5 (Five) Vital Things you can Learn from Aliko Dangote

5 (Five) Vital Things you can Learn from Aliko Dangote

5 (Five) Vital Things you can Learn from Aliko Dangote

1. Invest in what you know
Dangote learned from one of the oldest investing lessons in the book. Born in 1957, he was exposed to the entrepreneurial spirit at a young age. He was raised in Kano State, Nigeria, by his grandfather, who himself became one of the wealthiest men in the area selling commodities.

5 (Five) Vital Things you can Learn from Aliko Dangote

After graduating from Egypt’s Al-Azhar University, the 21-year-old took a $3,000 loan from his uncle and set out on his own, but he didn’t stray far from the family business. Dangote used the loan to import rice, sugar, and cement from overseas at wholesale prices and then sell locally at significant markups. This was a business Dangote understood thanks to his grandfather, and he was able to make the venture an immediate success. According to Warren Cassel at Investopedia, Dangote Group “had grown into one of the largest trading conglomerates operating in the country” by 1990.

2. Find companies that create value
Dangote’s business flourished for 20 years, but he saw the opportunity to shift directions, fulfill a dire need. and grow even more. Nigeria was at the end of a 15-year stretch of military rule, and the new president, Olusegun Obasanjo, had promised to protect local industry, which set the stage for Dangote to make his move. “In a country where imports constitute the vast majority of consumed goods,” the Dangote Group website states, “a clear gap existed for a manufacturing operation that could meet the ‘basic needs’ of a vast and fast growing population.”

Having begun as an importer and trader of commodities, Dangote already had a strong distribution network, so he had a distinct competitive advantage as his company transitioned into manufacturing flour, pasta, and sugar.

3. Harness the power of brands 
The distribution network was an important piece of the puzzle, but as Dangote has said, “[T]o succeed in business you need to build a brand and never destroy it.” Whether it was a Donald Trump-like flair or a desire to capitalize on name recognition built from his years as a commodities trader, Dangote branded the products with his name.

The brand would be built on high-quality products at affordable prices — which is something that works as well in Africa as it does everywhere else in the world — and is now one of the most recognizable brands on the continent.

4. Focus on strong capital allocation
Building and maintaining a brand requires substantial investment. And if there’s one thing that stands out about Dangote, it’s his ability to successfully plow money back into his businesses. He has created the economies of scale that allow his company to sell products at cheaper prices than his competitors do. That’s something many CEOs attempt to do but only a handful do well. Warren Buffett and Jeff Bezos are two names that come to mind.

In 2000, the Dangote Group acquired a cement company from the Nigerian government, and by 2003, Dangote was ready to expand the business by combining a $479 million loan with $319 million of his own money to commission the largest cement plant in sub-Saharan Africa. Today, Dangote Cement Plc is valued at roughly $14 billion, which makes it the largest company on the Nigerian Stock Exchange and accounts for 25% of the exchange by market cap.

The successful reinvestment into Dangote companies is a consistent theme. It’s also happened by way of multiple expansions at Dangote Sugar, which has grown to become the second largest sugar refinery in the world. The company’s distribution network has grown from 600 trucks to over 1,500 since the late 1990s.

5. Embrace optionality
However, along with reinvesting into current business, what makes companies such as the Dangote Group special is their ability to move in multiple directions. The Dangote Group has ventured beyond its initial focus of cement, sugar, and flour and into real estate, telecom, steel, and oil and gas.

There are probably sectors Dangote won’t move into, but it seems as if nothing is off limits. That approach is what has allowed Dangote’s business — and his net worth — to grow so incredibly. Today, Dangote Group is a massive conglomerate generating $3 billion in revenue annually.

In Africa, Dangote Group is viewed as part folk hero — for reinvesting in and creating jobs on the continent — and part villain — as Dangote himself came from wealth and has potentially leveraged government relationships to establish unfair advantages. Dangote is a polarizing figure, but his story provides plenty of interesting business insights and investment advice. And since he’s just 58 years old, we can expect to hear plenty more

from Africa’s richest man.

Is all About Blogging and Entertainment --- From Vivian, 24/7 Updates on celebrity Gossip and Entertainment +News , I ? U , Welcome to VivianGist ... come for more ... Everyday

2 Comments

  1. danakellysuppler

    April 9, 2016 at 5:13 am

    @ oddB, if this is indeed his business
    model than he is only very smart doing
    what major companies outside Nigeria
    have done which is probably why he is
    the richest in Africa , driving cost low is
    what has made Wal- Mart the household
    name it is today. some people may have
    problems with this business model but I
    don’ t, I tell people you are upset that
    Wal- Mart is kicking you out of business ,
    then why don’ t you be competitive like
    Wal- Mart , if you were there before Wal-
    Mart or in this case Dangote and they
    were still able to run you out then you
    were doing something wrong and if you
    were came after the competition and did
    not do your research on how to beat
    them then again that’ s on you .
    As for buying into vendors it is a
    worldwide phenomenon NOT especially
    Nigeria , how do you think the Great
    Value brand came about ? I worked for a
    big oil and gas service company and
    buying into vendors waS the order of the
    day because to stay competitive, you
    need to constantly look for ways to
    lower cost of production , supplying e . t. c
    if not the next person who jumps on the
    scene will drive you out of business
    before you can say Jack . Let us use
    being a makeup artist as an example , I
    started out as a makeup artist , charging
    20 k for bridal makeup, my next door
    neighbor sees my business is running
    successfully and decides she wants in
    but charges 15 k , if I don’ t look for ways
    to keep lowering my cost of service
    there will come a point when I will no
    longer be able to lower my cost and still
    remain profitable hence get chased out
    of business due to competition because
    people in most cases will go for the
    cheaper option . Buying into vendors not
    only translates to cheaper cost of
    production but it means that although
    money is changing hands it is ultimately
    all coming to 1 pocket.
    Enough business lesson for today or add us on danakellysuppler@gmail.com or +2348106618681

  2. Albert

    June 7, 2016 at 4:07 pm

    DAGOTE CEMENT COMPANY HAS CRASHED DOWN PRICE TO #1400 PER 50kg, THIS PRICE IS THE LEGAL MARKET VALUE PRICE, BUT YOU CAN GET IT AT LESS AS #1000 PER 50kg bag, WHEN YOU BUY FROM THE COMPANY DIRECTLY, YOU CAN CONTACT ME ON; +2348107391822, OR ANY OTHER OF OUR MANAGERS ANYWHERE ACROSS THE COUNTRY FOR YOUR BOOKING AND DELIVERY. note: THIS OFFER IS ONLY VALUED FOR CUSTOMERS BUYING ABOVE 100bags. thanks

Leave a Reply

Your email address will not be published. Required fields are marked *