Grail Research Assessment of Market Potential Framework Africa

Framework to Assess Market PotentialAfrica

Copyright © 2011 Grail Research, LLC 2

Table of Contents

Need for Market Potential Assessment in Africa

The Assessment of Market Potential Framework

Case Study - South African Steel Sector

Our Regional Experience in Africa

Case Studies – Additional Examples of Regional Expertise

Subject Matter Experts


Source: The Economist; 1IMF; ‘World Bank Boosts Sub-Saharan Africa's Economic Growth Forecast to 5.3%’, Bloomberg, Jan 2011; South Africa Resource Watch (SARW); ‘South African Companies Unlock Sub-Saharan Africa’, Bloomberg, Dec 2008

Need for Market Potential Assessment in AfricaAfrica is poised for growth due to expected economic development, global expansion of regional companies and increased interest from multinational companies

Growth Factors: 7 African nations were ranked among the top10 fastest growing

economies globally in terms of GDP for 2011–20151

• Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia, Nigeria Expected economic growth has driven local companies to seek

opportunities to increase their global foot print and multinationals to evaluate growth prospects in Africa• Mar 2010: Metorex, De Beers, and Implat reported that they were

evaluating investment opportunities in the SADC region

Market Opportunity:The current growth scenario in Africa creates a need to identify and evaluate opportunities in the market Our Assessment of Market Potential Framework evaluates specific

opportunities in a market based on current offerings and growth interests• Grail Research has conducted such studies in 24 African countries

in the last 12–18 months


Table of Contents








What is the Assessment of Market Potential Framework?A methodology which helps firms identify and prioritize a large set of markets, and within those markets assess potential customer segments, analyze competitive landscapes and craft effective marketing messages

Appl

icab

le in

Sec

tors

:

Potential Growth

Opportunities

Product Portfolio Assessment: Optimize the current portfolio based on market needs

MANUFACTURING

MINING

CONSTRUCTION

INSTITUTIONALINVESTORS

Consumer Segment Evaluation: Identify highest potential segment across various consumer segments

Assessment of High Potential Geographies: Identify the most lucrative markets for growth

First the methodology identifies the most attractive market or markets for entry by developing, defining, and evaluating a set of variables to benchmark across markets

• This is done on an iterative basis, first by developing a high level overview of a large set of markets, and then filtering out some markets and conducting progressively deeper dives on a subset of more meaningful markets

Then, it identifies the most attractive consumer segments and needs to target in the defined geographies.

• This is done through a variety of approaches, including secondary research, expert interviews and discussions with end consumer segments

Wha

t typ

es o

f As

sess

men

t?H

ow d

oes

it w

ork?


We also support clients in developing Market Entry plans by helping in assessments such as:• Most-suitable

distribution channel• Potential partners to

enter into a new market

Attractive opportunities are sequenced for investment decisions based on:• Appeal of each

opportunity• Success potential

based on client’s abilities in these markets

For prioritized markets, opportunities are evaluated based on:• Market and customer

landscape• Value chain analysis• Competitive analysis• Opportunity

identification and analysis

Develop Market Entry Plan

Evaluate Market Appeal

Identify and evaluate a set of key market variables in order to create initial universe leading to a short-list of prioritized markets based factors such as:• Macroeconomic

indicators• Size and growth of

the sector• Client preferences

Analyze and Identify Specific Opportunities

Key Steps in the Framework

Optional

Screen and Prioritize Potential Areas of Growth

Note: 1Time frame is subject to change based on the number of opportunities to be evaluated

1

The framework evaluates markets and opportunities systematically by starting with a large set of potential markets and filtering to the most relevant opportunities

Screen and Prioritize Potential Markets

1–2 Weeks11–2 Weeks1 4–5 Weeks1

1 2 3 4

Filtering a group of potential markets

In-depth evaluation of each prioritized market

Final sequencing of opportunities based on

ability to win

Formulation of an actionable entry strategy


Product-specificOpportunity Prioritization

Geography-specific Opportunity Prioritization

Screen and Prioritize Potential MarketsFiltering and Selection Process

Potential Actionable Opportunities

Initial prioritization based on macroeconomic indicators such as GDP, growth, and ease of doing business

