Understanding South Africa's Labor Force: Formal and Informal Sectors, Populism, and Economic Trends

In this document we will discuss about Understanding South Africa's Labor Force and below are the summary points of this document:- The South African labor force comprises both formal and informal sectors with equal exposure in the local market. The informal sector in South Africa is booming, contributing to 18% of the GDP and employing nearly half of the workforce. Populism poses a significant threat to globalization and democratic foundations, leading to potential discord.

Running Head: INTERNATIONAL BUSINESS MANAGEMENT
INTERNATIONAL BUSINESS MANAGEMENT
Name of the Student:
Name of University:
Author Note:

1INTERNATIONAL BUSINESS MANAGEMENT
Answer 1
The South African formal and informal sector shares near equal exposure in the local
market. The labour force in the South market has been increasing in a rapid pace since the last
decade. One of the contributing factors in this regard can be identified as the influx of foreign
direct investment and the government policies in order to deal with the highly escalating labour
force participation rate. However, as per the statistics of the Zourides (2018) it can be stated that
the rate of participation has been decreased in the fourth quarter of 2018 up to 10% in compare to
the third quarter with a percentage of 59.50. However, it can be argued that the labour force in
South Africa divides into both formal and informal labour forces. As per the government report it
can be argued that there are more than 35,000 are employed in the formal sectors where as the
informal sectors comprises 73,000 workers (tradingeconomics.com., 2019). The increasing trend
of employment in the informal sectors is resembled with the purpose of degradation in the
economic situation all over the country. The pace of industrial boom is not equal for all the
sectors. As a result of that the manufacturing industry suffers the most with a loss of nearly
105,000 people whereas the social and personal service employment has been reduced with
93,000 workers lost their jobs (statssa.gov.za., 2018). However, the present economic situation is
advantageous and effective for the transport, construction, mining and private household sectors.
For an instance, in the transport industry the number of workers increases with a record number
of the 54,000 are recruited.
Based on this understand, the formal sectors in South Africa is comprised with the
mining, manufacturing, transport, construction and the electric industries. This is considered to
be one of the major industries in the country with a total amount of gross earning was R627
billion in the fiscal year of 2017 (Charman et al., 2017). In the non-agricultural sector, the

2INTERNATIONAL BUSINESS MANAGEMENT
economy is quite soothing with an increase of 1.6% in compare to the previous year. Therefore,
the promising trend of the South African formal industry is contributed a lot in the process of the
developing the economy of the country. On the other hand, the informal sector in South Africa is
more interesting with almost half the employment is working in the informal industry. In fact,
the informal sector contributes 18% of the GDP (Rogerson, 2016). Due to the lack of industrial
expansion it becomes a problem for the South African government to afford more job
opportunities so that the unemployed people start doing informal business. However, the
informal sector is booming rapidly as most of the organised retailers are starting encapsulate the
informal market like Pick n Pay started using its spaza supply program and create a competitive
environment for the informal businessmen (Zourides, 2018).
Answer 2
As per the writing of Gantz (2017) it can be stated that populism is a great threat to the
discourses of globalisation and started shaking the ground of democracy in a more sophisticated
manner. The rise of populism led to confront the democratic foundation and in a matter of time it
turns into an authoritarian principle leading to discord. In this context, the situation in Europe
after Brexit is quite challenging and not free from further upside down in the form of economic
progress. Small countries like Romania and The Netherlands are started joining the populist
movements and the growing political support for those political leaders are increased in a rapid
pace which could rupture the social cohesion easily (Cox, 2017). In this regard, the new global
phenomenon and the renegotiation of the NAFTA between UK and European Union is identified
as an important aspect. Retaining the practice of globalisation and free trade occupation an
unrestricted trade dialogues and agreement has been signed between UK and EU with the
purpose to flourish the trade extensively so that it will make a trade nexus among the important

