Managing International Trade for Tesco in South Africa

Managing International Trade

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Background of the country:.........................................................................................................3
Background of the company:.......................................................................................................5
Analysing the key issues & business issues in global trade that affects the businesses..............6
Recommendations......................................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

INTRODUCTION
Every business organization plan to expand in international market, these organizations
have huge success in local economy and now plan to trade in foreign and emerging economies. It
is very clear that those firm who plan expansion have to face various issue and challenges which
even can lead to overall failure of the company, that is why identifying the issue in the economy
related to the industry is very important and manage international trade (Hiscox, 2020). This
study is based on Tesco, this company is one of the largest and the most successful retail giant of
the UK. Tesco after getting success in local market now planning to expand in South African
international market. South African economy is still developing which can be challenges for
Tesco to manage their expansion in this country (Tesco, 2021). In this report, will discuss
background of the South Africa as a chosen country and will discuss background of Tesco as a
chosen company. Later this report, will discuss how Tesco manage international trade in South
Africa and will discuss major issue of retail sector of the country and how this effected the
business organization. At last, this report will provide recommendations.
MAIN BODY
Background of the country:
South Africa is one the most enlightened country of African continent, this country is the
powerhouse of the African continent because this country have being fuelling the development
speed of whole continent. South Africa have emerging economy which provide promising
growth to the foreign giant who plan to invest in the local market, this country have first-world
economic infrastructure who tend to welcome international companies to deal in the emerging
economy of the country (Arndt, et.al., 2020). The GDP of the country went up to 301.92 billion
US dollar alone in the year 2020. According to the World Bank, South Africa contribute 0.27%
in the development and betterment of the world economy.

The above data show that South Africa is on the way to become one of the developed
country of the world, this country have being showing great performance in GDP growth but it is
very clear that growth was heavily impacted by the COVID-19. South Africa have emerging
economy which means they have chance to reach milestone of 320.9 Billion dollar by the end of
2021.
South Africa is located in southernmost part of the continent which means most of the
growth can be seen from the import and export activities, Port of Durban is one of the largest and
main port of the country. This port manage 60% of water transportation traffic of southern
African coastline. While South Africa and it's emerging economy is going well, there are certain
issue in the business environment of the country (Jones and Muller, 2016). There are certain
trade barriers in the country which will impact the company who are planning to invest in the
emerging economy and local market of the country, these barriers include tariff policy of the
country and non tariff barrier. NTB (Non Tariff Barrier) include port congestion, permit of
import, custom value added to already established invoice price, technical and anti dumping
standard, IRP and many other issue which become the biggest barrier in the growth. Market
giants like Tesco who wish to enter market of South Africa need to face these barriers, these
barriers are very much related to import and export of the goods.
Illustration 1: The GDP of South Africa
(Source: Trading economics)