Question

a. Discuss how the cultural environmental factors can affect the retail industry in Botswana. (Make use of relevant examples in your discussion).

b. With the aid of a relevant diagram and an example, outline the concept of opportunity cost.

Answer 1

Retailing is the sale of goods and services to the ultimate consumer for personal, family or household use, which contribute significantly to gross domestic product (GDP) through investment in technology, employment income and generation of government revenue through taxation and tax collection. The Household Income and Expenditure Survey (2003) indicate that Wholesale and Retail trade accounted for 13 percent of the 462,000 employed persons in Botswana, making it the third largest employer. Given small market size of Botswana, there is lack of attraction form foreign manufacturing firms. Botswana government intensified efforts to address this problem by attracting foreign investors to establish export-oriented manufacturing facilities. Most attractive features of Botswana are entrepreneurial skills development, employment generation, poverty alleviation, increased citizen empowerment participation and economic diversification. In many developing countries to regard wholesale and retail trade as a less productive sector with low potential to contribute to economic growth and development. Retail is one of the most diverse and dynamic sectors which presents numerous challenges to practitioners and policy makers alike.
Cultural Environment factors:
Material culture: which is refers to tools, artefacts and technology. It is important to assess the material culture like transportation, power and communication and so on. Material culture introductions into a country may bring about cultural changes which may or may not be desirable.
Education: Education refers to transmission of skills, ideas and attitude as well as training in particular discipline. This can transmit cultural ideas or be used for change.
Attitude and values: Values have religious foundation while attitude relates to economic activities. It is essential to ascertain attitudes towards marketing activities which lead to wealth or material gain.
Safety and security: Botswana is one of the most secure and safe country in Africa and compares well worldwide for low crime rates and the rule of law. Well trained law enforcement deploys the latest crime prevention strategies and equipments.
Stable inflation: A major component of country’s macroeconomic policy has been to attain low, stable and predictable level of inflation maintain economy’s global competitiveness while preserving value for foreign investors and domestic business.  
Taxation: Comparatively low level of taxation in Botswana as an incentive to investment.
Accessing credit: Botswana’s financial and capital markets are among the most sophisticated in Africa, boasting numerous domestic companies and regional offices of multi-national.

b) Opportunity cost is the cost of alternative opportunity that is sacrifice or given up. It arises because of resources are scarce and they have alternative uses. It is also known as displacement cost. The opportunity cost of ay good is the next best alternative good that is given up to produce this good. Opportunity cost in money terms is the sum of total explicit ad implicit cost. i.e. economic cost. In some cases opportunity cost can alter personal behaviour. For example, that you spend $8 on lunch every day at work. You may know perfectly well that bringing a lunch from home would cost only $3 a day, so the opportunity cost of buying lunch at the restaurant is $5 per day. The fundamental problem of economics is the issue of scarcity. Therefore, we are concerned with the optimal use and distribution of this scarce resource. Best examples of opportunity cost are the cost of war, spending on new roads, tax cuts, time etc. Using the production possibility frontier we can find the opportunity cost.