INT220 Final Project

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Feb 20, 2024

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Mike Leal Jr Professor Erik Nikodem INT 220 Business Brief Template Course Project Section One: Drivers for Global Entry Country Selection South Africa Purpose of Global Expansion Global expansion is described as "the process by which companies from one market (often referred to as their home market) expand operations into a foreign market (often referred to as the target market)" (Smartling, 2023). Domestic trade firm sales might become stagnant in some situations, resulting in revenue loss and a decrease in overall sales. Global growth would help the corporation overcome its slump. Some of the most significant advantages of expanding to other nations would be the generation of new revenues, the discovery of new customer marketplaces and intakes, and the discovery of new competitive marketplaces. "These benefits demonstrate to new customers that your company meets their wants and needs, as well as adapts to the cultural nuances of the market" (Velocity Global, 2023). Business Impacts of Global Business The expansion of a local corporation into international trade is always seen as a complicated system. This is due to the careful examination and evaluation of aspects that might make or ruin a business. These are both internal as well as external causes. Every firm pursuing worldwide development must assess its everyday business tasks so that owners may choose whether innovation is appropriate for their organization. The various demands and desires of returning and prospective clients, the rules and regulations that the business follows, the general state of the market as a whole, competition within the market they are targeting, the cost structure of the goods, and resource availability are some of the various kinds of variables which could possibly impact a business going global. All these functions might be damaging to the firm. As a result, these functions necessitate adjustments to the firm in order for it to perform successfully in a global commerce market. Societal Impacts of Global Business Several things may have an influence on society inside a worldwide corporation. "Since prehistoric times, humans have sought remote locations to live, produce, and exchange goods, made possible by advances in technology and transportation" (PIIE, 2022). When discussing job opportunities, if a company is seeking global growth, it will look for overseas personnel to develop a wider labor pool. "Between 2007 and 2015, foreign-owned enterprises operating in the United States recruited more Americans than US private employers. Demand for more

highly trained manufacturing employees in sectors such as management, engineering, financing, computer, and mathematical jobs, and sales are expected to rise" (PIIE, 2022). Having a global structure inside your firm may help you build a stronger foundation and stable ties with your collaborating nations. Cultural Considerations for Global Business One's country's culture significantly influences the company and how they make decisions. It is described as the buying habits of consumers and the actions of various institutions inside their country. Before entering an unfamiliar market, it is critical that the firm grasp the customs and traditions of the latest market into which they seek to penetrate. Cultural preferences, religious beliefs, and ethical ideals are cultural elements that might help with decision enlargement. Section Two: Market Profile Cultural Profile Category United States South Africa Commonly Spoken Languages English (also Spanish) IsiZulu, IsiXhosa, Afrikaans, Sepedi, English, Setswana, Sesotho, Xitsonga Commonly Practiced Religions Christianity Christianity & Islam Power Distance Index (PDI) 40 49 Individualism Versus Collectivism (IDV) 91 65 Masculinity Versus Femininity (MAS) 62 63 Uncertainty Avoidance Index (UAI) 46 49 Long-Term Orientation Versus Short-Term Normative Orientation (LTO) 26 34 Indulgence Versus Restraint (IVR) 68 63 Political and Economic Profile Category United States South Africa Political System Democracy Republic Current Leaders President Joe Biden President Cyril Ramaphosa Economic Classification Mixed Economy Dual Economy

