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I.

Cultural Analysis
I. Introduction

Company: T-Mobile offers plans that allow for pre-paid services. These plans allow a customer to buy a phone that is usually in the lower price bracket and buy however many minutes they want to for that month. Pre-paid services are great for the lower income population that do not want to be attached to any agreements and can have flexibility with pay rates. II. South Africa Brief History (South Africa: Introduction, 2001-2009) South Africa was originally founded by Dutch traders in 1652. They discovered the land while sailing on a spice route between the Netherlands and the East. The Dutch decided that the land would be a good stopover point on their journey and founded Cape Town, South Africas first settlement. In 1806, the British invaded the area founded by the Dutch which inevitably forced the Dutch North and turned Cape Town into an English settlement. Soon after the British took over, diamonds and gold were discovered bringing large amounts of wealth to the settlement and the Brits. The new found wealth started a large dispute between the remaining Dutch (which were then known as The Boers) and the British which lead to the Boer War (18991902). The war ended up benefiting both parties, the British and the Afrikaners (which were formally The Boers) having them ruling together under the Union of South Africa. The National Party was voted into power in 1948 which brought a major change for South Africa. They implemented an apartheid policy that separated the races and gave favor to those of European decent. It wasnt until 1994 that the apartheid policy came to an end when the first multi-racial election occurred. The 1994 election brought into power the African National Congress which held power up until 2008. III. Geographical setting A. Location

(South Africa: Introduction, 2001-2009) (Agency, 2009) South Africa is located at the most southern tip of Africa. It is bordered by Swaziland in the east, Mozambique to the northeast, Namibia to the northwest, and Botswana and Zimbabwe to the north and the Ocean to the South. South Africa has many ports and terminals located in Cape Town, Durban, Port Elizabeth, Richards Bay, and Saldanha Bay making it a very accessible country for trading. South Africa is 9,607.51 miles from the United States.

B. Climate (Agency, 2009) (International Business Etiquette and Manners, 2009) South Africas climate varies across its regions. It is mostly semiarid, though subtropical along its east coast. The country as a whole has comfortable temperatures throughout the year, with sunny days and cool nights. The summer months of May to August become much drier with less rain and less vegetation. C. Topography (International Business Etiquette and Manners, 2009) A central plateau, mountain ranges that surround the plateau and low lying land along the coast make up most of the countrys topography. The savannah still plays a major role much like in other African countries. All of this variation makes South Africa one of the most geographically varied countries. Implications: South Africa is a very accessible country. Being surrounded in the South by water makes for a very easy entrance via boats, and by being mainly a plateau there would be low difficulty getting our product distributed throughout the country. Along with the climate being relatively nice year round, it seems that South Africa will leave little difficulty for us to distribute mobile phones throughout its land. IV. Social institutions A. Family 1. The nuclear family (South Africa- Language, Culture, Customs and Etiquette) The nuclear family is especially important to the English-speaking white community. Even though it is not as important to them, the more traditional Afrikaans still sees it has the crucial basis of their tribe. 2. The extended family (South Africa- Language, Culture, Customs and Etiquette) While down played to the white South African population, the colored traditional Afrikaans considers their extended family to be as or close to being as important as their nuclear family.

3. Dynamics of the family a. Parental roles (Family Life in Colored Families) For the most part, South African families have adopted the western lifestyle. In these cases, the father brings the money in for the family and the mother is the homemaker. In poorer communities where having a child outside of wedlock is common, the mother raises the child in a support web made up of her family while the father tends to have little to do with the upbringing. b. Marriage and courtship (Tree) South Africa has much better statistics when it comes to marriage and divorce rates when compared to the United States. Market Tree Consultancy found that 55% of South Africans aged 25 or more are married or living with their significant other, 4% are divorced or separated, and 10% are widowed. The countrys divorce rate is extremely low in comparison to many of the countries around the world that have divorce rates that are on a steady rise. 4. Female/male roles (changing or static?) (Kraft) The female role is changing and is coming out to be a more powerful role than before. Females are becoming more involved in the government, business and family life. There are even some female tribal chiefs now. Although they are starting to play a more important role, they are still not easily accepted in some traditional societies. Implications: The importance of the extended family in some of South African population can benefit our selling of pre-paid mobile phones, because of the communication that can be brought from it. It being pre-paid will help with the lower income families and will still give them the opportunity to keep in contact with their family.

B. Education

1. The role of education in society (Education) (About South Africa) a. Primary education (quality, levels of development, etc.)

Primary education students begin their education at the beginning of the year in which they turn seven. They partake in the basic learning activities which include reading, writing and calculating and move on to reading, mathematics, history, geography, general science, and teaching different skills. Schools try to incorporate more than one language to be learned from the beginning. b. Secondary education (quality, levels of development, etc.) After primary education, students move on to FET, further education and training. This includes the equivalent of Grades 10 through 12 and National Certificate one through three in technical colleges. Students write a public examination over all of their subjects after Grade 9 to obtain a Senior Certificate and move on to FET. Their vision for the FET system is to provide high-quality, flexible and responsive programs and opportunities for a learning society. c. Higher education (quality, levels of development, etc.) South Africa houses 24 state-funded tertiary institutions consisting of 11 universities, five universities of technology, and six comprehensive institutions. Some of these institutions are well known for being world-class academic institutions and have more than a million students enrolled in them. 2. Literacy rates (Agency, 2009) It is found that people over the age of 15 can read and write. 86.4% of South Africas total population can read and write; 87% of males and 85.7% of females, making this a very literate country. Implications: Education seems to be high in South Africa, which tells us that they could be a higher technological country. Mobile cell phones would be important to those students especially in the higher institutions that are getting an education that will push them into the business world and where cell phones are necessary. Being a world that is being pushed more and more towards technology, it is important to be up-to-date with the rest of the world, thus mobile cell phones are a must.

