Market Entry Strategy
Table of Contents
Introduction 2 Part 1: Porter’s National Diamond Analysis 2 Factor Conditions 2 Demand Conditions 3 Related and Supporting Industries 4 Firm Strategy, Structure and Rivalry 5 External Variables 6 Part 2: Contemporary Management Issues 7 Part 3: Market Entry Strategy 10 References 12 Appendices 17
Abstract
This report focuses on the competitive advantage of food industry of one of the fastest emerging economies of the world, South Africa. The report uses Porter’s National Diamond model’s attributes factor conditions, demand conditions, related and supporting industries and firms strategy, structure and rivalry and external variables to evaluate the competitive advantage of South African food industry. The analysis shows that the South Africa is self sufficient to meet its domestic food needs, has high domestic demand with increasing paying capacity, possess relatively well developed supporting industries and has high competition among the companies operating in the food industry. South Africa however lacks basic infrastructure, has a shortage of skilled workforce and has high unemployment and inflation rate. The Porter’s national model thus shows that the South African food industry does not have all the attributes to possess the competitive advantage in the food retail industry. However, the government’s plan to invest in infrastructure and related industries is expected to improve the situation in the next few years and thus could be a good option to enter the South African food retail industry. The report also evaluates the management issues that a foreign company could face while entering and operating in South Africa.
Introduction
South Africa (henceforth SA) is Africa’s biggest economy (Maylie, 2012) and is a part of BRICS (Brazil, Russia, India, China and South Africa) group that now accounts for the 28% of the world economy (BBC, 2012). This report will analyse one of SA’s fastest growing industry, food
Introduction 2 Part 1: Porter’s National Diamond Analysis 2 Factor Conditions 2 Demand Conditions 3 Related and Supporting Industries 4 Firm Strategy, Structure and Rivalry 5 External Variables 6 Part 2: Contemporary Management Issues 7 Part 3: Market Entry Strategy 10 References 12 Appendices 17
Abstract
This report focuses on the competitive advantage of food industry of one of the fastest emerging economies of the world, South Africa. The report uses Porter’s National Diamond model’s attributes factor conditions, demand conditions, related and supporting industries and firms strategy, structure and rivalry and external variables to evaluate the competitive advantage of South African food industry. The analysis shows that the South Africa is self sufficient to meet its domestic food needs, has high domestic demand with increasing paying capacity, possess relatively well developed supporting industries and has high competition among the companies operating in the food industry. South Africa however lacks basic infrastructure, has a shortage of skilled workforce and has high unemployment and inflation rate. The Porter’s national model thus shows that the South African food industry does not have all the attributes to possess the competitive advantage in the food retail industry. However, the government’s plan to invest in infrastructure and related industries is expected to improve the situation in the next few years and thus could be a good option to enter the South African food retail industry. The report also evaluates the management issues that a foreign company could face while entering and operating in South Africa.
Introduction
South Africa (henceforth SA) is Africa’s biggest economy (Maylie, 2012) and is a part of BRICS (Brazil, Russia, India, China and South Africa) group that now accounts for the 28% of the world economy (BBC, 2012). This report will analyse one of SA’s fastest growing industry, food
References: African Economic Outlook. (2012). Corruption. Retrieved on November 2, 2012 from http://www.africaneconomicoutlook.org/en/outlook/governance/corruption/ Araoz, M.F Arun, T.G. and Turner, J. (2009). Corporate governance and Development: Reform, financial systems and legal frameworks. UK: Edward Elgar publishing ltd. BBC (2012) Brics summit of emerging nations to explore bank plan. Retrieved on October 31, 2012 from http://www.bbc.co.uk/news/world-asia-17545347 Barnes, J Binder, J.C. (2007). Global project management: Communication, collaboration and management across borders. England: Gower publishing ltd. Business Wire. (2012). Research and markets: South Africa retail report Q2 2012. Retrieved on November 2, 2012 from http://www.businesswire.com/news/home/20120511005506/en/Research-Markets-South-Africa-Retail-Report-Q2 Cohen, M., (2012) Deloitte. (2011). Hidden heroes, the next generation of retail markets. Retrieved on November 1, 2012 from http://www.deloitte.com/assets/Dcom-Global/Local%20Assets/Documents/Consumer%20Business/dttl_HiddenHeroes_2011.3.pdf Deloitte Durham, L. (2011). Opportunities and challenges for South African retailers. Retrieved November 1, 2012 from http://www.supermarket.co.za/SR_Downloads/S&R%20May%202011%20Trend%20tracker.pdf Fin 24 (2010) World Bank fingers SA labour costs Johnson, D. And Turner, C. (2010). International business: Themes and issues in the modern global economy. (2nd Ed.), New York: Routledge. Juma, C Kew, J. (2012). Zara enters south Africa as foreign brand seek growth. Retrieved on November 2, 2012 from http://www.businessweek.com/news/2012-08-27/zara-enters-south-africa-as-foreign-brands-seek-growth Geert-Hofstede Harcourt, D.A. (2011). The South African food processing industry. Retrieved on November 4, 2012 from http://www.sanec.org/themes/sanec/uploads/files/The%20SA%20Food%20Processing%20Industry.pdf Henry, A Kaila, H.L. (2006). Industrial and organisational psychology volume-2. Delhi: Kalpaz publication. Maxwell, J NAMC. (2012). South African fruit trade flow. Retrieved on November 2, 2012 from http://www.namc.co.za/dnn/LinkClick.aspx?fileticket=M8uOUDmDpXs%3D&tabid=120&mid=638 PMA Robbins, S.P. (2009). Organisational behaviour: Global and South African perspectives. (2nd Ed.), South Africa: Pearson Education. Stonehouse, G., Campbell, D., Hamill, J Samovar, L.A., Porter, R.E. and McDaniel, E.R. (2010) Communication between cultures. Canada: Cengage learning Sandrey, R Selassie, A.A. (2011). What ails South Africa. Retrieved on November 3, 2012 from http://www.imf.org/external/pubs/ft/fandd/2011/12/selassie.htm South Africa Treasurey Sustainalytics. (2012). Building a sustainable South African food retail sector. Retrieved on October 31, 2012 from http://www.sustainalytics.com/sites/default/files/uploads/BuildingSustainableSAFoodRetailSector_August2012.pdf Thomas White UNHCR. (2012). Freedom on the net 2012- South Africa. Retrieved on November 4, 2012 from http://www.unhcr.org/refworld/country,,,,ZAF,456d621e2,5062e89ac,0.html USDA .(2010) World Bank. (2011). The Africa competitiveness report 2011. Retrieved on November 3, 2012 from http://www3.weforum.org/docs/WEF_GCR_Africa_Report_2011.pdf World Bank South Africa: Key macroeconomic data Source: Deloitte (2011) Source: World Bank (2011) APPPENDIX- 3 South Africa’s fruit and vegetable production 1981-2011 Source: NAMC (2012) Source: African Economic Outlook (2012)