International Business Environment Business Essay

This study is based on the analysis of investing chances in United Kingdom and Nigeria. It will analyze and the Nigerian corporate suit for adult females by demoing how the National concern systems, cultural differences will impact our house, assess the trade forms between the two states in the fabric and vesture industry, outline the exchange rate government that governs the two states and the political hazards that our house may meet. Finally, a determination and recommendation will be made as to whether our house should export or utilize foreign direct investing or a combination of the two agencies to run efficaciously in Nigeria.

1.0 Introduction

Choices Apparel was established in 1898 in Ducks land, London. It ‘s a celebrated international company that produces corporate suits specifically for adult females. The company is known for its good plants and effectual client services. It has successfully gained a high repute and built a niche market for itself. It is famously known as most wanted because the demand for its suits by corporate forces and high net worth persons has of all time been increasing.

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The laminitis, Sir Grey Choices was obsessional about quality and value and worked difficult to construct picks apparel ‘s repute by first doing adult females ‘s shirt with a tail form. He was the first individual in old ages to do a “ tail shaped shirt with buttons ” . The company started from doing merely underbodices and shirts for adult females before it expanded into the doing suits. Over the old ages, the company has created adult females ‘s merchandise to cover the full concern closet and has presently introduced assorted form of suits runing from bright colored suits, every bit good as striped, checked and patterned suits. The company presently has over 50 shops in the United Kingdom and still on the brink of opening more. It besides has assorted shops in United States, China and Germany.

Choices dress has decided to diversify into the Nigerian market as it is non well-known over at that place. Its mark market will be the corporate on the job category adult females like bankers and other workers of fiscal establishments.

1.1 Historical Background

Nigeria was colonised by the British in October 1st 1960. It is the largest state in Africa and histories for 41 % of the West African population. It ‘s the biggest oil exporter in the whole of Africa and blessed with natural resources ( World Bank, 2010 ) . This immense potency is Choices dress ‘s chief motivation for desiring to put in the state. The state ‘s presently has 36 provinces with Abuja being the capital, major faiths are Islam and Christianity.

The study from CIA universe fact book ( 2011 ) shows that 55.5 % of the state ‘s population are male and female between the ages of 15-64. This pose a great chance for picks apparel based on the big mark market. The major spoken linguistic communications in the state are Yoruba, Hausa, and Igbo but English remains the official linguistic communication for national, political and commercial communications. Therefore picks apparel would non hold jobs in pass oning its concern activities.

Although Nigeria has a great possible but might non be seen as an attractive force for international investing because it dwells in catastrophe of tremendous proportions like political instability, regional discord and the deteriorating influence of huge corruptness. These has resulted in the state neglecting to profit from its many advantages ; go forthing the mass population in comparative poorness and the state tremendously infra-structure hapless.

1.2 Fabric and Clothing Industry in Nigeria

The fabric industry in Nigeria is the largest in Africa after Egypt and South Africa. The industry which presently accounts for 25 % of fabricating value added has faced a batch of challenges during growing. The major fabric industry in Nigeria is in Lagos, the Centre of excellence, while others are in the northern portion of the state ( Kano and Kaduna ) . In Nigeria, the industry is known to be labour intensive and has been estimated to supply occupation chances for over 150,000 Nigerians.

Fabrics have been produced in Nigeria for so many old ages but the industry merely began its existent activities like fiber production, whirling, weaving, lacing and embellishment devisings, dyeing, printing, rug production and coating. The sector produces assorted cloths every twelvemonth from African prints, shirting, embellishments and wax print. Similarly it has been reported that the Nigerian Textile and vesture Industry which consists of the cotton fabric and man-made cloths have continued to account for a important proportion of the overall growing of fabrication merchandises ( CBN 2005 Annual study ) .

Although, Nigeria ‘s purpose is to go a textile investing finish of pick but it is faced with assorted environmental issues in the production procedure. The hazard associated with the procedure is the H2O usage like scouring, decoloring etc, the intervention of coloring material remotion besides increases hazard pollution. The industry is an of import earner of foreign exchange and its exports were estimated between 25 % – 30 % of production. Investing in fabric and vesture industry is bright either runing locally or exporting.

