Planning for investment in the dairy future of Sub-Saharan Africa: Navigating uncertainty in the contextual business environment

Planning for investment in the dairy future of Sub-Saharan Africa: Navigating uncertainty in the contextual business environment

Sonneveld, A.M.H.

Tavasszy, L.A. (mentor)
Enserink, B. (mentor)
Hulstijn, J. (mentor)

Technology, Policy and Management

Engineering Systems and Services - Transport and Logistics

Systems Engineering, Policy Analysis and Management

2015-08-27

The global dairy market is turning sour. Prices have continued to fall due exceptionally strong supply growth – in particular following EU milk quota removal at the time of writing – and reduced buying. This stress has caused dairy players to seek new markets. Sub-Saharan Africa has become the new target. However, those with intentions to invest in this region are facing uncertainty due to (1) lack of knowledge and (2) variability inherent to the sector. The focal decision of Rabobank clients to which this thesis aims to provide decision support is: ‘Whether or not to invest in dairy business development in Sub-Saharan Africa and if so, where and how?’. A combined approach has been used. Trade flow mapping helps to put the promise of Sub-Saharan Africa in perspective and provides insight into regional differences in access to market, thereby breaking the tendency to evaluate the continent as if it constitutes “one big country”. The second approach, strategy analysis of multi-actor systems, reveals why business development is perceived as a challenge. Investigation of complex dynamics within the ‘black box’ of African dairy allows for pinpointing sources that add to the uncertainty. Lastly, the scenario planning helps in navigating future uncertainty. This third approach has been adjusted to match the cross-organizational research set up. Reviewing the options for business development against the portrayed possible paths into the future yields the conclusion that African dairy business is not for the risk averse. Robust strategies do not exist. Solely adaptive strategies provide a way out for the level of uncertainty close to the ignorance extreme. The strategic balance between trade and foreign direct investment (FDI) should be adapted as forks in the road appear. As a starting point, guidance is provided regarding the relative attractiveness of trade versus FDI for ten selected countries. Following this case study, next steps for academia would be (1) to analyse the potential of the cross-organizational set up in case of redeployment from a banking perspective, (2) to review the use of scenario methods in the changing landscape of food and agriculture and (3) to explore possibilities for proper integration of corporate social responsibilities (CSR) in order to prevent scenarios from reinforcing the tendency of taking a blinkered, economic view on the focal decision. The scientific article accompanying the thesis critically reflects on a structural weakness of the scenario approach, rooted in a rule-of-thumb, that increases the chance of CSR remaining unaddressed in business planning.

scenario planning
multi-actor systems
dairy business development
global commodity trade

http://resolver.tudelft.nl/uuid:d1094eb2-49c0-4e07-8900-bb97719c51a6

2016-09-01

Student theses

master thesis

(c) 2015 Sonneveld, A.M.H.