South Africa Preliminary Analysis
Economic Risks:
A. GNP, GDP, GNP/capita (GNI)
GNP: Gross National Product (GNP) is the measure of the value of goods and services of a country within
a period of one year. In other words it measures total economic activity of a nation. The GNP of South
Africa is continuing rising at 110.6 billion PPP dollars in 1980 to 718.9 PPP dollars in 2016.
GDP: Gross domestic product (GDP) measures the total money value of all goods and services of a
country produced for a specific period of time. GDP is mostly referred to the size of the economy.The
GDP of South Africa is continuing rising from 1970 to 2011 at the highest point at 416.4 billion USD. But
from 2011 to 2016 is continuing decreasing to the point at 294.8 billion USD.
GNI : Gross National Income (GNI) which was previously referred as Gross national product measures
the country income which is the total foreign and domestic output which includes gross domestic
product claimed by residents of a nation, plus foreign residents incomes earned, minus nonresidents
income earned in the domestic economy.GNI of South Africa is continuing rising from 1980 to 2015. The
amount is from 110.6 billion PPP dollars to 718.9 billion PPP dollars.
B. Purchasing power parity
Purchasing power parity states that over time the prices of goods and services of countries should
equalize. This allows people across the world to purchase goods and services at the best prices.The
Gross Domestic Product per capita in South Africa was last recorded at 12294.88 US dollars in 2017,
when adjusted by purchasing power parity(PPP). The GDP per Capita, in South Africa, when adjusted by
Purchasing Power Parity is equivalent to 69 percent of the world's average.
C. Exchange rate and type of currency
Exchange rate is the comparison of a country currency with another currency in terms of their prices
thus it has the foreign currency and the domestic currency. Type of currency is the function of specific
currency which differs in different countries. Now 1 south African Rand equals to 0.069 USD.
D. Growth rate of the economy
The South African economy shrank a seasonally adjusted annualized 0.7 percent on quarter in the
three months to June of 2018, following a 2.6 percent contraction in the prior period and missing
market consensus of a 0.6 percent growth. It was the second consecutive period of contraction, as
output fell for agriculture, transport and trade. GDP Growth Rate in South Africa averaged 2.78 percent
from 1993 until 2018, reaching an all time high of 7.60 percent in the fourth quarter of 1994 and a
record low of -6.10 percent in the first quarter of 2009.
E. Import/export data
South Africa had a total export of 74,110,816.97 in thousands of US$ and total imports of
74,744,010.29 in thousands of US$ leading to a negative trade balance of -633,193.32 in thousands of
US$ The Effectively Applied Tariff Weighted Average (customs duty) for South Africa is 4.51% and the
Most Favored Nation (MFN) Weighted Average tariff is 6.49%.The trade growth is -8.68% compared to a
world growth of -4.43%. GDP of South Africa is 294,840,648,280 in current US$. South Africa services
export is 14,360,177,850 in BoP, current US$ and services import is 14,953,835,693 in Bop, current
US$.South Africa exports of goods and services as percentage of GDP is 30.32% and imports of goods
and services as percentage of GDP is 30.18%.
F. Economic composition – type of economic activity
was traditionally rooted in the primary sectors – the result of a wealth of mineral resources and
favourable agricultural conditions. ... Since the early 1990s, economic growth has been driven mainly by
the tertiary sector – which includes wholesale and retail trade, tourism and communications.
G. Overall economic situation
The long-term potential growth rate of South Africa under the current policy environment has been
estimated at 3.5%. ... The high levels of unemployment, at over 25%, and inequality are considered by
the government and most South Africans To be the most salient economic problems facing the country.
H. Ease of Doing Business
South Africa is ranked 82 among 190 economies in the ease of doing business, according to the
latest World Bank annual ratings. ... Ease of Doing Business in South Africa averaged 51.60 from 2008
until 2017, reaching an all time high of 82 in 2017 and a record low of 32 in 2008.
National Culture:
A. Religion: A set of beliefs concerning the cause, nature, and purpose of the universe, especially when
considered as the creation of a superhuman agency or agencies, usually involving devotional and ritual
observances, and often containing a moral code governing the conduct of human affairs. Below is the
percentage of population in South Africa that follow the corresponding religion.
Christian
68.00 %
indigenous beliefs and animist
28.50 %
Muslim
2.00 %
Hindu
1.50 %
B. Business Culture: Business culture is related to behaviour, ethics, etiquette and more. A business
culture will encompass as organisation’s values, visions, working style, beliefs and habits.
