UNIVERSITY OF SAINT THOMAS DE MOZAMBIQUE

BUSINESS SCHOOL

Natlim Dirce Pereira Manguilaze

Factors that influence the business environment in companies in the hotel and tourism
sector in Maputo city: case of Southern Sun Maputo Hotel and Radisson Blu Hotel

Maputo, July 2020

 UNIVERSITY OF SAINT THOMAS DE MOZAMBIQUE
BUSINESS SCHOOL

Factors that influence the business environment in companies in the hotel and tourism
sector in Maputo city: case of Southern Sun Maputo Hotel and Radisson Blu Hotel

Natlim Dirce Pereira Manguilaze

Supervisor:

Research project to carry out the End of Course Work, to obtain the Degree in Business
Management

Maputo, July de 2020

Table index

Table 1: Schedule of activities.................................................................................................10

Table 2: Budget plan................................................................................................................11

Figure index

Figure 1: Example of a company's business environment.........................................................6

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Abbreviation Lists

SPSS -Statistical Package for the Social Sciences-pacote

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Index

1. INTRODUCTION..................................................................................................................1

1.1. Contextualization.................................................................................................................1

1.2. Justification..........................................................................................................................2

1.3. Problem................................................................................................................................2

1.4. Hypotheses...........................................................................................................................2

1.5. Objectives............................................................................................................................3

1.5.1. General objective..............................................................................................................3

1.6. Research methodology.........................................................................................................3

1.6.1. Type of research and target companies.............................................................................3

1.6.2. Data collection..................................................................................................................4

1.6.3. Data processing and interpretation of results....................................................................4

1.7. Expected results...................................................................................................................4

1.8. Delimitation of the theme....................................................................................................4

2. THEORETICAL FRAMEWORK..........................................................................................5

2.1 - Definition of key concepts..................................................................................................5

2.1.1 Transaction costs within organizations..............................................................................6

2.1.2. Transaction costs outside organizations............................................................................7

2.1.3 - Transaction costs and the business environment.............................................................7

2.3. Business environment in Maputo City.................................................................................8

2.4. Factors that influence the business environment.................................................................8

3. SCHEDULE OF ACTIVITIES.............................................................................................10

4. BUDGETARY PLAN..........................................................................................................11

5. BIBLIOGRAPHIC REFERENCE........................................................................................12

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1. INTRODUCTION

1.1. Contextualization

During the past decade Mozambique has introduced several reforms aimed at improving the
business environment for the private sector. Recently, it made the connection to the electricity
grid faster, imposing new deadlines and simplifying procedures; has made paying taxes easier
by reducing the time that taxpayers have to wait to claim value added tax refunds; and
implemented a single electronic window for international trade.
In the context of tourism, the Government of Mozambique recently approved the Decree
number 3/2017, of 24 March on border visas, as one of the actions that are part of the
introduction of legislative reforms that ensure the improvement of the business environment,
through simplification of procedures. The tourism sector is one of the four priority areas
defined by the government for the country's development.

To speak of the Business Environment is to refer to all factors of a political, economic, social
and technological nature, most of which are outside the control and influence of the business
itself (KPMG, 2013).

Some of these factors are of the purely governmental scope, which must reform them and
others are up to the private sector to identify them to seek / research solutions and to prepare
alternatives to recommend to the government with a view to economic growth and poverty
reduction.

However, companies continue to face difficulties in creating new companies, as well as in

their operation and expansion - a result, in part, of excessive government bureaucracy. While
Mozambique performs above average both regionally and globally in obtaining construction
permits or resolving insolvency, it ranks among the last economies in the ranking among the
190 economies measured by Doing Business 2019 when it comes to opening a company or
resolve commercial disputes in the courts. The lack of coordination between government
agencies, outdated legislation, overly complex regulations and inefficient implementation
practices are the main reasons.
This research project aims to conduct a study in Maputo city about the business environment
in companies in the hotel and tourism sector, whose objective is to analyze the factors that
influence the business environment in companies in the hotel and tourism sector in Maputo
city. For its execution, methodologically data will be collected through a structured interview

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with the managers of Southern Sun Maputo Hotel and Radisson Blu Hotel and the president
of the Confederation of Economic Associations.

