Critically discuss the obstacles and drawbacks in doing business in Africa.
There are some key strategic issues facing Africa as a whole, and Sub-Saharan Africa in particular, which present
challenges to investors and business in Africa:
● Lack of infrastructure
This is a significant damper on investment and business in Africa. For businesses, the lack of infrastructure may
translate into a supply chain and distribution system that is inadequate and disorganised.
● Lack of industrial development
Most of the member countries apply primary resource development and then export the raw product for secondary
and tertiary economic processing. This results in extensive imports as the final products then need to be brought
back into these countries for local consumption.
● Political instability
From a business perspective, political instability in Africa takes the form of unpredictable government decision
making that leads to volatility or armed conflict, making foreign investment extremely risky at best.
● High levels of poverty
In most African countries, a significant portion of the population fall in the ‘the bottom of the pyramid’ economic
bracket. The bottom of the pyramid is those families surviving on less than the international poverty line of $2 per
day. Those living at the bottom of the pyramid often endure poor living conditions.
● Corruption
The cumulative effect of endemic corruption on business and the African economy is massive. According to
Transparency International’s 2012 Corruption Perception Index (CPI), 90% of African countries scored below the
‘pass mark’. Corruption destroys lives and communities, and undermines countries and institutions.
● An inefficient public sector
In 2013, economic growth for the African economy was negative. This dismal failure to alleviate poverty in
sub-Saharan Africa can be attributed to an inefficient public sector.
● Lack of key skills
Due to limited access to education at various levels, African markets often present investors with lack of people with
key business skills and an oversupply of semi-skilled and unskilled workers.
Describe the four pillars of corporate sustainability.
Corporate sustainability has four pillars:
1) Sustainable development
The notion of sustainable development had its roots in the triple bottom line of economics, environment and society.
Sustainable business hinges on three main factors, namely ethical profits (economic), a healthy physical environment
(environmental) and healthy communities (social). A holistic model of a sustainable business includes:
environmental context
social context
economic context
organisational context
stakeholders
strategic fit
2) Corporate social responsibility (CSR)
CSR refers to the role of business in society. It is based on the principle that managers have an ethical obligation to
consider and address the needs of society, not solely the interests of the shareholders or their own self-interest.
3) Stakeholder management
Stakeholders are those entities that can affect or be affected by the organisation's actions. Not all stakeholders have
the same effect or are entitled to the same consideration. The purpose of a stakeholder management approach is to
help the organisation to prioritise and develop strategies for dealing with stakeholders
4) Business ethics (corporate accountability theory)
Ethical business is an essential element of corporate accountability. It is ultimately up to every organisation to define
what ethical business means in its context and how it will deal with it. There are some obvious guidelines as to what
would constitute unethical business practices:
Behaviours that are illegal or in contravention of regulations or legal contracts.
Discriminatory and unfair practices. For example, in the appointment of employees.
Misleading stakeholders deliberately.
Deliberately behaving in ways that are detrimental to stakeholders.
Being unduly influenced in, for example, purchasing and recruitment practices.
In strategic management it is important to have a code of conduct that will guide the actions of management.
, Explain what sustainable strategies are and why they are important.
The purpose of sustainable strategy is to generate a maximum increase in the outputs, turnover and other aspects of
a company, the consumers of the company, and employee value by embracing opportunities in the macro- and
market environments and managing risks derived from environmental and social developments.
The following six elements are important in developing sustainable strategies:
1) Environmental context – For strategies to be sustainable, they should not harm the physical environment in
which the organisation operates.
2) Social context – Sustainable strategies contribute positively to the communities in which they operate.
3) Economic context – This aspect relates to the economic success and contribution of the organisation, typically
measured by financial measures such as profits, return on equity and economic value added.
4) Organisational context – The internal functioning of the organisation is critical to sustainable strategies. This may
relate to strategy implementation processes as well as internal role players such as the board of directors,
management, employee effectiveness, corporate governance, and so on.
