Something has been going on in the nation’s business environment for some time. There is a gradual divestment process that has seen several multinationals leave the shores of Nigeria and in some cases relocated their entire operations from Africa. This trend comes with outcomes that might determine the prospect of business in the country.
But beyond the changes that has seen asset swap or sale,there is an undercurrent pointing at the direction of a new shape of business ownership and management in Nigeria. In the last few years, Unilever, Shell, ExxonMobil, Procter and Gamble, Sanofi Pasteur, Glaxo SmithKline and Reckitt Benckiser have all gradually wound up their manufacturing operations or relocated from Nigeria citing a tough business operating environment as their key reason.
More recently, Nigerian Breweries announced it would shut down two of her nine breweries while PZ Cussons has issued a statement that it would shut down operations in Nigeria and Africa because of dwindling sales. It calls to question the economic policies and incentives in our economy but also signals a new paradigm in the dynamics of the business climate.
A close look reveals that the assets sold by the multinationals have been quickly acquired by Nigerian businesses. On the surface it looks like an indictment of our economy but on a historical context, there has always been a tendency for businesses to fulfill the aphorism of “adapt or die” in the way they approach a rapidly shifting system.
Unilever’s manufacturing plants were quickly leased by another firm,this time a local manufacturer. The operations of two energy giants, Shell and ExxonMobil, were acquired by Oando OHV and Seplat, two local giants. The inference is that while the big multinationals are seeing too much risk and turbulence,the local firms are seeing opportunities and possibilities.
These could still turn out to be a bad bet but overall they seem to know something about the local business climate which the multinationals have either failed to know or decided to simply cut their losses.Unilever and PZ Cussons have existed for many decades, expanding their operations globally. Their focus on fast moving consumer goods have seen them dominate the business in most countries in the world, edging out local industry in the process.
This cycle seems to have become overtaken by new trends, Businesses must evolve to survive. The same market Unilever and PZ Cussons are exiting has seen firms like Aspira and Wings, the manufacturers of Viva and Klin detergent respectively succeed. The latter were able to understand the tastes of Nigeria, and adjusted accordingly. Wings, for instance, introduced a new detergent brand, Good Mama, to ensure it has products in every niche of the market.
That brings us to the question of what happened to Omo detergent and Elephant Blue detergent,and even Sunlight detergent which once dominated the market? Indeed what happened to Ariel detergent from Procter and Gamble? They misread the market trends and could not take advantage of changes in consumer behaviour and tastes.If we remember how much Pampers, a brand from Procter and Gamble became the generic name for diapers, one begins to wonder why in the brand left our shores. In its place, Haya A.S, a Turkish firm has taken over the market by storm through her popular diaper brand, Molfix, and has expanded operations because of demand.
The key to success in a tough business environment is to understand the market and take advantage of changes. When McVitie’s, the global biscuit giant understood the Nigerian business climate, it set up a joint venture with Pladis,and began manufacturing her quality biscuits like Hobnobs and Digestive in-country. Suffice it to say, the business strategy has succeeded so far for the firm. In the same economy some are leaving in droves, others are expanding. It means there is something some are getting right which others got wrong. In other climes, businesses rise and fall, get acquired or get sold, collapse or rejuvenate.
Nothing can change about that. It happens in rich and poor economies. Yet I once read a great report by Newsweek magazine where it revealed that even at the peak of the Intifada in Palestine around 2006, Coca Cola kept producing and selling in the ravaged territory. Around 2011, the same Coca Cola was able to keep producing in Syria as aircraft dropped bombs. They adapted to war, and today kept themselves in business.
This is not to make excuses for bad economic policies or poor leadership. These remain the bedrock of attracting investment. Business is anchored on having a good idea of the market and its underlying structure. It is a question of strategy, a question of adaptation, a question of resilience. Beyond these, businesses should ask themselves what others are getting right which they are yet to understand. And if all fails, we need to recall that though the Titanic sank, it has not stopped ships from sailing. Revolving doors allow some get inside at the same time others are exiting.
Exactly why businesses should constantly change strategies to survive no matter the economic conditions they meet.
@Ronald.O