1.2. Justification

The present study is justified by its intention to contribute in the academic and entrepreneurial
scope, offering, through research, a different view about the Business Environment in Maputo
city in the companies of the Hotel and Tourism sector, expanding the theoretical material,
which can be used to learn about the factors that influence the business environment and to
recommend to the government and companies improvement through legal reforms aimed at
economic growth and poverty reduction.
According to Djankov (2008) a good business environment (micro sense) reduces transaction
costs, increases entrepreneurship.
The State, through the execution of its budgetary policy, has the role of regulating and
boosting the most important socio-economic areas, creating a good business environment. The
legal reforms in the scope of the financial, tax, labor, and commercial legislation carried out
by the Governments contribute significantly to strengthen this good environment and,
consequently, the attraction of national and foreign private investment.

1.3. Problem

Despite the improvement in the Business Environment that Mozambique has seen in recent
years, according to the report prepared by Doing Business 2019, many companies continue to
face difficulties in the creation of new companies, as well as their operation and expansion - a
result, in part, of bureaucracy excessive governmental. On the other hand, the lack of
coordination between government agencies, outdated legislation, overly complex regulations
and inefficient implementation practices are the main reasons. In view of the above, the
following research question arose:

What are the factors that influence the business environment in companies in the hotel
and tourism sector in Maputo city?

1.4. Hypotheses

H0: Among the various factors that influence the business environment in the companies of
the hotel and tourism sector in Maputo city, the difficulty of access to credit stands out, the

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excessive tax burden on business activity, the deficient coverage of infrastructures socio-
economic conditions and the high cost of hiring workers.

H1: The business environment in companies in the hotel and tourism sector in Maputo city is
healthy, entrepreneurs have easy access to credit and there is no excessive tax burden on
business activity, which is deficient.

1.5. Objectives

1.5.1. General objective

 Analyze the factors that influence the business environment in companies in the hotel
and tourism sector in Maputo city.

1.5.2. Specific objectives

 Identify the main constraints that hinder the improvement of the business environment
for companies in the hotel and tourism sector in Maputo city;
 Identify the factors that influence the business environment in companies in the hotel
and tourism sector in Maputo city;
 Investigate the efforts made by both the government and the private sector to improve
the business environment in Maputo city.

1.6. Research methodology

This chapter describes the methodology to be used in the practical part of this work,
presenting, the type of study, the methodology of data collection, treatment and interpretation
of results.

1.6.1. Type of research and target companies

The research consists of a case study. This type of research translates into the intensive
exploration of an analysis unit, in this specific case the research will be carried out at
Southern Sun Maputo Hotel and Radisson Blu Hotel.
The case study is chosen, as it is a methodological approach to research adopted to address
complex contexts. According to Yin (2001), this allows researchers to retain general and

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significant characteristics of real events. The case study is a research method, whose main
concern is the interaction between factors and events.
1.6.2. Data collection

The interview and the questionnaire will be the essential instruments used for the collection of
data in the place of study. However, these instruments will not be exclusive, since the
literature review and documentary research will also be important sources for data collection.

1.6.3. Data processing and interpretation of results

The processing of the obtained data will be carried out according to the specific objectives.
The first specific objective, which is to identify the main constraints that hinder the
improvement of the business environment in companies in the hotel and tourism sector in the
city of Maputo; and secondly, it is to identify the factors that influence the business
environment in the companies of the hotel and tourism sector in the city of Maputo, will be
reached through a questionnaire that will be applied to the managers of the companies
Southern Sun Maputo Hotel and Radisson Blu Hotel. The answers obtained will be processed
using the statistical software package SPSS. SPSS is a computer program that allows
processing raw data, combining variables or crossing different levels or fields of research and
presenting, in summary, in the form of tables and charts or other graphic illustrations, the
results of a statistical analysis of collected data, through of the qualitative study surveys.
The third specific objective, which is to ascertain the effort made by both the government and
the private sector to improve the business environment, will be achieved through the
structured interview addressed to the President of the Confederation of Economic
Associations and the Director of the Provincial Directorate for Culture and Tourism of the
city of Maputo. The answers obtained will be edited in the form of texts in Microsoft Word.

1.7. Expected results

It is hoped that with the results to be obtained, it will help companies in the hotel and tourism
sector in the city of Chókwè to identify the internal and external factors that influence the
business environment, consequently reforming internal factors and proposing reforms to the
government in external factors, in order to promote economic growth and competitiveness.