C. Political system

1. Political structure

(South Africa) The parliament has two chambers, the National Assembly and the National Council. The National Assembly has 400 members that are elected for five-year terms by proportional representation. Their executive president is elected by the National Assembly for a five-year term of office. The National Council has 90 members that are elected for five-year terms by the provincial parliaments. 2. Political parties (South Africa) Inkatha Freedom Party is the current ruling party in South Africa. They lead a alliance with The African National Congress. 3. Stability of government (South Africa - An Overview) Standard and Poors gave the country a ranking of Risk of A-Stable/A-2 BBB/Stable/A-3 because of reflections from their government. They stated that the South African government has implemented sensible fiscal policies and has managed to bring spending under control. They have also decreased their debt burden and deficits immensely. 4. Special taxes (South Africa - Taxation) Previously there was an appeal to use South Africa as an off-shore location for international headquarters because of their territorial system of taxation. But that has since been replaced with a more common worldwide taxation system and the appeal has been reduced. Their indirect tax, VAT, is charged on most goods and services. It has a standard rate of 14%. 5. Role of local government (South African Local Government Association) SALGA, South African Local Government Association is an organization that was originated to help with the transformation of the previous government to the new democratic system in the early 1990s. Currently the SALGA focuses on the local government, how it can improve and learn from past weaknesses. Implications: The implications seem to be positive in relation to the South African government. They have a stable government that has control of their deficit and debt, which is good when it comes to countries that you want to have trade relationships with. Their low risk also makes it a safe environment to market and sell within. South Africa is always open to trade and do already

have other cell phone providers there, so we see this as a market that will be beneficial to penetrate. D. Legal system (Agency, 2009) 1. Organization of the judiciary system Their judiciary system consists of a Constitutional Court, a Supreme Court of Appeals, High Courts, and Magistrate Courts. 2. Code, common, socialist, or Islamic-law country? South Africas courts rule under Roman-Dutch law and English common law. 3. Participation in patents, trademarks, and other conventions South Africa is much like the United States along the lines of patents and trademarks. They follow their common law and related back to previous cases when a problem arises. 4. Marketing Laws No information was found on this topic, but I believe that their marketing laws are much like the United States, because of their common law that they adhere to. Implications: South Africas political system seems to be a lot like the United States, which is good news for T-Mobile because of the familiarity they will have. Their use of common law and their participation in patents and trademarks shows their business environment to be one that our company would be comfortable in and can easily do trade with. E. Social organizations (Harsch, 2001) 1. Group behavior Though South Africas society is going through a transformation and is headed towards better life, they still experience discrimination towards

women and those with HIV/AIDS. Violence is still a very common act towards women and children as well. 2. Social classes South Africa consists of the basic social classes of a poverty class, a working class and an upper class. The gaps between these classes have been widening, mostly due to the increase in the poverty class. Keeping jobs is one of their biggest problems and the government is struggling to find ways to lessen the gap. 3. Clubs, other organizations No information was found on this topic. 4. Race, ethnicity, and subcultures (Agency, 2009) South Africa is known as one of the most multicultural countries in the world. They are made up of 79% black Africans, 9.6% whites, 8.9% colored, and 2.5% Indian/Asian. Implications: South Africas mixture of cultures at a glance would make it seem like it would be hard to market to them, but they are all so similar in lifestyle that it would be easy for T-Mobile to successfully market to them all at once. The problem they have with HIV/AIDS could be something T-Mobile could use to reach out to their population, by lending a hand an organization that profits them or market towards using their pre-paid phones to keep in touch with their loved ones that are affected by the disease. F. Business customs and practices (South Africa- Language, Culture, Customs and Etiquette) (International Business Etiquette and Manners, 2009) The following are all business customs and practices that are used in South Africa: y y y y y y Gift giving is not the norm Do not present gifts with your left hand; use both or your right hand Gifts are opened upon receipt Business meetings are held over lunch or dinner at a nice restaurant Appointments are necessary and should be made starting at 9 am and as far in advance as possible Business dealing are very casual

y y y y y y y

y y y

South Africans business people prefer a win-win situation Use titles and surnames to address people Handshakes are the most common greeting, though there are a variety of handshakes between ethnic groups Networking and relationship building are crucial for long-term business success Sports analogies and metaphors are often used to demonstrate a point Face to face meetings are much more preferred over more impersonal communication mediums Women arent in high position in South Africa, so women should expect to encounter some condescending behavior and to be tested in ways that a male colleague would not Do not interrupt a South African while they are speaking Deadlines are often viewed as fluid rather than firm commitments Decision-making is made at the top of the company and can take a long amount of time

V.

Religion and aesthetics

A. Religion and other belief systems 1. Orthodox doctrines and structures and the relationship with the people No information was found on this topic 2. Which religions are prominent and what is their membership? (International Business Etiquette and Manners, 2009) (About South Africa) South Africa is a predominantly Christian country; they are two-thirds Christian (mainly Protestant) that combine Christian and traditional African beliefs. The other third consists of Islam, Hinduism, and Judaism. 3. Any powerful or influential cults? (Cultic ritual child murders, 2002) While information on actual cults was not available, information on cult like behavior was found. Studies have shown that in South Africa it is common for people who are studying Muti, which is the Zulu word for medicine, to take people and make them into human sacrifices. Many children disappearances have been reported and hundreds of people are said to have been killed for these sacrifices.