3INTERNATIONAL BUSINESS MANAGEMENT
countries. In this regard, the global tension is further heightened with the new shape in the global
polity in an economic nutshell (Rodrik, 2018).
Besides this, the new global order where the clash between authoritarian populism and
the globalisation has become inevitable the global managers also try to deal with different global
scenario. In this regard, more intensity of the free trade will be attached with the organisational
activities so that encourage the other countries in making more profit by entering into a free trade
agreement. In this context, the report of Stavrakakis et al., (2017) points out that most of the
developed countries solidify their position with the purpose to establish a free trade agreement.
In fact, entering into the new market and launching new branches into the developing world
would provide them the strategic advantage to continue the free trade practice effectively
(Gordon, 2018). Moreover, this free trade practice will also be beneficial for the development of
the country’s economy as well.
In this context, the free trade practice will eradicate the process of comparative advantage
as the big organisations are tied up with other business houses and make an international
business web so that it will be beneficial for all the stakeholders. Basically, the perception of
comparative advantage will no longer be valid if the free trade and process of globalisation will
reach atop (Essletzbichler, Disslbacher & Moser, 2018). Therefore, the principle of free trade
will try to curb down the process of making populism an authoritarian and vulnerable enough. It
is associated with the cooperative advantage theory that will be invalidated. It is true that there
are enough time for globalisation to initiate itself in full swing. Still, the growing practice of
popular ideology restricts the pace of the free trade.

4INTERNATIONAL BUSINESS MANAGEMENT
Answer 3
Q1. Abundant of agricultural supply line with fertile land and suitable environment make Brazil
one of the leading agricultural powers across the world. As a matter of fact, most of the
agricultural products have immense market value. For an instance, Brazil leads the world in
exporting beef, coffee, poultry, soybeans and sugar. Those agricultural products require less
investment but high profitability in compare to other countries. For example, in France grapes
are harvested once in a year. However, the fertility and hospitable environment for the grapes
make it suitable to harvest grapes twice a year in Brazil. This profitable business opportunity
leads to the high competitiveness in agriculture. On the other hand, this enormous dependency on
agricultural economy creates a major setback for the industries to develop. The government
before 1990s could not realise the pressure on agricultural industry and neglected to make some
progress in the industrial sectors. As a result of that Brazil failed to set up infrastructure in
international standards that paved the way for lack of competition in the international market.
Q2. Economic modernisation is considered to be the best hope for Brazil to refurbish its poor
industrial condition. There is another reason that compelled the Brazilian government in 20th and
21st century to put emphasis on its industrial development. Huge pressure on the agricultural
products pushes the country to think about an alternative in order to curb down the volatile
nature of the international agricultural demand. After dissolving protectionism in 1990s there
was huge demand for ethanol and Brazil was one of the major countries that produced huge
quality of ethanol every year. In response to this, the government felt the potential nature of the
Brazilian industry to get the international attraction. As a result of that the Brazilian
administration also felt the urge to develop world class manufacturing industry so that it can
provide possible elevation to the economy and reducing the pressure on agriculture.

5INTERNATIONAL BUSINESS MANAGEMENT
Q3. Ethanol was played a major role to bring Brazilian industry into the international attention.
As a by-product of sugar, Ethanol was dominated the international market since 1970s as a
additive to gasoline. Brazil is one of the major producers of sugar across the globe and as a result
of that it was obvious that the country became an international hub or distributor of ethanol.
Currently, Brazil produces 18 billion litres of ethanol and is considered to be the leading global
exporter. From that point of view, it can be argued that the Brazilian industry subsequently gets a
boom and turns into a competitive market in the international business platform.
Answer 4
The Great Recession of 2008 was a cause of influx of debt and risks in credit that the
investment banks failed to turn into profitable assets. As per the research of Cohen (2014) it can
be stated that there are several factors that cause the recession. One of the major factors is the
boom in the capitalist financial market. High risk factors in the financial market created a
shallow vacuum that none of the investors nor the banks anticipated. The growing price in the
house mortgages pulled them towards high aspirations of making more money. As a result of that
the investors contacted with the investment banks to secure their investments and the banks
assured it by looping the house owners into the framework. In this context, Haw et al., (2015)
advocated that capitalism in some extent becomes volatile or uncontrollable and causes huge
damages in the financial edifice. In case of United States, the investment banks already took
credit from international investors and earned billions of money. However, it was unexpected to
them that there should always be an alternative plan in case of facing huge problem. Lack of
understanding of the situation and more ambitious aspiration created bankruptcy in the
investment banks when the price of the houses went down. The house owners found that it was
not justified to pay huge amount of money when they could buy a new one. Therefore, they