5) Stakeholders – Key stakeholders are creditors, directors, employees, government, owners, suppliers, unions and
the community from which the business draws its resources. While it is impossible to satisfy the demands of all
stakeholders, the organisation must, as far as possible, develop strategies that balance the demands of multiple
stakeholders.
6) Strategic fit – Long-term strategic success is only possible if the strategies of the organisation are aligned with
the internal and external environments, and if processes and capabilities exist to adapt to changes in the
environment.
Define strategy, strategic planning and strategic management
● Strategy:
Strategy can be described as the long-term direction of the organisation, a pattern in a stream of decisions, the
means by which organisations achieve their objectives and the deliberate choice of a set of activities to achieve
competitive advantage.
● Strategic planning:
Strategic planning is the first phase of an integrated strategic management process, based on the concepts of
strategic thinking and strategy, and comprises the following three main decision stages:
(1) Deciding on the future of the organisation
(2) Analysing the organisation's external and internal environments
(3) Selecting appropriate competitive strategies – strategic choice
● Strategic management:
Strategic management involves managers from all parts of the organisation in the formulation and implementation
of strategies. It integrates strategic planning and management into a single process.
Illustrate and explain the strategic management process
The structure of the traditional process approach to strategic management is as follows:
1) Strategic planning or strategy formulation
Deciding on the organisation's strategic direction and its long-term objectives
Analysing the organisation's external and internal environments
Selecting appropriate competitive strategies – strategic choice
2) Strategy implementation or execution requirements
Leadership and culture
Implementation competencies
Learning organisation
Systems, policies and procedures
Organisational architecture and structure
3) Strategy review, feedback and control
Control measures ensuring that strategies are on track
Traditionally the strategic management process is portrayed as a neat, cognitive (rational), logical and sequential
process. This is evident from above structure. The traditional approach stems from microeconomics, and is widely
criticised for its lack of consideration of the role of people at all levels in the organisation and changes in the
environment.
There are some key strategic issues facing Africa as a whole, and Sub-Saharan Africa in particular, which present
challenges to investors and business in Africa:
● Lack of infrastructure
This is a significant damper on investment and business in Africa. For businesses, the lack of infrastructure may
translate into a supply chain and distribution system that is inadequate and disorganised.
● Lack of industrial development
Most of the member countries apply primary resource development and then export the raw product for secondary
and tertiary economic processing. This results in extensive imports as the final products then need to be brought
back into these countries for local consumption.
● Political instability
From a business perspective, political instability in Africa takes the form of unpredictable government decision
making that leads to volatility or armed conflict, making foreign investment extremely risky at best.
● High levels of poverty
In most African countries, a significant portion of the population fall in the ‘the bottom of the pyramid’ economic
bracket. The bottom of the pyramid is those families surviving on less than the international poverty line of $2 per
day. Those living at the bottom of the pyramid often endure poor living conditions.
● Corruption
The cumulative effect of endemic corruption on business and the African economy is massive. According to
Transparency International’s 2012 Corruption Perception Index (CPI), 90% of African countries scored below the
‘pass mark’. Corruption destroys lives and communities, and undermines countries and institutions.
● An inefficient public sector
In 2013, economic growth for the African economy was negative. This dismal failure to alleviate poverty in
sub-Saharan Africa can be attributed to an inefficient public sector.
● Lack of key skills
Due to limited access to education at various levels, African markets often present investors with lack of people with
key business skills and an oversupply of semi-skilled and unskilled workers.
Describe the four pillars of corporate sustainability.
Corporate sustainability has four pillars:
1) Sustainable development
The notion of sustainable development had its roots in the triple bottom line of economics, environment and society.