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1.8. Delimitation of the theme

This project has as its theme the analysis of the factors that influence the business
environment in companies in the hotel and tourism sector, it will be carried out in the city of
Maputo and will have as reference time from 2014 to 2018.
2. THEORETICAL FRAMEWORK
At the beginning of 1930s, Coase introduced a new approach to firms, which revoked the
approaches that firms were simply represented by the production function. Coase in his
studies concluded that the firm, in addition to transforming inputs into products, also had a
regular role and coordinated its relationship with other economic agents. The conclusion is
reached that both the firm and the market compete with each other to coordinate economic
activity. The exercise of this relationship implies costs arising from the collection of
information, from the negotiation (purchase and sale), from the establishment of contracts and
the requirement to comply with them. These costs are called transaction costs (Farina, 1997).
These costs weaken competitiveness and prevent or delay the entry of potential investors who
could explore alternative markets with high competitiveness gains. The result of high
transaction costs is low profitability for entrepreneurs and, therefore, a hostile investment
climate.

Transaction costs fit within an environment and the government (and / or public institutions)
through a set of rules, codes of conduct, laws, regulations, contracts and strategies or policies
aims to reduce such increase the confidence needed to carry out economic exchanges.

According to North (1990), the inability to create ways to reduce transaction costs is
the most important source of both historical stagnation and underdevelopment in the
so-called peripheral countries. Underdevelopment resides, above all, in a social
environment in which the lack of human cooperation hinders innovation, is
supported by localized hierarchical ties and blocks the expansion of the circle of
social relations in which people move.

2.1 - Definition of key concepts

Negotiating is the transfer of goods and services (buying and selling). Negotiation occurs
when the need for a joint solution of the differences between the parties. Negotiation also
implies that each party has some degree of power over the other (Elizabeth, 2004).
Environment is everything that involves an organization and / or company externally.

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Business Environment is a set of external forces that influence decisions to do business.
The business environment contains the agents, the institutionally established rules and
regulations that guide exchange relations, as well as the various factors that influence it,
including political, economic and social.
Macro business environment: its effect is generic and comprehensive for all organizations.
They are forces that escape the control, forecast and even understanding of organizations.
Micro business environment: it is the closest and immediate to the organization, from which
it obtains its inputs and in which it places its outputs or results.

Figure 1: Example of a company's business environment

Source: Adapted from Morgan, 2002

The figure represents an example of a business environment for a company.

The area between the first and second circles is the part of the environment directly linked to
the achievement of the company's goals. It consists of factors that can positively or negatively
influence an organization's business decisions. In the area between the second and the third
circle is the part of the environment directly linked to the achievement of the organization's
goals but whose relevance is not clear.

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2.1.1 Transaction costs within organizations

These costs were determined based on the discovery of opportunities for gains related to
individual interests to the detriment of the interests of the organization. Conflict of interest has
been installed since then, creating the need to create instruments or control instances of the
management process. These instruments represent an increase in costs for organizations, such
as board of directors, audit committee, fiscal council, among other inspection devices
(Camêlo, 2009).
2.1.2. Transaction costs outside organizations
These costs correspond to an extension of the transaction costs at the internal level of the
organizations, but add the relationships of the organizations as a whole and these with other
institutions (public and private).
These costs, in addition to the other factors that affect the business climate in the country, are
study variables of the present work.

2.1.3 - Transaction costs and the business environment

According to Filártiga (2007), the microeconomic theory comprises the consumer theory
represented by the demand curve and the firm theory represented, traditionally by the function
of producing goods and services through the technological unit. Based on production costs
and market prices, the possibilities for allocating resources are derived. Business decisions
take into account this marginal relationship and the opportunity costs of each investment
option. However, in addition to the operating costs and expenses of the productive activity
and other costs classified as production, there are costs for the effect of exchange relations
between economic agents, called: transaction costs.
Therefore, exchange relations and / or business decisions between economic agents are
associated with transaction costs.

Transaction costs involve, for example:

 Monetary expenses of the negotiation: corresponds to the monetary expense to
negotiate (disbursement with transportation in displacements, telephone calls, taking
of information on prices practiced in the markets etc. these in turn are conditioned by
the existence of the respective infrastructures;
 Opportunity cost of time to negotiate: corresponds to the estimated cost of the number
of occasions when the economic agent is dedicated to closing a deal; Monetary

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 expenses to enforce the contract: refer to expenses with lawyers, notaries, etc. to
convince the buyer to comply with its obligation;
 Opportunity cost caused by late payment: incurs when those involved in the
negotiation do not honor the commitment;
 Transport cost: represented by transport costs. The cost of transportation is not
commonly considered a transaction cost, but it has been the subject of negotiation.