High-level market potential analysis based on attributes such as size of key consumer sectors and sector growth

Final prioritization based on client’s immediate focus and preference

First phase of prioritization based on industry-specific indicators such as size and industry growth

Identify potential product segments (across the initially shortlisted product categories) based on factors such as demand patterns and consumer growth

Final prioritization based on client’s immediate focus and preference

Level III – Preference-basedScreening

Larger Set of Opportunities

Level II – Opportunity-specificScreening

Level I – General Attributes

We employ a three-stage prioritization process to shortlist opportunities offering maximum potential within the client’s industry/business of interest


Analyze and Identify Specific Opportunities Approach and Key ComponentsWe study the industry landscape within each prioritized market to identify specific opportunities and assess their potential as a suitable and sustainable business destination

Market & Customer Landscape

Opportunity Identification& Analysis

Competitive Analysis

Value Chain Analysis To understand growth opportunity and upcoming trends

in the market, we study the following:

• Industry size and growth

• Drivers and barriers to growth

• Government policies and regulatory scenario

• Key influencers in consumers’ purchase process

• Profitable consumer segments

• Bargaining power of the consumers

To analyze the industry value chain, we study:

• Key suppliers and end customers, and power equations

• Market split between domestic and foreign players, and identification of intermediaries

• Different distribution channels being employed and their relevance

To understand the degree of competition in the market, we analyze:

• Key players, their market shares, and business strategies

• Major product categories, their contribution to the business, and prevalent pricing

• Current and expected future trends around product offerings

Based on this analysis, we help identify potential opportunities using the following criteria:

• Current size of the opportunity and expected growth

• Current set of incumbents serving that market

• Specific abilities required to seize the opportunity

Analyze Priority Markets and

Industry-specific Opportunities


Evaluate Market AppealMarket and Business AttractivenessBoth quantitatively and qualitatively, we rank the opportunities based on their market, business and product category attractiveness

We measure attractiveness of markets based on factors such as:

• Size and potential of market

• Degree of competition

An overall weighted averagescore is calculated to rank markets in order of attractiveness

We also evaluate the attractiveness of doing business in each market on parameters such as:

• Outlook of end industries

• Openness to foreign players

• Product offerings and pricing expectations

• Competitive landscape

We analyze the attractiveness of various product categories across the value chain based on parameters such as:

• Demand patterns for products

• Current market size for categories

• Assessment based on upcoming technological innovations

Market Attractiveness Business Attractiveness Product Attractiveness


Develop Market Entry Plan Activation of Program/OfficeFacilitation of discussions with key internal and external stakeholders to develop a market entry plan

Facilitate Discussions

with Stakeholders

Evaluate Purchase Process

Identify Relevant Entities

For the final selected opportunity, our team identifies the key influencers to the market entry decision• e.g. Relevant government regulatory departments, industry associations,

and end consumers

To better understand the key decision making criteria, we conduct interviews with senior industry officials and experts that have significant experience in the sector for the particular geography of interest

The Grail Research team facilitates discussions between key stakeholders to develop and assess the appropriate entry strategy and key considerations related to market entry


Methodologies for Gathering Research in AfricaAfrica poses a number of research challenges, such as limited information availability, local languages and context, which we tackle through customized research methodologies

Network Based Approach

Panel of Experts

Meta Analysis

Deployment of Global & Regional Sources

• Industry Associations

• Africa specific organizations such as Africa Economic Outlook, Africa Development Bank, etc.

• Paid sources such as Euromonitor, etc

Access to Subscribed Databases

• Bloomberg

• Thomson One Banker

• Lexis Nexis

• Thomson Research

• Who Owns Whom

Access to Broad Panel of Experts

• Through trusted research partners

• Rich experience within specific sectors and industries

• Breadth and depth of knowledge about specific geographies and markets

Network-based Approach to Executing Research

• Leverage client’s existing contacts to further liaison with senior executives having in-depth information

• Create a network of industry experts through adhoc calls and acquire rich insights through high-level information sharing

