Porter’s National Diamond Analysis for South African Mobile Telecom Industry

This article evaluates the South African Mobile telecom industry using Porter’s Diamond model. It discusses factors such as factor conditions, firm strategy, structure and rivalry, demand conditions, related supporting industries, government, and chances that affect the industry. It also explores market entry strategies and contemporary management issues.

Running head: GLOBAL BUSINESS MANAGEMENT
GLOBAL BUSINESS MANAGEMENT
Name of the student
Name of the university
Author note

1GLOBAL BUSINESS MANAGEMENT
Table of Contents
Part 1: Porter’s National Diamond Analysis......................................................................2
1. Introduction....................................................................................................................2
2. Evaluation of the Porter’s Diamond model....................................................................2
2.1 Factor conditions......................................................................................................3
2.2 Firm strategy, structure and rivalry..........................................................................4
2.3 Demand conditions..................................................................................................5
2.4 Related supporting industries..................................................................................6
2.5 Government.............................................................................................................8
2.6 Chances...................................................................................................................8
Part 2: Market Entry Strategy............................................................................................9
1. Advantages and limitations of using Foreign Direct Investment (FDI)......................9
1.1 Advantages of Foreign Direct Investment (FDI)...................................................9
1.2 Limitations of Foreign Direct Investment (FDI)..................................................10
2. Evaluation of a relevant market entry mode............................................................11
3. Recommendations...................................................................................................11
Part 3: Contemporary Management Issues.....................................................................12
References.......................................................................................................................14
Appendix..........................................................................................................................17

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Part 1: Porter’s National Diamond Analysis
1. Introduction
The Mobile telecom industry is an emerging business in South African markets.
The different technological innovations that are undertaken by the organizations have
helped the same in maintaining the efficacy of the operations as per the needs of the
business. The identification of the different trends in the industry will be helping
overseas organizations in undertaking smooth business operations as per the needs of
sustenance and growth.
The discussion will undertake an evaluation of the South African telecomm
industry, which will be helping an overseas organization in understanding the
opportunities and threats that might be encountered while making foreign investments in
the market. In this connection, the discussion will facilitate a detailed assessment of the
South African Mobile telecom industry through the utilization of the Porter’s Diamond
model.
2. Evaluation of the Porter’s Diamond model
The Porter’s Diamond model will help in delineating the market structure of
Mobile telecom industry in South Africa through an assessment of the different threats
and opportunities held by the same. Cotula (2013) stated that the Porter’s Diamond
model helps in identifying the capabilities and competencies of an overseas
organization while making an market entry. The relationship between the different
factors in the model helps in maintaining the efficacy of the operations that are designed
by organizations adhering to the sustenance needs. The section will be focusing on
critically discussing the different factors in the model relating to the South African Mobile
telecom industry.

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Figure: Porter’s diamond model
(Source: E. Dobbs, 2014)
2.1 Factor conditions
Huge amount of cheap and qualified human resource and anti- discrimination
The availability of cheap and qualified human resource in the nation will be
helping the organization in undertaking smooth operations. As per a report, the rate of
unemployment in the nation is 25.1% computed in the year 2017 (Anwar et al., 2014). It
will be helping the organization in facilitating the operations through the recruitment of
skilled workforce in a cheaper rate. On the other hand, the recruitment of cheap labor
force will be helping the European organization in minimizing the rate of labour
expenses. Stork, Calandro and Gillwald (2013) stated that the smooth functioning of
the business processes are dependent on the efficient functioning of the workforce. In
this relation, the European organization will undertake smooth functioning of the
processes through the enhanced supply of skilled workforce in a cheaper rate. The