Category United States South Africa Economic Blocs Impacting Trade United States-Mexico- Canada Agreement (USMCA) Southern African Development Community (SADC) Gross Domestic Product $26.24 Trillion $400.550 billion Purchasing Power Parity 1.000 6.981 Gross Domestic Product Per Capita $59,939 $6,120 Legal and Regulatory Profile Trade restrictions are a major concern for firms in both South Africa and the United States. South Africa has various trade treaties with other African countries, as well as the European Union and China. The country also belongs to the World Trade Organization (WTO) and follows its laws and regulations. Importers and exporters must follow customs procedures and get the appropriate permits and licenses. Trade limitations in the United States are controlled by a range of laws and regulations, including those pertaining to national security, intellectual property, and environmental protection. The nation is also a member of the World Trade Organization and has trade agreements with several other countries. Regulation of products or services is another area where South Africa and the United States vary. Products in South Africa must adhere to a variety of technical standards pertaining to safety, health, and environmental protection. There are also industry-specific rules, such as those governing mining, electricity, and telecommunications. Product regulations in the United States are overseen by many federal organizations, including the Food and Drug Administration (FDA), the Environmental Protection Agency (EPA), and the Federal Communications Commission (FCC). These organizations establish guidelines for product safety, labeling, advertising, and other issues. Legal procedures for doing commercial transactions differ in South Africa and the United States. Contracts must be in writing in South Africa to be enforceable, while oral contracts may be accepted in certain circumstances. Typically, disputes are settled by lawsuit or arbitration. Contracts in the United States can be oral or written, but written contracts are often preferable. Litigation or alternative dispute resolution procedures such as mediation or arbitration can be used to resolve disputes. Important constraints or documents are also critical considerations for organizations operating in both South Africa and the United States. Foreign ownership is restricted in some areas in South Africa, including banking, mining, and telecommunications. Businesses must also abide by labor regulations governing minimum pay, working conditions, and other elements of employment. Businesses in the United States must follow a variety of federal and state rules concerning employment, taxation, and other issues. Permits, licenses, contracts, and other legal papers may be required as documentation. In conclusion, while there are some parallels between the legal and regulatory requirements of the South African market and those of the US market, there are also significant

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distinctions that enterprises operating in both nations must be aware of. These include trade limitations, product or service laws, legal processes for commercial transactions, and significant constraints or documentation. Section Three: Market Considerations Monetary Considerations To expand into South Africa, monetary considerations such as currency, exchange rates, and exchange-rate management would need to be carefully considered. These considerations can have a substantial influence on an organization's choice to enter a foreign market. The currency used in the nation is one of the most important monetary concerns when growing into South Africa. South Africa's national currency is the South African rand (ZAR). The exchange rate between the ZAR and the US dollar (USD) swings on a regular basis, which can have influence on the profitability of an organization's South African activities. For example, if the USD increases against the ZAR, the organization's operations in South Africa may become more expensive because of the unfavorable exchange rate. Exchange-rate management is another key monetary factor. When operating in South Africa, businesses must evaluate how they will handle their foreign exchange risk. This entails devising measures to reduce possible losses caused by currency volatility. For example, a company may decide to hedge its foreign currency risk through financial instruments like forward contracts or options. Exchange rates might also influence a company's choice to grow into South Africa. If the USD/ZAR exchange rate is advantageous, it may be more appealing for corporations to invest in South Africa since they can obtain more value for their money. However, if the exchange rate is unfavorable, firms may be discouraged from investing in South Africa since it may not be financially feasible. Finally, while growing into South Africa, firms must address monetary aspects such as currency, exchange rates, and exchange-rate management. These elements can have a substantial influence on a company's profitability and performance in a foreign market. Category The U.S. Dollar South African Rand Exchange Rate $1.00 18.19 Management and Logistics Considerations Various management techniques and compliance with staff and labor regulations are among the management and logistics strategies that effectively handle human-resource issues in South Africa. One of the most essential management tactics is to guarantee workplace diversity and inclusiveness. South Africa is a varied country with a complicated history of racial