2.0 National Business System and Cultural Conditions in Nigeria

2.1 National Business Systems

National concern systems can be seen as elements in an environment that affects the workings of an administration. States have different political, societal and legal systems and all this differences have major deductions for rehearsing international concern. These assorted systems have great impact on the “ benefits, costs and hazards associated with making concern ” ( Hill 2007:44 ) . It directs the manner operations should be managed in different states and how international concern should run in different states. In add-on, a good apprehension of the national concern systems in Nigeria will help picks apparel in doing successful investing within the state.

2.1.1 Political System

Nigeria adopted a democratic system of authorities whereby citizens are straight involved in decision-making. At the federal degree, the authorities is headed by an elective president. The president acts as the Head of province, the main executive of the federation every bit good as the commander-in-chief of the armed forces ( Federal Executive Council, 2010 ) . The state looks up to the president as the overall director of the economic system whereby he/she will derive recognition in times of prosperity and criticized for economic failures. The state has 36 provinces and 1 district. Choices dress has tonss of options in make up one’s minding which of the provinces to set-up its concern. Additionally, the state has assorted political parties which include All People ‘s Party ( ANPP ) , Action Congress ( AC ) , and People ‘s Democratic Party ( PDP ) amongst others. The opinion PDP has displayed its triumph in national elections.

Nigerian ‘s theodolite from military to democratic regulation began in 1999. However, the 3rd democratically elective authorities is committed to be in line with the “ 7 Point Agenda ” which focuses on developing the human capital, critical substructure, nutrient security, land term of office alterations and place ownership, national security, wealth creative activity and the Niger-delta.

World Bank ( 2010 ) studies that the Nigerian socio-political system is reasonably stable but there are still assorted parts of the state with instability due to corruptness, Lack of independency, Lack of transparence in operating and doing determinations and failure to do logistical agreements where necessary. Nigeria is non a hapless state but its biggest job is Bribery and Corruption ( Transparency ticker, 2008 ) . Corruptness is really high among authorities functionaries in Nigeria. In every bit much as the President is committed to contend corruptness, he still has to work within a political model surrounded by corruptness. In kernel, Choices dress might hold to conform to the corporate administration in the state in other to run a smooth concern.

2.1.2 Economic System

Harmonizing to U.S section of province diplomatic negotiations in action, Nigerian population was reported to be 152million individuals in 2010 and it ‘s expected to be 178.72 million individuals in 2015. Nigeria ‘s economic system portion of universe entire GDP, adjusted by buying power para, was 0.48 % in 2009 and it ‘s forecasted to be 0.51 % in 2015 ( International Monetary Fund in Trading economic sciences, 2010 ) .

Nigeria is the largest state in Africa, It accounts for 47 % of West-African population ( World Bank, 2010 ) . This makes it the regional power axis in Africa. Nigeria is known as the biggest oil exporter in Africa as it has the largest natural militias in the continent. This fundamentally explains some of the grounds why picks dress is sing puting in the state. The state has been on the border of constructing a comfortable economic system by cut downing poorness, supplying wellness, instruction, infrastructural comfortss to its population with its big militias of human natural resources. The job of electricity in the Nigerian economic system can non be over emphatic because it has made so many industries inefficient. This is so traveling to impact our company and it is necessary that we make available electrical installations that will be used to bring forth power supply.

In add-on, the oil roar in Nigeria led it to disregard the strong fabrication and agricultural system because it was excessively dependent on the petroleum oil ( US section of province diplomatic negotiations in action, 2010 ) . Harmonizing to World Bank ( 2010 ) , employment chances have been a major restraint in Nigeria and it has been estimated that 50million of Nigerian young persons are unemployed. This poses an chance for our company “ Choices Apparel ” because the issue of unemployment makes cost of labor comparatively inexpensive, and puting up our concern will supply extra employment for Nigerian young persons.

