Question

INFORMATION

Shop n Pay is a fast-growing, diversified South African-based retailer dealing in fast moving consumer goods (FMCGs). The recently-appointed operations manager of Shop n Pay, Mr Benedict Msimanga, is currently reviewing all operations management policies of the company and has gathered the following information:

A. Internationalisation strategy

With the recent conclusion of the African Continental Free Trade Agreement (AfCFTA), the company is in the process of expanding its operations to key markets on the African continent. Countries on the radar of Shop n Pay include Kenya, Tanzania and Ethiopia in East Africa, and in West Africa, Ghana, Ivory Coast and Senegal. Market research has revealed that the four countries have favourable tax policies, stable electricity network, relatively good road network and investor-friendly business environment.

2.1 REQUIRED:

Discuss any SIX (6) factors motivating Shop n Pay’s internationalisation of its operations to other countries on the African continent.

Answer 1

Answer:

The various factors that are supposed to be motivating Shop n Pay’s internationalisation of its operations to other countries on the African continent are:

1. Favourable tax policy as discussed in AfCFTA that would help business in saving huge taxes that otherwise would have been incurred for setting up of a plant in the African continent.

2. Stable electricity network that would help the company to operate without the introduction of intermittent production barrier that otherwise would have been introduced in the business if it would have set up plant in some other country as that has been mentioned by AfCFTA.

3. Good infrastructure that would help company in the transportation and other allied activities such as proximity to the market, proximity to suppliers, easy availability of water, electricity, internet, etc.

4. Relatively good road network would help the company in connecting with various other markets and expanding the scope of its business to that market.

5. Investor friendly business environment would ensure receipt of assistance from AfCFTA that would help business in reaping various benefits that would be made applicable to the company through the policies of AfCFTA.

6. Sufficiently high number of customers in the countries mentioned by AfCFTA would help the company in generating higher revenues by serving to the larger customer base.