GLOBAL & INTERNATIONAL

BUSINESS CONTEXT (SM0269)

TAN HUI KIAT

W16040809
BASLCM

Lecturer: DR DONALD TAN

Word Count: 2908

Task 1: 1447
Task 2: 1461
Part 1

+ Diagram List PointsDiscuss Porter Diamond Model

Factor Condition
In the current context, South Africa has emerged as the most favourable market
globally, The collaboration with the BRIC group of countries like Brazil, Russia, India
and China has allows South Africa to established its country moving towards the key
choice of market for investors. In support, South Africas government had also
demonstrated its dedication to open market, privatization and a favourable investment
climate through the release of a Growth, Employment and redistribution (GEAR )
strategy that took place.
Statistically, South Africa is a developing country with population of 55.4 milliom as of
2017 with current GDP 360. Its unemployment rate and labour relation continue to
pose challenges for the country. Unemployment remain high at ____ overall people
between ages of 15 and 24. The government had launched employment tax incentive
targeting on private sector to employ youth labour by subsidising the salaries of newly
recruited workers aged between 18 and 29 since year 2013. However, the overall
labour market remained constrained and labour unrest continued to affect the output
of South Africa, especially in agriculture and manufacturing. The output potential has
also been affect by a lowly skilled labour which called upon the government to make
further investment to reform on their poorly performing education system.
South Africa, natural resources is one of the key factors for the growth of its country
economy, with a huge amount of natural resources like Gold, Platinum, Vanadium and
even Coal, had contributed to the most of it profitable market. Being a soft drink
company looking into the establishment of a company in South Africa, It is an
advantages factor to know the stability of the country economy had been consistent
over the past decade.
There was a significant increase in the quality of infrastructure in South Africa. In 2017
quality of infrastructure had an enhancing impact on the Food & beverage industry in
South Africa. Since 2012, the South Africa Government had adopted a National
Infrastructure Plan, considering the improvement of its healthcare facilities, schools,
water, sanitation, housing and electrification.(National Infrastructure Plan| South Africa
Government, 2017)
National Infrastructure Plan | South African Government. (2017). Gov.za.
Retrieved 12 February 2017, from http://www.gov.za/issues/national-
infrastructure-plan

These governments decision to spend more on the infrastructure in South Africa has
gained some positive fruit. Its shown a significant plus point to the company on setting
up factory within South Africa.
Water being one of the main ingredient for the making of soft drink. It is very important
for the company to consider the source of getting water in South Africa. In the country,
the government had owned up to 500 dam which spreads across nine provinces and
can be seen to range in storage capacity for a volume of 5500 million cubic metre.
Which mean the supplies of waters in South Africa would not been an issue in the
country and the soft drink company will not face any issue of getting the main
ingredient within the country itself.
Trading and exporting in South Africa could have posed a key advantage to the
investors. With its availability of major shipping lanes passing along the South Africa
coastline in the southern Atlantic and Indian ocean, South Africa geographic had
allows more trade and export being made between others countries easily.
Demand Condition
South Africa being the eighth highest sugar intake country in the world, It posed an
advantage for the company to venture into the market of soft drink industry. In facts,
South African has the highest overweight and obesity rate among the Sub-Saharan
African. With the trend of the women obesity rate stand at 42% high and 13.5% for
men. As compare to the world obesity index of 37%, South Africa women had gone
beyond the average. In another word, the demand for soft drink in South African are
relatively high among the women.
Per World bank, South Africa is a middle-income country as statistic shows that more
people from the basic income group previously becoming more economically stabled
joining the mainstream economy. Over the past few years, the living cost of the South
African have increase significantly. The growing of middle and elite classes have
meant that the consumption on higher end or luxury products had also increase. Soft
drink products are a substitute of water, since the buying power increase among the
South African, its shown that the people be more willing to spend the extra cash to
add the additional flavour to their drinks.
Inflation in South African has been seen to be constantly decreasing over the years,
which mean that the products in South Africa are becoming more affordable to more
people. In return, its posed an increase demand for south drink since the more people
abled to make purchase from the company.
Firm Strategy and Rivalry.
In the context of south Africa competitive advantages, the country has an advantage
in term of low work cost, natural resources, government support and many more.
The rivalry is an essential factor of the competitive advantage of the industry. The
domestic rivalry could lead to the pressure on the firm to lower costs, improve quality
and innovation. Unfortunately, many others big firms company had already been
sourcing their items from South Africa and further setting up a fully owned subsidiary
In the country for item sourcing.
Coca-Cola Co. is one of the main competitor in the Soft Drink industry of South Africa.
As per Igumbor et.al(2013) Coca-Cola Co. continue to dominate the market of Soft
Drink Industry in South Africa. Followed by PepsiCo and others local brand getting a
small pie of the market.