• Provide incentives to experts, if necessary, to gather relevant information


Table of Contents








Shortlisted Countries

Rank Country Name Score

1 South Africa 88.42 2 Egypt 88.29

3 Morocco 65.29

4 Algeria 61.44

5 Nigeria 57.43

6 Tunisia 56.86

7 Libyan Arab Jamahiriya 51.35

8 Ghana 48.95

9 Kenya 45.83

10 Ethiopia 45.50

11 Botswana 44.98

12 Rwanda 44.77

13 Angola 44.24

14 United Republic of Tanzania 44.13

15 Sudan 43.82

Case Study - South African Steel Industry Assessment of Market Potential

TunisiaMorocco

Algeria

MauritaniaMali

Niger

Libya

Chad

Egypt

Sudan

Ethiopia

Djibouti

Eritrea

Kenya

Tanzania

Democratic Republic of the Congo

Central African Republic

RwandaGabon

Equatorial Guinea

Angola

Nigeria

Benin

Senegal

Ghana Cameroon

Malawi

Zambia

MozambiqueMadagascarZimbabwe

Botswana

SwazilandLesotho

Namibia

Angola

Uganda

Burundi

Togo

Cote D’ivoire

BurkinaGuinea

South Africa

Somolia

Rep. oftheCongo

Note: The heat map is based on country ranking among all the countries studied in the Africa region, determined by evaluating the macroeconomic scores, and the individual industry-specific scores for steel, manufacturing, construction, and mining and utilities, using an excel-based framework

Source: UN Data; IMF; Transparency International; Ease of Doing Business – World Bank; World Steel Association; Grail Research Analysis

1-7 8-15 16-25Country Rankings Over 25

Selected for further in-depth study (of the 15

initially shortlisted)

South Africa is the largest producer of crude steel in Africa, accounting for 50.4% of the total crude steel production (in 2009) and hence ranks amongst the shortlisted markets in Africa

Across all African nations, 15 countries

were shortlisted based on their macroeconomic

scores, and the individual industry-specific scores for steel, manufacturing, construction, and mining

and utilities


Production of steel is expected to grow owing to an increase in demand for steel products across various end-user industries:

During 2010-2011, automotive sales are expected to grow at ~12%, construction sales are projected to grow ~3-4% per year until 2015

South Africa is anticipated to be able to meet the increasing demand with abundant reserves of iron ore In 2009, the country reported 1,000 MM tons

of iron reserves and was the 7th largest producer of iron ore globally, with 53 MM ton production (in 2009)

The National Energy Regulator increased electricity tariffs in February 2010, to improve the power situation in South Africa This will have a major impact on the cost

structure of the steel industry, as it is a major consumer of electricity

Market DynamicsSteel Industry Metrics (2009)

Case Study - South African Steel Industry Market Overview

Source: World Steel Association; UN Comtrade; South African Iron and Steel Institute (SAISI); ‘South Africa’s Steel Industry’, Creamer Media, October, 2009; Creamer Media; ‘ANALYSIS: South African auto sector looks to build on positive 2010’, Just-auto.com, January, 2011; ‘South Africa to Lift Electricity Tariffs by 24.8%‘, Bloomberg, Feb 2010; ‘South Africa Metals Report Q1 2011’, BMI, Companiesandmarkets.com; Grail Research Analysis

-9.6%-28.3%-16.6% 36.2%

Y-O-Y (2008-2009)

MM

Ton

s

0.9

2.7

3.9

0

2

4

6

8

Stocks Exports Domestic Sales

Production

7.5South Africa is the top exporter of steel, accounting for the 46% of exports in 2009

The South African steel industry is expected to grow in the short term, driven by an increase in steel consumption by the manufacturing, building and construction sectors


Case Study - South African Steel IndustryValue Chain

Note: 1The list of competitors is not exhaustive but indicativeSource: Grail Primary Research and Analysis

Large manufacturing and construction companies purchase flat steel directly from mills; the long lead time provides an opportunity for steel merchants to operate in this market

Steel Mills Wholesalers and Steel Merchants Mini Merchants Fabricators End

Consumer

South African Steel Industry Value Chain

Key Competitors1

Skip mini merchants, to earn a better profit margin on the products; Does not exist when orders are relatively small

Supply bulk primary steel products to gain a price advantage (avoid price increment by merchants), however, lead time is relatively long