Implications: The implications with religion are sparce. They are a dominately a Christian country which have no problems that coincide with selling or marketing pre-paid cell phones. This leaves T-Mobile with no barrier with the religious population. B. Aesthetics (About South Africa) 1. Visual arts (fine arts, plastics, graphics, public art, colors, etc.) Art is a treasured aesthetic to South Africa because they have some of the most ancient and beautiful rock art saved from the ancestors of todays Bushman. Since theyre discovery, foreign artists have been drawing, painting and sculpting their life, environment and people. The colonial era brought artists that concentrated on depicting this new world, while the end of the 19th century had work that captured the traditional Afrikanns life that was lived. 2. Drama, ballet, and other performing arts Dance has become a very popular way of artistic expression in South Africa. There are two main dance productions: the Umojas dancers that have no formal trainding and come straight from their communities; and the professional dancers that come from dance companies. Thought there has been a long history of classical ballet, contemporary dance is becoming more and more important. Afrofusion is a represenatation of a blend of multiple cultures through the combination of formal dance training, African spirit and classical ballet. 3. Folklore and relevant symbols No information was found on this topic. Implications: There could be no implications found relating to this area. VI. Living conditions

A. Diet and nutrition (South African Eating Habits) (South Africa)

(Sibbel)

1. Meat and vegetable consumption rates The foods that consist of more fat, sugar and salt (including meat) are found to be consumed more by the city dwellers. The rural dwellers seem to consume more vegetables with beetroot, pumpkin leaves, and morogo (wild spinach) in their diet. 2. Typical meals South Africans have the typical three meals a day. Their breakfast is typically hot cooked cereal served with milk and sugar, corn bread, or dried sweet bread, tea and coffee. Their other meals are typically a main course of meat, seafood, or stew accompanied by vegetables and rice. 3. Malnutrition rates The malnutrition rate in South Africa is much less than it used to be. The group that is most affected by malnutrition are the native Africans. The country is actually becoming a more overweight and obese country. 4. Foods available Seafood is a common food found in South Africa; Hake is the most common fish and is made into the popular fish and chips meal. There are a variety of fruits and vegetables. Potatoes, cabbage, corn, peppers, and green beans are the most common. Tropical fruits can be found in the rainy parts of the country. They include bananas, pineapples, and mangoes. Sausages, ostrich, chicken, seasoned lamb on a skewer and sosaties are the common meats eaten at meals. Implications: The implications related to their diet and nutrition are that they are a developing country rising out of malnutrion in most areas which goes hand in hand with the building of their country. This affects pre-paid cell phones because though they are becoming a more developed country they still dont have the funds available for or want to spend the money on expensive phone plans. This leaves a niche market for pre-paid cell phone plans.

B. Housing (Hall) (Family Life in Colored Families)

1. Types of housing available There are three types of housing available in South Africa. The formal housing consists of adequate housing, dwelling or brick structures, flats or apartments, and town/cluster/semi-detached houses. The informal housing consists of an informal dwelling or shack in a backyard, an informal settlement, a dwelling or house/flat/room in a backyard, and caravans or tents. The traditional housing consists of a traditional dwelling/hut/structure made of traditional materials. 2. Do most people own or rent? No information was found on this topic. 3. Do most people live in one-family dwellings or with other families? In some parts of South Africa where there is high-density, it is not uncommon to find more than one nuclear family living in the same household. Many times these homes are made for one family but due to the poverty in that area the strength of nuclear families comes into play. Implications: Much like the implications for the diet and nutrition above, this would be another area of their lifestyle that shows they are a developing country, but still have the percentages of population that cant afford a more expensive lifestyle. C. Clothing (South Africa- Language, Culture, Customs and Etiquette) (International Business Etiquette and Manners, 2009) 1. National dress The South African population generally wear western style clothing. They dress well when in public. African women typically wear a sari.

2. Types of clothing worn at work South African business people typically are well dressed, in professional business attire. Though it is becoming more informal in many companies, they still dress to impress at first meetings. It is more common for them to dress conservatively. Men wear dark colored conservative business suits, and women wear elegant business suits or dresses. Implications: There are no implications found related to this area. D. Recreation, sports, and other leisure activities (About South Africa) 1. Types available and in demand The three big sports in South Africa are rugby, cricket and football (soccer). Football is seen as the peoples sport and is the main sporting attraction for them. Their national team is nicknamed Bafana Bafana which means The Boys. They are hosting the 2010 FIFA World Cup, which is an extremely important and exciting event for their country. 2. Percentage of income spent on such activities No information was found on this topic. Implications: The implications we have for this area, would be for T-Mobile to enter this market by sponsoring their countrys football (soccer) team which is an extremely important sport for South Africa. Also with them hosting the World Cup next year, this would be a great marketing opportunity for T-Mobile. E. Social security (Van der Berg) Social Security in South Africa began as a welfare program for people of European blood because of the apartheid society that they had at the time. Over time this has relaxed and it has become a program that includes all South Africans and works similarly to other developing countries. This includes insurance for workers and social assistance for a large amount of the population funded by the central government. Implications: The growing stability of their social security is another reason to enter their business market. Like the section above on government, this shows that South Africa is supporting a stable environment which house Afrikaans that can support a cell phone bill and that our country should feel comfortable entering.

F. Health care (Health care in South Africa) The health care system in South Africa consists of two sectors, a large public sector and a smaller private sector. The systems vary from the basic primary health care offered free by the state, to the highly specialized hi-tech services that are available to those who can afford it. The public sector is under-funded and over used. Implications: There are no implications found relating to this area. VII. Language (About South Africa) (Agency, 2009) (South Africa- Language, Culture, Customs and Etiquette) A. Official language(s)

There an abudant amount of languages that are spoken throughout South Africa. 23.8% speak IsiZulu 17.6% speak IsiXhosa 13.3% speak Afrikaans 9.4% speak Sepedi 8.2% speak English 8.2% speak Setswana 7.9% speak Sesotho 4.4% speak Xitsonga 7.2% speak other Though there are many different languages, English is generally understood throughout the country because it is the language of business, politics, and media. B. Spoken versus written language(s)

Because of their roots beginning with the Dutch, the Afrikaans began by having their written language being proper Dutch. Over time this has conformed to include more of their own language and English. Since English is the business language, Afrikaans have taken to making that one of their more common written languages.

C. Dialects Because of the vast amount of languages spoken throughout South Africa, there are many different dialects that coinside with them. It is very common for African language speakers to combine languages when they speak, for example their English will be peppered with their Setswana. The languages all do have common similarties in syntax and grammer so it is easy for a native speaker of one to understand a different one for the most part. Implicaitons: The implications related to language is not an extrememly important one to TMobile other than they may want to offer options that support some of the dominate languages in South Africa. But since they use English and their business language and it is understood throughout the country, they should not have a problem using the English system they have in place already.

