Africa is currently experiencing exponential growth and attracting foreign investors from all over the world. However, it is important to keep in mind that Africa as a continent is composed of 54 countries, each of which is uniquely diverse in its economies and businesses (Nwankwo & Ibeh, 2014). Entry into a new market is a risky business and businesses ought to consider certain factors.
Regional Political Economy
Political stability is a key factor in the proper functioning of a business. While it is difficult to generalize all 54 countries’ political environments, there are certain similarities. The continent’s political situation varies ranging from those that enjoy political stability such as South Africa and Kenya, to those recuperating from political unrest such as Rwanda and Mozambique, to those currently in an overt political crisis such as Libya and Tunisia (Nwankwo & Ibeh, 2014). Governmental strife poses a huge threat to the ability of a nation to support the businesses within it. It, therefore, follows that the more politically stable a country is, the better the chances of a business succeeding there. Thus, Star Service Limited should consider establishing its operations in a politically stable country.
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Regional Culture
The culture of a region is key in determining the outcome of a business. Most African countries prefer to do business in person rather than by more advanced technological means. The acceptance of technology into the business process is still minimal because penetration of the technological advances has been slow (Nwankwo & Ibeh, 2014). This definitely indicates that online business dealings would encounter a huge challenge among the locals due to lack of familiarity. It is therefore important to ensure that the business established is within the locality of the citizens as compared to an online version. Moreover, a large population in Africa still subscribes to traditional ways of living and are generally more conservative than most other people, choosing to conduct business with individuals or businesses that are considered well mannered (Nwankwo & Ibeh, 2014). For this reason, it is important to exercise caution with words and dressing when taking part in business with them.
Investment and Finance Market
Africa’s economies are diverse, including some of the fastest growing economies and some of the poorest economies (George et al., 2016). Due to these variances, it is difficult to analyze the probability of success across the continent. However, it is important to consider the tax regimes and the local payment methods. Unfortunately, corruption in Africa remains a huge challenge due to the poor enforcement of ethical business regulations. Additionally, poor wages among employees drives many workers to collect bribes to supplement their salaries. Bribery is the most common form of corruption and businesses that do not engage in bribery may have a hard time establishing themselves within the country because the authorities have gotten used to bribery (Nwankwo & Ibeh, 2014). However, proper ethical practice is key in establishing a business and provides great long-term benefits.
Based on the factors discussed above, South Africa stands out as a potential investment country for business success. South Africa boasts as the leading economy in Africa. Even though it was one of the last African countries to gain independence, it has seen an exponential growth in the number of new companies being set up. Additionally, South Africa possesses better rates of acceptance of technological advancements as compared to other African nations (Nwankwo & Ibeh, 2014). Therefore, it should be considered as the country of choice for extension of Star Services Limited into Africa. A good way to enter the market would be through the franchising strategy. Due to the conservative nature of the citizens, it would be more efficient to get semi-independent business owners to provide the services within South Africa. Therefore, Star Service Limited should consider venturing into the South African market through franchise partners.
- George, G., Corbishley, C., Khayesi, J. N., Haas, M. R., & Tihanyi, L. (2016). Bringing Africa in: Promising directions for management research. Academy of Management Journal, 59(2), 377-393.
- Nwankwo, S., & Ibeh, K. (Eds.). (2014). The Routledge companion to business in Africa. London: Routledge.
