IB52Inst

SWOT Analysis

Channon Collier

National American University

SWOT Analysis

South Africa

SWOT Analysis

Strengths

South Africa’s strength rests in the fact that it has a high population of approximately 53 million people. High population has a potential to increase the organization’s market space and influence by increasing high demand for its products and services. South Africa has advanced infrastructure that is supportive of business operations. These include advanced transport and telecommunication facilities (Asefeso, 2012). The country also has a wide industrial base. For investors, this translates to a good entry point into the African market. Most significantly, South Africa has a good access to the SADC region. By investing in South Africa, an organization has a potential to enjoy the wide single market of southern African nations, such as Namibia, Zimbabwe, Zambia, and Mozambique. Further, South Africa enjoys relatively moderate political climate that is conducive for investors.

Weaknesses

Although South Africa has cheap labor, the population faces the challenge of shortage of skilled labor. Since the organization requires a team of employees with technical skills, South Africa may not meet this high demand. As a result, the organization might be compelled to use expatriates, thus increasing its labor costs. The country also faces the challenge of energy shortages and series of power outages (Asefeso, 2012). This problem does not offer conducive climate for company operations. Energy shortage also affects companies in the sense that production environment is often energy-intensive. Finally, high crime levels pose major threats to the performance and wellbeing of foreign employees. Crime means that the company has to incur high costs to boost its security and avoid vandalism.

Opportunities

South Africa’s advanced infrastructures provide potentials for business growth and expansion. The country also has high demand for imported products, particularly technological and machinery products. In addition, the country is ranked as one of the leading consumers owing to the growing middle class population (Asefeso, 2012). This means that the organization can set lucrative prices and still witness increase in sales volumes. Furthermore, the country is witnessing increase in energy demands, which provide opportunities, especially in renewable energy.

Threats

Rising energy costs means that the organization will incur a lot of costs to support its growing energy demand. The country is one of the leading in social inequality in Africa. This phenomenon threatens long-term stability and potentially attracts frequent labor strikes. South Africa is increasingly being affected by high wages (Asefeso, 2012). This situation has resulted in increase in cases of low productivity. Further, regular strikes have adversely affected the investment climate in the country. Further, Political and racial conflicts occur at alarming pace. This phenomenon is going to affect the state of the country’s economy.

Legal and Ethical Challenges

South Africa has introduced laws that have potential to adversely affect the performance and productivity of foreign direct investments in the country. For instance, the country has many labor laws that are almost similar to United Kingdom’s laws when exporting to the country. As a result, businesses are sometimes charged with Value Added Tax. Taxation laws are highly stringent on foreign businesses, thereby lowering their profitability. Examples of taxes that are imposed on foreign investments include stamp duties, customs and excise duties, capital gains taxes, and skills development levies (Asefeso, 2012). South Africa is also a corrupt nation in the sense that some foreign investors have to comply with the bribery demands of the ruling political elites for them to operate in the country. In some cases, the company country confronts the ethical challenge of gender and racial inequalities in the appointments of people to high managerial and technical jobs. Racial and gender-based inequalities have created an environment of mistrust among employees from different groups and backgrounds, thus creating hostilities.

China

SWOT Analysis

Strengths

Since 1978, China has been witnessing tremendous growth in economic development, which is conducive for foreign investment. For instance, its GNP has been increasing at a rate of more than 9 percent annually and has been ranked as the third internationally. The country has the highest population, thereby offering strong potential for customers. Its per capita consumption is also low (Ambler, Witzel & Xi, 2016).  However, with a large population, opportunities are many, particularly for low-end products. Its high population also means availability of cheap but skilled labor force for the organization. The country has advanced infrastructure that supports business operations. They include state of the art transport and communication facilities such as roads, railway lines, and airports for transportation of products and services to different market destinations. Further, the country has favorable government policies that have embraced an open-door approach to foreign investors. For instance, overseas-funded companies are given equal status as domestic enterprises in terms of taxes and sales.

Weaknesses

One of the weaknesses of China with respect to business environment includes scarcity in energy and important raw materials, which have remained unresolved for a long time, thus slowing economic growth. Inflation rates do not provide necessary climate for growth of foreign investments. The average inflation rates in China are often 15 percent. This, coupled with fluctuations in currency at international levels, affects business productivity. Surplus labor due to increased population has led to an increase in unemployment rates that threaten income-based inequalities (Ambler, Witzel & Xi, 2016).  Further, the wage growth has not kept pace with the inflation in China. Employees may also lack the productivity and innovation needed to guarantee constant growth. China’s rate of college and university student enrollment is often proportionately low. This phenomenon poses major threat to acquisition of skilled labor force. When skilled workers are disproportionately few in comparison with the whole population, then the cost of acquiring skilled employees increases.

Opportunities

China has expressed plans to launch programs aimed at development of advanced technologies that can be mastered by the Chinese. The country also has easy-to-target bottleneck sectors that offer chap energy, transport, and telecommunications services. Further, equity and contractual investments in China offer easy access to the market. Partners in China can also help with the bureaucracy, consumer base, and distribution (Ambler, Witzel & Xi, 2016).  China has engaged in trade talks and relations that have improved trade ties with the United States and other western countries. This means more opportunities for American investors who want to venture in the country. China has also funded more infrastructure projects, especially those that seek to expand increase in electrification across different parts of the country. The Chinese government has also removed tariffs on foreign products in an effort to promote more and more foreign direct investments into the country.