4GLOBAL BUSINESS MANAGEMENT
enhanced supply of cheap labor force in the South African markets and the higher rate
of unemployment will be providing the organization with a scope of attracting most of
the people to the different job roles. On the other hand, the regulations imposed by the
South African government relating to prohibition of discrimination will also assist the
organization in adhering to the EEO (Equal Employment Opportunity) and minimizing
discrimination in the workforce (Chavula, 2013). Diversity in the workforce will support
innovative culture and positive working environment in the processes for enabling the
smooth functioning of the systems.
Tax and tariff reductions for supporting foreign investments in the telecom sector
South African government holds an Economic Partnership Agreement (EPA)
with the European Union (Luo & Bu, 2016). It will be helping the European organization
in maintaining the business operations in reduced taxations and tariffs. The reduced
taxation and trade tariffs will be helping the business in reducing the operating
expenses of the same. Goldstuck (2012) stated in a report that the reduction in the tariff
rates from a simple average of more than 20% to an average of 5.8% will help in
supporting the smooth functioning of the systems. The reduction in the trade tariffs will
be helping the organization in facilitating aggressive expansion in the South African
economy. On the other hand, the diminishing rate of technological advancements
relating to mobile telecomm industry in South African market has forced the government
in reducing the taxation and trade tariffs for maximizing foreign investments in the
sector. Therefore, the reduction in taxation and trade tariffs will help the organization in
undertaking wide expansion in the markets.
2.2 Firm strategy, structure and rivalry
High competition in the local markets
The higher competition in the local markets of South Africa is subjected to the
involvement of different multinational organizations aiming to provide excellent cellular
telecomm services to the urban regions. In a research Fosu (2013) stated that the
South Africa holds the position of the 4th most advanced mobile telecommunications
network in the world. The higher competition in the telecomm sector might challenge the

5GLOBAL BUSINESS MANAGEMENT
competitive strength of the European organization while making an expansion in the
South African markets. High competition in the markets might challenge the smooth
functioning of the European organization. On the other hand, the higher competition in
the market has maximized the expectations of the consumers in the South African
market. It would also contribute to the challenges in the organizational context. Snijders
(2012) stated that the rigid regulations imposed by the governments affect the smooth
functioning of the systems as per the objectives of the business. The regulations that
are framed by the government agencies in controlling the competition and the new
entrants in the market might result to significant barriers that might be faced by the
organization.
Imitation of technology
Barth and Heimeshoff (2014) stated that the imitation of technology by the other
existing firms in the South African markets might affect the brand name of the business.
In this relation, the European organization faces a high risk of technology imitation acts
by the other existing firms. It has been reported that around 27% of the firms
encountered risks of imitation while making an expansion in the telecomm sector
(Murphy, Carmody & Surborg, 2014). The enhanced risk of imitation might restrict
collaborative functioning of the European organization in the South African cellular
telecomm markets. On the other hand, the imitation of the technology might also affect
the trust and loyalty of the customers in the South African telecomm industry. As per a
report, 150 network providers are active in the South African economy, which supports
the cellular telecom industry (Sutherland, 2012). The availability of substitutes in the
South African markets offering lower priced services will be affecting the organizational
efficacy of adhering to the increased needs of the customers.
2.3 Demand conditions
Lower demand in the urban markets
The organization will be encountering lower demand in the urban markets of
South Africa. As per the reports, 76% of the urban consumers depend on the existing
telecom service providing organizations (Murray-Evans, 2015). Stocchetti (2013) stated

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that the customer loyalty towards the existing firms, in a market, restricts the smooth
functioning of the new entrants in the market. The existing service providers in the
South African market have taken every possible step for retaining the loyalty of the
customers. It has helped the same in sustaining in the home grounds irrespective of the
attractive propositions made by the new entrants. On the other hand, the European
organization might face significant issues in attracting the attention of the customers
towards the service offerings. Sanders (2015) stated that the competencies of the
organization in attracting the attention of the customers affect the rate of productivity
and profitability in an international market situation. Therefore, it might be stated that the
European organization will be facing huge challenges in attracting the attention of the
urban customers to their product offerings in the context of the South African Cellular
Telecom sector.
Higher demand in the rural markets
The European organization might face a huge demand in the rural regions of
South Africa due to the lower availability of cellular telecom services. Siroën (2013)
stated that the limited access of the telecomm services and the higher cost of the
services have affected the affordability of the South African customers. Higher rates of
unemployment, illiteracy, income inequality and the public debts in the rural regions
have affected the rate of potential customers. On the other hand, the remote rural areas
are often left disconnected from the major urban regions of South Africa, which has
affected the technological advancement related needs of the same. However, the
conditions provide a favorable market for the European organization as the lower priced
proposition will be helping the venture in maximizing the customer base in the rural
regions. Hurt (2016) stated that the price regulations and the attractive propositions by
the overseas organization helps in enhancing the customer base as per the needs of
the business propositions. The higher demand faced by the organization in this
connection will be helping the same in attracting the attention of most of the customers
in the rural South African markets.
2.4 Related supporting industries
Might find isolated supportive firms for Networking and BPO

