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I. Cultural Analysis

I. Introduction

Company: T-Mobile offers plans that allow for pre-paid services. These plans allow acustomer to buy a phone that is usually in the lower price bracket and buy however manyminutes 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 landwhile 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 Africasfirst settlement. In 1806, the British invaded the area founded by the Dutch which inevitablyforced 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 thesettlement and the Brits. The new found wealth started a large dispute between the remainingDutch (which were then known as The Boers) and the British which lead to the Boer War (1899-

1902). The war ended up benefiting both parties, the British and the Afrikaners (which wereformally 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 tothose of European decent. It wasnt until 1994 that the apartheid policy came to an end when thefirst 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 thenorthwest, and Botswana and Zimbabwe to the north and the Ocean to theSouth.

South Africa has many ports and terminals located in Cape Town, Durban,

Port Elizabeth, Richards Bay, and Saldanha Bay making it a veryaccessible country for trading.

South Africa is 9,607.51 miles from the United States.


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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 coolnights. The summer months of May to August become much drier withless rain and less vegetation.

C. Topography

(International Business Etiquette and Manners, 2009)A central plateau, mountain ranges that surround the plateau and low lyingland along the coast make up most of the countrys topography. Thesavannah still plays a major role much like in other African countries. All

of this variation makes South Africa one of the most geographicallyvaried countries.

Implications: South Africa is a very accessible country. Being surrounded in the South by watermakes for a very easy entrance via boats, and by being mainly a plateau there would be lowdifficulty 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-speakingwhite 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


While down played to the white South African population, the coloredtraditional Afrikaans considers their extended family to be as or closeto being as important as their nuclear family.


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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 thefamily and the mother is the homemaker. In poorer communitieswhere having a child outside of wedlock is common, the mother

raises the child in a support web made up of her family while thefather 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. MarketTree Consultancy found that 55% of South Africans aged 25 or

more are married or living with their significant other, 4% aredivorced or separated, and 10% are widowed. The countrysdivorce rate is extremely low in comparison to many of thecountries 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 powerfulrole than before. Females are becoming more involved in the

government, business and family life. There are even some femaletribal chiefs now. Although they are starting to play a more importantrole, they are still not easily accepted in some traditional societies.

Implications: The importance of the extended family in some of South African population canbenefit 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 theopportunity 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.)


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Primary education students begin their education at the beginningof the year in which they turn seven. They partake in the basic

learning activities which include reading, writing and calculatingand move on to reading, mathematics, history, geography, generalscience, 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, furthereducation and training. This includes the equivalent of Grades 10

through 12 and National Certificate one through three in technicalcolleges. Students write a public examination over all of theirsubjects 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 consistingof 11 universities, five universities of technology, and sixcomprehensive institutions. Some of these institutions are well

known for being world-class academic institutions and have morethan 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 and85.7% of females, making this a very literate country.

Implications: Education seems to be high in South Africa, which tells us that they could be ahigher technological country. Mobile cell phones would be important to those studentsespecially 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, thusmobile cell phones are a must.

C. Political system

1. Political structure


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(South Africa)

The parliament has two chambers, the National Assembly and the

National Council. The National Assembly has 400 members that areelected for five-year terms by proportional representation. Their executivepresident is elected by the National Assembly for a five-year term of

office. The National Council has 90 members that are elected for five-yearterms by the provincial parliaments.

2. Political parties

(South Africa)

Inkatha Freedom Party is the current ruling party in South Africa. Theylead 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. Theystated that the South African government has implemented sensible fiscalpolicies 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-shorelocation for international headquarters because of their territorial system

of taxation. But that has since been replaced with a more commonworldwide 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 organizationthat was originated to help with the transformation of the previous

government to the new democratic system in the early 1990s. Currentlythe SALGA focuses on the local government, how it can improve andlearn 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 asafe environment to market and sell within. South Africa is always open to trade and do already


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have other cell phone providers there, so we see this as a market that will be beneficial topenetrate.

D. Legal system

(Agency, 2009)

1. Organization of the judiciary system

Their judiciary system consists of a Constitutional Court, a Supreme Courtof Appeals, High Courts, and Magistrate Courts.

2. Code, common, socialist, or Islamic-law country?

South Africas courts rule under Roman-Dutch law and English commonlaw.

3. Participation in patents, trademarks, and other conventions

South Africa is much like the United States along the lines of patents andtrademarks. 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 marketinglaws are much like the United States, because of their common law thatthey adhere to.