VIII. Executive summary Throughout this cultural analysis there have been descriptions on the South Africa history, culture and the many dimensions of their lifestyle. The effects that they have on bringing T-Mobile pre-paid cell phones to the country are great, but positive in the same. The major effects that South Africa has on bringing our product to their market are located in the following summary. South Africas location is a major advantage for trading with them. It is a very accessible country. Being surrounded in the South by water makes for a very easy entrance via boats, and by being mainly a plateau there would be low difficulty getting our product distributed throughout the country. Along with the climate being relatively nice year round, it seems that South Africa will leave little difficulty for us to distribute mobile phones throughout its land. Education seems to be high in South Africa, which tells us that they could be a higher technological country. Mobile cell phones would be important to those students especially in the higher institutions that are getting an education that will push them into the business world and where cell phones are necessary. Being a world that is being pushed more and more towards technology, it is important to be up-to-date with the rest of the world, thus mobile cell phones are a must. The implications are positive in relation to the South African government. They have a stable government that has control of their deficit and debt, which is good when it comes to countries that you want to have trade relationships with. Their low risk also makes it a safe environment to market and sell within. South Africa is always open to trade and do already have other cell phone providers there, so we see this as a market that will be beneficial to penetrate. South Africas political system seems to be a lot like the United States, which is good news for T-Mobile because of the familiarity they will have. Their use of common law and their participation in patents and trademarks shows their business environment to be one that our

company would be comfortable in and can easily do trade with. South Africas mixture of cultures at a glance would make it seem like it would be hard to market to them, but they are all so similar in lifestyle that it would be easy for T-Mobile to successfully market to them all at once. The problem they have with HIV/AIDS could be something T-Mobile could use to reach out to their population, by lending a hand an organization that profits them or market towards using their pre-paid phones to keep in touch with their loved ones that are affected by the disease. In relation to entertainment events, sports in a major industry T-Mobile can use to relate to the South African population. The implications we have for this area, would be for T-Mobile to enter this market by sponsoring their countrys football (soccer) team which is an extremely important sport for South Africa. Also with them hosting the World Cup next year, this would be a great marketing opportunity for T-Mobile. The implications related to language is not an extrememly important one to T-Mobile other than they may want to offer options that support some of the dominate languages in South Africa. But since they use English and their business language and it is understood throughout the country, they should not have a problem using the English system they have in place already. T-Mobile has a chance to enter a market has many positive implications. This could be a great opportunity for their pre-paid cell phone plans and they could benefit greatly by taking advantage of all the positive factors that South Africa has to off er them. Looking through the information you will see the positive heavily outweighs the negative implications that South Africa provide for T-Mobile pre-paid cell phone plans, which leads us to our reccommendation of entering the South African market.

IX.

Sources of information

Bibliography
About South Africa. (n.d.). Retrieved November 2009, from SouthAfrica.info: http://www.southafrica.info/about/ Agency, C. I. (2009). The World Factbook. Retrieved October 2009, from South Africa: https://www.cia.gov/library/publications/the-world-factbook/geos/sf.html Cultic ritual child murders. (2002, April 2). Retrieved November 2009, from FACTnet: http://www.factnet.org/cults/Sangoma/Muti_Murder.html Education. (n.d.). Retrieved November 2009, from South African Consulate General: http://www.southafrica-newyork.net/consulate/education.htm Family Life in Colored Families. (n.d.). Retrieved November 2009, from South Africa : http://family.jrank.org/pages/1615/South-Africa-Family-Life-in-Colored-Families.html

Hall, K. (n.d.). Housing and Services. Retrieved November 2009, from Statistics on Children in South Africa: http://www.childrencount.ci.org.za/uploads/factsheet_11.pdf Harsch, E. (2001, January). Africa Recovery. Retrieved November 2009, from South Africa tackles social inequities: http://www.un.org/ecosocdev/geninfo/afrec/subjindx/144soafr.htm Health care in South Africa. (n.d.). Retrieved November 2009, from SouthAfrica.info: http://www.southafrica.info/about/health/health.htm International Business Etiquette and Manners. (2009). Retrieved from Cyborlink: http://www.cyborlink.com/ Kraft, D. (n.d.). The changing role of Africa's women. Retrieved November 2009, from iol: http://www.iol.co.za/index.php?set_id=1&click_id=68&art_id=qw107111754327B213 Sibbel, G. (n.d.). South African Manutrition The Changes of Urbanization. Retrieved November 2009, from http://www.worldfoodprize.org/assets/YouthInstitute/05proceedings/KuemperCatholicHighSchool.pdf South Africa. (n.d.). Retrieved October 2009, from GMID - Global Market Information Database: http://0-www.portal.euromonitor.com.source.unco.edu/PORTAL/Magazines/GeographiesRegion.aspx South Africa. (n.d.). Retrieved November 2009, from Food in Every Country: http://www.foodbycountry.com/Kazakhstan-to-South-Africa/South-Africa.html South Africa - An Overview. (n.d.). Retrieved November 2009, from MBendi Information Service: http://www.mbendi.com/land/af/sa/p0005.htm South Africa - Taxation. (n.d.). Retrieved Noovember 2009, from Encyclopedia of the Nations: http://www.nationsencyclopedia.com/Africa/South-Africa-TAXATION.html South Africa- Language, Culture, Customs and Etiquette. (n.d.). Retrieved October 2009, from Kwintessential: http://www.kwintessential.co.uk/resources/global-etiquette/south-africa-countryprofile.html South Africa: Introduction. (2001-2009). Retrieved November 2009, from GlobalEdge: http://globaledge.msu.edu/countries/South-Africa/ South African Eating Habits. (n.d.). Retrieved October 2009, from Anne Collins: http://www.annecollins.com/diet_news/african-eating-habits.htm South African Local Government Association. (n.d.). Retrieved November 2009, from About SALGA: http://www.salga.net/home.asp?pid=1825 Tree, M. (n.d.). Cellphone usage in South Africa. Retrieved November 2009, from Market Tree Consultancy: http://www.markettree.co.za/fact_desc.html?fact_det:acode=13