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The organization might find different isolated supportive firms in the networking
and the BPO sectors. De Melo and Regolo (2014) stated that the collaborative
functioning of an organization and outsourcing the critical activities helps a venture in
reducing the level of risk that might be encountered by the same. As per the case, the
European organization might face different supportive firms for collaboration, which
would assist the same in upholding the efficacy of the operations as per the objectives
of the business. On the other hand, Murray-Evans (2015) opined that the collaboration
with the supportive firms will be helping the organization in maintaining the smooth
functioning of the operations through minimal capital investments. The European
organization might collaborate with the isolated networking and BPO organizations for
undertaking promotions and developing activities in order to cope with the demand. The
collaboration with the existing supportive organizations will also help the same in
identifying the market dynamics as per the objectives of the business.
Services and machinery are imported
The South African technology is not advanced in the fields of IT and networking
and thereby machinery and services are to be imported by the organizations. The key
requirements in the organizational operations are dependent on the smooth functioning
of the systems through the supply of advanced technologies. Makhaya and Roberts
(2014) stated in a research that around 56% of the networking companies in the nation
imported the machinery and outsourced different services for the smooth functioning of
the business units. In this relation, the European organization might take steps to import
the machinery and services in order to facilitate the smooth functioning of the processes
as per the objectives. Murphy, Carmody and Surborg (2014) stated that outsourcing the
services will be helping the organization in making a reduction of the different risks that
might be en countered by the same. Importing the services and the machinery might be
a challenging activity for the European organization as it lacks suitable networks and
contacts with the other supportive organizations in the South African telecomm markets.
Therefore, the organization might take steps to collaborate with the supportive
organizations from the European Union and import machinery and services, which will
be increasing the cost of operations of the business.

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2.5 Government
The stable political situation in the South African market will be helping the
European organization in maintaining the smooth functioning of the processes. The
ANC (African National Congress) dominated the political scenario since the year 1990,
which has helped in minimizing the conflicts between different political parties
(Sutherland, 2012). The reduced conflicts between the political parties in the nation will
be helping the same in upholding the efficacy of the operations as per the needs of the
business. On the other hand, the European Union holds an agreement with the African
government, which will be helping the organization in operating in the South African
markets through minimized taxation and tariffs (Kholilul Rohman, 2012). The Economic
Partnership Agreement (EPA) will be helping the organization in maintaining the
efficacy of the operations as per the objectives of the business. Hawthorne (2015)
stated that the agreement between the South African government and the European
Union is aimed at mutual profitability. The agreement will be helping the organizations
from the European Union in making a proficient market entry in South Africa. On the
other hand, the enhanced rate of foreign investments will bring forth developments in
the GDP of the South African economy. The current GDP of the economy is reported to
be $323.809 billion, which is rising by 0.7% annually (Chetty, Naidoo & Seetharam,
2015). The growth of the GDP is dependent on the contribution of the foreign
investments that are made by the different organization while bringing forth
developments in the South African markets.
2.6 Chances
The supply of cheap labor force and the support of the government will be
helping the concerned European organization in facilitating the smooth functioning of
the processes in the South African economy. The opportunities of growth are also
dependent on the lower availability of the telecomm services in the rural areas of the
nation. On the other hand, the lower rates of taxation and tariffs through the delineation
and implementation of the EPA (Economic Partnership Agreement) will be helping
the organization in facilitating the smooth functioning of the business processes (Barth
& Heimeshoff, 2014). The growth of the supportive industries like BPO and IT in the
nation will be helping the concerned business in upholding the efficacy of the operations