discrimination, and it is critical to establish a friendly work environment for all workers, regardless of color, gender, or ethnicity. This can be accomplished through enacting policies that encourage diversity, such as affirmative action initiatives, and by giving cultural sensitivity training to managers and staff. Compliance with labor rules is another key part of human resource management in South Africa. The country has a comprehensive set of labor laws that safeguard employees' rights, such as minimum wage legislation, limited working hours, and overtime compensation requirements. To prevent legal complications and preserve a healthy connection with their employees, employers must ensure that they comply with these regulations. Employers must examine the impact of policies and procedures on their employees in addition to complying with labor regulations. Implementing flexible working arrangements, for example, can assist employees in balancing their professional and personal life, leading to higher job satisfaction and productivity. Training and development opportunities may also help individuals feel appreciated and involved in their professions. Overall, efficient management and logistics practices in South Africa necessitated a focus on diversity and inclusion, labor law compliance, and consideration for the impact of policies on personnel. Mode of Entry Considerations Entering a new market may be a difficult endeavor for any firm, and selecting the appropriate form of entrance is critical for success. South Africa has a varied economy and a growing middle class, making it an appealing market for companies wanting to expand. Traditional routes of entrance, such as exporting, licensing, franchising, joint ventures, and wholly-owned subsidiaries, might be examined in this context. The simplest and most popular method of entrance is exporting. It entails selling items or services directly to South African clients from the home nation. This way of entrance offers various benefits, including cheap investment costs, low risk, and the option to test the market before making larger commitments. However, there are several drawbacks to exporting, including restricted control over marketing and distribution channels, potential trade obstacles, and high shipping expenses. Another conventional way of entrance is licensing, which entails providing a license to a South African firm to exploit the foreign company's intellectual property. This way of entry offers various benefits, including cheap investment costs, low risk, and access to local knowledge and skills. However, there are also drawbacks to licensing, such as restricted control over operations and potential conflicts over intellectual property rights. Franchising is similar to licensing in that the complete company model is transferred to a local franchisee in South Africa. This way of entry offers various benefits, including cheap investment costs, low risk, and access to local knowledge and skills. However, there are also drawbacks to franchising, such as restricted control over operations and potential conflicts over brand image and quality standards.

Joint ventures include collaborating with a South African firm to form a new entity in which the foreign company and the local partner share ownership and management. This way of entry provides several benefits, including shared risks and expenses, access to local knowledge and skills, and faster access to government clearances. However, joint ventures have significant drawbacks, such as potential management and control issues and the requirement for a strong bond between the partners. The establishment of a new corporation in South Africa that is entirely owned and controlled by the foreign firm is what wholly-owned subsidiaries entail. This form of entry offers various benefits, including complete control of operations, marketing, and distribution networks, as well as faster access to government clearances. However, wholly-owned subsidiaries have several drawbacks, including high investment costs, high risks, and the requirement for a thorough grasp of local rules and regulations. Finally, the most appropriate method of entry for entering South Africa is determined by a variety of characteristics such as the degree of investment, risk tolerance, local knowledge, and experience. Before making a selection, each conventional route of entrance has advantages and disadvantages that should be carefully weighed. References Conversion rates - Purchasing power parities (PPP) - OECD Data . (2023). theOECD. http://data.oecd.org/conversion/purchasing-power-parities-ppp.htm Currency Converter | Foreign Exchange Rates | OANDA . (n.d.). OANDA. https://www.oanda.com/currency-converter/en/?from=USD&to=ZAR&amount=1 GDP by Country - Worldometer. (2023). GDP by Country - Worldometer. https://www.worldometers.info/gdp/gdp-by-country/ GoGlobal, & Bui, M. (2022). Spotlight on South Africa: Global Business Insights. GoGlobal. https://goglobalgeo.com/blog/spotlight-on-south-africa-global-business-insights/ Looking to expand to South Africa? Here’s what you should know. (2022, June 15). The Polyglot Group. https://www.thepolyglotgroup.com/globalpedia/south-africa/ South Africa - Import Requirements and Documentation . (2023). International Trade Administration | Trade.gov. https://www.trade.gov/country-commercial-guides/south-africa- import-requirements-and-documentation The Ultimate Guide to Global Expansion | Smartling. (2023). The Ultimate Guide to Global Expansion | Smartling. https://www.smartling.com/resources/101/the-ultimate-guide-to-global-

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expansion/#:~:text=What%20is%20global%20expansion%3F,to%20as%20the%20target %20market ). Velocityglobal. (2023, April 28). The Ultimate Guide to Global Expansion: 5 Benefits of Global Expansion. Velocity Global. https://velocityglobal.com/blog/the-ultimate-guide-to-global- expansion-5-benefits-of-global-expansion/ What is Globalization? (2022, October 24). PIIE. https://www.piie.com/microsites/globalization/what-is-globalization? gclid=Cj0KCQjwtsCgBhDEARIsAE7RYh1qAroEXZS803L- Sa78K4TaJPOmwvoGNE0ReQQeUraGfvKxlyoCC-MaAss5EALw_wcB

INT220 Final Project

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