Producers Suppliers Customers

Domestic manufactured steel products constitute the bulk of domestic consumption in South Africa

Wholesalers and merchants supply steel products either directly to fabricators or they supply them to small merchants in the value chain

Merchants such as Macsteel have acquired small merchants in the past to increase their footprint in the country

Majority of fabricators and construction companies source their demand mainly from merchants to avoid longer lead times required by steel mills

Predominant Path Less Predominant PathLegend:


Case Study - South African Steel IndustryProduct LandscapePrimary steel products are semi-finished products that are categorized as flat steel or long steel products

Note: 1The sales figures represent the sales by SAISI members; 2Long Steel products are referred to as profile products by SAISISource: South African Iron and Steel Institute (SAISI)

Primary Steel Products

Long Steel ProductsFlat Steel Products

Flat steel products mainly include plates, sheets, and slabs

Long steel products include sections, bars, rods, tubes, forgings, blooms, billets, reinforcing bars, steel tools, railway track material, etc.

2.32.9 2.8 2.8

0

1

2

3

4

2005 2006 2007 2008

7.4%

CAGR: 2005-2008

Local Sales1 of Primary Flat Steel Products (MM Tons), South Africa

Local Sales of Primary Long2 Steel Products (MM Tons), South Africa

2.02.5 2.5 2.6

0

1

2

3

4

2005 2006 2007 2008

9.9%

CAGR: 2005-2008

Long steel products, in South Africa, have a broader portfolio compared to flat steel products. During 2005-2008, long steel products witnessed higher growth in sales compared to flat steel products

1 2


Case Study - South African Steel IndustryCompetitive Landscape

Note: Steel production of Cape Gate, Cisco, Columbus, and other small manufacturers in 2009 is calculated as: (Total steel production in South Africa in 2009) – (Steel production of Arcelor Mittal South Africa, Scaw Metal Group, and Highveld Steel & Vanadium Corporation in 2009)

Source: South African Iron and Steel Institute (SAISI); Arcelor Mittal South Africa, Annual Report 2009; Highveld Steel and Vanadium Corporation Limited, Annual Report 2009; Anglo American, Annual Report 2009; Columbus Stainless Steel

Company Flat Steel Products

Long Steel Products

Steel Production (in MM tons, 2009)

Arcelor Mittal South Africa 5.3

Scaw Metals Group 0.7

Highveld Steel & Vanadium

Corporation 0.7

Cape Gate 0.8 (includes Cape

Gate, Cisco, Columbus Stainless

Steel, and other small

manufacturers)

Cisco

Columbus Stainless Steel

Location of Steel Plants, South Africa

Limpopo

Free State KwaZulu Natal

Mpumalanga

North West

Northern Cape

Western Cape

Eastern Cape

Major Steel Manufacturers

Gauteng

Saldanha Bay

Newcastle

Vanderbijlpark

Cape Town

Vereeniging

Gauteng province is the hub for steel manufacturing in South Africa with Arcelor Mittal South Africa accounting for ~70% of the total steel produced in the country in 2009

Witbank

MiddelburgPretoria

Johannesburg

Germiston

Arcelor Mittal South Africa

Columbus Stainless SteelCiscoCape GateScaw Metals Group

Highveld Steel & Vanadium Corporation


Case Study - South African Steel IndustryEnd ConsumerSteel consumption in South Africa is mainly attributed to the manufacturing, building and construction, and mining sectors

Note: 1Values include % of the total domestic dispatches and does not includes import and exports; 2Manufacturing sector includes Packaging, Structural Metal (tube & pipe, plate & sheet metal works, and roofing & cold forming), Automotive, Cables, Wire products & gates, Agriculture, Fasteners, Electrical Apparatus/ White Goods, and Others (government, hardware, furniture, railroad); 3Include % of domestic dispatches which is not allocated to any industry

Source: SAISI; ‘South African task team on steel prices to report in 2 weeks‘, Steel Prices –China, Aug 2010; Grail Research Analysis

