Ethiopia: A Growing Economy with Unique Characteristics - Essay Sample

Introduction

Ethiopia has a tremendous national market of over 100 million individuals, making it the second famous country in Africa, with Nigeria being at the forefront. Over the last years, Ethiopia has been characterized as one of the world's most growing economies, with an annual growth rate ranging from seven to twelve percent. Its gross domestic product has also been increasing by seven percent, and the world bank states that it is expected to grow by eight percent.

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What are the unique characteristics of this market?

The Ethiopian market is characterized by different ethnic groups, family backgrounds, education, work experience, and lifestyles. This makes the market possess several characteristics of communication styles, display of emotions, formality, and managerial qualities. For instance, in any market, good communication is vital to enhance buying and selling. Anger is discouraged in the Ethiopian airlines where it is comical for foreigners to lose their temper in public places.

What are the relevant dimensions of distance?

The Ethiopian market has four main dimensions. These dimensions include collectivism and individualism, uncertainty avoidance, power distance, and femininity, and masculinity. The dimension of individualism and collectivism generally looks at the relationship of people with others. The power distance explores the extent to which the members of families and other institutions suppose and admit that power is spread unequally. This dimension advocates that the followers and the leaders sanction inequality. Masculinity is considered as the society in which social gender roles are discrete. For instance, women should be tender, modest, and concerned with life quality, while men are concerned with toughness and involve themselves with material things. Feminity is engaged in the community in which the societal gender roles overlay. The last dimension is uncertainty avoidance, which represents the need to evade doubt about the future and work relations. The uncertainty avoidance differs where a high avoidance indicates that a low nation tolerance for uncertainty and avoidance. In contrast, low uncertainty demonstrates that a nation has less concern concerning uncertainty and ambiguity.

Institutional quality?

Ethiopia's poverty rate has been decreasing with the world bank, stating that its poverty fell to 31%, with about 109 million citizens. It is the second-most populous nation in Africa with the fastest economic growth in the region.

What are the dominant forces?

The dominant force in the Ethiopian market is agriculture. Its agriculture accounts for 46.3 percent of GDP, 60 percent of exports, and 80 percent of total jobs. This makes agriculture to be a useful resource for the country.

What is Ethiopian Airlines' motivation for internationalization? Discuss this in the context of emerging market MNE theory.

According to the emerging multinational enterprise theory, Ethiopian airlines has been involved in small and medium enterprises such as global international firms. The assertion that international expansion is the main challenge in African organizations, the Ethiopian airline is competing on an international strategy, although participation and speed differ (Al-Kwifi et.al 2019). The dependence on formal and informal networking has motivated Ethiopian airlines to get into global markets.

What are Ethiopian Airlines FSAs? Are they 'traditional' or 'non-traditional'? Or both??

The prominent firm-specific advantages of Ethiopian Airlines are providing opportunities for aviation professionals from all over the world to help gather the present issues and future guidelines. It also offers a chance to hear from CEOs of different Airlines. The specific advantages of Ethiopian Airlines are both traditional and non-traditional since the opportunity provided by the airline is both locally offered and internationally offered.

Which FSAs should Ethiopian leverage into its international strategy?

The Ethiopian airline should use the investment in strategy such as the hub and spoke (HS) model to help connect with flights between the origin and the destination. This helps in improving the economic feasibility of serving thinner markets hence the improvement of airline seat capacity.

In which region should Zewoldi and his team locate the first hub?

Zewoldi and his team should locate the first hub in South Africa. The South African Airways (SAA) recent performance presented an opportunity to establish the hub in the region. This was as a result of developed infrastructures in the area.

Which entry mode is ideal for Ethiopian? Please discuss the details (e.g., if you recommend a JV, discuss whether Ethiopian should be a majority or minority owner).

The most critical entry mode for Ethiopian is exporting. Exporting entails sending of produced goods to other countries for sale. This entry mode has low-risk strategies that different businesses view as crucial for several reasons. For instance, firms find it easier to export existing products rather than the development of new ones. Ethiopian should be the majority owner to enhance the sale of products to different countries. The majority of owners help other countries to partner in business and carry out business globally.

References

Al-Kwifi, O. S., Frankwick, G. L., & Ahmed, Z. U. (2019). Achieving rapid internationalization of sub-Saharan African firms: Ethiopian Airlines’ operations under challenging conditions. Journal of Business Research.

https://doi.org/10.1016/j.jbusres.2019.02.027‌