This chapter will revisit the objective of this dissertation, resume the findings of this study and make conclusions based on the findings. The case study results covering the chapters 2; 3; 4 will be synthesised. Moreover, recommendations for future researches will be discussed, in terms of how this analysis can be progressed and reflections made on both western and African points of view.
6.1. INTRODUCTION
The overall aim of this research was to advance comprehension of international competitiveness of domestic firms in developing countries within the financial industry particularly in Africa. In the second chapter, a literature review was developed in a systematic way by connecting some aspects not linked until now to explain this new phenomenon. In essence to have a close understanding of the context, the African market status was explained, also was identified how firms evolve and how new incoming with a thirst to have their part also of the world market use bold strategies and their knowledge to adapt to the context.
In order to have a precise idea, two firms were sampled; Ecobank, for its uniqueness and Standard Bank, due to the similarity of the market model of South Africa with that in the west and developed world. So therefore, to tackle the analysis, two hypotheses were developed, the first as a driving force and the second as an outcome in international competitiveness by using knowledge as a resource and source of competitive advantage against competitors.
6.2. RESEARCH OBJECTIVES: Synthesis of Findings and Conclusions
This case study revealed the extent to which local knowledge can be involved in the development of business strategies and the business models in the market in which a firm operates. This gives two different views on the subject whether or not it is about taking African firms abroad outside Africa, or just developing strong companies inside the continent.
In a difficult market as Africa, with a growing resentment emerging in Africa with regards to foreign firms and the ex-colonial system, a challenger mind-set to outperform against foreign firms has become an element of pride. During this study, many claims and analysis were confirmed and supported, and some revelations were made to the lack of small and medium enterprises which are supposed to strengthen some African economies. It was shown that foreign firms are unwilling to undertake large risks and have not improved the financial and banking sector in Africa, which by creating some animosities, has pushed to the development of new strategies, and business models enabling local firms to prosper against foreign firms through difficult regulations discouraging their growth.
Also, culture is part of the implementation strategies and domestic firms have a better understanding of this context than foreign firms and can thus have better performance. Whilst expanding, African MNCs are very cautious in using regional integration to link and develop their knowledge and culture as a pillar thereby creating a sustainable competitive advantage for the long run. In addition, most of these firms have adapted to the international system by implementing IFRS norms for example for better clarity.
However, the lack of transparency, the insecurity coming from the political, the social and even the economic environment restricts any large FDI inflows. Through the assessment of the two firms it was revealed that on one side, Ecobank, coming from a very poor country, was born global by status. Because its capital was formed by various institutions from a RIA, in which regulations, norms are harmonised and used the same currency from the French speaking countries. With an honourable ambition to serve pan-African interest, by using also its local knowledge to grow and its expertise to be able to adapt into the African environment and to develop suitable banking solutions for Africa and African, the foundation of its strategy and source of profits, Ecobank decided to stay in the continent.
Nevertheless the lack of technologies pushes the firm to sign a contract enabling it to be successful, making evident that at this moment no many firms in Africa within the financial sector cannot build a sustainable competitive advantage without utilising technology coming from another concurrent. By making a bank more accessible, Ecobank target the middle class, which cannot afford very expensive entry cost in the mainstream banks and do not want to be banked by microfinance institution. On a final note, its partnership with Western Union with cover almost 40 percent of the money transfer in sub-Saharan Africa, and represent at some point about 90 percent of the activity of the banks revealed a weakness on an economy. But when internationalising Ecobank would like to expand within the Africa but with some activities abroad to continue to act on its “mission” associated of panafricanism, this company which claims to be an African Expert, would have to wake up when regulation will start to arrive.
In the other side, Standard Bank, a colonial subsidiary which came to a growth and get out to a niche market to a more open one. By pushing the competition not just in the African market but also outside, opens international dimension in others continent and also arguing that is not just and African market expert but developing market expert with international dimension. While Through the use of local knowledge as element of competitive advantage and each firm on the development of their strategy, utilise it to brand itself as the “proper” African bank for African and their interest around the world; in opposite to Ecobank which is just the expert of Africa. This gives two different reliefs on the subject rather or not it is about taking African firms abroad outside Africa, or just developing strong companies inside the continent. Who is right? Maybe none, maybe both. However the market is still large to have all these challengers. Moreover, even using its colonial heritage, which helped surely in the technology and competences development, Standard Bank grows firstly through the MMA, then in the East coast of Africa. However, its international development out Africa represents today 45 percent of its global presence in almost all continents. In opposite to the Togo’s market, the South African one is more competitive, many large banks with little restrictions, giving the space for more development and more competition.
Nonetheless, in developing countries, especially in Africa, have the ability to understand its own environment is part of the development of a competitive advantage, which links to a cocktail of “fairly” conditions enable domestic to growth, and flourish by using their cultural appurtenance and identity. Because internationalisation is not linear (Hitt et al., 1997), even for the search of economies of scale and scope (Teece, 1980; Hymer, 1976; Caves, 1971). To succeed, firms in Africa use their knowledge to undertake their international development which is done first in the cocoon of the regional integration (Peters and Waterman, 1981; Shein, 1992); add to the element of culture which impacts strongly in Black Africa, push to innovate in the aspect wherein the lack of financial resources makes the region to set of tool this will enable a general and understandable environment, which will become competitive for inward FDI; according to Vernon (1988: 32-33) and created some firm formation as Ecobank which is already international by bird because it has to act in different countries as one with a good push of advantageous regulations (Caprio et al., 2001:4).
