Dangote's Brute Force Approach : Lessons in Market Domination
Home African CEOs Aliko Dangote’s Brute Force Approach Unveiled: Lessons in Market Domination 
African CEOs - April 28, 2023

Aliko Dangote’s Brute Force Approach Unveiled: Lessons in Market Domination 

As the founder and CEO of the Dangote Group,  a conglomerate that operates in various sectors including cement, sugar, salt, and flour, Aliko Dangote’s success is not only attributed to his business acumen but also to his brute force approach to market domination.

Dangote’s approach involves using his vast resources and influence to dominate markets, often through aggressive price cuts and strategic acquisitions. Dangote who started his company as a trading firm in 1981 used his brute force approach to quickly establish dominance in markets and reap significant profits. Let’s take a look at some of the strategies he employed.

Dangote prioritised relationships

Aliko came from a wealthy background. His father, grandfather and great-grandfather were influential figures in the business and political world. Returning to Lagos after his university education in Egypt, he focused on building relationships. Reports say he was close friends with Femi Otedola, the son of a former Lagos state governor, and other People Democratic Party (PDP) governors. Also, he had a great relationship with Olusegun Obasanjo, who later became the President of Nigeria from 1999-2007. 

The Nigerian business magnate understood that dominance can be achieved through men of influence so he took a chance at grooming relationships that will later advance the course of his business. From this entrepreneurs, should learn that dominating a market is not restricted to the quality of goods and services you deliver, it also involves your relationship with influential men in society. 

Invested in Obasanjo’s election

According to reports, Dangote who had known Obasanjo since 1981 contributed about $1.5 million (at the time) to Obasanjo’s first election campaign, and in 2003 at least another $7.5 million for the second term. Dangote’s success is built on his ability to identify opportunities and invest heavily in them, even if it means facing short-term losses or criticism.

From this entrepreneurs can learn the benefits of having a long-term vision and a willingness to take risks. Dangote could have examined the numerous benefits his business would gain if Obasanjo wins the election. He also could have weighed his loss, if Obasanjo was not victorious at the polls. But he was willing to take the risk to pursue a long-term vision. Achieving market dominance happens over time, not overnight. It involves having a long-term vision and working towards it despite the risks you may encounter on the way.

Taking unfair advantage

Dangote’s relationship with men that mattered gave him the opportunity to hold exclusive import rights in sugar, cement, and rice. He used such an advantage to do volume business and undercut competitors. This is one of the ways he achieved market dominance.

Reports revealed that tariffs or outright bans on imported items introduced by the government favored his Group in nearly all areas of business including wheat flour, cement, certain textiles, sugar and pasta. While other companies were grappling with tariffs and other bills, Dangote Group was on a ride. The African billionaire once admitted in a 1996 interview that a government mandate forced him to import so much rice that the local market crashed by almost 80 per cent. 

Dangote’s strategic acquisitions

To achieve market dominance, Dangote had to be in control of every stage of the value chain, from production to distribution. This made him prioritise bold acquisitions, which include acquiring lands for his cement plants, petrochemical plants, etc. 

This is evident in his 2002 acquisition of Obajana Cement and the purchase of a 45 per cent stake in South Africa’s Sephaku Cement. These acquisitions expanded his interests and increased his control in the cement market. Inherent in his strategy of acquisition is a desire to diversify. Dangote’s business empire spans multiple sectors, which allows him to leverage his resources and knowledge across different industries. 

It is also pertinent to state that Dangote invests heavily in technology and infrastructure as his $19 billion oil refinery reportedly has some of the world’s best equipment. By investing heavily in technology and infrastructure, Dangote has been able to streamline his operations and reduce costs, which in turn allows him to offer lower prices to consumers and gain market share. All of these are tools Dangote uses to uphold his relevance in the market.

Why the goal of every business is to dominate the market

Dangote in one of his quotes said, “Don’t kill the competition. Competition is healthy for businesses. It keeps you the entrepreneur on your toes.” While this quote is a good business lesson, it is important to note that the desire of most businessmen is to dominate the market and keep competitors out of the market. You may ask why? Well, the answer is not far-fetched. 

Entrepreneurs aspire to dominate the market because it can give them a competitive edge over their rivals. Dangote once said, “One competitive advantage I had when I ventured into manufacturing was my brand ‘Dangote,’ which I diligently built in the course of my trading commodities.” He built his brand diligently because he wanted to attract more customers, which translates to higher sales and profits.

Also, dominating a market can allow you to set the prices for your products or services, which will give you more control over the industry.  While Aliko Dangote’s brute force approach may be controversial, it has undoubtedly been successful in allowing him to dominate multiple markets in Africa. 

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