9GLOBAL BUSINESS MANAGEMENT
as per the objectives of continuous growth in the business. Calandro and Moyo (2012)
stated that the collaborative functioning of the organization with the different existing
institutions in a particular economy helps the same in reducing risks and establish the
foundation through minimal CAPEX (Capital Expenditure). Therefore, it might be stated
that the expansion in the south African market is a proficient choice made by the
organization in order to support the sustenance as per the needs of the customers.
Part 2: Market Entry Strategy
1. Advantages and limitations of using Foreign Direct Investment (FDI)
1.1 Advantages of Foreign Direct Investment (FDI)
Employment and economic boost to the host nation
The European organization might take FDI as a market entry mode as it will be
helping the venture in utilizing the cheap labor force in the South African markets. The
creation of employment opportunities in the South African economy will be helping the
organization in attracting the attention of the chief stakeholders for undertaking a
collaborative approach. Anwar et al. (2014) stated that the collaborative functioning of
the stakeholders in the different sectors helps an organization in maintaining the
efficacy of the operations as per the needs of the business. As per a report, the rate of
unemployment in South Africa is 25.1%, which has affected the livelihood of the people
in the nation (Luiz & Stephan, 2012). Therefore, the concerned European organization
might undertake FDI in order to boost the economic rate through creation of
employment opportunities.
Reduction in taxation
The tax incentives and reductions will be helping the concerned organization in
maintaining the efficacy of the operations in the South African economy. The exposition
of the EPA between the European Union and the South African government has
considerably reduced the taxation and tariffs in the economy, which will allow the
concerned business in upholding the functions through the support of South African
government and other supportive agencies. The FDI mode helps an organization in

10GLOBAL BUSINESS MANAGEMENT
involving the interests of the government relating to the economic boosts, which will be
helping the organization in maintaining the efficacy of the operations as per the needs of
the business.
Increased productivity
Snijders (2012) stated that the increased productivity of the organization is
dependent on the availability of cheap and skilled labour force in the respective
markets. In this relation, the concerned European Union organization might take steps
to create employment in the South African markets for supporting the productivity of the
business as per the needs of the same. The delineation of the different productivity
measures will be helping the organization in maintaining the efficacy of the operations
as per the needs of the business while operating in diverse international markets.
1.2 Limitations of Foreign Direct Investment (FDI)
Risk from subtle political changes
The stable political situation in the South African economy will be helping the
organization in establishing the foundation of the business in the markets. However,
subtle changes in the political relations between the European Union and the South
African government might affect the agreement (EPA) resulting to maximization of tax
and tariff rates (Rogerson, 2013). On the other hand, the change political condition
within South Africa might also affect the smooth functioning of the venture while
undertaking FDI. The change in the regulations might affect the structure and
functioning of the business venture. Cotula (2013) stated that the subtle political
changes in the host country adversely affect the recruitment, supply and manufacturing
activities of an entrant. In this relation, the change in the legislation might affect the
smooth functioning of the business in the South African telecomm industry resulting to
loss.
Higher costs incurred by the organization
Fosu (2013) stated that FDI demands different costs that might be incurred by an
entrant while developing business in the host country. The concerned European

