When bringing the vehicles to the South African market, SOLA will need to conduct extensive market research to identify potential customers and purchasing trends and preferences. Because South Africans are notoriously brand-conscious, this is especially true for lesser-known firms. Because the market is so fragmented, understanding how to segment it is crucial for choosing where and how new products should be placed. Like those of the other BRICS countries, South Africa’s imports are dominated by transportation and travel services, with a few additional commercial services thrown in for good measure. Surprisingly, royalties and licensing are a far greater category in the United States than in other countries. (Shepherd et al., 2017).
Malgas and Zondi (2021) aimed to identify the critical competitive criteria that distinguish foreign national small business retailers from local South African small business retailers regarding how they run their firms. In the two townships(Delft and Eindhoven) in Capetown, the data revealed an increase in foreign national stores and a decrease in local retailers. Migrant retailers had a competitive advantage over native businesses, according to the research. According to the survey, in comparison to their migrant trader colleagues, most local traders had a lesser educational level. In addition, the study found that the majority of local small business retailers have never had a business finance mentor over their whole trading career. (Malgas & Zondi, 2021)
I would recommend Direct Exporting to SOLA, the most straightforward technique that involves producing the goods in America simply shipping to South Africa. This market entry technique is ideal for start-up businesses that lack the financial resources to take risks, as in the case of SOLA. It is also simpler for them to hire agents or distributors to handle the exporting and promotion of new products in South Africa. However, one big issue is that businesses may not respond to client communications as rapidly as a local representative. (Business Wire, 2018) Despite the several BRIC foreign investment treaties in South Africa’s favor, BRIC investments are lagging. South Africa should ease entry and offer special incentives in critical sectors such as energy, health, food production, and mining; create a more stable and transparent legal environment; establish special and industrial economic zones, and have a clear foreign investment policy to increase direct investment flows. (Mazenda & Masiya, 2021)
Travel accounts for nearly two-thirds of South Africa’s service exports, with transportation (related to goods trade) accounting for 20% and other business services accounting for 13%; SOLA’s vehicle characteristics and price will suit South Africa. Other industries account for a small percentage of total service exports. As in most other BRICS countries, this sectoral distribution of services exports is very standard. It only gives the new services sector a limited number of options through other business services. The quality of a country’s market infrastructure varies dramatically. Advanced economies, such as the United States, have large pools of skilled market intermediaries and efficient contract-enforcing mechanisms.
In contrast, emerging economies, such as South Africa have untrained intermediates and inefficient legal systems. Firms cannot effortlessly transfer their domestic strategy to emerging markets because intermediary services are absent or inadequately skilled. (Country Commercial Guide, 2021)
Conditions are favoring direct exporting of SOLA vehicles in South Africa. South Africa has limited sales potential, little product adaptation required, distribution channels close to plants, high production costs, liberal import policies, and high political risk. The advantages include minimizing risk and investment, speed of entry, and SOLA to maximize scale using existing facilities. The disadvantages, however, include trade barriers & tariffs that add to costs, involve transport costs, have limited access to local information, and the locals will view the company as an outsider. (Mulenga, 2013)
Managing the International Operation
South Africa is a diverse country with people from various cultures, such as Sotho, Zulu, Swazi, Xhosa, Ndebele, Venda, Hindu, Afrikaans, and Chinese; therefore, I would advise SOLA to have “polycentric staffing frameworks.” It is essential to keep in mind that these cultures and belief systems might impact how employees behave. Because of the country’s growing economy, South African enterprises, particularly senior management, are increasingly adopting European or Western organizational culture approaches. These models frequently fail to account for different cultures and behaviors, resulting in misunderstandings between a company and the people that work for it. Employee and management performance and communication improve as cultural diversity is better understood. It is critical for any business, large or small, to run smoothly. Ending cultural segregation necessitates a more holistic organizational culture, which is crucial in South Africa, where individuals come from hundreds of different cultures. (Expat Arrivals, 2021)
The ethnicity, language, and customs of South African businesspeople are all very different. While doing business in South Africa, the most crucial thing for SOLA is to grasp the nuances of the country’s business culture. A few standard procedures will arise over time, such as Cultural subtleties in which one city’s working world contrasts with that of rural equivalents and other cities. The majority of South Africans prefer to do business with somebody they’ve met before. They are also friendly and welcoming, and a little relationship-building can help cement business deals. (Expat Arrivals, 2021)
Hard work is valued in South Africa, and people who have achieved success are praised, but other parts of life, such as family, excellent living, and friendship, are prioritized. Punctuality is crucial, however, depending on the culture of the client, patience may be required. For example, government figures are frequently late. With the possible exception of some larger firms and more established financial institutions, the South African work environment is more easygoing and friendly than expats may be accustomed to. Nonetheless, there is still a distinct management structure in place, and it is critical to demonstrate respect for senior executives and coworkers. (Expat Arrivals, 2021)
South Africa is one of the best and most exciting areas to do business, as it is one of Africa’s most developed countries. Doing business in South Africa has several advantages, including labor costs that are significantly cheaper than in other emerging economies. When compared to other emerging markets, it has a meager corporate tax rate. Rent, labor prices, land, human resources, transportation, and basic living expenses are additional costs that differ by province. (Mulenga, 2013)
South Africa has one of Africa’s most modern and vast infrastructures. This infrastructure is vital to the South African economy, and neighboring countries rely on it as well. South Africa is a cost-competitive country; it was placed 53rd in the world as the most competitive country, placing it second in Africa behind Mauritius (45th). The overall investment climate remains favorable. For investors seeking a footing in Africa, South Africa is regarded as a low-risk investment option. (Mulenga, 2013)
Business Wire, I. R. (2018, April 10). Perfect market entry strategies to enter International Markets: Infiniti Research. Perfect Market Entry Strategies to Enter International Markets | Infiniti Research | Business Wire. Retrieved October 26, 2021, from https://www.businesswire.com/news/home/20180410005826/en/Perfect-Market-Entry-Strategies-to-Enter-International-Markets%C2%A0-Infiniti-Research.
Country Commercial Guide, S. A. (2021, October 9). South Africa – market opportunities. International Trade Administration | Trade.gov. Retrieved October 26, 2021, from https://www.trade.gov/country-commercial-guides/south-africa-market-opportunities.
Expat Arrivals, S. africa. (2021). Doing business in South Africa. Doing Business in South Africa | Expat Arrivals. Retrieved October 26, 2021, from https://www.expatarrivals.com/africa/south-africa/doing-business-south-africa.
Malgas, M., & Zondi, W. .B. (2021). Competitive factors between local and foreign national small business retailers in South Africa: The case of cape town’s townships. Journal of Business & Retail Management Research, 15(02). https://doi.org/10.24052/jbrmr/v15is02/art-06
Mazenda, A., & Masiya, T. (2021). BRIC bilateral direct foreign investment relations with South Africa: A critical review. Insight on Africa, 097508782110128. https://doi.org/10.1177/09750878211012881
Mulenga, C. (2013). Market Entry to South Africa. Valkeakoski International Business Management. Retrieved October 26, 2021, from https://www.theseus.fi/bitstream/handle/10024/68607/final%20final%20%20thesis2.pdf.
Shepherd, B., Sotelo, J., Lan, J., & Zhao, Q. (2017). BRICS countries: Emerging players in global services trade. Geneva, 52.