Furthermore, Nigeria operates a free market system where all productive activities are in private owned. The monetary value of corporate suits is determined by the market demand and supply. There are no barriers to entries into any concerns in Nigeria. Even the industries that seem protected merely last for a short piece before it starts runing freely. An effectual direction house can transport out its concern in any industry where inefficiency has created an chance for entry. For case, the fabric and vesture industry which was neglected by the authorities serves as a immense chance for Choices Apparel to research. We should besides hold in head that authoritiess have minimum determinations as respects concern operations in the free market economic system and this will convey approximately immense competition in the industry as new entrants can emerge at any point in clip.

Another of import factor to observe is that labour brotherhood in Nigeria is really strong. Nigerian Labour Congress ( NLC ) sets a minimal pay for the citizens, defends their political, economic, societal and cultural rights and unites them against any favoritism or development. However, this may non be a large challenge for Choices Apparel sing that the United Kingdom ‘s trade brotherhood is besides really effectual. However, we should endeavor non to put rewards below the minimal pay required by the state. In add-on, we would profit from making concern in Nigeria in the long-run because the fabric and vesture industry is still in its early phase of development ( Encyclopaedia of the states, 2011 ) . Therefore, we should put early in the possible hereafter of the Nigerian economic system and construct a trade name trueness for our merchandises.

2.1.3 Legal System

The Nigerian legal system is based on the English common jurisprudence legal tradition because she was colonized by the British. The English had a singular influence on the Nigerian legal system and the English jurisprudence forms a important portion of the Nigerian jurisprudence says Obilade ( 1979 ) . The beginnings of the Nigerian jurisprudence are the fundamental law, the statute law, English jurisprudence, customary jurisprudence, Islamic jurisprudence and judicial case in points.

The Nigerian legal system is the civil jurisprudence system and the current fundamental law is the “ 1999 fundamental law which came into limelight in May 29, 1999. The 1999 fundamental law of the Federal democracy of Nigeria regulates how legislative concern is distributed between the National Assembly which make Torahs for the federation and House of Assembly make Torahs for the provinces. However, all affairs related to how concerns are operated are handled by the federal authorities and their different bureaus such as Bureau of Corporate Enterprises, Corporate Affairs Commission, Independent National Electoral Commission, National Planning Commission, Central Bank of Nigeria and the National Police Force.

The Economic and Financial Crimes Commission ( EFCC ) is besides portion of the federal authorities bureau set up by the present disposal to reform Nigeria ‘s economic system sector. It serves as a Financial Intelligence Unit to contend against money laundering and other economic and fiscal offenses. This has led to an betterment in the state ‘s economic system.

However, Choices apparel may take part in organizing a company in Nigeria, capable to the proviso of any jurisprudence modulating the rights and capacity of aliens to prosecute in any concern within the state.

2.2 Cultural differences

Hofstede defined civilization as “ the corporate scheduling of the head which distinguishes the members of human group from another ” ( in Hill, 2007 p.91 ) . The following are the assorted cultural conditions in Nigeria.

Background to Business: Nigerians population is made up of around 200 cultural groups, 500 different linguistic communications and two major faiths which are Christianity and Islam. This clearly gives Choices Apparel an chance for a successful investing as female Pastors, Deaconess and some choir members dress corporately to church. The basic cultural patterns in Nigeria are salutations, personal infinite, oculus contact, and gestures ( Global ) . It is besides applied to concern etiquettes, meetings, dialogues and frock codifications.

Business Structures: Autochthonal Nigerian companies have different attacks of covering with their concerns. Because the state is rich in tribal tradition and civilization, all foremans or seniors are expected to have respects from those below them. Age is extremely valued in the Nigerian civilization because it is believed to convey wisdom.

Nigerian Meetings: Meetings may turn out hard to set up by telephone in Nigeria because the infrastructural installations are undependable. Appointments within a vicinity are made by self visual aspect or manus delivered notes. Constructing relationships is really of import in Nigeria ; therefore meetings will get down and complete with societal interaction. Another of import thing to observe is forbearance is really of import in covering with concerns in the state because meetings do non get down on clip. It is by and large called “ African clip ” .

Nigerian Dress Code: It is really of import to dress decently in Nigeria because 1s mode of dressing determines 1s degree of significance. Men wear dark suits, while adult females wear dark concern manner suits. This is means that our concern has the potency of doing gross revenues to a big population of high-net worth and corporate persons. Choices Apparel should besides observe that Nigeria is a really hot topographic point ; therefore the vesture battalion should be light.