6INTERNATIONAL BUSINESS MANAGEMENT
ransacked those houses and the rate was increasing in a rapid pace. A total chaos in the financial
system made the investment banks declared them bankrupt as they had assets but the demand
was less. From that point of view, Yilmazer, Babiarz and Liu (2015) advocated that it was in the
process of capitalism to anticipate the volatile nature of the market. Lack of alternative
assumption created such a financial disaster that bestowed in Capitalism itself.
In this regard, the research of Hoffmann and Lemieux (2016) articulated that it is
important for an international business manager to procure a risk assessment before taking the
decisions. Market volatility is considered to be one of the major challenges for the organisation
in case of dealing with the situation in crisis time. As the nature of capitalism is always step
forward therefore there are some problems that can create obstacles in the process of making
better understanding of the entire situation. Therefore, it is pertinent for the international
business managers to keep in stock an alternative solution that can be highly valuable in dire
situation. In fact, the financial sector is highly volatile and the frequent ups and downs in the
market require further smart approach by the international business managers. In this regard,
direct negotiations with the investors should be avoided and make a loop or chain of process so
that the damage will be lesser.
Answer 5
Apple Inc. is considered to be the major or leading mobile phone manufacturer across the
world. The organisation is popular for its unique features and creative ideas. This VRIO analysis
will provide better speculation into the competitive advantage and threats for Apple in the global
market.
Factors Valuable Rare Inimitable Organised

7INTERNATIONAL BUSINESS MANAGEMENT
Brand image Yes Yes Yes Yes
Technology and
invention
Yes Yes Yes Yes
Supply chain
management
Yes Yes No Yes
Organisational
hierarchy
Yes No No Yes
International
distribution
Yes No No Yes
Based on the above understanding, it can be argued that there are some opportunities that Apple
has in order to establish its market further. For an instance, the brand image of the organisation is
of high value. In the international market there are few companies that can challenge the brand
value of Apple. The logo of the company is a cult and the people using Apple also feel a prime
quality of service. This unchallenged brand image of Apple is associated with its technological
advancement and the innovative visionary that no other mobile manufacturing organisation can
afford.
However, there are some challenges that Apple is facing in terms of its global
distribution. Due to the premium quality of the gadgets, the price of the Apple products is higher
than the competitors. Moreover, there is no provision or facility in the developing countries like
India to maximise the customers with a so much high price. The international distribution system
of Apple is also not so good enough to make a better opportunity to enter into markets in the
developing countries.