Implications: South Africas political system seems to be a lot like the United States, which isgood 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 ourcompany 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 isheaded towards better life, they still experience discrimination towards


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women and those with HIV/AIDS. Violence is still a very common acttowards women and children as well.

2. Social classes

South Africa consists of the basic social classes of a poverty class, aworking class and an upper class. The gaps between these classes havebeen widening, mostly due to the increase in the poverty class. Keepingjobs 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-Mobileto 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 organizationthat profits them or market towards using their pre-paid phones to keep in touch with their lovedones that are affected by the disease.

F. Business customs and practices



The following are all business customs and practices that are used in South

Africa:y Gift giving is not the normy Do not present gifts with your left hand; use both or your right handy Gifts are opened upon receipty Business meetings are held over lunch or dinner at a nice restauranty Appointments are necessary and should be made starting at 9 am and as far in

advance as possibley Business dealing are very casual


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y South Africans business people prefer a win-win situationy Use titles and surnames to address peopley Handshakes are the most common greeting, though there are a variety of

handshakes between ethnic groupsy Networking and relationship building are crucial for long-term business successy Sports analogies and metaphors are often used to demonstrate a pointy Face to face meetings are much more preferred over more impersonal

communication mediums

y Women arent in high position in South Africa, so women should expect toencounter some condescending behavior and to be tested in ways that a malecolleague would not

y Do not interrupt a South African while they are speakingy Deadlines are often viewed as fluid rather than firm commitmentsy 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?



South Africa is a predominantly Christian country; they are two-thirds

Christian (mainly Protestant) that combine Christian and traditionalAfrican 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 iscommon for people who are studying Muti, which is the Zulu word formedicine, to take people and make them into human sacrifices. Many

children disappearances have been reported and hundreds of people aresaid to have been killed for these sacrifices.


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Implications: The implications with religion are sparce. They are a dominately a Christiancountry 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


1. Visual arts (fine arts, plastics, graphics, public art, colors, etc.)

Art is a treasured aesthetic to South Africa because they have some of themost ancient and beautiful rock art saved from the ancestors of todaysBushman.

Since theyre discovery, foreign artists have been drawing, painting andsculpting their life, environment and people. The colonial era broughtartists that concentrated on depicting this new world , while the end of

the 19th

century had work that captured the traditional Afrikanns life thatwas 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 thathave no formal trainding and come straight from their communities; andthe professional dancers that come from dance companies. Thought there

has been a long history of classical ballet, contemporary dance isbecoming more and more important. Afrofusion is a represenatation ofa blend of multiple cultures through the combination of formal dance

training, African spirit and classical ballet.

3. Folklore and relevant symbols


Implications: There could be no implications found relating to this area.

VI. Living conditions

A.Diet and nutrition

(South African Eating Habits)

(South Africa)


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B. Housing

(Hall)

(Family Life in Colored Families)

1. Types of housing available

There are three types of housing available in South Africa. The formalhousing consists of adequate housing, dwelling or brick structures, flatsor apartments, and town/cluster/semi-detached houses. The informal

housing consists of an informal dwelling or shack in a backyard, aninformal settlement, a dwelling or house/flat/room in a backyard, andcaravans or tents. The traditional housing consists of a traditional

dwelling/hut/structure made of traditional materials.

2. Do most people own or rent?


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 notuncommon 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 anotherarea of their lifestyle that shows they are a developing country, but still have the percentages ofpopulation that cant afford a more expensive lifestyle.

C. Clothing



1. National dress

The South African population generally wear western style clothing. They

dress well when in public. African women typically wear a sari.


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2. Types of clothing worn at work

South African business people typically are well dressed, in professionalbusiness attire. Though it is becoming more informal in many companies,

they still dress to impress at first meetings. It is more common for them todress 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


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 sportingattraction 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


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 marketingopportunity for T-Mobile.

E. Social security

(Van der Berg)

Social Security in South Africa began as a welfare program for people ofEuropean 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 allSouth Africans and works similarly to other developing countries. Thisincludes 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 issupporting a stable environment which house Afrikaans that can support a cell phone bill andthat our country should feel comfortable entering.


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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 thebasic 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


(Agency, 2009)


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 English8.2% 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 toinclude more of their own language and English. Since English is the businesslanguage, Afrikaans have taken to making that one of their more common written

languages.


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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 forAfrican language speakers to combine languages when they speak, for exampletheir English will be peppered with their Setswana. The languages all do havecommon 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 T-Mobile other than they may want to offer options that support some of the dominate languages inSouth 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 inplace already.

