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Abstract

Jules Munyampeta, founder and CEO of RD Tech Rwanda, was at a crossroad. He was questioning his company’s current strategy. The ICT (information and communication technology) market in Rwanda had transformed significantly since the company was founded in late 2005 with the help of two foreign investors, Preston Winter and Nathanael Brice. RD Tech began as a computer importer that sourced new laptop computers from Dubai. Munyampeta soon realized that the market for new computers in Rwanda was very small, and subsequently had great success with a new approach - importing and selling refurbished used computers from the United States. The lower price point for refurbished used computers allowed RD Tech to expand its market and have a greater impact on Rwandan society, a goal of its founder and investors. Originally, the company sold personal computers to individuals, but quickly shifted focus to schools and government institutions as a result of changes in government policy. This shift resulted in rapid growth, and RD Tech Rwanda expanded distribution of refurbished computers throughout Rwanda, Burundi, and eastern Democratic Republic of Congo. Three years after start-up, the company had net sales of US$413,000 with a profit of $60,000. RD Tech survived the impact of the global financial crisis, competition from Chinese entrants into the Rwandan market, and NGOs, such as One Laptop per Child, providing free computers to schoolchildren when, suddenly, sales came to a crashing halt. The Rwandan government made rapid technological advancement a priority for public schools and local governmental agencies, the company’s two largest market segments, but refurbished computers and monitors were no longer acceptable for these institutions. As he reflected, Munyampeta considered his options. Was integrating the refurbishment operations into the East African supply chain the answer? Would this strategy deliver sufficient cost savings to justify the initial capital outlay and continuing operational costs? If so, could Winter and Brice raise the capital required to make the change? Or might a return to the original unsuccessful model of selling new computers now be feasible? Munyampeta wondered if, instead of focusing on a growth strategy, he should be considering a liquidation strategy. The case is designed to facilitate discussion of the complexities of starting, growing, and sustaining a technology-focused business in a dynamic, evolving, emerging market such as Rwanda. This case provides a special lens on issues faced by business leaders as they navigate the turbulent environment of Sub-Saharan Africa’s emerging markets, and as they face key inflection points for their industry. The RD Tech case highlights trade-offs that start-up companies make as they adapt their business model to respond to environmental changes. Historic information tracks the company from a start-up focus on importing computers into Rwanda, to a change in the business model as the company encounters opportunities and threats driven by dramatic changes in governmental policy, regional expansion possibilities, infrastructure development, and ICT industry evolution. The case draws attention to consideration of alternatives for growth, and even survival, and emphasizes the need for speed, flexibility, and adaptation in dynamic emerging markets with potential bottom-of-the-pyramid opportunities. Detailed information in the case helps the reader understand business risk, risk analysis, and survival challenges inherent in growing a small business in a dynamic industry in a turbulent emerging economy. The case fits well into courses on entrepreneurship, industry and competitive strategy, global strategy, general management, operations management, and regional business environment. Concepts from the case include risk in emerging markets; fundamental challenges of coordination and control in emerging markets; the internationalization of emerging market start-ups, and the strategic role of the leader at key inflection points. These concepts are applicable in emerging markets in general, and in multiple other industries.
Location:
Industry:
Other setting(s):
2011

About

Abstract

Jules Munyampeta, founder and CEO of RD Tech Rwanda, was at a crossroad. He was questioning his company’s current strategy. The ICT (information and communication technology) market in Rwanda had transformed significantly since the company was founded in late 2005 with the help of two foreign investors, Preston Winter and Nathanael Brice. RD Tech began as a computer importer that sourced new laptop computers from Dubai. Munyampeta soon realized that the market for new computers in Rwanda was very small, and subsequently had great success with a new approach - importing and selling refurbished used computers from the United States. The lower price point for refurbished used computers allowed RD Tech to expand its market and have a greater impact on Rwandan society, a goal of its founder and investors. Originally, the company sold personal computers to individuals, but quickly shifted focus to schools and government institutions as a result of changes in government policy. This shift resulted in rapid growth, and RD Tech Rwanda expanded distribution of refurbished computers throughout Rwanda, Burundi, and eastern Democratic Republic of Congo. Three years after start-up, the company had net sales of US$413,000 with a profit of $60,000. RD Tech survived the impact of the global financial crisis, competition from Chinese entrants into the Rwandan market, and NGOs, such as One Laptop per Child, providing free computers to schoolchildren when, suddenly, sales came to a crashing halt. The Rwandan government made rapid technological advancement a priority for public schools and local governmental agencies, the company’s two largest market segments, but refurbished computers and monitors were no longer acceptable for these institutions. As he reflected, Munyampeta considered his options. Was integrating the refurbishment operations into the East African supply chain the answer? Would this strategy deliver sufficient cost savings to justify the initial capital outlay and continuing operational costs? If so, could Winter and Brice raise the capital required to make the change? Or might a return to the original unsuccessful model of selling new computers now be feasible? Munyampeta wondered if, instead of focusing on a growth strategy, he should be considering a liquidation strategy. The case is designed to facilitate discussion of the complexities of starting, growing, and sustaining a technology-focused business in a dynamic, evolving, emerging market such as Rwanda. This case provides a special lens on issues faced by business leaders as they navigate the turbulent environment of Sub-Saharan Africa’s emerging markets, and as they face key inflection points for their industry. The RD Tech case highlights trade-offs that start-up companies make as they adapt their business model to respond to environmental changes. Historic information tracks the company from a start-up focus on importing computers into Rwanda, to a change in the business model as the company encounters opportunities and threats driven by dramatic changes in governmental policy, regional expansion possibilities, infrastructure development, and ICT industry evolution. The case draws attention to consideration of alternatives for growth, and even survival, and emphasizes the need for speed, flexibility, and adaptation in dynamic emerging markets with potential bottom-of-the-pyramid opportunities. Detailed information in the case helps the reader understand business risk, risk analysis, and survival challenges inherent in growing a small business in a dynamic industry in a turbulent emerging economy. The case fits well into courses on entrepreneurship, industry and competitive strategy, global strategy, general management, operations management, and regional business environment. Concepts from the case include risk in emerging markets; fundamental challenges of coordination and control in emerging markets; the internationalization of emerging market start-ups, and the strategic role of the leader at key inflection points. These concepts are applicable in emerging markets in general, and in multiple other industries.

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Location:
Industry:
Other setting(s):
2011

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