8INTERNATIONAL BUSINESS MANAGEMENT
There are some benefits of the VRIO framework that help to understand the future
opportunity of the organisation effectively. According to Chatzoglou et al., (2018) the easy to
understand framework of VRIO analytical tools is highly helpful for the readers to understand
the strategic opportunities and threats that the company is facing. The portrayal of the
organisational framework through the 4 elements is time effective and easy to identify the
opportunities and threats for an organisation (Szymaniec-Mlicka, 2014). Moreover, it can be
argued that the VRIO analysis is associated with a strategic framework that can influence the
decision making process for the organisation. In other words, it can be stated that the analytical
framework tries to identify the internal factors that makes the organisation strategically advanced
in position. From that understanding, it can easily understand the strengths and weaknesses of the
company. Based on that understanding, it will be helpful to recommend effective strategy.
Besides this, Knott (2015) opined that both the tangible and intangible factors of an organisation
can be highlighted through the VRIO framework. As a result of that it projects both the external
and internal factors that influence the organisation intensely (Aghazadeh, 2015). Based on those
understanding, it is very easy to highlight the opportunities and threats of an organisation and the
way those factors can influence the farm in near future. Therefore, it can be argued that VRIO
framework is highly effective in making a clear understanding of the future competitiveness of a
company and at the same time indicates to resolve the limitations as well.
Answer 6
The competitive edge of the tourism industry in Australia has helped the same in maintaining the
efficiency of the operations as per the needs of sustenance. Forsyth et al. (2014) stated that the
growth in the travel and tourism industry has contributed largely to the GDP of Australia by 49.7

9INTERNATIONAL BUSINESS MANAGEMENT
billion computed in the year 2017. The discussion will undertake a review of the tourism
industry in Australia through the utilization of the Porter’s Diamond model.
Firm strategy, structure and rivalry
The development of the tourism industry in Australia is chiefly based on the perfect
competition that is faced by the same while operating in the international markets. The diverse
range of service offerings of the Australian tourism industries has helped the same in upholding
the efficiency of the operations. The tourism developments in Philippines and other developing
economies pose a serious threat of competition to the Australian tourism industry (Mahadevan,
2014).
Demand conditions
The maximization of demand relating to adrenaline sports and interests relating to the
Great Barrier Reef has attracted the attention of most of the tourists from all around the world.
Forsyth et al. (2014) stated that the maximization of the demand helps an organization in
positioning their services as per the needs and preferences of the customers. In this connection, it
has been noted that there was a growth in the tourism activities from 6.1% in the year 2017 to
6.7% at the year 2018 (Mistilis, Buhalis & Gretzel, 2014). The growth of tourism activities in
Australia has also contributed to the GDP of the nation.
Related and supporting industries
The BPO and networking industries support the smooth functioning of the tourism
industry in Australia. The different paradigm of change carried out by the organization are
depends on better functioning of the entire process based on the objectives of the business.

10INTERNATIONAL BUSINESS MANAGEMENT
Mahadevan (2014) stated that the supporting industries supports the smooth functioning of a
concerned industry while operating in diverse international markets. Therefore, the supporting
industries has helped the Australian tourism industry in attracting the attention of the tourists
through application of IT solutions.
Factor conditions
The factor conditions that are faced by the tourism industry of Australia is dependent on
the evaluation of the physical resources, capital expenditure and infrastructural capabilities. The
maximization of CAPEX in the different infrastructural growth elements has helped the
Australian tourism industry in upholding the efficiency of the operations through upgradation of
physical resources (Dredge & Jamal, 2013). On the other hand, the development of the
hospitality services and accommodations has helped in boosting the Australian tourism industry.
Chance
The changes in the preferences and tastes of the tourists will uphold a better chance for
the tourism industry in Australia. Therefore, the diversity in the service propositions is
maintained by the industry for maintaining flawless functioning of the tourism activities as per
the needs of the tourists.
Government
The imposition of strict government legislations relating to sustainable tourism practices
might restrict the unnatural growth of the tourism activities in Australia. On the other hand, the
sustainability of the practices has helped the industry in diversifying the propositions for
attracting the attention of most of the tourists.