Using the Hofstede Framework to analyze the concern civilization in Nigeria.

Uncertainty Avoidance

Individualism/ Collectivism

Masculinity/ Femininity

Power Distance

Figure 1

Individuality and Bolshevism shows how members of a civilization set themselves apart from a group rank. In the individualist civilization people are expected to expose their single personalities. This can be seen in practise in the Nigerian concern civilization. Therefore, it is of import for Choices apparel to understand the indispensable behavior of making concern in Nigeria as the civilization is manner different from its beginning.

3.0 Forms and Trends of Trade between United Kingdom and Nigeria in Women Suits

Nigeria is UK ‘s 33rd largest abroad market and 2nd largest African market for goods and services. UK export of goods to Nigeria was deserving ?1,235million in 2009 and services was deserving ?1279million in 2008 ( UK trade and Investment, 2011 ) . It has been reported that Nigeria has strong historical, linguistic communication and constitutional ties with the UK. This serves as a major advantage for our company.

Nigerian ‘s import was grossed over $ 42.1billion in 2009. A big proportion of this import came from UK, Netherlands, France, Germany, US and China. Major goods imported scopes from consumer good, machineries and equipment. Similarly, the trade ( % of GDP ) in Nigeria was reported to be 66.32 harmonizing to World Bank. The graph below shows the state ‘s trade in GDP from 1968-2008.

Graph 3.1 Nigeria-Trades ( % of GDP )

Most significantly, the Nigerian authorities placed a prohibition on the importing of fabric and vesture into the state in 2003 based on the allegations by local makers that the stuffs being dumped in the state were inferior, so besides to give domestic makers the chance to boom ( Anosike 2010 ) .The prohibition has resulted to authorities fring immense grosss as local makers were inefficient in their production due to unstable power supply. As a consequence, many of the state ‘s retail merchants engaged in smuggling of banned goods such as vesture ‘s, suits and so on from neighboring states.

However, stakeholders have urged authorities of the state to raise the trade stoppage placed on finished apparels based on the undermentioned grounds ; over 50million Nigerians have been unemployed, the state has no working fabric industry to dress its citizens. They further argued that the fabric stuffs are neither menaces nor harmful stuffs.

After all said and done the Nigerian authorities have lifted the prohibition placed on the importing of fabrics and vesture ‘s ( This Day, 2010 ) . This information serves as a great chance for Choices Apparel to research the market cognizing full good that as Nigerians love for foreign goods, most significantly suits keeps increasing and Nigeria will do an investing friendly environment to our company.

4.0 Exchange rate government in United Kingdom and Nigeria and its associated hazards

4.1 Exchange rate government in Nigeria

Exchange rate is the monetary value at which national currency is valued in relation to a foreign currency ( Latter, 1996 ) . A state could either hold fixed or drifting exchange rate systems. Under the fixed exchange system, the authorities of cardinal bank of the state determines the exchange rate, whereas, the exchange rate is freely determined by the market forces under the floating exchange rate system.

The exchange rate government in Nigeria has experienced tonss of important alterations since it gained independency in 1960. It operated under the fixed government in the 1960 ‘s to a “ pegged ” agreement between the 1970 ‘s and mid 1980 ‘s ( Sanusi, 2004 p.1 ) . It has been runing on a floating exchange rate government since 1986 following the acceptance of the Structural Adjustment Programme ( SAP ) . The net incomes on the state ‘s foreign exchange are more than 90 % depending on the crude-oil export grosss ( Sanusi 2004 ) .

On the other manus, the drifting exchange rate government implies that the exchange rate will be determined by the forces of demand and supply, intending that there will be no presence of any seeable manus in the foreign exchange market and the exchange rate can set automatically to unclutter any shortage or excess in the market.

The chief advantage of the floating exchange rate system is the pecuniary policy independency which enables the state to command its pecuniary sums and to act upon its domestic involvement rate and rising prices. On the contrary, there are some hazards of the drifting exchange government which could impact Choices Apparel, some of which are exchange rate volatility, high rising prices and dealing cost.