Threats

The main threats that the country faces emerge from political instability. China has an unpredictable political climate that is characterized by series of unrests and protests. China also has rising unemployment rates, which have increased insecurity and crime (Ambler, Witzel & Xi, 2016).  Clash with American culture and traditions also have potential to cause many business conflicts.

Legal and Ethical Climate

China has tough employment regulations that obstruct overall employment and productivity growth. For instance, the non-salary cost of employing workers is often high. China is also facing intellectual property problems. Although intellectual property laws have been passed in the country, American companies still complain of being targets of violation of copyright, trademark, and trade secret laws (Kariyawasam, 2011).  This problem has been worsened by the emergence of counterfeit products that have adversely affected the sales of American firms.

Canada

SWOT Analysis

Strengths

The leading strengths of Canada’s political and government issues include fostering of national unity and promotion of cultural tolerance and modernization. The Canadian government also promotes the incorporation of ethno cultural minorities into governance issues. As a public policy, the government and political class have used multiculturalism as a way of promoting national unity and identity (Ng & Bloemraad, 2015). This was accompanied by programs geared towards promotion of cultural tolerance through incorporation of ethno cultural minorities by accepting immigrants and placing significant emphasis on citizenship and allegiance to the crown as a symbol of unity and identity.

Weaknesses

The Canadian government and a group of politicians have come under international criticisms for creating ‘fault lines’, which are hypothetic practices of dividing lines in a bid to split groups into subgroups based on attributes such as race, gender, and socio-economic statuses of people. For instance, there is a big income disparity between salaries of white men and black women (Ng & Bloemraad, 2015). This problem has been further worsened by the creation of separate but parallel lives doctrines, particularly targeting ethnic minorities and immigrants. This concern is especially evident in Canada, where minorities have to retreat to their ethnic cocoons. Further, some policies are regarded as obstructions to equality. The maintenance of cultural practices by minorities, especially Muslims and Natives is normally associated with multiculturalism.

Opportunities

Canadian government has launched programs meant to promote talents. This policy is driven by the desire to address the aging workforce concerns. As a result, the country welcomes skilled immigrants as a source of national competitive advantage. When multicultural as opposed to assimilation policy is introduced, immigrants and foreign businesses are encouraged to retain their ties and heritage (Ng & Bloemraad, 2015). Moreover, in order to gain mileage, politicians and businesses in Canada have used multiculturalism as a tool to celebrate, criticize, and gain political and competitive advantages over their rivals.

Threats

There have been growing concerns that multiculturalism undermines western liberal values. This is particularly true when foreign companies from different cultural backgrounds are allowed to operate in Canada (Ng & Bloemraad, 2015). In addition, assimilationist systems such as those found in Canada have reported poor immigrant acculturation and integration in comparison with other immigrant-embracing countries. Considering these prevailing attitudes, it is surprising that these countries support the idea of immigrants taking greater responsibilities to assimilate and perceive immigrants to be a burden to the state. This has sometimes resulted in political instabilities that are unfavorable to businesses that operate in Canada.

Legal and Ethical Challenges

Canada is a democratic society with a parliamentary system of government that contains the House of Commons. The main parties include the Liberals, Conservatives and the New Democratic Party. Canada is generally a politically stable country that is friendly to both foreign and local investors (Campbell & Campbell, 2009).  In the last five years, the country has never witnessed labor strikes, civil unrests, and political demonstrations that pose threats to the wellbeing and performance of investments. However, the decisions that are made by politicians affect both local and foreign direct investments in many ways. For instance, the Canadian government sunk the country into a $150 billion debt crisis, a decision that has adversely affected the economy of the country. In the beginning of his term, Prime Minister Harper made a pledge to avoid a deficit. However, he ended up with this humongous debt problem. Canada has also passed legislations that seek to increase minimum wage. In so doing, organizations both foreign and local, are going to be affected by meteoric increase in costs of operation (Campbell & Campbell, 2009).  However, the country scores excellently on corruption, since there are no cases of favoritism associated with having to decide which investors to take into the country. In addition, there have been minimal cases of bribery of government official’s for business favor.

References

Ambler, T., Witzel, M., & Xi, C. (2016). Doing business in China. London: Routledge.

Asefeso, A. (2012). CEO Guide to Doing Business in South Africa. New York: Global Sourcing.

Campbell, D., & Campbell, C. T. (2009). Legal Aspects of Doing Business in the North America.

New York: Lulu. com.

Kariyawasam, R. (Ed.). (2011). Chinese intellectual property and technology laws. Edward

Elgar Publishing.

Ng, E. S., & Bloemraad, I. (2015). A SWOT analysis of multiculturalism in Canada, Europe,

Mauritius, and South Korea. American Behavior Scientist, 59 (6), 619-136.