I'm not a goood writer, and need someone to review my paper, and correct if something is wrong.
Its like 9-10pages.
Its on South Africa - and starbucks.
When people think coffee, they mean Starbucks. In United States Starbucks coffee can be bought in almost every city, furthermore Starbucks is also available in most countries throughout the globe. However South Africa is one country that Starbucks have yet to engage in business. If Starbucks launches its stores in South Africa, will it be successful or not?
Background
South Africa the most developed country in the African continent, constitute of about 1.3 million square kilometers, has a population of about 47 million people, but the majority at around %80 are black. The country is lead by a Parliamentary democracy, meaning the power is share by the president, and the parliament.
The country itself is very rich with diamonds, gold, and other essential elements. According to Encarta.com: ?South Africa is the world?s largest producer of gold, with almost all of it coming from the Witwatersrand. Gold is mined to depths below 3,000 m (10,000 ft), making production expensive. Uranium is also extracted commercially in the Witwatersrand. Vast, easily worked coal seams occur between Lesotho and Swaziland, and South Africa has become a leading coal exporter.?
President Mbeki has promised to institute new systems of education, economics institutions, to allow this once apartheid country to excel with its deep resources, and large amount of people.
Starbucks was created by Howard Schultz, while in a trip to Italy he foresaw the potential for a European style coffee bar experience in the United States. In 1985 Shultz funds the first store the Il Giornale, which later will be knows as Starbucks when in 1987 he buys his former employers and renames the store as Starbucks.
From about 1987 to 1992 when Starbucks goes public under trade name ?SBUX? Shultz opened more than 165 stores throughout the west coast by that year, but in less than 12 years later Starbucks evolves into an almost 10,000 store company, with a global brand that rival that of Coke.
What made Starbucks so successful, and popular are the coffee product lines they offer. The flavors range from classic coffee to iced espressos, caramel mocha, and newer types like frappuchinos. Starbucks also offers pastries and other types of drinks if coffee is not desired. Every store shares the simplistic tranquil environment you need while sipping a delicious smooth flavored coffee.
Business Environment
The economic structure of South Africa can be categorized into two parts; that of a developing country, and that of an industrialized country. The energy, transmission and distribution, forest Industry, telecom, and other industries represent South Africa?s industrialized, developed side. However the lack of employment, high levels of poverty and the increase in Africans infected with the Aids virus has slowed the booming economy illustrating the urgency to create a governmental program to help the %20 of the population suffering.
Not to be discouraged South Africa is of great importance to the global international finance. Furthermore the business environment is structured very similar to other continents like North America. Free enterprise, ?the freedom of private businesses to operate competitively for profit with minimal government regulation? as explained by Dictionary.com, is allowed except in the programs the government owns.
According to Werksman South African business guide: ?South African entrepreneurs and business professionals are generally highly educated skilled and competitive.? The apartheid was only abolished nine years ago, meaning that the country is beginning to reestablishing itself, but the process can take generations to make a large enough impact.
The problem with the business environment in South Africa is the high rate of crime. Because when crime is high people become cautious, it is possible that Starbucks become known as target locations, instead of a tranquil environment.
However there are opportunities in countless fields such as, as listed in exportinfo.org:
? Automotive component industry
? Plastics
? Tourism
? Clothing and textiles
? Information technology
? Manufactured jewelry
? Stainless steel
? Telecommunications Equipment
? Telecommunications Services
? Information Technology
? Computer Software
? Computer Services
? Medical Equipment
? Chemical products
? Timber
As a sign of comfort, the United States currently established over 500 companies
in South Africa. What is the opportunity that intrigues United States?
Location and affordable labor.
South Africa is located in the south of the African continent. This location is very important for business that relies on export for its income. Since the African continent is situated in the middle of the world, having presences in South Africa establishes ones business with the abilities for faster access, and delivery.
South Africa has a population of almost 50 million, high unemployment, and a exchange of rand to dollar of about 1 dollar for 6.145 Rands. This can be useful for companies that need affordable labor, and need proximity to all countries, without relying in the labor of Japan, Taiwan, or China. Affordable labor is a necessity for companies to offer a price on products low enough for the consumers to be able to afford. If the price of labor would rise, then prices on goods will do the same.
There are many programs, acting as incentives for foreign investors to invest in South Africa. Below is a list of some of the programs:
? IDC ? Industrial Development Corporation
? SBDC ? Small Business Development Corporation
? SDI ? Spatial Development Initiative
? Tax Holiday Scheme
? EMIA ? Export Marketing and Investment Assistance
? Customs Rebates provision.
