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.

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

Answer 1

INTRODUCTION

Shop n Pay is a fast-growing, diversified South African-based retailer dealing in fast moving consumer goods (FMCGs). 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 favorable tax policies, stable electricity network, relatively good road network and investor-friendly business environment.

MOTIVATING FACTORS FOR INTERNATIONALIZATION

Some of the motivating factors for Shop n Pay in international market are given as follows -

1. COMPETITIVE ADVANTAGE

Internationalization is very helpful for any organization in winning competitive advantage in other country. Competitive advantage can be treated as one of the most effective motivating factor of internationalization. Most of the companies set up their business in various countries for winning competitive advantage in that country. According to the case study given in this question we can say that this organization can win competitive advantage in foreign countries with effective strategies.

2. PROFIT GAIN

Profit is also one of the motivating factor in international business. Organization used to set up their business outside the country for gaining huge profits. Initially organization have to bear cost because company have to invest in market research and other component before setting up business in other countries. According to the case study given we can say that, this organization is going for international business for profit gain.

3. INTERNATIONAL EXPOSURE

International exposure is also a motivational factor for the organization in international business. Organization get the international image for the company it helps in creating the credibility and good image of the organization. Many organizations operate their business in international market for international exposure.

4. RISK MANAGEMENT

Organization can manage the risk in international business. Risk management can be treated as one of the motivational factor for the companies in international business. When an organizational operates in both home country and host country then risk can be divided between both the countries. So we can say that company operates international business for the management of the risk.

5. FOREIGN CURRENCY

Foreign currency or money is one of the best motivating factor for the organization. Companies operates their business at foreign land for foreign currency. After reading the case given in this question I can say that this organization is planning to operate its business in various countries for gaining various currencies from these countries and this is a motivation for the organization.

6. BETTER OPPORTUNITIES

Companies go for international business for getting better business opportunities. In the international market organization get various opportunities that help the company to grow on foreign land. After reading this case we can say that this organization is working for getting best opportunities in international market.