Topic 3 Nhóm 9 t2

Topic 3: Risk Managerment
1. Appraise the Tanzanian business environment as it has evolved over the past 30
years. What are the greatest risks and sources of uncertainty? What are the
greatest opportunities?
- Political risks:
The effectiveness of Magufuli’s policies was questionable, with the public (both
Tanzanians and foreign residents) divided on the benefits such policies had brought to the
local economy and the burden that recent restrictions had placed on the import of cheap
goods. More concerning was both the reality and perception of corruption. The most
affected governmental institutions were procurement, land administration, taxation, and
customs. High tax rates, in combination with an inefficient and corrupt tax administration,
were named as the main deterrents to investment.
- Economical risks:
Between 1980 and 1990, The implementation of Nyerere’s social and economic policy
brought the country to the brink of starvation, facing a declining economy as well as
systematic corruption, and Tanzania became one of the most foreign aid-dependent
countries in the world.
- Market risks:
Between 2000 and 2017, gross domestic product (GDP), based on purchasing power
parity, grew steadily from $1,200 to $3,090.19 Tanzania had also become the number one
destination in East Africa for foreign direct investment, with natural gas reserves and
mineral industry attracting investment from the United Kingdom, China, Canada, and
other countries.
Although agriculture remained the predominant industry and employed more than half the
country, a significant growth area was tourism, accounting for more than 14 per cent of
GDP and the clear majority of its foreign exchange earnings. Tanzania was home to some
of the biggest tourist attractions in all of Africa.
- Customers tastes risks:
The home market was even further divided into ground coffee, whole coffee beans,
instant coffee, and coffee capsules. In countries such as Tanzania, hotels and restaurants
were major coffee consumers. Since many hotels catered to international guests, coffee
was always in demand. While instant coffee had been the dominant product category until
recently, both local and international guests had become savvier, demanding fresh coffee.
In Tanzania, tea was a major substitute for coffee, stemming from the country’s British
and Indian influences.
- Suppliers risks:
Coffee-producing countries exported most of their beans due to limited local demand and
the beans’ short shelf life. While green coffee could be roasted up to three years after
harvest, roasted coffee was ideally consumed within three months of being roasted. Thus,
coffee was usually roasted at or near the point of sale and not in the country of origin.
2. How would you assess Fischer’s strategic decisions and the performance of
KCC?
3. What strategic decision(s) would you recommend to Fischer? Why?

I would like to propose option 2: Expansion within Tanzania—The Manyara Coffee Resort to
Fischer. The idea was to build four to six self-contained lake houses, outfitted with all
amenities. Initially, guests would rent the units via the KKL and obtain food and beverages
from nearby guest houses or use the kitchenettes of the beach houses. Once the business was
proven to work, a restaurant could be considered, and a permanent team comprising
management and staff would be relocated to Matema to operate the resort year-round.
Because:
Capital existed to grow the company’s original coffee farm, develop another coffee-themed
resort in Tanzania’s growing tourism market, or get involved with developing apartment
buildings in the country’s dominant city, Dar es Salaam.
He loves the coffee industry and Tanzania, and he doesn't want to leave either, so choosing
option 4 would be a shame for his time building the company.
With many risks related to social and political issues, choosing option 1 is difficult to adapt to
future changes and can be harmful to the company. So instead of maintaining the original
stability, we need to change and develop in a sustainable direction while still ensuring the
original core of the company is retained.
Lake Manyara was approximately two hours southwest of Arusha and a one-hour drive from
Karatu. The lake, together with the national park, was famous for hosting one of the world’s
largest flamingo populations. Furthermore, more than 400 bird species inhabited the park,
which made it an excellent spot for birdwatchers.
In anticipation of a potential upswing, Fischer had acquired a building permit on a sizable
piece of land at Lake Manyara a few years back. It was directly on the shore of Lake
Manyara and a short distance to the gates of Lake Manyara National Park. Good natural
conditions create favourable conditions for building ecological areas with a market aimed at
the high class.
If he chooses option 3, he will need to find financing for an additional $150,000. Fischer had
never been in debt before and was apprehensive about the concept of borrowing money.
Fischer is already at retirement age, so expanding his investments and having to borrow more
is risky.

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Topic 3: Risk Managerment

3. What strategic decision(s) would you recommend to Fischer? Why?

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