VIII. Executive summary

Throughout this cultural analysis there have been descriptions on the South Africahistory, culture and the many dimensions of their lifestyle. The effects that they have onbringing 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 thefollowing summary.

South Africas location is a major advantage for trading with them. It is a very accessiblecountry. Being surrounded in the South by water makes for a very easy entrance via boats, andby being mainly a plateau there would be low difficulty getting our product distributedthroughout 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 andwhere cell phones are necessary. Being a world that is being pushed more and more towardstechnology, 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 astable 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 safeenvironment to market and sell within. South Africa is always open to trade and do already haveother 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 goodnews for T-Mobile because of the familiarity they will have. Their use of common law and theirparticipation in patents and trademarks shows their business environment to be one that our


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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 tosuccessfully market to them all at once. The problem they have with HIV/AIDS could besomething 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 lovedones 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-Mobileto enter this market by sponsoring their countrys football (soccer) team which is an extremelyimportant 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 throughoutthe 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 agreat opportunity for their pre-paid cell phone plans and they could benefit greatly by takingadvantage of all the positive factors that South Africa has to off er them. Looking through theinformation 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 reccommendationof 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


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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-country-

profile.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


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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. Introductiony 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 theyounger population between ages 0 and 14 is very beneficial for selling our

product. This is because the younger generations are more prone to purchasingnew technology. This, along with 61% of the total population being urban areasproves 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, totaling49,888,700 as of 2008 (South Africa: Country Factfile)

1. Growth rates

.281% (U.S. Department of State)

2. Number of live births


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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 thepopulation is between the ages of 0-14 which indicates a young population

1. Age (South Africa: Country Factfile)

y Age 0-14 in 2008: 30.8%y Age 15-64 in 2008: 64.8%y Age 65+ in 2008: 4.4%

2. Sex (South Africa: Country Factfile)

y Male population in 2008: 49.3%y Female population in 2008: 50.7%

3. Geographic areas (urban, suburban, and rural density andconcentration)

y Urban population: 61% of total population (2008)y Rate of urbanization: 1.4% annual rate of change (2005-10 est.)

(Central Intelligence Agency)

y Rate of Rural changes: -0.04% annually (Nation Master.com, 2005)4. Migration rates and patterns

y Net Migration Rate: -0.13 migrant(s) per 1,000 population(Central Intelligence Agency)

5. Ethnic groups (South Africa: Country Factfile)

y Black African: 79%y White: 9.6%y Colored: 8.9%y Indian/Asian: 2.5%

III. Economic statistics and activity


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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 millionso 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 thattheir economy is on the rise, supporting our sales of pre-paid mobile

phones

B. Personal income per capita

y GDP per capita in 2008: $10,100 (South Africa: Country Factfile)y Implications: No immediate implications

D. Distribution of wealth (Central Intelligence Agency)

y Household income by percentage of share:


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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 annualincome of R360,000

y 6.3% of total householdsImplications: 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 themeans to spend a lot of money on cell phone contracts. Also, the factthat the richest 10% of the population has 44.7% of the income, pre-

paid cell phones could sell very well.

E. Minerals and resources

y South Africa is the largest producer and exporter of platinum. (GMID)


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y They are the third largest gold producer in the world (GMID)y Coal and iron ore are two other significant exports for South Africa

(GMID)y Implications: No immediate implications

F. Surface transportation

y South Africa's transportation infrastructure is well-developed, supportingboth domestic and regional needs. (U.S. Department of State)

y The following is a list of South Africas transportation information(Central Intelligence Agency)


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Airports:

607 (2009)

country comparison to the world: 11

Airports - with paved runways:

total: 148over 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 kmcountry 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


paved: 73,506 km (includes 239 km of expressways)

unpaved: 288,593 km (2002)

Merchant marine:total: 3


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)


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Ports and terminals:

Cape Town, Durban, Port Elizabeth, Richards Bay, Saldanha Bay

y Implications: When selling pre-paid mobile phones in ruralSouth Africa, we should consider using air as a means totransport our products. The 459 unpaved runways work in our

advantage so that we will be able to get our product to ruralareas.

