Term Paper: South Africa the Republic

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[. . .] 4%, industry: 28.9%, services: 66.7% (2001) (CIA, WFB 2003) as industry and support for urban dwellers in the form of service staff are clearly at a great advantage over the agricultural field. Though the division of labor in the country reflects an slightly uneven distribution between agriculture and industry/service, (agriculture 30%, industry 25%, services 45% (1999 est.) it does not reflect such a broad disparity of income, or spending power and the urbanization numbers as well. (CIA, WFB 2003) As can be seen above 30% of the total working population holds only 4.4% of the total working capital in the country. This disparity must be addressed by investment and foreign business ventures.

Specific Foreign Business Opportunities

South Africa, as it is designated as an emerging nation, must also be viewed as an emerging economic entity and investment in South Africa must be accepted as untraditional. It is not longer the case that large corporate entities must invest in large global high profit business ventures, such as mining and the like. In the past few years it has become clear that investment in smaller market demands by smaller entities can assist the nation in development in far greater fashion. In the example provided her there has been an investment to meet the needs of a growing economy that can usher in a change in the ways in which traditional and non-traditional investors alike can benefit and in turn assist the country in beneficial development.

Still, there are opportunities for smart investors and entrepreneurs. Professional Carpet Systems, an Atlanta-based firm, last year sold a master franchising license to black South African brothers Kgosi and Mandla Letlape, allowing the brothers to establish franchises throughout the country. "They [Professional Carpet Systems] understood it's a whole new ballgame out here," Kgosi Letlape told BE. "[With a franchise] you're buying into a system that works ... You don't have to start from scratch." (Mack & Lowery, 1994)

Changes made today in the manner in which investments are planned and implemented in South Africa can greatly assist the country in its goals to reformulate the opportunity for its diverse population.

"Americans are flocking to South Africa," commented Kathryn Leary, managing director of NMBC's International Trade Program, at a recent Made in USA Southern Africa Trade Expo. At the expo, she lobbied for NMBC [National Minority Business Organization] member companies and conducted a study of the business potential for their products and services. (Reynolds, 1995, p. 37)

With this newly found interest in South African investment there have been some recommendations for large and small companies wishing to invest:

Robinson identified the following areas as potential profit makers: Construction, computer software / hardware, business consulting, public relations and marketing. According to the NMBC, the average South African company reports $150,000 to $200,000 in revenues. These South African firms, in turn, are seeking American partners with revenues of at least $250,000 and two to three staffers. To oblige South African comrades, the NMBC recently advanced its international trade efforts with a fact-finding mission to South Africa. (Reynolds, 1995, p. 37)

The business climate of the nation is clearly poised to accept foreign investment in existing firms already working in South Africa and in new ventures associated with underserved areas of he country. Challenges are great but the growth potential is clearly astronomical, with the right formulation and business strategy, and the inclusion of adding to the progress already made by the nation in growth for all.

Recommendations

Clearly the climate for business in South Africa has changed dramatically, with the political and social changes that have occurred in the country, and those changes are reflected in the international business opportunities in the country.

The process of South Africa's reintegration internationally is well under way. Henceforth South Africa will be shaping its own destiny without the need to apologize, make excuses, or seek special favors (Ogilvie-Thompson 1993:10). However, this freedom is accompanied by a number of challenges. South Africa has some very important choices to make, the most urgent being the creation of wealth and jobs. This process can be enhanced by attracting foreign investors, increasing exports, and becoming a global competitor. (Grobler, 1996)

South Africa's new emphasis on becoming a global competitor without all the spoils being directed at those who have been historically high achievers, mainly the non-white settlers remaining from subjugation and colonialism is in need. Sensitivity to this issue is paramount as growth occurs, and the natural progression of simply making the rich richer must be combated with intensity. Growth must be based on a business and social concept of inclusion and bridge building between the haves and the have nots and social welfare systems and help agencies must be strengthened not just by the South African government but by international players as well.

Even with renewed international interest, South Africa's economy is a deformed one at best, having suffered from years of isolation. The country has been starved of access to important international markets. Domestically, money had been allocated to maintain segregation and white supremacy, which experts say resulted in the duplication of facilities, a bloated bureaucracy, rafts of regulations and corruption. That imbalance nurtured a private sector with investment concentrated on First World consumption. The business sector, experts say, has been afflicted with the "greenhouse" effect - business owners unable to diversify from the core businesses they were good at, like mining, used profits to buy industries in which they had no particular expertise. (Mack & Lowery, 1994)

One particularly important piece of the puzzle for anyone wishing to invest in South Africa's newly opened doors is, sensitivity. New investors must take social welfare and the development of NGO partner service agencies into consideration when planning to reap the benefits of the countries changes. Within the country there have been and remain to be intensely underserved populations and in order to make healthy investments in the nation without gleaning and leaving investors must partner with individuals to provide services, for profit or not that might temper their own gain but will in the long run increase the health of the labor force and increase the strength of this emerging economy.

References

Boyd, L., Spicer, M., & Keeton, G. (2001). Economic Scenarios for South Africa: A Business Perspective. Daedalus, 130(1), 71. Retrieved October 29, 2004, from Questia database, http://www.questia.com.

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Grobler, P.A. (1996). In Search of Excellence: Leadership Challenges Facing Companies in the New South Africa. SAM Advanced Management Journal, 61(2), 22+. Retrieved October 29, 2004, from Questia database, http://www.questia.com.

Ladzani, W.M., & Van Vuuren, J.J. (2002). Entrepreneurship Training for Emerging SMEs in South Africa. Journal of Small Business Management, 40(2), 154+. Retrieved October 29, 2004, from Questia database, http://www.questia.com.

Mack, G., & Lowery, M. (1994, August). South Africa Inc.; the Quest for Gold; the Rush Is on for Business Ventures and Investment Opportunities in Mandela's New Democracy. Black Enterprise, 25, 15+. Retrieved October 29, 2004, from Questia database, http://www.questia.com.

Mccoy, F. (1995, May). Doing Business in South Africa. Black Enterprise, 25, 58+. Retrieved October 29, 2004, from Questia database, http://www.questia.com.

Morris, M.H., & Zahra, S. (2000). Adaptation of the Business Concept over Time: The Case of Historically Disadvantaged South African Owner/Managers. Journal of Small Business Management, 38(1), 92. Retrieved October 29, 2004, from Questia database, http://www.questia.com.

Reynolds, R. (1995, February). South Africa: A Trade Haven? National Minority Business Council Develops Market-Entry Program for Minorities. Black Enterprise, 25,… [END OF PREVIEW]

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