In short, in most cases transaction costs are associated with factors that directly or indirectly
influence the business climate, such as corruption, bureaucracy, property registration, etc.
Therefore, there is an inverse relationship between transaction costs and the business
environment, that is, the higher the transaction costs, the less competitiveness there is and the
less favorable the business environment will be and vice versa.

2.3. Business environment in Maputo City

In general terms, the business environment in the country has improved in recent years, as a
result of several reforms and measures that have been introduced and implemented for this
purpose. This fact is recognized in the classification made by the World Bank's Doing
Business, where the city of Maputo is in the 135th position in a universe of 190 economies. If
Maputo City adopted all the good practices found in the provinces, its overall performance
would improve, going from 135 to 113 in the global ranking of the Doing Business.

2.4. Factors that influence the business environment

Several factors influence the business environment, from macroeconomic factors; factors
linked to the financial and credit market, factors linked to governance, factors linked to
industry and trade, factors linked to infrastructure and services, factors of a legal order to
factors linked to labor.

Factors linked to infrastructure and services

 Air Transport;
 Supply of Energy and Water;
 Roads, Railroad - Port;
 Communications services.

Macroeconomic Factors
 Market conditions (demand and supply);
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  Public expenditure;
 Metical behavior;
 Taxes;
 Inflation.

Legal factors
 Legislation to start Business;
 Incorporation and registration of companies;
 Compliance with Contracts;
 Environmental legislation;
 Access to land.

Factors linked to governance acts

 Internal political situation;
 Efficiency of tax administration;
 Bureaucracy;
 Corruption;
 Crime (staff safety)

Factors related to Labor

 Labor (Cost and availability);
 Labor law;
 Minimum wage levels;
 Restriction on the entry of foreign labor;
 HIV-AIDS, malaria and other diseases.

Trade-related factors
 Import and export;
 Implementation of commercial protocols.

Factors linked to the financial and credit market

 Access to credit;
 Currency availability;

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  Exchange rate

3. SCHEDULE OF ACTIVITIES

In this chapter, the activities to be performed during the estimated period for carrying out the
investigation are defined and detailed in detail.
Table 1: Schedule of activities

Period in months 2020

June July August September October November

Activities 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Organization of
resources

Data collection

Data analysis and

organization

Data processing

Analysis of results

Essay Writing

Work Review

Delivery and
presentation of
Job
Source: Author

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4. BUDGETARY PLAN

Budgetary plan is the part that includes the forecast of costs determined in the exercise of
carrying out the investigation.

Table 2: Budget plan

description Cost in MZN Source

Transport 2 000,00 Own
Print 1 500,00 Own
Internet 3 000,00 Own
Photocopies 1 000,00 Own
Credit 3 000,00 Own
Snack 3 000,00 Own
Pens 20,00 Own
Total 13 520,00
Source: Author

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5. BIBLIOGRAPHIC REFERENCE

CAMÊLO, André Mejia et al (2009), Cultura e Confiança: Capital social e Economia de

Custos de Transacção nas organizações. Available in

www.excelenciaemgestao.orgPortals2documentcneg5anaisT8_0162_0814.pdf

Djankov, S. (2002). The regulation of entry. Quarterly Journal of Economics. 117, 1-37.

Farina E. M. M. Q., F. Azevedo P. e SAES M. S. M (1997). Competitividade: Mercado,

Estado e Organizações, São Paulo: Singular.

Filártica, Gabriel Braga (2007). Custos de Transacção, Instituições e a Cultura da

Informalidade no Brasil. Available in
www.bndes.gov.brSiteBNDESexportsitesdefaultbndes_ptGaleriaArquivosconhecimentorevist
arev2804.pdf.

Gil, A. C. (2002), Como elaborar projectos de pesquisa. 4ª Ed., São Paulo: Atlas

MORGAN G. A (2002). Imagem das Organizações. São Paulo: Atlas, 2002.

North, Douglass C. (1990). Instituitions, Institutional change and economic perfomance.

Cambridge: University Press.

Yin, R. K. (2001), Estudo de Caso: Planeamento e Métodos, Porto Alegre: Bookman-Artmed,

Consulted Documents

Banco Mundial (2019) Doing Business em Moçambique. Washington, DC: Banco Mundial.

KPMG (2013). Ambiente de Negócios em Moçambique: Evidência de Pesquisa Empresarial.

XIII Conferência Anual do Sector Privado.

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Legislation consulted

Decreto nº 3/2017, de 24 de Março sobre vistos de fronteira

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