Political Stability
The South African region had been under a political instability since the arrival of the British in the 1800?s. The climax was reached after a war broke out in 1994, and more than 1 million people were killed in a genocide. In the same year, a new government took place which marked the start of an era without apartheid, and the will of democracy, which Nelson Mandela became president.
Nowadays South Africa has a parliamentary democracy. The power is divided between the parliament, and the current president Thabo Mbeki. The government is divided into two branches: the National Assembly, and the National Council of Provinces. There are 3 political powers:
1. The African National Congress ? ANC
2. The National Party ? NP
3. The Inkatha Freedom Party ? IFP
The ANC is the biggest party with over %70 of votes, while the NP received %20 in the 1999 election.
The stability of the region has improved greatly, as results of dedicated social programs to help the poor, to educate the population, and to ease unemployment. In a March article in Reuters.com unemployment rate fell by almost %2 from 2004 to this year: ?South Africa's jobless rate dipped to 26.2 percent in the third quarter of 2004, official data showed on Thursday, a hopeful sign in the battle against the main scourge of the continent's biggest economy. A quarter of a million jobs were created between March and September last year -- a development which Statistics South Africa described as "significant" and took the number of employed people up to 11.6 million.?
President Mbeki is still facing the endless years of apartheid, which might hunt them for more year to come. The rise in Aids has put a strain the political party, because of the lack of treatment to contain the disease from spreading. Aids have become an epidemic in South Africa with almost %20 of the population.
The risk for instability like in the previous decade is slim, as long as President Mbeki, and the government continues battling Aids, poverty, and unemployment.
Economic Infrastructure
South Africa economic has a GDP (Gross Domestic Product) of $213 Billion, with a growth rate of almost %4 annually. The GDP per capita is only $3,480. In an article in Mail & Guardian online, they commented on the outlook of South Africa: ?"Economic growth is above 4%, whilst inflation is at 3%. Consumer borrowing rates hover around 20-year lows and the long-term investors are happy to lend to government at about 8% -- also the lowest in more than two decades," Mohr said.
The economic outlook is bright especially with lower unemployment, and higher annual growth, South Africa has great investment potential. According to Cia.gov: ?South Africa is a middle-income, emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors; a stock exchange that ranks among the 10 largest in the world; and a modern infrastructure supporting an efficient distribution of goods to major urban centers throughout the region.?
South Africa potential is in the facto of the disparity in the number. In relation to the African continent as charted in buyusa.gov:
? 6% of the population
? 50% of purchasing power
? 18% of continent-wide GDP
? 50+% of electricity generated
? 45% of mineral production
? South Africa has the largest and most diversified economy in the region and on the African continent.
South Africa has the power to change balance in the continent, the economic infrastructure allows foreign investment and opportunity, but because the economic is such that ?50% of the population earn only 11% of total domestic income?, it become increasingly difficulty to start consumer business if it is not a necessity.
Cultural Aspects
South Africa has eleven spoken languages: Afrikaans, English, Ndebele, North Sotho, South Sotho, Swati, Tsonga, Tswana, Venda, Xhosa and Zulu.
The income varies between the populations, as %50 on makes %11 of the GPD.
Education varies between those who grew up pre-apartheid times, and those under the new democracy. Poverty, Aids, and unemployment provides daily hardship for South Africa.
Sports events are very important to South Africa, especially economic and psychological. In the SouthAfricanEmbassy.fl they explain the importance of sporting events: ?Sports play an important role in economic development as evidenced by the success of the Cricket World Cup hosted in South Africa in February and March 2003, which attracted some 20 000 foreign spectators. This led to creation of 3500 jobs during the World Cup.?
Some customs are very in common with the American customs. Shaking hand as greetings. Calling people by first name are only allowed once given permission. Africans are very punctual. With the rise in education, and diminishing poverty, the diversities of the South African population will be combined to allow a much diverse culture.
Can Starbucks succeed in South Africa?
Starbucks is a concept that worked well in almost all of the countries that was expanded to. However with the strict laws foreign laws, high crime and poverty, and the inequality of income throughout the population, Starbucks potential target clientele could be less than %10 of the population. Although it is almost $5 million Africans, the risk of investment outweights the risk for annual return.
Starbucks has a laid back, peaceful set of mind, but the African all experience hardship, and they might not appreciate because of their brought up culture, since the time of apartheid. Another problem lies in the fact that if Starbucks becomes popular, the store might become associated as a crime target because of its popularity or amount of frequency of people.