Van der Berg, S. (n.d.). Issues in South African Social Security. Retrieved November 2009, from http://ideas.repec.org/p/sza/wpaper/wpapers1.html

II. Economic Analysis


I. Introduction y The economy of South Africa is split into two sections; one in competition with developed countries and another with the very basic infrastructure. Because of this, South Africa shares characteristics associated with developing countries. With this, an extremely unequal distribution of wealth and income exists. Although a good portion of South Africas population still subsides in rural areas, much of the country has access to distribution channels, technology, and means of communication. Each one of these factors, along with a wide variety of available media, makes South Africa a prime market to sell pre-paid mobile phones. Throughout this country notebook, ways in which these factors could possibly influence the marketing, selling, and distribution of our product will be discussed.

II.

Population y Implications: When selling pre-paid mobile phones, the high percent of the younger population between ages 0 and 14 is very beneficial for selling our product. This is because the younger generations are more prone to purchasing new technology. This, along with 61% of the total population being urban areas proves to support our sales due to the fact that these populations will want to purchase innovative technology. A. Total South Africas population has grown .218% since the previous year, totaling 49,888,700 as of 2008 (South Africa: Country Factfile) 1. Growth rates .281% (U.S. Department of State) 2. Number of live births

Infant mortality rate: 58 per 1,000 live births (U.S. Department of State) 3. Birthrates 2008: 22,000 (South Africa: Country Factfile) 4. There are no immediate implications affecting the selling of our product

B. Distribution of population The largest portion of South Africas population is between the ages of 15-64, female, in Urban areas, and of the Black African race. However, 30.8% of the population is between the ages of 0-14 which indicates a young population 1. Age (South Africa: Country Factfile) y y y Age 0-14 in 2008: 30.8% Age 15-64 in 2008: 64.8% Age 65+ in 2008: 4.4% Male population in 2008: 49.3% Female population in 2008: 50.7%

2. Sex (South Africa: Country Factfile) y y

3. Geographic areas (urban, suburban, and rural density and concentration) y y y Urban population: 61% of total population (2008) Rate of urbanization: 1.4% annual rate of change (2005-10 est.)
(Central Intelligence Agency) Rate of Rural changes: -0.04% annually (Nation Master.com, 2005)

4. Migration rates and patterns y 5. Net Migration Rate: -0.13 migrant(s) per 1,000 population (Central Intelligence Agency) Ethnic groups (South Africa: Country Factfile) y y y y III. Black African: 79% White: 9.6% Colored: 8.9% Indian/Asian: 2.5%

Economic statistics and activity

South Africas GDP real growth rate for 2008 was 3.1% showing that the economy is still growing. A. Gross national product (GNP or GDP) 1. Total (South Africa: Country Factfile) y GDP in 2008: o National currency: 2,283,777.0 millions o U.S. Dollars: $276,445.4 in millions 2. Rate of growth (real GNP or GDP) (South Africa: Country Factfile) y GDP real growth rate for 2008: 3.1% Implications: South Africas GDP is increasing at 3.1% showing that their economy is on the rise, supporting our sales of pre-paid mobile phones B. Personal income per capita y y GDP per capita in 2008: $10,100 (South Africa: Country Factfile) Implications: No immediate implications

D. Distribution of wealth (Central Intelligence Agency) y Household income by percentage of share:

 

Lowest 10% of population: 1.3% of the income Highest 10% of population: 44.7% of the income

(Nation Master.com, 2005) 1. Income classes ((ABSA), 2007) y Upper income class: 807,717 households earned a gross annual income of R360,000 y 6.3% of total households

Implications: South Africa has a high degree of inequality of distribution of income. This is very important in selling pre-paid mobile phones because a large amount of the population does not necessarily have the means to spend a lot of money on cell phone contracts. Also, the fact that the richest 10% of the population has 44.7% of the income, prepaid cell phones could sell very well. E. Minerals and resources y South Africa is the largest producer and exporter of platinum. (GMID)

y y y

They are the third largest gold producer in the world (GMID) Coal and iron ore are two other significant exports for South Africa (GMID) Implications: No immediate implications

F. Surface transportation y y South Africa's transportation infrastructure is well-developed, supporting both domestic and regional needs. (U.S. Department of State) The following is a list of South Africas transportation information (Central Intelligence Agency)

Airports: 607 (2009) country comparison to the world: 11 Airports - with paved runways: total: 148 over 3,047 m: 10 2,438 to 3,047 m: 6 1,524 to 2,437 m: 52 914 to 1,523 m: 68 under 914 m: 12 (2009) Airports - with unpaved runways: total: 459 over 3,047 m: 1 2,438 to 3,047 m: 1 1,524 to 2,437 m: 34 914 to 1,523 m: 298 under 914 m: 125 (2009) Heliports: 1 (2009) Pipelines: condensate 11 km; gas 908 km; oil 980 km; refined products 1,379 km (2008) Railways: total: 20,872 km country comparison to the world: 14 narrow gauge: 20,436 km 1.065-m gauge (8,271 km electrified); 436 km 0.610-m gauge (2008) Roadways: total: 362,099 km country comparison to the world: 18 paved: 73,506 km (includes 239 km of expressways) unpaved: 288,593 km (2002) Merchant marine: total: 3 country comparison to the world: 138 by type: container 1, petroleum tanker 2 foreign-owned: 1 (Denmark 1) registered in other countries: 8 (Bahamas 1, Nigeria 1, NZ 1, Saint Vincent and the Grenadines 1, Seychelles 1, UK 3) (2008)

Ports and terminals: Cape Town, Durban, Port Elizabeth, Richards Bay, Saldanha Bay

Implications: When selling pre-paid mobile phones in rural South Africa, we should consider using air as a means to transport our products. The 459 unpaved runways work in our advantage so that we will be able to get our product to rural areas.