Sustainable business hinges on three main factors, namely ethical profits (economic), a healthy physical environment
(environmental) and healthy communities (social). A holistic model of a sustainable business includes:
environmental context
social context
economic context
organisational context
stakeholders
strategic fit
2) Corporate social responsibility (CSR)
CSR refers to the role of business in society. It is based on the principle that managers have an ethical obligation to
consider and address the needs of society, not solely the interests of the shareholders or their own self-interest.
3) Stakeholder management
Stakeholders are those entities that can affect or be affected by the organisation's actions. Not all stakeholders have
the same effect or are entitled to the same consideration. The purpose of a stakeholder management approach is to
help the organisation to prioritise and develop strategies for dealing with stakeholders
4) Business ethics (corporate accountability theory)
Ethical business is an essential element of corporate accountability. It is ultimately up to every organisation to define
what ethical business means in its context and how it will deal with it. There are some obvious guidelines as to what
would constitute unethical business practices:
Behaviours that are illegal or in contravention of regulations or legal contracts.
Discriminatory and unfair practices. For example, in the appointment of employees.
Misleading stakeholders deliberately.
Deliberately behaving in ways that are detrimental to stakeholders.
Being unduly influenced in, for example, purchasing and recruitment practices.
In strategic management it is important to have a code of conduct that will guide the actions of management.
, Explain what sustainable strategies are and why they are important.
The purpose of sustainable strategy is to generate a maximum increase in the outputs, turnover and other aspects of
a company, the consumers of the company, and employee value by embracing opportunities in the macro- and
market environments and managing risks derived from environmental and social developments.
The following six elements are important in developing sustainable strategies:
1) Environmental context – For strategies to be sustainable, they should not harm the physical environment in
which the organisation operates.
2) Social context – Sustainable strategies contribute positively to the communities in which they operate.
3) Economic context – This aspect relates to the economic success and contribution of the organisation, typically
measured by financial measures such as profits, return on equity and economic value added.
4) Organisational context – The internal functioning of the organisation is critical to sustainable strategies. This may
relate to strategy implementation processes as well as internal role players such as the board of directors,
management, employee effectiveness, corporate governance, and so on.
5) Stakeholders – Key stakeholders are creditors, directors, employees, government, owners, suppliers, unions and
the community from which the business draws its resources. While it is impossible to satisfy the demands of all
stakeholders, the organisation must, as far as possible, develop strategies that balance the demands of multiple
stakeholders.
6) Strategic fit – Long-term strategic success is only possible if the strategies of the organisation are aligned with
the internal and external environments, and if processes and capabilities exist to adapt to changes in the
environment.
Define strategy, strategic planning and strategic management
● Strategy:
Strategy can be described as the long-term direction of the organisation, a pattern in a stream of decisions, the
means by which organisations achieve their objectives and the deliberate choice of a set of activities to achieve
competitive advantage.
● Strategic planning:
Strategic planning is the first phase of an integrated strategic management process, based on the concepts of
strategic thinking and strategy, and comprises the following three main decision stages:
(1) Deciding on the future of the organisation
(2) Analysing the organisation's external and internal environments
(3) Selecting appropriate competitive strategies – strategic choice
● Strategic management:
Strategic management involves managers from all parts of the organisation in the formulation and implementation
of strategies. It integrates strategic planning and management into a single process.
Illustrate and explain the strategic management process
The structure of the traditional process approach to strategic management is as follows:
1) Strategic planning or strategy formulation
Deciding on the organisation's strategic direction and its long-term objectives
Analysing the organisation's external and internal environments
Selecting appropriate competitive strategies – strategic choice
2) Strategy implementation or execution requirements
Leadership and culture
Implementation competencies
Learning organisation
Systems, policies and procedures
Organisational architecture and structure
3) Strategy review, feedback and control
Control measures ensuring that strategies are on track
Traditionally the strategic management process is portrayed as a neat, cognitive (rational), logical and sequential
process. This is evident from above structure. The traditional approach stems from microeconomics, and is widely
criticised for its lack of consideration of the role of people at all levels in the organisation and changes in the
environment.
