This report mainly focuses on Algeria as an emerging market, mobile phone as a product and Sagem as a French company. This report includes a detailed study of the marketing strategy and the economic conditions in Algeria and also analysis of the product and the services that Sagem offers to Algerians.
Algeria offers excellent opportunities for this particular company to look for new customers in the market as this market has substantial potential for growth. A study that was conducted last year shows good reasons to enter this market.
These are the reasons wy managers of Sagem believe that this step is important for the future.
This document examines the French mobile company Sagem and the emerging markets in Algeria. It is an international French group involved in consumer electronics, communication systems and defence electronics. This high-technology group is the second largest group in the field of telecommunications and the third for electronics with respect to defence and security. Sagem exists in more than twenty countries like Europe, Asia, Latin America and so on.
The first reason to choose Algeria as an emerging market was because this French company has been existent in the Algerian history and the borders of modern Algeria was created by the French. The Evian accords of March 18, 1962 provided continuous economic, financial, technical and cultural relations along with interim administrative arrangements until a referendum on self-determination came into place.
Then, Algeria became independent on July 3, 1963.
Although Algeria's international image is unfortunately limited, for most, the country is known for its independence struggle from the French and more recently for the civil crisis of the 1990s.
Because of the political context, terrorism and high unemployment, Algeria does not seem to be an attractive country. However, Algeria is important with respect to the energy markets because it is a significant oil and gas producer and exporter.
And since two years, Algeria has seemed to be an attractive country for foreign investments and a country with potential to set up a business.
Algeria is a large country, the second largest in Africa and it has a good geographical location, with a lot of resources, both natural and human. Moreover, the country's infrastructure consists of many airports, ports and 100,000 km of roads.
Finally, the second reason to choose Algeria and mobile phones is because of the liberalization of the telecommunications sector.
There are only 100,000 mobile phone lines for a total of 30 million inhabitants in comparison to Morocco (1.2 million subscribers for a total of 29.8 million inhabitants) and Tunisia (380,300 subscribers for a total of 9.6 million inhabitants). Furthermore, there are only two competitors in Algeria: Ericsson and Thuraya.
Sagem hence has decided to establish a business in this place. The question is: "How to enter this emerging market?"
For this, we first have to know the economics and the culture of the country in order to develop an efficient strategy. We also have to make a financial analysis to check if our project is feasible.
We will now explain why we are targeting the Algerian market. First, the idea was to do business with an African country and in an emerging market as Sagem did not have any trade relation with Africa.
The two main decisive points with respect to the global selection were the knowledge of the country's culture and geographic proximity. This allowed us to select three countries: Algeria, Morocco and Tunisia.
Then, it was very important to estimate the balance between the eventual risks and the potential profits of each of these three countries.
- Political instability
- Legal disadvantages
- Currency fluctuations
- Purchasing power fluctuations
- Sales potential
- Demand trend
- Cost reduction
With sales of mobile phones, we want to develop new habits in Algeria and facilitate communication between people and culture. The main targets chosen were the students and the business people.
The main idea of this report is to propose four-product lines for the Algerian market which will satisfy the different needs of the people. This French group kept in mind the fact that every customer has different needs and consequently it would make no sense to propose only one or two different mobile phones. Considering the actual weakness and emergence of the Algerian mobile phone market, this group wanted to sell cheap, simple and good quality products.
Selling "cheap" products is essential and important if we look at the purchasing power in the particular country. Production and distribution of expensive products would make no sense with respect to Algeria because very less people have the ability to buy these mobile phones.
Selling good quality products is essential for Sagem as this group gives importance to consumer satisfaction. Also this group wants to gain popularity in the new markets.
The basics of a mobile phone includes, easy (new) number settings, call register, call divert, schedule page, calendar, profiles, alarm, calculator and games. SMS service is very much important. This group wants to develop "SMS culture" because, in Europe it has become a common service and people want SMS service included in the whole price. On the buttons, the user can see the common numbers and letters which are on every mobile phone with Arabic letters. These different Arabic signs help in sending SMS (short message service).
Products that are sold to the customers by this group are of different sizes. Phonebook can save upto hundred numbers and the customers can choose between fifteen fixed ring tones and seven variable tones. Customer can also see who has called, what time and from what number.
[...] Especially in a context of terrorism, the family is really important, and it is very important to be in touch with each other with a mobile phone. This fact confirms that women could be a potential target because of their importance in the family. Education in Algeria At the time of independence, Algerian schools were based on the French system and most teachers came from France. French was the language of instruction and Arabic was offered as a second language. [...]
[...] Network quality of the country Let's present the results in a table: Algeria Morocco Tunisia million inhabitants inhabitants inhabitants Level of competition that Ericsson and Thurya Alcatel, Ericsson, Alcatel is already established Motorola, Nokia, There is just one company Philipps: Too much but a French one, for competition in the market which we must know the which is not as strong as culture of its business mobile phone market attained its growth in Relations and results of Algerie Telecom: Good Maroc Telecom: Tunisie Telecom: Good the negotiations made negotiations and human difficulties during the negotiations, but little with mobile phone relations with them negotiations with this relation troubles with operators Orascom Telecom: problems operator respect to Orascom Telecom Network quality of the Average Good Not great country Results and commentaries Good potential and good Good potential, but too Good potential and relations with Algerian much competition and presence of Alcatel Telecom difficulties with Maroc Telecom 2. [...]
[...] Algerian banks represent the most important banks on the continent in terms of balance sheet (South Africa and Egypt). The subsidiaries of foreign banks, mainly Arab and French ones that are operating in Algeria are ranked after these banks. They were recapitalized several times during the 1990s through direct cash transfers from the treasury and by the substitution of government bonds. However, in 2001, two public banks, Credit Populaire Algerien and Banque Nationale d'Algerie, were recapitalized, and others were opened to foreign partners. [...]
[...] Assuming stable participation rates, the World Bank (1994) expects the labor force to grow on average by 0.3 million workers per annum in the early 2000s compared with an annual average of 0.2 million through the mid 1980s, or 4 percent per year. Should the participation rates of the female labor force continue to rise; the total labor force growth will be even greater. Most new jobs were found in the public sector, the growth in employment particularly in the sectors of transport and communication. [...]
[...] Conscious of its position in the world (Sagem owns only of market shares in the world concerning the mobile phone sector), the French firm must develop a good strategy at all levels, with product adaptation, communication, dealing with Business to Consumer or/and Business to Business system(s), and price fixing considering the purchasing power. Furthermore, let us specify that Nokia, Motorola, Samsung, Sony-Ericsson and Siemens share 65% of the mobile phone market in the world. Communication For the communication of its products, Sagem must be aware of the target it aims for. [...]
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