G. Communication systems y South Africa has a well-developed system of communications. The mobile telephone users compared to world numbers is ranked at number 24. Internet users are ranked at number 49. Implications: When selling pre-paid mobile phones, it is important that there are a reasonable number of cell phone users. Because they are ranked at number 24 in the world for cell phone use, it is a good implication that our product will be able to sell successfully. The following is a list of the communications and infrastructure in South Africa (Central Intelligence Agency)

Telephones- main line in use 4.425 million (2008) country comparison to the world: 35 Telephones - mobile cellular: 45 million (2008) country comparison to the world: 24 Telephone system: general assessment: the system is the best developed and most modern in Africa domestic: combined fixed-line and mobile-cellular teledensity exceeds 110 telephones per 100 persons; consists of carrier-equipped open-wire lines, coaxial cables, microwave radio relay links, fiber-optic cable, radiotelephone communication stations, and wireless local loops; key centers are Bloemfontein, Cape Town, Durban, Johannesburg, Port Elizabeth, and Pretoria international: country code - 27; the SAT-3/WASC and SAFE fiber optic cable systems connect South Africa to Europe and Asia; satellite earth stations - 3 Intelsat (1 Indian Ocean and 2 Atlantic Ocean) Radio broadcast stations: AM 14, FM 347 (plus 243 repeaters), shortwave 1 (1998) Television broadcast stations: 556 (plus 144 network repeaters) (1997) Internet country code:

.za Internet hosts: 1.73 million (2009) country comparison to the world: 34 Internet users: 4.187 million (2008) country comparison to the world: 49

H. Working conditions/Business relationships y Business communications in South Africa are very professional. From a handshake to greet, to using formal titles and surnames when speaking to or about somebody, a classy image is always portrayed. However, when conducting business deals, the environment can be seen as more of a casual environment. A win-win situation is always preferred (International Business Etiquette and Manners") 1. Employer-employee relations (Global Edge, 2007) y There is not much small talk in business and it is not acceptable if people are too loud. As businessmen, show respect for the women and always treat them in a businesslike, professional manner. Avoid outbursts of chauvinism. Do not make suggestive jokes and comments. (Global Edge, 2007) Cellphones have become part of our lives and are an essential business tool. Using your cellphone incorrectly and at the wrong times will show disrespect to the people in your presence. This etiquette is not unique to South Africa but rather a sign of common courtesy in all countries. (Global Edge, 2007)

Implications: A key implication when selling our product is to make sure that in our advertisements, not to use cell phones in an inappropriate manner such as during a business meeting. This could create a negative feeling toward our product. I. Principal industries y minerals, mining, motor vehicles and parts, machinery, textiles, chemicals, fertilizer, information technology, electronics, other manufacturing, and agro-processing are South Africas principal industries (MBendi Information Services) Implications: Because we are selling mobile phones, the fact that information technology and electronics are a large part of their

industry show that the chances of our product being accepted are high.

1. What proportion of the GNP does each industry contribute? (U.S. Department of State) y y Agriculture and mining (primary sector)--8% services (tertiary sector)--71%.

Implications: Although minerals and mining are a huge part of the South African economy, 71% of their GNP goes to the service industry. This is good for our cell phone business because we will be able to create a superior product with customer service and satisfaction that will affect a large portion of the economy. J. Foreign investment y Allowing privatized citizens to invest in offshore accounts, lowering threshold for foreign direct investment to allow for strategic international partnerships, and establishing a rand currency future market, are all factors that South Africa has implimented to stay involved in foreign investments while creating the best opportunities for their own country. The stock of direct for foreign investment at home is $120 billion. This is ranked 29 compared to the rest of the world (Central Intelligence Agency) The stock of direct for foreign investment abroad is $63.57 billion. This is ranked 28 compared to the rest of the world (Central Intelligence Agency) Implications: With South Africas ranks being in the top 30 for foreign investment, it shows their willingness to do business abroad and this increases the likelyhood that they would invest in our company and product. y Private citizens are now allowed a one-time investment of up to 2,000,000 rand (R) in offshore accounts (U.S. Department of State) Shareholding threshold for foreign direct investment outside Africa was lowered from 50% to 25% to allow companies to engage in strategic international partnerships (U.S. Department of State) South African companies involved in international trade permitted to operate a single Customer Foreign Currency

(CFC) account for all international transactions (U.S. Department of State) Permission was also granted to the Johannesburg Securities Exchange (JSE) to establish a rand currency futures market, in order to deepen South Africas financial markets and increase liquidity in the local foreign exchange market (U.S. Department of State)

1. Opportunities y A national investment agency called Investment South Africa was launched in 1997. It teamed up with the promotion of investment at a national and provincial level, and it provides opportunities available in every province. (MBendi Information Services)

K. International trade statistics South Africa's major trading partners include Germany, China, the United States, Japan, and United Kingdom. Major imports include passanger vehicles, motor behicle parts, cell phones, trucks, non crude oil, and medicines in doses. Some of their major exports include platinum, coal, and diamonds (MBendi Information Services)

1. Major imports, Values, and Trends (Global Edge, 2007)

2. Major exports, Values, and Trends (Global Edge, 2007)

3. Balance-of-payments situation, Surplus/Deficit, and Trends (GMID) y South Africas economy is currently in a deficit of $20,499

4. Exchange rates y The U.S. dollar can buy 8.3 South African rands (R). The trends of the U.S.-South Africa exchange rate have fluctuated down and up for the past few years. It is currently on an increase.

a. Current rate of exchange (GMID)  Exchange rate against the U.S. dollar is 8.3 as of 2008

b. Trends (South Africa: Country Factfile)  Exchange rate trends since 2003 against the U.S. dollar started at 7.6 and decreased for two years, where it rose in 2006 and has continued to do so. Implications: Key implications for international trade statistics include; 1. Cell phones are one of the top imports to South Africa, making it a good and popular product, but also creating more competition. 2. The U.S. exchange rate with the Rand is very high. This implies that the U.S. dollar can purchase much more than one Rand, making our U.S. product less appealing.