Domestic Carbon Steel Sales by End-Consumer Industry, South Africa, 2009

54.8%

Perc

enta

ge S

ales

by

End

Indu

stry

1 25.7%

4.8%

14.7%

The manufacturing sector accounted for more than half sales in 2009 Major industries contributing to the

sales include cable, wire products,and gates (14%), tube and pipe (9.5%), plate and sheet metal work (8.9%), packaging (6.2%), and automotive (5.5%)

Steel consumption in the construction sector is expected to grow due to anticipated decline in steel prices, as compared to the prices in 2009

Sales in the building and construction sector increased from 22.5% in 2005 to 25.7% in 2009

Steel consumption in the mining sector is increasing, which is evident from the increase in steel sales to the sector from 4% in 2006 to 4.8% in 2009

Others3

Manufacturing2

Building &Construction

Mining


Source: Grail Research Analysis

Owing to expected short-and medium-term growth in key end-consumer industries such as construction and automotive, the demand for steel products in South Africa is expected to grow

• Domestic auto sales is expected to increase from 0.49 MM in 2010 from 0.55 MM in 2011

Outlook of End Industries1 Product

Demand2 CompetitiveLandscape3 Openness to

Foreign Players4

Demand for steel products such as steel sheets and sections is expected to increase, with the growth in construction and infrastructure sector projects• Imports of steel products

increased ~40% to 0.57 MM Tons during the first 10 months of 2010, compared to same period in 2009

The market for crude steel has consolidated, with a few players occupying the majority of market share

Steel merchants are looking to grow in South Africa through acquisition of smaller players, causing market consolidation

Though foreign direct investments (FDI) in developing nations increased 10% in 2010 compared to 2009, South Africa witnessed a decrease of 77.9% in the FDI inflows

The doing business ranking for South Africa is 34 in 2011

• However, the ranking decreased by 9 places to 75 on the attribute –‘starting a business’

Steel Industry in South Africa – Market Attractiveness

Market Attractiveness

Medium to High Low Medium

High product demand supported by the growing end-consumer industry increases the attractiveness of the market; however, a high degree of consolidation reduces its potential

Case Study - South African Steel IndustryMarket Attractiveness

Medium to High Low


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0.0 0.3 0.6 0.9 1.2 1.5 1.8 2.1 2.4 2.7

Opportunity C

Opportunity B

Opportunity A

Mar

ket A

ppea

l

Ability to Succeed in the Market

Capture the broad consumer market through low cost

offerings

Cater to the demand of a niche customer segment

through an existing product

Partner with an existing player and use its distribution channel to sell new offerings in the market

Legend: Size of the bubble represents the size of the opportunity

Facilitate conversations with key stakeholders to evaluate the potential for success in each market, and ultimately prioritize/sequence growth opportunities

By combining market appeal and success potential, we balance the inherent attractiveness of a market with the client’s ability to take advantage of the opportunity and ultimately make money in the market

(i.e., be successful)

Country ACountry B

Case Study - South African Steel IndustryOpportunity Prioritization Matrix


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Extensive Regional Experience in Africa

Office in Johannesburg Experience in Industry Analysis,

Customer Surveys, Segmentation, Benchmarking and Best Practice Research, and Due Diligence Support, Projects executed across Tourism,

CT, CPG, Healthcare, Manufacturingand Education Sectors

Experience in Customer Survey and Analysis, and Industry Analysis Projects executed in Healthcare and

Tourism sectors

Experience in Customer Surveys and Analysis, and Market Attractiveness Analysis Projects across Tourism,

Aviation, Manufacturing and Construction sectors

Experience in Industry Analysis, Competitive Intelligence, Benchmarking and Best Practice Analysis, Investment Attractiveness Assessment, and Due Diligence Support Multiple projects across sectors

including: Tourism, Government Support for Foreign Direct Investment, Utilities, Manufacturing and Oil & Gas, Retainer relationship with two

consulting firms

Countries where we have conducted research since 2008

On the ground research experience

Countries where we have conducted Assessment of Market Potential study

Assessment of Market Potential Projects

Industry Geographic Coverage

Metals & Mining South Africa, Ghana,Tanzania, Mali, DRC, Zambia

Construction/ Infrastructure Angola, Nigeria

Food & Beverages South Africa

Rail Market Kenya

Real Estate Kenya, Nigeria, Mauritius, Tanzania, Uganda, Rwanda

We have completed over 80 projects in Africa and have strong research coverage across the continent, spanning several industry verticals