Even though, the South Africa Soft drink industries had the presence of the two
powerhouses, it does not mean that other competitor does not have a chance to
venture into the market. Furthermore, as per Business day (2017) stated that the long
collaboration between Coca-Cola Co. and SABmiller had finally come to an end.
Which give an opportunity for others competitor to venture into the industries.
According to Anheuser-Busch InBev(Ab InBev) state that Coca-Cola Co. are looking
into a different operation of their company in South Africa in order to give a better
service to their consumer and communities in Africa, offering them with greater choice
of beverages and other varieties of soft drink. These separations had shaken up the
industries leaving more vigorous competitor to inject into the market.

In the context of making business in South Africa, firm need to take into consideration
of the business etiquette within the country. South Africans tend to be more
transactional as compared to establishing a long-standing relationship before making
business. This implied that firm should focus more on their business proposal rather
than focusing on having good relationship with the local partners. South African are
also open to new company which give the firm a chance to have a more induction itself
easily into to the south Africa soft drink market. Once entered into the market in South
Africa, company should than focus on matianing a good networking and relationship
building with the local for a longer-term business success. However the diverse
communication style varies among South Africa culture. Most of the south African
prefer face to face meeting than impersonal communication mediums such as email,
letter or telephone.

Business Day, Coca-Colas SAB exit could add fizz to sector. (2017). Retrieved 12 February
2017, from https://www.businesslive.co.za/bd/companies/retail-and-consumer/2016-10-
17-coca-colas-sab-exit-could-add-fizz-to-sector/

Igumbor, E., Sanders, D., Puoane, T., Tsolekile, L., Schwarz, C., & Purdy, C. et al. (2012). Big
Food, the Consumer Food Environment, Health, and the Policy Response in South
Africa. Plos Medicine, 9(7), e1001253. doi:10.1371/journal.pmed.1001253

The competitiveness depends on how organisations create, organise, and manage,

as well as the nature of local rivalry. In the linkage of national competitive advantage,
India has a notable advantage in terms of low work cost, accessibility of raw
materials and so forth.

Additionally, numerous foreign retailers like Arrow, Levi's, JC Penny, Wal-Mart, and
Gap have already been sourcing their items from India labour cost has increased in
developed nations (Pawar & Veer, 2013). An increasing number of corporations are
moving their operations to developing nations such as India and China. Walmart has
decided to set up a fully owned subsidiary in India for item sourcing (Pawar & Veer,
2013).

The organisational objectives, plans, and methods for managing businesses differs
in every nation. National competitive advantage results from a great match between
these factors as well as the sources of competitive advantage in a specific industry.
A corporation's administration and its competitive structure is influenced by national
circumstances. There is not one management system that is universally suitable.
Countries will have a tendency to succeed in businesses on the preface that the
managerial practices and modes of organisation favoured by the national
environment are appropriate to the industries sources of competitive advantage
(Pawar & Veer, 2013).
The abilities of food retailers as well as the power of the buyers are crucial in
achieving a competitive advantage in the food retail industry (UK Essays, 2010). The
food retail industry is immensely powerful and capable in influencing and negotiating
the prices of producers both domestically and internationally. It is fundamental to
create a long-lasting relationship of trust and create partnership amongst the
retailers keeping in mind the end goal to increase the value of opportunities (UK
Essays, 2010).

There is a definite increase in the market size, as more people from previously disadvantaged groups
become economically active and join the mainstream economy. Inflation in South Africa, as measured
by the consumer prices index (CPI), also indicates a decreasing trend since 2000 (Stats South Africa,
2004). This means that products in Sousth Africa are becoming more affordable to more people. The
percentage change each year in the CPI is illustrated in Figure 7.2.