C. Hofstede’s Dimensions of Difference
1. How do the numbers compare to the US?
2. What does the data mean for managing employees?
Power Distance Index (PDI): refers to the degree of inequality that exists and is accepted between
people with and without power.g
South Africa maintains a higher (PDI) than the United States which means that organizations are more
centralized, hierarchies are more complex. This also means there are larger gaps in authority
compensation and respect.
Individualism Versus Collectivism (IDV): refers to the strength of the ties that people have to others
within their community.
South Africa has a significantly lower (IDV) rate then the United States. Typically a low (IDV) indicates an
emphasis on building skills and becoming master of something. People work for intrinsic rewards.
Maintaining harmony among group members overrides other moral issues.
Masculinity Versus Femininity (MAS): refers to the distribution of roles between men and women. In
masculine societies, the roles of men and women overlap less, and men are expected to behave
assertively.
South Africa is ranked very close to the United States in terms of (MAS) rank this means that both
countries share similar values. However South Africa is very slightly more masculine than the united
states which means you can expect strong egos the quality of life.
Uncertainty Avoidance Index (UAI): Refers to how well members of the given society are able to cope
with stress and anxiety.
South Africa has a higher score than the U.S. this means you will encounter a high energy society that is
conservative, rigid and structured where people are expressive, and are allowed to show anger or
emotions, if necessary.
Pragmatic Versus Normative (PRA): refers to the degree to which people need to explain the
inexplicable, and is strongly related to religiosity and nationalism.
South Africa has a higher (PRA) score than the U.S. who has a normative score this indicates virtues and
obligations are emphasized more than values and rights are emphasized
Indulgence Versus Restraint (IVR): Refers to the orientation of a country in terms of indulgence vs.
restraint.
South Africa has a high (IVR) which means that society encourages a relatively free
gratification of people's own drives and emotions, such as enjoying life and having fun. In a society with
a low IVR score, there is more emphasis on suppressing gratification and more regulation of people's
conduct and behavior, and there are stricter social norms.
3. How does this data impact the decision you are going to make?
After analysing the data and comparing it to that of the U.S. we came to the conclusion that South Africa
would be a great market for expansion. The data was very close to that of another market that has been
successful.
D. Trompenaars’ analysis of the country
1. How do the numbers compare to the US?
Universalism versus particularism: Refers to whether rules or relationships are more important to
individuals. “ the third King Report on Governance for South Africa (2009:21) lists the following four
ethical values as essential to good practice: responsibility, accountability, fairness and transparency.
Universalism insists on equality before the law, so that all the members of a society can be treated in
the same way. If universal moral norms are fairly applied, those who are rich, powerful and corrupt, for
instance, will not escape justice.”
Individualism versus communitarianism.
Specific versus diffuse.
Neutral versus emotional.
Achievement versus ascription.
Sequential time versus synchronous time.
Internal direction versus outer direction.
2. What does the data mean for managing employees?
3. How does this data impact the decision you are going to make?
Resources:
https://welections.wordpress.com/guide-to-the-2014-south-african-election/south-africas-politicalsystem/
https://freedomhouse.org/report/freedom-world/2018/south-africa
https://tradingeconomics.com/south-africa/corruption-rank
https://www.inflation.eu/inflation-rates/south-africa/current-cpi-inflation-south-africa.aspx
https://www.dictionary.com/browse/civil--liberties
https://www.investopedia.com/terms/c/consumerpriceindex.asp (CPI)
https://www.transparency.org/whatwedo/publication/bpi_2011
https://www.transparency.org/country/ZAF
"Countries Compared by Government > Corruption > Bribe Payers Index. International Statistics at
NationMaster.com", Wikipedia: Bribe Payers Index. Aggregates compiled by NationMaster. Retrieved
from http://www.nationmaster.com/country-info/stats/Government/Corruption/Bribe-Payers-Index
http://www.countrywatch.com/Intelligence/CountryReviews?CountryID=159
https://www.gov.za/about-sa/international-relations
Naidoo, Vanessa (2014) Brand South Africa: A guide to South African political parties
https://www.brandsouthafrica.com/people-culture/democracy/a-guide-to-southafrican-political-parties
Freedom House (2018) Freedom in the World 2018: South Africa Profile
https://freedomhouse.org/report/freedom-world/2018/south-africa
TradingEconomics (2017) Trading Economics: South African Corruption Rank
https://tradingeconomics.com/south-africa/corruption-rank
inflation.edu (2018) Worldwide Inflation Data: Current inflation South Africa
https://www.inflation.eu/inflation-rates/south-africa/current-cpi-inflation-southafrica.aspx
Investopedia (2018) Consumer Price Index https://www.investopedia.com/terms/c/
consumerpriceindex.asp
Hardoon, Deborah & Heinrich, Finn (2011) Transparency Globalization: Bribe Payers
Index https://www.transparency.org/country/ZAF
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