Western Sahara

Djibouti

TunisiaMorocco

Algeria

MauritaniaMali

Niger

Libya

Chad

Egypt

Sudan

Ethiopia

Eritrea

Kenya

Tanzania

Democratic Republic of the Congo

Gabon

Nigeria

Senegal

Ghana

Cameroon

MalawiZambia

Mozambique

Zimbabwe

Botswana

SwazilandLesotho

Namibia

Angola

Uganda

BurkinaGuinea

South Africa

Somolia

Madagascar


Understanding and Addressing the Challenges

Limited coverage of public information and inconsistency in information across secondary sources: Inconsistency of information across available information sources increases the reliance on primary research

Limited coverage of public information by secondary sources: Public information is not always published and needs to be extracted via primary research

A large amount of information is still reported only in the local language

Lack of quality pan-African research providers with experience and reach across Africa

The number of quality research providers who have the ability to provide “on the ground” research support is very limited

Research providers in the region lack global reach and hence the ability to conduct international studies for local clients

Poor infrastructure and low Internet penetration imply that research must often be conducted offline in African markets• Local partnerships and a solid vendor network to conduct

the research offline and obtain ‘hard to find’ data Stringent control measures to ensure high quality data

collection and managing on-the-ground primary research• The guidelines have been developed specifically for Africa

region based on the past research experience in this market

Ability to Extract

“Difficult to Find”

Information

Africa Region – Research Challenges

Thorough understanding and deep knowledge of information sources that offer specific data on the region Office and team in Johannesburg provides seamless interface

for project execution and face to face interaction with clients Long term experience on how to access the knowledge

leaders / experts in the region, e.g. conducting interviews with local experts and government institutions in the region

Local Presence and Expertise

Experience in obtaining information that might not be publicly reported. This may involve speaking to the relevant person/authority, using unconventional research methodologies (blog search, answers forums etc.)

Awareness of the cultural context and a deep understanding of the sensitivities related to the region’s business context

Nuanced Understanding

of Cultural/ Business Context

We have created a strong research offering in Africa through our local presence, exclusive partnerships and stringent quality control measures, resulting in a growing client base

Grail Research Capabilities


Client Testimonials

We approached Grail Research because we needed accurate market intelligence about hard-to-reach regions where there was very limited publicly available information. The Grail team workedclosely with us to understand the specific questions we had about each region and the decisionswe needed to make. They applied a variety of research techniques to gather and validate data.The quality of analysis and insights they provided was exceptional, and was packaged anddelivered in a workshop format which ensured that our questions were answered and our teamcould quickly and confidently make decisions about each region.

“

Greg Maud, Manager, Value Based Management and Business Development SCAW Metals Group (A member of Anglo American plc)

”City Lodge was considering entering a new market and we needed support developing a detailedunderstanding of the traveler behavior in the market and business case for entry. We engagedGrail Research because they understood our business, had expertise in the market we wereconsidering and knew how to quickly gather the information we needed to make decisions. Wewere extremely pleased with the quality of insight the team delivered and with the way they helpedus think through important positioning and branding decisions. The analysis Grail prepared wasvery powerful and appropriate for use by our senior executives when presenting the business caseto our board. I highly recommend Grail as a strategic research partner for organizations that areevaluating high stakes decisions.

“

- Henri Joubert, International Business Development Manager, The City Lodge Family of Hotels”


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Conducted secondary research and expert interviews to collect country-level data on macroeconomic and

demographic indicators, real estate supply and demand, and recent investments, transactions, and

projects in Sub-Saharan real estate

Created an excel based model to quantify the demand, deficit, and investment required for each real

estate sub-sector across the target countries

Verified the output of the model through expert interviews and client

input. Created visuals to represent the research findings in a compelling and easily comprehendible layout for the

investors

2 weeks2 weeks 1 week

Objective: Create an investor presentation for a PE firm in order to depict the thesis and potential of investing in the real estate sector (residential, retail, hospitality, and commercial) in Sub-Saharan Africa