Its like 9-10pages.
Its on South Africa - and starbucks.
When people think coffee, they mean Starbucks. In United States Starbucks coffee can be bought in almost every city, furthermore Starbucks is also available in most countries throughout the globe. However South Africa is one country that Starbucks have yet to engage in business. If Starbucks launches its stores in South Africa, will it be successful or not?
Background
South Africa the most developed country in the African continent, constitute of about 1.3 million square kilometers, has a population of about 47 million people, but the majority at around %80 are black. The country is lead by a Parliamentary democracy, meaning the power is share by the president, and the parliament.
The country itself is very rich with diamonds, gold, and other essential elements. According to Encarta.com: ?South Africa is the world?s largest producer of gold, with almost all of it coming from the Witwatersrand. Gold is mined to depths below 3,000 m (10,000 ft), making production expensive. Uranium is also extracted commercially in the Witwatersrand. Vast, easily worked coal seams occur between Lesotho and Swaziland, and South Africa has become a leading coal exporter.?
President Mbeki has promised to institute new systems of education, economics institutions, to allow this once apartheid country to excel with its deep resources, and large amount of people.
Starbucks was created by Howard Schultz, while in a trip to Italy he foresaw the potential for a European style coffee bar experience in the United States. In 1985 Shultz funds the first store the Il Giornale, which later will be knows as Starbucks when in 1987 he buys his former employers and renames the store as Starbucks.
From about 1987 to 1992 when Starbucks goes public under trade name ?SBUX? Shultz opened more than 165 stores throughout the west coast by that year, but in less than 12 years later Starbucks evolves into an almost 10,000 store company, with a global brand that rival that of Coke.
What made Starbucks so successful, and popular are the coffee product lines they offer. The flavors range from classic coffee to iced espressos, caramel mocha, and newer types like frappuchinos. Starbucks also offers pastries and other types of drinks if coffee is not desired. Every store shares the simplistic tranquil environment you need while sipping a delicious smooth flavored coffee.
Business Environment
The economic structure of South Africa can be categorized into two parts; that of a developing country, and that of an industrialized country. The energy, transmission and distribution, forest Industry, telecom, and other industries represent South Africa?s industrialized, developed side. However the lack of employment, high levels of poverty and the increase in Africans infected with the Aids virus has slowed the booming economy illustrating the urgency to create a governmental program to help the %20 of the population suffering.
Not to be discouraged South Africa is of great importance to the global international finance. Furthermore the business environment is structured very similar to other continents like North America. Free enterprise, ?the freedom of private businesses to operate competitively for profit with minimal government regulation? as explained by Dictionary.com, is allowed except in the programs the government owns.
According to Werksman South African business guide: ?South African entrepreneurs and business professionals are generally highly educated skilled and competitive.? The apartheid was only abolished nine years ago, meaning that the country is beginning to reestablishing itself, but the process can take generations to make a large enough impact.
The problem with the business environment in South Africa is the high rate of crime. Because when crime is high people become cautious, it is possible that Starbucks become known as target locations, instead of a tranquil environment.
However there are opportunities in countless fields such as, as listed in exportinfo.org:
? Automotive component industry
? Plastics
? Tourism
? Clothing and textiles
? Information technology
? Manufactured jewelry
? Stainless steel
? Telecommunications Equipment
? Telecommunications Services
? Information Technology
? Computer Software
? Computer Services
? Medical Equipment
? Chemical products
? Timber
As a sign of comfort, the United States currently established over 500 companies
in South Africa. What is the opportunity that intrigues United States?
Location and affordable labor.
South Africa is located in the south of the African continent. This location is very important for business that relies on export for its income. Since the African continent is situated in the middle of the world, having presences in South Africa establishes ones business with the abilities for faster access, and delivery.
South Africa has a population of almost 50 million, high unemployment, and a exchange of rand to dollar of about 1 dollar for 6.145 Rands. This can be useful for companies that need affordable labor, and need proximity to all countries, without relying in the labor of Japan, Taiwan, or China. Affordable labor is a necessity for companies to offer a price on products low enough for the consumers to be able to afford. If the price of labor would rise, then prices on goods will do the same.
There are many programs, acting as incentives for foreign investors to invest in South Africa. Below is a list of some of the programs:
? IDC ? Industrial Development Corporation
? SBDC ? Small Business Development Corporation
? SDI ? Spatial Development Initiative
? Tax Holiday Scheme
? EMIA ? Export Marketing and Investment Assistance
? Customs Rebates provision.
