Foreign Direct Investment Senegal

1
Foreign Direct InvestmentSenegal
2
Country Risk

• Politically Low
• Democratic Nation
• Economically Low
• In relation to other African Nations
• 75 of Labor force in Agriculture
• Member of West African Economic and Monetary
  Union
• Devaluation of Currency

3
Expansion

• Kraft Foods Inc.
• Government open to Foreign Investment
• Tax Advantages offered to priority industries

4
Horizontal Expansion

• Rice Market in Africa
• Costs of Inputs
• Elastic Product

5
Vertical Expansion

• Low Profit Margins
• Transportation Capabilities

6
Modes of Entry

• Arms Length Joint Venture
• Agency Costs
• Dissipation of Firm-Specific Assets
• Hold-Up Problem

7
Exchange Risk

• CFA Franc
• Transaction Exposure
• Operating Exposure
• Low Pricing Flexibility
• Mitigate with production flexibility and
  devaluation of currency.

8
Regression
9
Operational Strategies

• Cost-Leadership Strategy
• Global Strategy

10
Conclusions

• Kraft Foods Inc. should horizontally invest their
  rice manufacturing in Senegal.