According to a recent Statista report, Toyota is the world’s largest car brand. Sales outside Japan account for over 51%, with North America contributing over 10 trillion Japanese yen to the company’s 2020 revenue. But this wasn’t always the story.
From its first car in 1937, Toyota rapidly established its brand in Japan, and in 1957 the company attempted to expand into the United States of America (USA) — one of the most profitable global markets. This first attempt at globalisation failed because Toyota’s cars lacked the cooling ability and mechanical strength best suited for the USA, and the design could not compete against European imports.
In 1965, Toyota made another attempt at market entry into the USA with the Corolla, which turned out to be the company’s big-ticket to the world stage. The Corolla was built specifically for American drivers. The air-conditioning, engine and automatic transmission were of such great quality that the import brand soon became the third bestselling car in the USA. From then on, the Toyota brand soared — acquiring other automobile brands like Hino and Daihatsu Motor to help build capacity, creating more efficient variations of the Corolla, and diversifying to luxury brands like the Lexus and hybrid models like the Prius.
Endeavor believes high-impact entrepreneurship is a vehicle for job creation, wealth creation and social development. As these businesses continue to grow within the Nigerian market, we expect that more scaleups will begin to look beyond their local markets and extend their growth strategies to viable international markets.
According to the World Bank’s 2020 Doing Business Report, Nigeria moved up 15 points to now rank 131 out of 190 countries. The report examines each country’s general ease of doing business including the ease of getting electricity, trading across borders, enforcing contracts, amongst others. With the current ranking, Nigeria is in the company of other low-income economies, where entrepreneurs typically spend about 50% of the yearly average income to launch a company, compared to just 4.2% for entrepreneurs in high-income economies. This means that relative to the potential revenue, starting and scaling up in high-income economies could prove to be a more cost-effective venture for local high-impact businesses.
Additionally, a 2020 Statista report shows that stock exchanges of the USA, Japan, United Kingdom and China account for 71.3% of the world’s market capitalization, whereas according to the World Bank’s 2019 World Federation of Exchanges Database, the Nigerian Stock Exchange accounts for 0.1%. Given that the world’s most successful companies include listing on stock exchanges in their expansion plans, high-impact businesses within Nigeria should look to gain presence and expand in countries with larger market share.
Here’s how high-impact businesses in Nigeria can compete on the world stage
- Pursuing Strategic Partnerships and Acquisitions: Conducting business in a new country means raising capital, market assessments, acquiring new customers, hiring, building relationships with new suppliers or distributors and more. To integrate into a completely new system, high-impact entrepreneurs must form lasting partnerships with trusted organisations and leverage their strong foundations within those countries. Paga, Nigeria’s largest multi-channel mobile money operator recently announced plans to expand into Ethiopia and Mexico. To support its expansion into the East African and Latin American markets, the brand has acquired Apposit, a USA-incorporated software development company headquartered in Addis Ababa. High-impact businesses looking to go global can adopt this approach for expansion in their target country.
- Maintaining Agile Systems: High-impact entrepreneurs must have systems that can easily be integrated into new markets. To do this, they must ensure that legal contracts, data privacy regulations, and operational processes are in line with international best practices. They must also leverage technology solutions that allow for seamless integration across various locations and ensure that the organizational structures are clearly defined with no gaps or overlaps in operations. Nigerian payment technology company Flutterwave is a good example of a high-impact company maintaining agile systems. Since it launched in 2016, it has integrated its systems across several African countries including Cameroon, Ghana, Ivory Coast, Kenya, Rwanda, South Africa, Tanzania and Zambia. By using one simple API, the company allows banks and merchants across the continent to process any form of payment (credit/debit card, mobile money, USSD, ACH, QR Code, etc.). This level of flexibility has made it easy for Flutterwave to build foundations in various regions within the continent, and potentially expand beyond its shores. Now, Flutterwave is facilitating digital payments between Nigeria and China through its integration with Chinese e-commerce company Alibaba’s Alipay. High-impact businesses can leverage technology, in the same way, to play on the world stage.
- Marketing to Culture: As part of Google Maps’ globalisation strategy, the company localized the app to speak in several variations of English accents for Nigeria, Ghana, Indian, Kenya, South Africa, and Tanzania. Airbnb also adopted this approach when carrying out its operations in over 190 countries. Instead of subtitles, the company features local voice-overs in all of its international videos, and sources all photography in the city of operation. These companies understand the importance of contextualising their brand to fit the nuances of a new market and establish a local presence by marketing to culture. As high-impact businesses expand into international markets, they need to be ready to adapt their branding strategy and products to suit the new culture.
Nigerian entrepreneurs undoubtedly have a lot to offer to the world and pursuing globalisation is one of the ways they can make an impact well beyond the African continent.