Grail Research Approach: Showcase the real estate investment potential in Sub-Saharan Africa by quantifying demand, analyzing growth drivers, examining recent investment/transactions in the sector, and evaluating possible exit options for investors

Case Study Assessment of Real Estate Investment Potential in Sub-Saharan Africa


Case StudyEvaluation of Market Opportunities in the Housing Sector

Conducted exhaustive secondary research to develop an understanding and build an

overview of the country’s macroeconomics, housing market, and government

regulations vis-à-vis the low cost and affordable housing

market

Facilitated exhaustive workshops with senior client

leadership to help understand the key opportunity area and provide actionable insights on how and where to play in the

value chain of the housing sector

Conducted in-depth and short telephonic interviews with

housing industry experts and government officials to gather

insights into the market, product overview, competitive

landscape, value chain, government regulations, and

consumer landscape

Performed in-depth analysis of the market, product, consumer,

and competitor landscape along with the value chain;

conducted five forces analysis of the housing industry to

generate insights; synthesized case studies on housing sector

in other similar countries

Objective: Global construction products manufacturing company seeking to evaluate potential market opportunities in the low-cost and affordable housing sector in Sub-Saharan Africa, and identify capabilities for successful market entry

Role of Grail Research: Executed extensive primary and secondary research across Sub-Saharan Africa, in markets with limited information availability, identifying potential market opportunities in the housing sector and ultimately facilitating discussions with key stakeholders around market entry strategy for the final selected opportunity

6 Weeks


Case StudyAssessment of Opportunities in the Manufacturing Sector

Shortlisted 7 key markets for deep-dive market assessment, based on parameters such as

country macroeconomics, sector-specific growth and

upcoming projects; identified experts and key stakeholders

from each industry

Objective: Global manufacturing company seeking identify and prioritize market opportunities in sectors such as mining, rail, construction, and infrastructure. The study was aimed at developing a market-entry strategy in the prioritized markets

Role of Grail Research: Gathered and analyzed competitive intelligence information for key market-entry decisions through primary and secondary research across multiple shortlisted geographies, including countries in Africa with very low information availability

8 Weeks

Conducted in-depth interviews with experts, government

officials, and purchase managers to gather insights into

the market, product profile, buying behavior, major

competitors, and the value chain of the various industries in the particular countries of interest

Performed in-depth analysis of the market, product, customer, and competitive landscape for each market based on multiple parameters; synthesized the output into detailed market

profiles, outlining the market opportunity and entry strategy

for each geography

Facilitated workshops with senior leadership to help design

the market entry strategy; in addition, prioritized the markets on a 2x2 matrix based on the

appeal of the market and client’s success potential in

those markets


Case StudyAssessment of Steel Industry in Sub-Saharan Africa

Facilitated a 2-day workshop with senior client leadership and

Managing Director of the firm to help design the approach to various business questions related to project objectives

Performed in-depth analysis of the market, product, and

competitor landscape along with customers’ satisfaction level; synthesized the output into

detailed actionable insights from both assessment of current

market and customer experience

Conducted in-depth qualitative interviews (face-to-face and telephonic) and quantitative survey among customers to

assess the degree of satisfaction with current product offerings,

and identify areas of improvement

Conducted exhaustive primary (ad-hoc calls and expert

interviews) and secondary research to analyze the current state of the Sub-Saharan Africa steel market and gather insights

into the market, product landscape, competitive

landscape, and value chain

Objective: Global steel products manufacturer seeking to assess the current state of the steel industry in Sub-Saharan Africa and understand the customers’ experiences related to the product/service offered by the client. The experiences were analyzedto identify the gap between current offerings and customers’ requirements

Role of Grail Research: Conducted detailed secondary research, expert interviews, qualitative research and a quantitative study in order to gain competitive intelligence specific to the market and understand the customer experience

12 Weeks

| Copyright © 2010 Grail Research, LLC — Confidential 2

Key Questions

Note: 1Market size refers to a sum of exports and consumption. The growth figures are as per the June 01, 2010 forecastsSource: Grail Primary Research and Analysis; Steel on the Net

Key Areas of Concern – Products

Which Product Offers Maximum Potential?

