- May 2, 2014
- Posted by: essay
- Category: Term paper writing
This coursework is dedicated to the analysis of business environment not of the one country, but of the whole continent in general ”“ Africa.
Clearly, Africa is one of the destinations of UK business expansion that have a real potential because its economies are booming. UK companies should be particularly interested in the business opportunities presented by the markets of Nigeria, South Africa and Kenya. (Momoh n.a.) The most attractive sectors of African economy for investors are its raw materials industry, including oil industry and tourism.
- Business culture of African continent
Unfortunately a large part of UK businessmen believe that launch of the business in Africa is risky because of its unfavorable location and also because of its perceptions as the region of civil unrest, starvation, deadly diseases, and economic disorder. (FDI Africa policy brief, 2011)
But these negative perceptions of Africa appear to be not that important for Chinese companies that have already managed to invest hundreds of billions of US dollars into African economies in the past few years. Therefore European companies should consider the opportunity to launch their operations in African countries without further delays.
- Political and legal systems
African countries fail to attract the large number of investments, because of the Â lack of policies, lack of profit opportunities, inconsistent setup, negative perceptions, and shortage of skills, labor regulations, poor infrastructure and corruption. (FDI Africa policy brief, 2011) Other reasons that need to be mentioned are lack of access to global markets, long time for receiving the approval to start the business, the usage of bribes, these things discourage from investing into Africa, despite its possible attractiveness.
It has to be mentioned that some initiatives are undertaken by the African governments to improve the business climate: they design and implement policies, they create necessary institutions and also they conclude the needed investment contracts.Â Therefore, as the argument “pro” investing in this region I would like to underline these positive steps that are being made. But there is no doubt for a practical business people that even if the process is going on it doesn’t mean that its already works and also these mentioned improvements really hard to assess and they usually differ f differ depending on the economy sector to sector and the employees capabilities, the size of the company, and of course the level of competitiveness of domestic African industries.
Emery et al (2000, 73) provides the factors of regulatory environment that have a negative impact over the investment climate of African countries:
- Unnecessary delaysÂ for approval of paperwork,
- The regulations are hard to obtain, the regulatory institutions often are not computerized, and therefore too much time is required for the processes ofÂ business registration and application,
- Duplication of effort among agencies, which require the same information, and
- High costs caused by the requirements for company formation and up-front capital taxes. (Emery et al, 2000, 73-74)
3. Africa’s values and norms
Africa has a very traditional values and norm. The values of African people include sense of community, good human relations, and the sacredness of life, hospitality, respect of spirituality and religion; respect for authority and the elders. These traditional values and norms create a good basis for the development of business in Africa.
In terms of Hofstede dimensions of culture, Africa has an average power distance, relatively low level of individualism. As for the risk acceptance, this culture is more traditional and therefore is it relatively closed in taking risks and dealing with change. In addition, Africa may be characterizes by the high level of masculinity.
Africa is often related to the civil unrest, starvation, deadly diseases, and economic disorder. This kind of unattractive publicity of Africa has caused the discourageÑƒ of the investors, who prefer instead other economically perspective regions, such as Asia. And it should be added that even in the case when African countries demonstrate a positive economic results this progress is rarely reported by media and therefore public often is not aware about the African economic developments.
Another way to improve the situation is obviously the development of enabling environment. Basically it means the improvement of legal, political, social and economic environment in order to make this region a good destination for the UK business expansion. These things of course can’t be implemented without appropriate policies and practical efforts of the national governments. The following elements of the Africa’s legal, political, social and economic environment should be improved in order to increase the chances of this region to attract investments: political stability and transparency, macroeconomic policies, trade policies, etc.
Africa is an attractive developing destination for the UK companies, and it has brilliant chances to become the leading recipient of investments in the world, if the national governments adopt clearly required changes into business and investing sectors regulations, into economic conditions, infrastructure, etc. Besides it, the local population also should be interested in such development, and improve its customer service to make the conditions for the foreign investors more easy and comfortable.