11GLOBAL BUSINESS MANAGEMENT
organization might encounter costs relating to import of machinery and recruitment of
human workforce for supporting the business related activities of the same. The
maximization of the direct and indirect costs that might be incurred by the European
organization might affect the capabilities of the same while expanding in South African
markets (Gillwald, Moyo & Christoph Stork, 2012). The South African telecom service
providers utilize outdated machinery, as the nation lacked IT service and networking
facilities. Therefore, the entrant organization might take steps to import relevant
technologies and services from the supportive industries, which will maximize the costs
of the organization.
2. Evaluation of a relevant market entry mode
The organization might also undertake acquisition of a business firm, which will
be helping the business in reducing the CAPEX and risks related to different processes.
On the other hand, acquisition will be helping the organization in finding loyal customers
in the South African telecomm market. Acquisition of an existing organization in the
South African telecomm industry will be helping the organization in establishing the
foundation of the business without extensive market research. It will assist the
concerned European organization in minimizing the risks of process failures while
adhering to the needs of the customers. The acquisition of an existing organization will
also provide the same with machinery and human resource thereby minimizing the
costs that might be incurred by the business while making business in the South African
telecomm industry.
3. Recommendations
The organization must undertake an acquisition, which will be helping the same
in minimizing the operational costs and thereby develop the existing processes in order
to gain a competitive edge while operating in the South African telecom industry.

12GLOBAL BUSINESS MANAGEMENT
Part 3: Contemporary Management Issues
The management issues that might be faced by the organization while
establishing the business venture in the South African market are being discussed in
this section of the analysis.
Huge competition in the South African telecomm industry
The concerned European business will be encountering a huge competition in
the South African Telecomm industry due to the presence of about 150 service
providers (Luo & Bu, 2016). Stork, Calandro and Gillwald (2013) stated that the
enhanced competition in the market affects the competitive edge of the new entrants.
The customer base in South Africa is mostly loyal to the offerings of the existing telecom
organizations in the nation. Therefore, the organization might face different challenges
in attracting the attention of the customers towards the product and service offerings
made by the same. The intense competition in the market might also affect the pricing
structure of the organization, which might result to a degraded revenue stream and
profitability.
The organization might also face challenges in retaining the skilled workforce as
the competitors might provide attractive packages to the employees resulting o
switches. Lack of skilled workforce in the competitive South African markets might affect
the smooth functioning of the systems as per the objectives of sustenance in the
markets. Goldstuck (2012) stated that the enhanced turnover rates affect an
organizational operations through the lack of skilled workforce. On the other hand, the
maximized rate of illiteracy in the South African market might affect the organizational
capabilities of recruiting a skilled workforce in the highly competitive market structure.
Lack of suitable technologies and supportive industries in the market
Lack of IT facilities in the South African market might affect the smooth
functioning of the concerned European organization. The lack of suitable networking
and IT support systems in the economy resulted to different challenges in the
organizational operations. Therefore, the concerned European organization would have
to import services and machinery from the other nations I order to support the smooth

13GLOBAL BUSINESS MANAGEMENT
functioning of the operations that maximized the operational costs of the same.
Faulkner, Loewald and Makrelov (2013) stated that maximization of the costs affects
the capabilities of an organization in gaining a competitive edge through the enhanced
price of the propositions. It has been reported that 51% of the total South African
population are below the poverty lines and resides in the rural areas (Chavula, 2013).
therefore, the organization would have to undertake huge CAPEX in order to target a
wide customer base. On the other hand, the enhanced pricing of the product
propositions would affect the sales rate through lack of potential customers in the
economy. Therefore, lack of proficient technological. support might affect the
competitive edge of the entrant while making business in the South African Telecom
industry.

14GLOBAL BUSINESS MANAGEMENT
References
Anwar, M. A., Carmody, P., Surborg, B., & Corcoran, A. (2014, December). The
diffusion and impacts of information and communication technology on tourism in
the Western Cape, South Africa. In Urban Forum (Vol. 25, No. 4, pp. 531-545).
Springer Netherlands.
Barth, A. K., & Heimeshoff, U. (2014). Does the growth of mobile markets cause the
demise of fixed networks?–Evidence from the European
Union. Telecommunications Policy, 38(11), 945-960.
Calandro, E., & Moyo, M. (2012). Investment models and regulatory constraints for
broadband backbone roll-out in selected African countries. info, 14(4), 21-35.
Chavula, H. K. (2013). Telecommunications development and economic growth in
Africa. Information Technology for Development, 19(1), 5-23.
Chetty, S., Naidoo, R., & Seetharam, Y. (2015). The impact of corporate social
responsibility on firms’ financial performance in South Africa.
Cotula, L. (2013). The international political economy of the global land rush: A critical
appraisal of trends, scale, geography and drivers. In The New Enclosures:
Critical Perspectives on Corporate Land Deals (pp. 43-74). Routledge.
De Melo, J., & Regolo, J. (2014). The African Economic Partnership Agreements with
the EU: Reflections Inspired by the Case of the East African Community. Journal
of African Trade, 1(1), 15-24.
Faulkner, D., Loewald, C., & Makrelov, K. (2013). Achieving higher growth and
employment: Policy options for South Africa. South African Reserve Bank
Working Paper, 13(03).
Fosu, S. (2013). Capital structure, product market competition and firm performance:
Evidence from South Africa. The quarterly review of economics and
finance, 53(2), 140-151.