11INTERNATIONAL BUSINESS MANAGEMENT
Answer 7
For the HRs in Canada there are some basic considerations in terms of the government
framework like the workplace health and safety regulation set by the government. In this context,
it can be stated that it is the responsibility of the HRM to deal with the legislative framework and
procuring better environment for the workers so that their rights can be retained effectively.
Moreover, the employment equity rights and human rights are also identified as the major
aspects on which the HR of a foreign organisation must put focus extensively (Zikic, 2015).
Besides this, there are some recruitment and employment regulation that the HRs have to follow
in order to cooperate with the government effectively. In association to this, the cultural factors
are also played pivotal part for the foreign business organisation and HRM. The cultural
differences between the employees in Canada is a bit different in compare to other countries
(Farndale & Sanders, 2017). In Canada, most of the employees enjoys rights and liberty in
course of the business orientation in compare to other countries.
However, there are some specific regulations that the Canadian government only enjoys
and in this context, the organisations are also compelled to follow the process as well. For an
instance, the minimum wages increase practice is considered to be one of the major aspect that
the HRs are followed pre-dominantly. In addition to this, the termination of the employees is not
so easier in Canada. The HR department should follow proper channels and associated with a
number of factors like the labour relation rules, occupational health and safety and the human
rights standards (Lai & Ng, 2014). As a matter of fact, the termination of the workers requires an
advanced written notice and compensation based on the length of consecutive services. Based on
this understanding, it can be argued that the role of the HRM in Canada is more complex than the
regular activities of an HR (Edwards et al., 2016). The protection of the labour rights and the

12INTERNATIONAL BUSINESS MANAGEMENT
government endorsement to safeguard the interests of the employees further pushes the HRM to
get accompanied with the business orientation of the organisation and in this regard, the role of
the HR is highly significant in order to establish better and sustainable business environment for
both the organisation and the employees (Pohler & Willness, 2014).

13INTERNATIONAL BUSINESS MANAGEMENT
Reference
Aghazadeh, H. (2015). Strategic marketing management: Achieving superior business
performance through intelligent marketing strategy. Procedia-Social and Behavioral
Sciences, 207, 125-134.
Charman, A. J., Petersen, L. M., Piper, L. E., Liedeman, R., & Legg, T. (2017). Small area
census approach to measure the township informal economy in South Africa. Journal of
Mixed Methods Research, 11(1), 36-58.
Chatzoglou, P., Chatzoudes, D., Sarigiannidis, L., & Theriou, G. (2018). The role of firm-
specific factors in the strategy-performance relationship: Revisiting the resource-based
view of the firm and the VRIO framework. Management Research Review, 41(1), 46-73.
Cohen, P. N. (2014). Recession and divorce in the United States, 2008–2011. Population
research and policy review, 33(5), 615-628.
Cox, M. (2017). The rise of populism and the crisis of globalisation: Brexit, Trump and beyond.
Retrieved from http://eprints.lse.ac.uk/86880/7/Cox_Rise%20of%20populism
%20published_2018.pdf
Dredge, D., & Jamal, T. (2013). Mobilities on the Gold Coast, Australia: Implications for
destination governance and sustainable tourism. Journal of Sustainable Tourism, 21(4),
557-579.
Edwards, T., Sanchez-Mangas, R., Jalette, P., Lavelle, J., & Minbaeva, D. (2016). Global
standardization or national differentiation of HRM practices in multinational companies?

14INTERNATIONAL BUSINESS MANAGEMENT
A comparison of multinationals in five countries. Journal of International Business
Studies, 47(8), 997-1021.
Essletzbichler, J., Disslbacher, F., & Moser, M. (2018). The victims of neoliberal globalisation
and the rise of the populist vote: a comparative analysis of three recent electoral
decisions. Cambridge Journal of Regions, Economy and Society, 11(1), 73-94.
Farndale, E., & Sanders, K. (2017). Conceptualizing HRM system strength through a cross-
cultural lens. The International Journal of Human Resource Management, 28(1), 132-
148.
Forsyth, P., Dwyer, L., Spurr, R., & Pham, T. (2014). The impacts of Australia's departure tax:
Tourism versus the economy?. Tourism Management, 40, 126-136.
Gantz, D. (2017). Renegotiating the EU-UK Trade Relationship Lessons from NAFTA.
Retrieved from https://www.cigionline.org/sites/default/files/documents/Brexit%20Series
%20Paper%20no.4.pdf
Gordon, I. R. (2018). In what sense left behind by globalisation? Looking for a less reductionist
geography of the populist surge in Europe. Cambridge Journal of Regions, Economy and
Society, 11(1), 95-113.
Haw, C., Hawton, K., Gunnell, D., & Platt, S. (2015). Economic recession and suicidal
behaviour: possible mechanisms and ameliorating factors. International Journal of Social
Psychiatry, 61(1), 73-81.

