The context:
Many companies are looking toward Sub-Saharan Africa for investment and expansion opportunities, after the reported success of a number of companies such as KFC (Yum! Brands), now the largest fast-food franchise on the continent, and fast-fashion retailers, H&M and Zara. That said, most of the stores of these large multinationals, including KFC, H&M and Zara, are located in South Africa. Nigeria, despite having the largest population in Africa and a growing economy, lacks the same concentration of international retail investment. Large fashion retailer Zara, owned by Inditex, entered the Nigerian market in 2012 but has since failed to expand at any notable rate. H&M and Fast-Retailing (Uniqlo), have not yet moved into the Nigerian market.
The question:
Analyse Nigeria as a potential location for business growth in the retail sector, inclusive of all factors in the external environment that may be relevant. Use at least three relevant frameworks to do the analysis. Use this analysis to explain the potential challenges H&M faces doing business in Nigeria and make recommendations for expansion into this market. Consider these questions when making your recommendation:
(a) What are the major obstacles to FDI in Nigeria, particularly for the retail sector?
(b) With regards to market and environment, what aspects are most important for businesses to consider?
(c) Is there potential for growth in this market and how should companies such as H&M approach expanding/entering this market?