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Gillwald, A., Moyo, M., & Christoph Stork, D. (2012). Understanding what is happening
in ICT in South Africa: A supply-and demand-side analysis of the ICT sector.
Goldstuck, A. (2012). Internet matters: The quiet engine of the South African
economy. World Wide Worx, 38-50.
Hawthorne, R. (2015). Economic regulation of the telecommunications sector in South
Africa 2009-2014. The African Journal of Information and
Communication, 2015(14), 1-19.
Hurt, S. R. (2016). The EU’s economic partnership agreements with Africa:‘Decent
Work’and the challenge of trade union solidarity. Third World Thematics: A TWQ
Journal, 1(4), 547-562.
Kholilul Rohman, I. (2012). Will telecommunications development improve the quality of
life in African countries?. info, 14(4), 36-51.
Luiz, J. M., & Stephan, H. (2012). The multinationalisation of South African
telecommunications firms into Africa. Telecommunications Policy, 36(8), 621-
635.
Luo, Y., & Bu, J. (2016). How valuable is information and communication technology? A
study of emerging economy enterprises. Journal of world business, 51(2), 200-
211.
Makhaya, G., & Roberts, S. (2014). The changing strategies of large corporations in
South Africa under democracy and the role of competition law.
Murphy, J. T., Carmody, P., & Surborg, B. (2014). Industrial transformation or business
as usual? Information and communication technologies and Africa's place in the
global information economy. Review of African Political Economy, 41(140), 264-
283.
Murray-Evans, P. (2015). Regionalism and African agency: negotiating an Economic
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World Quarterly, 36(10), 1845-1865.

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Rogerson, J. M. (2013). Reconfiguring South Africa’s hotel industry 1990–2010:
Structure, segmentation, and spatial transformation. Applied Geography, 36, 59-
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Sanders, R. (2015). The EU, economic partnership agreements and Africa. The Round
Table, 104(5), 563-571.
Siroën, J. M. (2013). Labour provisions in preferential trade agreements: Current
practice and outlook. International Labour Review, 152(1), 85-106.
Snijders, D. (2012). Wild property and its boundaries–on wildlife policy and rural
consequences in South Africa. Journal of Peasant Studies, 39(2), 503-520.
Stocchetti, M. (2013). Inside the European consensus on development and trade:
analysing the EU's normative power and policy coherence for development in
global governance.
Stork, C., Calandro, E., & Gillwald, A. (2013). Internet going mobile: internet access and
use in 11 African countries. info, 15(5), 34-51.
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international mobile roaming. Competition and Regulation in Network Industries
(CRNI), Brussels, 25.

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Appendix
Figure: Porter’s diamond model
(Source: E. Dobbs, 2014)
Factor conditions Huge amount of cheap and qualified human
resource and anti- discrimination
 The availability of cheap and
qualified human resource in the
nation will be helping the
organization in undertaking smooth
operations
 The rate of unemployment in the
nation is 25.1% computed in the
year 2017
 The recruitment of cheap labor
force will be helping the European
organization in minimizing the rate
of labour expenses
 The regulations imposed by the
South African government relating
to prohibition of discrimination will
also assist the organization in