L. Trade restrictions Implications: Luckily, our product is not prohibitied by South Africa, and does not have any immediate duties. If we decide to sell mobile phones through another vendor in South Africa, our product may be exempt from the Value Added Taxation. This is why we should consider finding a vendor to sell to instead of selling directly out of the United States. 1. Prohibitions (FedEx) y y y y y y y y y Drugs and narcotics Pornographic or objectionable materials Plants, seeds, bulbs, raw cotton Uncooked meat/poultry Honey, beeswax, bees and their larvae or eggs, used beehive appliances Uncut diamonds Unwrought gold Ammunition Dry Ice

y y y

Furniture Furs Dangerous Goods as defined by IATA (Intl. Air Transport Association)

2. Import Permits (FedEx) y Products still requiring import permits o Foodstuffs o Used clothing o Refined petroleum products o Chemicals These import permits must be obtained from the Director of Imports and Exports before the date of shipment and should be confirmed by the controlling authority prior to shipment

3. Quotas Africa also is an eligible country for the benefits under the African Growth and Opportunity Act (AGOA), and most of its products can enter the United States market duty-free and quota-free. South Africa has done away with most import permits except on used products and products regulated by international treaties (Global Edge, 2007) 4. Import taxes Value added tax (VAT) - The valuation of imported goods for VAT is based on the f.o.b. value plus 14% of that value, plus any non-rebated customs duty (tariff plus import surcharge). VAT is payable on goods imported into the Republic by any person, regardless of whether the importer is registered as a vendor. However, goods imported for the use in manufacturing or resale by registered traders may be exempt from VAT. If the importer is a vendor, he/she can claim an input tax credit, provided he/she imported the goods for the purpose of making a taxable supply (FedEx) 5. Customs duties (FedEx) Import Duties As a result of its market access offer for the Uruguay Round, South Africa has significantly reduced its number of tariff lines and bound most to World Trade Organization binding levels. Duty rates range from zero to 30% with a few exceptions- notably in clothing and textiles and motor industry products. The general trend has been for tariffs to be reduced to encourage industries to become more competitive and also to reduce cost structures. Antidumping South Africa levies antidumping duty on the imports of certain categories of goods from certain countries and in some cases from

specific factories within those countries. Details of what products are subject to antidumping duty can be found in the South African Customs Tariff. Excise Duties Specific excise duties are levied on luxury goods, alcoholic and nonalcoholic beverages, tobacco/tobacco products, mineral waters, some petroleum products, and motor vehicles. Ad valorem excise duties are levied on office machinery, photographic film, and luxury consumer goods such as cosmetics, home entertainment products, and motorcycles. M. Extent of economic activity not included in cash income activities We were unable to find any information on the extent of economic activity that was not included in cash income activities, therefore, there are no key implications. N. Labor force Implications: The majority of South Africas labor force works for the service industry. Because pre-paid mobile phones are a huge service product, the chances that we will be able to find a reliable and profit concious vendor for our product are good. Also, with the high unemployment rate of 23.6%, people are tight on money and may have problems with signing 2-year cell phone contracts, so our pre-paid mobile phones are the perfect subtitute. 1. Size (Central Intelligence Agency) y 17.79 million economically active o Agriculture: 9% o Industry: 26% o Services: 65% 23.6% in June 2009

2. Unemployment rates (U.S. Department of State) y

O. Inflation rates (U.S. Department of State) y 5.8% inflation rate y Implications: No immediate implications Developments in science and technology (U.S. Department of State) A. Current technology available (computers, machinery, tools, etc.) y South Africa currently has modern and efficient urban telecommunications infrastructure, however this comes with a high cost and very limited coverage for the rural areas. This is also true for other technology such as

IV.

computers, televisions, and modern machinery. They are available mostly to urban South Africa. (U.S. Department of State) y Implications: The fact that there is a lack of telecommunications infrastructure to much of rural South Africa, our pre-paid mobile phones could provide these areas with new opportunites.

B. Percentage of GNP invested in research and development/Technological skills of the labor force and general population y Implications: We were unable to find information regarding the GNP invested in research and development and the technological skills of the labor force, therefore there are no key implications.

V.

Channels of distribution The main channel of distribution is South Africa is through retailers. We could not find other information about Wholesale middlemen, import/export agents, or warehousing. A. Retailers (GMID) y Implications: There is a large amount of store-based retailing in South Africa. The value of non-grocery retailers is 221,906.1 and there are 56,748 outlets. This would be where we would sell our pre-paid mobile phones, so the fact that they have high value and a multitude of locations is very beneficial for us.

1. Number of retailers (GMID) y y Store-based Retailing - Retail Value RSP: 441,355.6 Store-based Retailing - Sites/outlets: 116,707.0

y y

Mobile phone retail volume: 8,157,900 (GMID) Mobile phone retail value: 12,514.1 R mn

3. Customary markup for various classes of goods No information found 4. Methods of operation (cash/credit) No information found 5. Scale of operation (large/small) No information found 6. Role of chain stores, department stores, and specialty shops No information found B. Wholesale middlemen No information was found for the last four categories 1. Number and size 2. Customary markup for various classes of goods 3. Method of operation (cash/credit) C. Import/export agents D. Warehousing E. Penetration of urban and rural markets VI. Media y The media available to South Africans consists mainly of television, radio, and newspapers. Because the amount spent per capita on information and communication technology is $502.854, the majority of the money is spent on television communication. y Implications: The key implication for the availability of media in South Africa is that when advertising pre-paid cell phones, we will have the most success through television advertisements. A. Availability of media, coverage, and population reached y The media available to South Africans consists mainly of television, radio, and newspapers. The average information and communication technology

expenditure per capita in U.S. dollars is $503.854 (Nation Master.com, 2005) 1. Television y y Households with televisions: 59.2% (Nation Master.com, 2005) Television receivers per capita: 127.058 per 1,000 people (Nation Master.com, 2005) Radio stations available: AM 14, FM 347 (plus 243 repeaters), shortwave 1 (Nation Master.com, 2005) Radio receivers per capita: 0.336 per capita (Nation Master.com, 2005) Newspapers per 1,000 people: 25.41 (Nation Master.com, 2005)

2. Radio y y

3. Print y

VII.