Political Stability
The South African region had been under a political instability since the arrival of the British in the 1800?s. The climax was reached after a war broke out in 1994, and more than 1 million people were killed in a genocide. In the same year, a new government took place which marked the start of an era without apartheid, and the will of democracy, which Nelson Mandela became president.
Nowadays South Africa has a parliamentary democracy. The power is divided between the parliament, and the current president Thabo Mbeki. The government is divided into two branches: the National Assembly, and the National Council of Provinces. There are 3 political powers:
1. The African National Congress ? ANC
2. The National Party ? NP
3. The Inkatha Freedom Party ? IFP
The ANC is the biggest party with over %70 of votes, while the NP received %20 in the 1999 election.
The stability of the region has improved greatly, as results of dedicated social programs to help the poor, to educate the population, and to ease unemployment. In a March article in Reuters.com unemployment rate fell by almost %2 from 2004 to this year: ?South Africa's jobless rate dipped to 26.2 percent in the third quarter of 2004, official data showed on Thursday, a hopeful sign in the battle against the main scourge of the continent's biggest economy. A quarter of a million jobs were created between March and September last year -- a development which Statistics South Africa described as "significant" and took the number of employed people up to 11.6 million.?
President Mbeki is still facing the endless years of apartheid, which might hunt them for more year to come. The rise in Aids has put a strain the political party, because of the lack of treatment to contain the disease from spreading. Aids have become an epidemic in South Africa with almost %20 of the population.
The risk for instability like in the previous decade is slim, as long as President Mbeki, and the government continues battling Aids, poverty, and unemployment.
Economic Infrastructure
South Africa economic has a GDP (Gross Domestic Product) of $213 Billion, with a growth rate of almost %4 annually. The GDP per capita is only $3,480. In an article in Mail & Guardian online, they commented on the outlook of South Africa: ?"Economic growth is above 4%, whilst inflation is at 3%. Consumer borrowing rates hover around 20-year lows and the long-term investors are happy to lend to government at about 8% -- also the lowest in more than two decades," Mohr said.
The economic outlook is bright especially with lower unemployment, and higher annual growth, South Africa has great investment potential. According to Cia.gov: ?South Africa is a middle-income, emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors; a stock exchange that ranks among the 10 largest in the world; and a modern infrastructure supporting an efficient distribution of goods to major urban centers throughout the region.?
South Africa potential is in the facto of the disparity in the number. In relation to the African continent as charted in buyusa.gov:
? 6% of the population
? 50% of purchasing power
? 18% of continent-wide GDP
? 50+% of electricity generated
? 45% of mineral production
? South Africa has the largest and most diversified economy in the region and on the African continent.
South Africa has the power to change balance in the continent, the economic infrastructure allows foreign investment and opportunity, but because the economic is such that ?50% of the population earn only 11% of total domestic income?, it become increasingly difficulty to start consumer business if it is not a necessity.
Cultural Aspects
South Africa has eleven spoken languages: Afrikaans, English, Ndebele, North Sotho, South Sotho, Swati, Tsonga, Tswana, Venda, Xhosa and Zulu.
The income varies between the populations, as %50 on makes %11 of the GPD.
Education varies between those who grew up pre-apartheid times, and those under the new democracy. Poverty, Aids, and unemployment provides daily hardship for South Africa.
Sports events are very important to South Africa, especially economic and psychological. In the SouthAfricanEmbassy.fl they explain the importance of sporting events: ?Sports play an important role in economic development as evidenced by the success of the Cricket World Cup hosted in South Africa in February and March 2003, which attracted some 20 000 foreign spectators. This led to creation of 3500 jobs during the World Cup.?
Some customs are very in common with the American customs. Shaking hand as greetings. Calling people by first name are only allowed once given permission. Africans are very punctual. With the rise in education, and diminishing poverty, the diversities of the South African population will be combined to allow a much diverse culture.
Can Starbucks succeed in South Africa?
Starbucks is a concept that worked well in almost all of the countries that was expanded to. However with the strict laws foreign laws, high crime and poverty, and the inequality of income throughout the population, Starbucks potential target clientele could be less than %10 of the population. Although it is almost $5 million Africans, the risk of investment outweights the risk for annual return.
Starbucks has a laid back, peaceful set of mind, but the African all experience hardship, and they might not appreciate because of their brought up culture, since the time of apartheid. Another problem lies in the fact that if Starbucks becomes popular, the store might become associated as a crime target because of its popularity or amount of frequency of people.
