International Business Strategies in Africa: Old Supply Chains and New Competitors “Lessons from the Ethiopian—Italian Leather Trade”
- Abebe Workneh
Sub-Saharan Africa (SSA) has always been a major source of various raw materials and commodities to the industrialized world. This paper specifically focuses on international business (IB) strategies in supply chains and commodities using the Ethiopian-Italian hides, skins and leather trade as a case study. The aim of this paper is to test to what extent internal public policy changes and competition from companies of newly emerging economies affected the business of long standing partners in the Ethiopian-Italian leather business. For the descriptive analysis, primary and secondary data are used. The primary data is gathered using personal observation and interviews with relevant personnel on both sides of the trade. Whereas, secondary data is collected from different published and unpublished materials including annual reports of relevant institutions. The Author primarily applies two theoretical perspectives: Michael Porter’s five competitive forces model and Ronald Coase’s transaction cost theory of the firm.
The paper is narrowly focused on leather supply trade, but with implications on all old and rusting, strategic and non-strategic supply chains stretching out of Africa to Europe. The purpose of the paper is to contribute in furthering research agenda on identifying strategies tailored for researchers and executives interested in expanding to Africa.
The conclusion is that, it seems, European leather companies have stuck to the strategies they’ve traditionally deployed in Africa. And, the old strategies of international business firms seem no more working in the continent. Even though, it is not possible to comprehensively present all the reasons for the competitive loss of European leather companies to newly emerging companies with regard to the African supplies, it could be better explained from the perspectives of complacency trap coupled with failure to develop dynamically tailored strategies, rather than the traditional business competitiveness theories.
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