South Africa is a country of about 50 million people that is rich in diverse culture, people and nautral
heritage. South Africa has the largest economy in the continent of Africa. Together with Brazil, Russia ,
India and China, South Africa they form the BRICS country under the factors of a emerging world
economic powerhouse. Therefore South Africa is consist as a key emerging market for global investors.

South Africa is a middle income with vass amount of natural resource. The country can be consider
as realituvely well established in fininacial, legal, communicaton, transport system and also a stock
exchange that ranked among the ten largest in the world. Economical wise, south Africa is leading in
the exporter amongst the Africa countries especially in the minerals and tourism secotors. Since the
end of the apartheid era in 1994, the south africas government had demonstrated its dedication to
open market, privatization and a favourable investment cliate through the realease of a Growth,
Employment and redistribution(GEAR ) strategy that took place. However, the rise in unemployment
rate is still on-going even the inplace of the black empowerment programme. The country unequally
in the income of the people is still being the main topic in South Africa especially smong the
disadvantaged group and large wealth siaprities.

South Africa government has demonstrated its dedication to open markets, privatization, and a
favourable investment climate through the release of a Growth, Employment and
redistribution(GEAR ) strategy that took place in the periof from 1996 to 2000. However
unemployemet continued to rise even after continiuing programs of black empowerment. Country
wealth still remains unequally distributed among racial lines. Second budgetary reforms that aimed
to provide better reporting, auditing and accountability and changes in monetary policy in terms of
inflation targeting, allowed south Africa to have transprancy and predictability that are highly-
praised. Third the process of trade liberalixation has progress significantly since the early 1990s,
which together with implementation of WTO obligation and initiation of the DOHA DEVELOPMENT
round shows South Africa recognition of free market values.
Today there are 49,109,107 people living in the country. More or less half of the population

lives in urban areas, and many live in rural areas with insufficient housing. In both rural and

urban centers, a lot of people do not have access to water supply and sanitation, electricity,

and other services. Due to the fact that population is more mobile today and there are more

employment opportunities in the urban areas, the immigration among the citizens is

growing rapidly. Poverty is the highest among the Black population, reaching over 60%.

There have been several reforms in the education sector and now all inhabitants have

access to education, however still around 13,6% of population are illiterate.

From the time when apartheid was abolished, political violence in South Africa has went

down noticeably, however today violent crime is still a major concern in South Africa and

these acts are increasingly economically rather than racially motivated. Therefore, there are

many robberies targeting upper-class citizens. In 2008, due to the national dissatisfaction

with high unemployment rates and illegal immigration, people from other African countries

who came to urban cities of South Africa were often targeted by local citizens

In rural areas of South Africa telecommunications are limited and quite costly, but in general

telecommunications infrastructure is developing in the main regions of South Africa.

Country made some efficient steps towards liberalization of its telecommunication market

by releasing Electronic Communications Act in 2005. SEACOM - African cable system is first

private venture made towards under-sea cable infrastructure, that provides affordable

bandwidth via volume discounts and large bandwidth growth. SEACOM is based on satellite-

based technology.

In South Africa there are 150 internet providers, thus there is internet access is everywhere.

South Africa has 19 different airports, three international, seven domestic and nine are
military. Existence of these facilities makes travelling easy, fast and cheap for people. South
Africa's major ports and harbors are Cape Town, Durban, East London, Mossel Bay, Port

Elizabeth, Richards Bay and Saldanha Bay. In 2006 the new port is to open: Ngqura, at

Coega, which is 20 km northeast of Port Elizabeth.

Another issue which affects SA agriculture is environmental damage caused by misuse of

land and global climate change. South Africa is defenseless towards climate changes and

results in reduction of surface waters. Some predictions state that water supply might

decrease by 60% by the year 2070 in some parts of Western Cape. To reduce the damage

caused by mismanagement, the government has supported a scheme which promotes

sustainable development and the use of natural resources.

Part 2

Discuss the chosen FDI Adv vs disadvantage

Benefit for greenfield, and limitation. Answer why? Justify

Partner or place, Recommendation into o JV, answer Why?

Part 3

Anyting link to management can be an issue, How issit a management issue. Must have citation.
Supported.