Moreover, Standard Bank grows through the MMA first of all then, in the East coast of Africa. However, its international development out Africa represents today 45 percent of its global presence in almost all continents. In the other side, Ecobank seems to develop another type of model slightly different financial to serve pan-African interest, by using also its local knowledge to grow and its expertise to be able to adapt into the African environment and to develop suitable banking solutions for Africa and African, the foundation of its strategy and source of profits.
The more solid is the knowledge of the firm on its local market, the stronger is the driving forces to out-perform against competitors. Through the use of local knowledge as element of competitive advantage and each firm on the development of their strategy, utilise it to brand itself as the “proper” African bank for African and serving their interest around the world with its partnership with Western Union which is one of the most used service abroad by the Pan-African diaspora; and the expert of Africa which is Ecobank. And the other Standard Bank by pushing the competition outside Africa, in opening international dimension in others continent and also arguing that is not just and African market expert but developing market expert with international dimension. This gives two different reliefs on the subject rather or not it is about taking African firms abroad outside Africa, or just developing strong companies inside the continent. Nonetheless, there is a margin to come to the absolute conclusion on it when Africa economies still suffer of instability and strong Small and Medium Enterprises (SME) (Prado, 2011).
6.3. LIMITATION OF THE STUDY
Many limitations apply to this research and they need to be taken into account and in the future for the purpose of finalising a Master’s Dissertation. Firstly, this is a Master’s degree dissertation which has the aim of helping our future employability but the nonobligation of an internship associated to it, might be impacting job prospects. Also, the research has been limited by the time allocated to it. The work has been carried out mainly after the examination and this is a holiday’s period for many respondents and supervisors. The limited time has had a serious impact on the level of in-depth exploration of a very challenging, complex, demanding and passionate topic as required for this level of qualification. Due to these reasons, it was decided to inquire via case study method, focused in a financial sector because of the ease of capital mobility. The time also affected the numbers of investigations made by narrowing the numbers of respondents. However the impact of all these disadvantages has been lowered by the good choice of respondents based on their knowledge on international trade, experience in Africa and involvement in the development of developing countries. This has strengthened the analysis and the level of investigation of this research which has perhaps gone into greater detail and has better examined the themes and associated issues.
Secondly, in light of the strategic significance and impact of African economies on our day to day life, one would expect a substantial literature on the competitiveness of African firms in general. Surprisingly, the subject remains one of the most understudied of international business. Some plausible explanations for this neglect can be found for instance in:
– the difficulty and cost of finding information in Africa ;
– international competitiveness being a distributed field of knowledge requiring crossfunctional expertise,
– the lack of common practice for many academic disciplines to work together, which is needed in Africa in particular;
– the lack of intellectual focus and interest in African businesses, (resulting in not many publications available for fostering research – although recent integration of theories from economics and business has broadened the understanding of the dynamics of the subject).
Most existing theories of competition is related to the experience of firms in advanced developing countries and has been used to analyse them. More recently these theories have been applied to firms located in emerging countries like China, India, Brazil, etc.
Their application to what is going on in the developing economies especially in Africa remains uncovered. Hence, to fill this gap in the literature, this paper reflects on the internal and external work on the competitiveness of the financial industry environment of African firms.
Lastly, this dissertation is aware of any potential bias which may occur during the analysis due to the emotional connection with this region and the choice of the sector representing a particular target of work. However, by following a scientific method based on Yin methodology, the elements of bias tend to be reduced to their minimal level referred to by Olson (1981) as an “insider view or perspective”. Thus this research explores deeper in detail by knowing well the region, its situation and institutions.
6.4. CONCLUSION AND RECOMMENDATIONS
Regional integration constitutes an essential element in the internationalisation process and the development of regional banks tends to lift the development of companies in Africa. The watermark of culture also helps to build up a sustainable model which connects directly with the population sometimes considering foreign MNCs as predators opposed to the local needs.
On one aspect or the other, Ecobank and Standard bank have understood what they have to take on board to develop a sustainable model. Foreign firms have to adapt as soon as possible to stay in tune with the competition going through the African market. However, further studies must be done to confirm this development by using a large scale sample of companies on a long term basis so as to obtain a significant and appreciable comparison with other sectors. Nonetheless, it has been demonstrated that knowledge is a key factor for success and African MNCs use it advisedly.
Whilst evidence presented in this study has confirmed the work of BCG about the native advantages and challenging mind-set animating the African MNCs, and that they act undera deregulated environment, in which the cultural aspect is essential for success, but lacking in scope because of the lower number of studies present on the topic, and present two ways of branding strategy. So therefore, because barriers are against competitiveness, rules have to be first more harmonised in the continent level or in a larger scale. Secondly, policies against foreign firms are totally against international trade agreements and do not help to create a dynamic structure enabling innovation. As it well known, no economies without a good banking system and good industries, the harmonisation would create transparency, making investors not in fear while investing in Africa. Also stability is crucial to make people start to consider any kind of investment or venture. In the African perspective, firms have to act to prepare themselves and demand for a regulated economy, even most of them are profiting of volatility and deregulation.
No strong economies without domestic firms which are emerging but not enough so therefore plan of boost is needed. No domestic firms without small and medium firms, because they tend to employ a larger population and are strong element of the chain of development process, also banks have to use their role and lend surely carefully, but do so for the increase of number of corporate banking. And for the individuals, it is still awaited when the number of banked will increase and when with a proof of identity and a symbolic fees lower than a penny people will have the possibility to have a bank account. In the western perspective, these challengers are viewed as competitors partnerships can be developed making foreign firms taking less risks by having the lacking and missing connection to the culture or social connection immediately at disposal. And, they may have to change their model and be a real social institution with local attaches.