15INTERNATIONAL BUSINESS MANAGEMENT
Hoffmann, F., & Lemieux, T. (2016). Unemployment in the Great Recession: a comparison of
Germany, Canada, and the United States. Journal of Labor Economics, 34(S1), S95-
S139.
Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources?. Management
Decision, 53(8), 1806-1822.
Lai, T. K., & Ng, T. (2014). The impact of product market competition on training provision:
Evidence from Canada. Canadian Journal of Economics/Revue canadienne
d'économique, 47(3), 856-888.
Mahadevan, R. (2014). Understanding senior self-drive tourism in Australia using a contingency
behavior model. Journal of Travel Research, 53(2), 252-259.
Mistilis, N., Buhalis, D., & Gretzel, U. (2014). Future eDestination marketing: perspective of an
Australian tourism stakeholder network. Journal of Travel Research, 53(6), 778-790.
Pohler, D., & Willness, C. (2014). Balancing interests in the search for occupational legitimacy:
The HR professionalization project in Canada. Human Resource Management, 53(3),
467-488.
Rodrik, D. (2018). Populism and the economics of globalization. Retrieved from
https://drodrik.scholar.harvard.edu/files/dani-rodrik/files/populism_and_the_economics_
of_globalization.pdf
Rogerson, C. M. (2016). South Africa’s informal economy: Reframing debates in national
policy. Local Economy, 31(1-2), 172-186.

16INTERNATIONAL BUSINESS MANAGEMENT
statssa.gov.za. (2018). Quarterly Labour Force Survey – QLFS Q2:2018 | Statistics South Africa.
Retrieved from http://www.statssa.gov.za/?p=11361
Stavrakakis, Y., Katsambekis, G., Nikisianis, N., Kioupkiolis, A., & Siomos, T. (2017). Extreme
right-wing populism in Europe: revisiting a reified association. Critical Discourse
Studies, 14(4), 420-439.
Szymaniec-Mlicka, K. (2014). Resource-based view in strategic management of public
organizations–a review of the literature. Management, 18(2), 19-30.
tradingeconomics.com. (2019). South Africa Labor Force Participation Rate. Retrieved from
https://tradingeconomics.com/south-africa/labor-force-participation-rate
Yilmazer, T., Babiarz, P., & Liu, F. (2015). The impact of diminished housing wealth on health
in the United States: Evidence from the Great Recession. Social science & medicine, 130,
234-241.
Zikic, J. (2015). Skilled migrants' career capital as a source of competitive advantage:
implications for strategic HRM. The International Journal of Human Resource
Management, 26(10), 1360-1381.
Zourides, H. (2018). The informal sector in SA in 2018. Retrieved from
https://www.supermarket.co.za/SR_Downloads/S&R%202018-6_Informal%20sector.pdf

17INTERNATIONAL BUSINESS MANAGEMENT
Appendix
Appendix 1
Figure 1: Porter’s diamond model
(Source: Mahadevan, 2014)

18INTERNATIONAL BUSINESS MANAGEMENT
Appendix 2
Figure 2: Tourists visiting Australia every year
(Source: Mahadevan, 2014)

19INTERNATIONAL BUSINESS MANAGEMENT
Appendix 3
Figure 3: South African Labour force
(statssa.gov.za, 2018)