Harmonizing to concern proctor international, the Nigerian naira has began to see some failings. It has moved from NGN149.80/US $ to NGN152.30/US $ in the past six hebdomads, but it ‘s expected to return to NGN150/US/ $ if the cardinal bank meets forex demand in full. Nigeria ‘s foreign exchange market is controlled by the cardinal bank utilizing the Dutch Auction Gross saless ( DAS ) .

CBN Committed To Stability

Beginning: Business Monitor International

Graph 4.1 Nigeria – Exchange Rate, NGN/US $

4.2 Exchange rate government in United Kingdom

The tabular array below shows United Kingdom exchange rate government for past old ages.


end-1989 terminal -1995

Number of states

Pegged to individual currency or composite

Flexibility limited in footings of individual currency or group of currencies

More flexible ( adjusted harmonizing to put indexs, or managed independent float )









Beginning: International Monetary Fund

Table 1

The exchange rate government in the United Kingdom is the floating exchange rate system. Overall, alterations in the market demand and supply affects are responsible for the alterations in the value of lbs. The rate of naira-pounds has been around N250-?1 which is the really high.

5.0 Mode of entry to be undertaken in order to come in Nigeria

Although the prohibition placed on the importing of finished goods such as vesture and fabrics have been lifted late in Nigeria and the duties placed on these goods are high. The Nigerian federal authorities late launched a 2008-2012 Nigeria imposts and strike duty books which states that finished goods that are non produced locally will pull 35 % duty ( Trade Invest Nigeria, 2008 ) .

As a consequence, I would suggest that Choices apparel should prosecute in a Horizontal Foreign Direct Investment in Nigeria i.e. covering with the same vesture industry. I besides suggest that due to incapableness of some vesture and fabric industries in the Nigeria, we could prosecute in a brown field manner of entry by geting some of the affected companies as they will be willing to allow travel of their belongingss at a lower sum.

6.0 Assessment of political hazards in Nigeria and steps of extenuating the hazards

Political hazards are those hazards carried out by political relations of a state to do 1s concern hard to run. There are assorted political hazards that affect the concern environment in Nigeria, table 1.1 below shows the different properties of hazards built-in in the state and ways to cut down them. Ways to cover with these hazards is to develop a comprehensive eventuality program.

Political hazard issue


Wayss of cut downing the hazards

Combativeness in Nigeria

Kidnappings and onslaughts have been go oning in state for past hebdomads particularly in the Niger Delta oil part

Choices dress should avoid puting in countries like the Niger-delta sectors in order to hold a smooth operation

Intervention in operations

Economic instability which affects production such as deficient electricity.

In order for Choices apparel to work decently, it needs to set in topographic point bring forthing installations in order to hold changeless power supply.

Intervention in operations

Corruptness is really high even amongst authorities functionaries, low-level of transparence in covering with concern operations in Nigeria

Choices Apparel should guarantee rigorous conformity with all laid down regulations and ordinances steering the operations of the concern particularly within the fabric and vesture industry.

Political force

Some parts of Nigeria are known for terrorist act and sabotage, kidnap and ransom, extortion and larceny.

Choices dress should guarantee tight security by non maintaining immense amounts of money in the company and seek to prosecute in community developments in order to derive persons Black Marias. We should see all our belongingss in instance of other unobserved circumstances.Table 1.1

The tabular array below shows the hazard evaluations in Nigeria as at 2010.






Last Month







Mkts Avg

S-T Political






L-T Political






S-T Economy






L-T Economy






Business Environment













Beginning: Business monitor international

Table 1.2

7.0 Recommendation

We should prosecute in Foreign Direct Invest in Nigeria through brown field manner of entry because there are several chances to be gotten. Some of which are ;

It will be cheaper due to the fact that some companies in the vesture industries can no longer run the concern because of unequal substructure

Nigerians love for foreign goods keeps increasing to the extent that the prohibition placed on importing of fabrics and vesture resulted in high rate of smuggling into the state.

Our company has a strong trade name name in the UK and other states where it operates ; therefore it can construct a niche market in Nigeria.

Nigeria is the most populated state in Africa, and the 2nd graded finish in Africa for Foreign Direct Investment.


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