Executive summary

Throughout this country notebook, South Africas economy is broken down into specific categories and factors. The majority of these economic factors have somewhat of an influence on how we will be able to sell pre-paid mobile phones. Researching, analyzing, and being able to interpret these influences is vital in selling our product. The following is a brief breakdown of the major influences and the effects they have on our product. The first economic factor of South Africa that influences how our pre-paid mobile phones sell is the population. 30.8% of the population is between ages 0-14. The fact that young generations are more prone to purchase new and innovative technology, supports that there will be many people interested in having cell phones. Also, 61% of the total population is concentrated in urban areas where technology is much more prominent, giving our product a better chance at success. Next to the population distribution is income distribution. This is an important factor for selling pre-paid cell phones because of the degree of inequality is so significant in South Africa. The poorest 10% of the population account for 1.3% of total income. However, the richest 10% of the population accounts for 44.7% of total income. This indicates that the majority of the population does not necessarily have the means to sign yearly contracts with a service provider, so our pre-paid mobile phones will appeal great to these consumers. Communicating and transporting our product and services are very important in being successful. South Africa has many means of transportation; however, when selling our product, it is important that there are 459 unpaved air runways. This works in our advantage because it gives us an easier way to transport cell phones to rural areas. Along with getting the product to its destination, effective communication is vital. First of all, South Africa is ranked 24 in the

world for cell phone users, so we will not have a huge problem with getting the market to accept our product. When advertising cell phones, it is important to keep in mind the fact that cell phones during business meetings is extremely unacceptable, so we need to make sure not to use a cell phone in this situation in an advertisement or else it will create a negative impression of our product. South Africas industry has a big impact on how our product will sell. Because technology and electronics are a large part of their industry, we can be confident that our prepaid mobile phones will sell successfully. Also, 71% of South Africas GNP goes to the service industry and since our product is largely a service product, we can assure that vendors who are selling it will have knowledge of customer satisfaction. Cell phones are also one of the top imports into South Africa, which makes this difficult considering there will be more competition. However, because we plan to possibly sell through another vendor, we may be exempt from Value Added Taxes. There are no other immediate trade restrictions against our products. When choosing channels of distribution, there are 56,748 non-grocery retail outlets. This would be the main means as to how we distribute our product. Lastly, the media available in South Africa is very important. They do have television, radio, and newspapers. However, television is the most received media per capita, so it would be most beneficial to advertise this way. These are only basic factors of South Africas economy which influence the marketing and selling of pre-paid mobile phones. Whether the factor is a positive influence, or a negative influence, it is very important for us to look at all aspects and take them into consideration so we can sell our product as successfully as possible.

VIII. Sources of information

Works Cited
(ABSA), J. D. S. (2007, june 22). Property South Africa. Retrieved from Household Income Trends: http://propertysouthafrica.wordpress.com/2007/06/22/household-income-trends/ Central Intelligence Agency. (n.d.). Retrieved november 10, 2009, from The World Factbook: https://www.cia.gov/library/publications/the-world-factbook/geos/sf.html FedEx. (n.d.). Retrieved from South Africa Country Profile: http://fedex.com/us/international/irc/profiles/irc_za_profile.html?gtmcc=us#C05

Global Edge. (2007, march). Retrieved from South Africa Trade Statistics: http://globaledge.msu.edu/countries/South-Africa/tradestats/ GMID. (n.d.). Retrieved from South Africa: http://unco.blackboard.com/webapps/portal/frameset.jsp?tab_id=_2_1&url=%2Fwebapps%2Fblackboa rd%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_33202_1%26url%3D InfoSud Human Rights Tribune. (n.d.). Retrieved november 8, 2009, from Wealth gap becoming a chasm in South Africa: http://www.humanrights-geneva.info/Wealth-gap-becoming-a-chasm-in,3654 International Business Etiquette and Manners". (n.d.). Retrieved november 10, 2009, from South Africa: http://unco.blackboard.com/webapps/portal/frameset.jsp?tab_id=_2_1&url=%2Fwebapps%2Fblackboa rd%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_33202_1%26url%3D International Trade Centre. (n.d.). Retrieved november 10, 2009, from South Africa: http://www.intracen.org/menus/countries.htm MBendi Information Services. (n.d.). Retrieved november 10, 2009, from South Africa Overview: http://www.mbendi.com/land/af/sa/p0005.htm#25 Mokonyama, M. (2008, april 21). Road (Surface) Transport Research in South. Retrieved from http://www.esastap.org.za/esastap/pdfs/present_trasaeu_2008.pdf Nation Master.com. (2005). Retrieved from Distribution of Family Income: http://www.nationmaster.com/red/graph/eco_dis_of_fam_inc_gin_ind-distribution-family-income-giniindex&b_map=1 South Africa: Country Factfile. (n.d.). Retrieved October 25, 2009, from GMID - Global Market Information Database: http://unco.blackboard.com/webapps/portal/frameset.jsp?tab_id=_2_1&url=%2Fwebapps%2Fblackboa rd%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_33202_1%26url%3D South African Revenue Service. (n.d.). Retrieved from Customs Duty: http://www.sars.gov.za/home.asp?pid=180#whatis U.S. Department of State. (n.d.). Retrieved November 8, 2009, from Background Note: South Africa: http://www.state.gov/r/pa/ei/bgn/2898.htm

IX.

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