Macro-environmental Differences between South Africa and Britain

A multinational to enter into a new market, with strong brand name, promising product quality and durability, there is a need to understand the macro-environment first in order to see if the opportunity is feasible in terms of four different factors, political, economic, social, and technological (PEST).  

PEST analysis determines the macro environmental factors that affect the business’s profitability in any country. For a business to operate successfully, it has to do PEST analyses on continual basis, understand the environment and make changes accordingly. For IMPERIAL FURNITURE, it is important to understand business scenario in South Africa as well. 

Political Factors: South Africa has previously been home of political upheavals and de-stabilized political situation. The inter-country riots among different cultures of people were a reason for racism, low economic activity and destabilized political situation. But the Nelson Mandela’s government in 1990 changed the political scenario of the country by dissolving all the discriminatory laws, rules and regulations and the situation began to improve. Since then, South Africa has been an improved and attractive opportunity for businesses, even multinationals. The end of political and social riots in the country brought stability, increasing economic performances. 

These political conditions are different from that of the company’s home country on the basis that the political scenario in UK has been very stable with no apparent political problems. Britain is home for many multinational and internationally recognized big retail stores, IMPERIAL FURNITURE being one of the examples in home furnishings. However, the tax policies and other legal issues for a business are very stringent and the companies have to abide by them all the time. Whereas this in South Africa is an attractive factor, with the recent policies and tax structures, it is easier to operate in that market; the government for the businesses is flexible and a new entering multination can easily develop relationship with government. 

Economic Factors: Over the last few years, the economic conditions for the country have been improving given the fact that the country policies for few years have been designed to attract businesses by lower costs for doing businesses, lesser taxes for businesses and business friendly policies. South Africa is a developing nation, therefore the economic growth in terms of GDP is expected to grow as well, not only this, the income levels of the average south Africans have also been improving due to gradual increase in economic activity. The barriers to entry in the country are low, gradual increase in consumerism among South Africans is the major reason that the opportunity seems lucrative for a new multinational.

Social Factors: South African market is a mix of different languages, cultures, norms, value and traditions. The country is also divided among high and low income groups due to high income disparity. This can also be seen as an opportunity for the merging businesses as they will be able to choose the target market very clearly, and target the ones who can afford and are relevant to meeting the overall business objectives. Almost the whole population has access to basic facilities whereas a sizeable number is able to exploit the upscale products and services as well. 

These social factors in South Africa are different from UK as there are not many cultures and communities in latter one; there is a growing sense of consumerism and individuality, the concept of societies and togetherness is less prominent, the divorce rate is higher as well; whereas in South Africa, the communities and cultures are still there, making the opportunity more lucrative for the business.

Technological factors: The technological environment of South Africa is attractive as it gives access to the basic infrastructure and technological facility. The cheaper manpower in terms of operating technology is also available which can support the business infrastructure very well. Other than that, the support activities like telecommunication, travelling, internet and broadcasting facilities are present for the business.

United Kingdom is more technologically aware and far advanced than South Africa, therefore the business from Britain going in South Africa, would have to make some efforts in the field if it has to work with technology savvy operations.  

Legal factors: The legal environment of South Africa is favorable for businesses of any type. The world-class progressive framework of the country enables organizations to settle in the country without facing a lot of obstacles. The legislation dealing with the labor and commerce issues is highly developed while international laws and conventions should be adhered in dealing with competition, patents and copyrights. On the other hand, the legal environment of UK is very strong and strict they have rules and regulations that have to be followed and this affects the company’s activities and operations tremendously as breaking of the laws results in penalties for the business.

Authors Websites : http://www.brilliantassignments.com/assignment-help-for-students/