing market (Shaw, 2012).

3.5.2. Market development

FMCG Nigeria Plc can find new geographic markets to launch its existing products

Another way to pursue this expansion strategy is through celebrity endorsements. Celebrities can help FMCG Nigeria Plc in finding new customers for existing products

FMCG Nigeria Plc can also consider adding new product dimensions, or revising the packaging to reach new consumer markets.

Another way to pursue this expansion strategy is by exploring new distribution channels. FMCG Nigeria Plc can strengthen its presence on e-commerce, and open multiple online sales channels to reach new customer markets (Hussain et al. 2013).

FMCG Nigeria Plc can also charge two different prices to expand the reach from high-end to middle-class customers.

3.5.3. Product development

FMCG Nigeria Plc can expand its business operations by pursuing a product development strategy.

Instead of adopting a reactive attitude by coping with the competitors, FMCG Nigeria Plc must proactively behave while launching new products. Some possible proactive product development strategies are discussed below.

To pursue a proactive product development strategy, FMCG Nigeria Plc may increase investment on research and development activities to bring the product innovation.

FMCG Nigeria Plc may also invest on the market research to identify and respond to the unmet customer needs (Katsikeas et al. 2016).

FMCG Nigeria Plc may consider strategic alliance and partnership options to launch new products. It will enable the company to pool the resources and capabilities together, and share risks while launching new products.

Acquisition of smaller firms can also enable FMCG Nigeria Plc to successfully launch new products in the comparatively shorter time span.

3.5.4. Diversification

FMCG Nigeria Plc can adopt the diversification strategy to reach new markets through new products.

FMCG Nigeria Plc can pursue either a related or unrelated diversification strategy.

The related diversification strategy requires FMCG Nigeria Plc to enter in similar markets. But, unrelated diversification requires FMCG Nigeria Plc to find entirely new markets (Dhir and Dhir, 2015).

Unrelated diversification is riskier, and can affect the brand image. So, FMCG Nigeria Plc should pursue a related diversification strategy.

By pursuing related diversification, FMCG Nigeria Plc can horizontally and vertically add new product lines

Through successful diversification, FMCG Nigeria Plc can increase its profitability, and generate more revenue from the new products and new market segments (Loredana, 2016).

4. Conclusion

The in-depth strategic analysis of FMCG Nigeria Plc reveals some interesting insights. FMCG Nigeria Plc currently holds strong competitive positioning. However, the challenging business environment and intensifying competition require FMCG Nigeria Plc to adopt a proactive behavior. FMCG Nigeria Plc needs to continuously assess its external and internal business environment to timely identify the potential threats and opportunities. Here, the application of relevant strategic management tools and frameworks can help FMCG Nigeria Plc in making wise business decisions. The key to success in a such challenging and complex business environment is- to proactively respond to the external environment by leveraging core strengths, and overcoming the weaknesses.