18GLOBAL BUSINESS MANAGEMENT
adhering to the EEO (Equal
Employment Opportunity) and
minimizing discrimination in the
workforce
Tax and tariff reductions for supporting
foreign investments in the telecom sector
 South African government holds an
Economic Partnership
Agreement (EPA) with the
European Union
 The reduction in the tariff rates from
a simple average of more than 20%
to an average of 5.8% will help in
supporting the smooth functioning
of the systems
 The diminishing rate of
technological advancements
relating to mobile telecomm industry
in South African market has forced
the government in reducing the
taxation and trade tariffs for
maximizing foreign investments in
the sector
Firm strategy, structure and rivalry High competition in the local markets
 South Africa holds the position of
the 4th most advanced mobile
telecommunications network in the
world
 The rigid regulations imposed by
the governments affect the smooth
functioning of the systems as per
the objectives of the business
Imitation of technology
 Around 27% of the firms
encountered risks of imitation while
making an expansion in the
telecomm sector
 150 network providers are active in
the South African economy, which
supports the cellular telecom
industry

19GLOBAL BUSINESS MANAGEMENT
 Availability of substitutes in the
South African markets offering
lower priced services will be
affecting the organizational efficacy
of adhering to the increased needs
of the customers
Demand conditions Lower demand in the urban markets
 76% of the urban consumers
depend on the existing telecom
service providing organizations
 European organization will be
facing huge challenges in attracting
the attention of the urban customers
to their product offerings in the
context of the South African Cellular
Telecom sector
Higher demand in the rural markets
 The European organization might
face a huge demand in the rural
regions of South Africa due to the
lower availability of cellular telecom
services
 Limited access of the telecomm
services and the higher cost of the
services have affected the
affordability of the South African
customers
 Higher rates of unemployment,
illiteracy, income inequality and the
public debts in the rural regions
have affected the rate of potential
customers
Related supporting industries Might find isolated supportive firms for
Networking and BPO
 Collaborative functioning of an
organization and outsourcing the
critical activities helps a venture in
reducing the level of risk that might
be encountered by the same

20GLOBAL BUSINESS MANAGEMENT
 Collaboration with the existing
supportive organizations will also
help the same in identifying the
market dynamics as per the
objectives of the business
 European organization might
collaborate with the isolated
networking and BPO organizations
for undertaking promotions and
developing activities in order to
cope with the demand
Services and machinery are imported
 South African technology is not
advanced in the fields of IT and
networking and thereby machinery
and services are to be imported by
the organizations
 Around 56% of the networking
companies in the nation imported
the machinery and outsourced
different services for the smooth
functioning of the business units
 Importing the services and the
machinery might be a challenging
activity for the European
organization as it lacks suitable
networks and contacts with the
other supportive organizations in
the South African telecomm
markets
Government  The ANC (African National
Congress) dominated the political
scenario since the year 1990. It has
helped in minimizing the conflicts
between different political parties
 The Economic Partnership
Agreement (EPA) will be helping
the organization in maintaining the
efficacy of the operations, as it is
aimed at mutual profitability
 the enhanced rate of foreign
investments will bring forth
developments in the GDP of the
South African economy
 The current GDP of the economy is

21GLOBAL BUSINESS MANAGEMENT
reported to be $323.809 billion,
which is rising by 0.7% annually
 Growth of the GDP is dependent on
the contribution of the foreign
investments that are made by the
different organization while bringing
forth developments in the South
African markets.
Chances  The supply of cheap labor force and
the support of the government will
be helping the concerned European
organization in facilitating the
smooth functioning of the processes
 Opportunities of growth are also
dependent on the lower availability
of the telecomm services in the
rural areas of the nation
 The lower rates of taxation and
tariffs through the delineation and
implementation of the EPA
(Economic Partnership
Agreement) will help in supporting
the growth of the business
 Growth of the supportive industries
like BPO and IT in the nation also
supported the technological needs
of the firm
 Collaborative functioning of the
organization with the different
existing institutions in a particular
economy helps the same in
reducing risks and establish the
foundation through minimal CAPEX
(Capital Expenditure)