How to Improve Current Product Offerings?

5.6

5.8

6.0

6.2

6.4

6.6

6.8

7.0

7.2

7.4

7.6

7.8

8.0

8.2

8.4Growth inDomestic Consumption & Exports(2010 - 2015)

Market Size (2009)1

800400 3,2002,8002,4002,0001,6001,200

Product 1 (12%)

Product 2 (36%)

Product 3 (17%)

Product 4 (8%)

Product 5 (48%)

Size of the bubble represents the size of exports (for 2009, in 000’ tonnes). The figures inside the brackets represent the size of exports as a percentage of total size of the opportunity

Low growth in exports and domestic consumption due to availability of low cost imports primarily from

the Asian countries

High expected growth in exports due to growth in

demand in the African region primarily driven by planned

mining projects

Product 5 have a large market size, with 18% constituted by exports. Country A is one of the major importers for South

African products


Case StudyAssessment of Market Potential in Mining Equipment Wear Parts Industry

Objective: Leading steel castings manufacturer seeking to assess the market potential for mining equipment wear parts across geographies to help create and support the market-entry strategy

Role of Grail Research: Applied Assessment of Market Potential Framework to gather intelligence for key market-entry decisions through primary and secondary research across multiple shortlisted geographies, including countries in Africa with very low information availability

Performed in-depth analysis of the market, product, customer, and competitor landscape for

each market based on multiple parameters; synthesized the output into detailed country

profiles and competitive analysis, outlining the market opportunity and entry strategy

for each geography

Conducted in-depth interviews with industry experts, equipment

manufacturers, and purchase managers to gather insights into

the market, product profile, buying behavior, major

competitors, and value chain of each market

Shortlisted 8 key markets,including 5 African nations, for deep-dive market assessment, based on parameters such as size and growth potential of mining and usage of specific mining equipment; identified

experts and key stakeholders from the industry

Facilitated workshops with senior leadership to help design

the market entry strategy through suggested models for

market sizing, and key insights, and performed analyses for

each market

6 Weeks


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Vivek Neb

Vivek Neb has research experience across various industrial sectors, including information technology, telecommunication, tourism, finance and FMCG. His work is focused on Industry analysis, market sizing, confirmative due diligence, market opportunity analysis, and competitive intelligence. He has worked on various assignments, including assessment of market opportunity for a global leader in farm equipments to help the client device the entry strategy for the Indian market, assessment of global market opportunity for a leading technology product for usage in ICT space, analyses of global mobile internet market to help a technology leader to identify potential growth opportunities.

Kurian Thomas brings 15 years of experience to his role at Grail Research. Kurian joined Grail from Monitor Group where he spent five years as a strategy consultant post his MBA from Kellogg. In his most recent role at Monitor, he managed large, complex projects at a number of the firm’s largest relationship accounts. His experience includes corporate strategy, M&A strategy (including due diligence and transaction advisory services), and marketing strategy. He has consulted across a number of different industries, including chemicals, energy, automotive, and healthcare.

Kurian Thomas

Rahul Sethi is a Vice President at Grail Research, before joining Grail he was with Monitor Group’s marketing strategy practice. He has been instrumental in leading a number of engagements in Europe, Africa and South East Asia. He is responsible for the commercializing the firm’s Africa practice . His primary areas of focus have been working with clients in the public and private sector regarding topics such as market growth strategy, market segmentation and tracking, competitiveness strategy, market entry planning and implementation. Rahul holds a degree in economics, a masters degree in communications and a MBA.

Rahul Sethi

Shashank Dewan has a rich experience of working across sectors such as manufacturing, mining, finance, consumer electronics, etc. His work is focused on assessment of market opportunity, industry analysis, market sizing and competitive intelligence. He has worked on over 6 assignments to support clients in identifying opportunities across15 geographies, in the past 12 months. These assignments include assessment of market potential for an Africa based, manufacturing sector company, to identify new market opportunities; support an Africa based steel giant, identify opportunities in existing markets, etc.

Shashank Dewan


For More Information Contact:

Rahul Sethi([email protected])

Shashank Dewan([email protected])

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Grail Research Assessment of Market Potential Framework Africa