G. Communication systems

y South Africa has a well-developed system of communications. The mobiletelephone users compared to world numbers is ranked at number 24.Internet users are ranked at number 49.

y Implications: When selling pre-paid mobile phones, it is important thatthere 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 goodimplication that our product will be able to sell successfully.

y The following is a list of the communications and infrastructure in SouthAfrica (Central Intelligence Agency)

Telephones- main line in use

4.425 million (2008)


Telephones - mobile cellular:

45 million (2008)


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 l inks,

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:


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H. Working conditions/Business relationships

y Business communications in South Africa are very professional. From ahandshake to greet, to using formal titles and surnames when speaking to

or about somebody, a classy image is always portrayed. However, whenconducting business deals, the environment can be seen as more of a casual

environment. A win-win situation is always preferred (InternationalBusiness Etiquette and Manners")

1. Employer-employee relations (Global Edge, 2007)

y There is not much small talk in business and it is not acceptable ifpeople are too loud. As businessmen, show respect for the womenand always treat them in a businesslike, professional manner.

Avoid outbursts of chauvinism. Do not make suggestive jokes andcomments. (Global Edge, 2007)

y Cellphones have become part of our lives and are an essentialbusiness tool. Using your cellphone incorrectly and at the wrongtimes will show disrespect to the people in your presence. Thisetiquette 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 surethat in our advertisements, not to use cell phones in an inappropriate

manner such as during a business meeting. This could create a negativefeeling toward our product.

I. Principal industries

y minerals, mining, motor vehicles and parts, machinery, textiles,chemicals, fertilizer, information technology, electronics, othermanufacturing, and agro-processing are South Africas principalindustries (MBendi Information Services)

y Implications: Because we are selling mobile phones, the fact thatinformation technology and electronics are a large part of their

.za

Internet hosts:

1.73 million (2009)


Internet users:

4.187 million (2008)



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industry show that the chances of our product being accepted arehigh.

1. What proportion of the GNP does each industry contribute? (U.S.Department of State)

y Agriculture and mining (primary sector)--8%y 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 tocreate a superior product with customer service and satisfaction that

will affect a large portion of the economy.

J. Foreign investmenty 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 futuremarket, are all factors that South Africa has implimented to stayinvolved in foreign investments while creating the best opportunities

for their own country.

y The stock of direct for foreign investment at home is $120 billion. Thisis ranked 29 compared to the rest of the world (Central Intelligence

Agency)

y The stock of direct for foreign investment abroad is $63.57 billion. Thisis ranked 28 compared to the rest of the world (Central Intelligence

Agency)

y Implications: With South Africas ranks being in the top 30 for foreigninvestment, it shows their willingness to do business abroad and this

increases the likelyhood that they would invest in our company andproduct.

y Private citizens are now allowed a one-time investment of upto 2,000,000 rand (R) in offshore accounts (U.S. Department

of State)y Shareholding threshold for foreign direct investment outside

Africa was lowered from 50% to 25% to allow companies toengage in strategic international partnerships (U.S.Department of State)

y South African companies involved in international tradepermitted to operate a single Customer Foreign Currency


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(CFC) account for all international transactions (U.S.Department of State)

y Permission was also granted to the Johannesburg SecuritiesExchange (JSE) to establish a rand currency futures market, inorder 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 Africawas launched in 1997. It teamed up with the promotion ofinvestment at a national and provincial level, and it providesopportunities available in every province. (MBendi InformationServices)

K. International trade statisticsSouth Africa's major trading partners include Germany, China, the UnitedStates, 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 (MBendiInformation Services)

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


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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 trendsof the U.S.-South Africa exchange rate have fluctuated downand up for the past few years. It is currently on an increase.


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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. dollarcan 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, anddoes not have any immediate duties. If we decide to sell mobile phones

through another vendor in South Africa, our product may be exempt fromthe Value Added Taxation. This is why we should consider finding avendor to sell to instead of selling directly out of the United States.

1. Prohibitions (FedEx)

y Drugs and narcoticsy Pornographic or objectionable materialsy Plants, seeds, bulbs, raw cottony Uncooked meat/poultryy Honey, beeswax, bees and their larvae or eggs, used

beehive appliances

y Uncut diamondsy Unwrought goldy Ammunitiony Dry Ice


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y Furniturey Fursy Dangerous Goods as defined by IATA (Intl. Air Transport

Association)

2. Import Permits (FedEx)

y Products still requiring import permitso Foodstuffso Used clothingo Refined petroleum productso Chemicals

y These import permits must be obtained from the Director ofImports and Exports before the date of shipment and shouldbe 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 canenter the United States market duty-free and quota-free. South Africahas 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-rebatedcustoms duty (tariff plus import surcharge). VAT is payable on goods

imported into the Republic by any person, regardless of whether theimporter is registered as a vendor. However, goods imported for the usein manufacturing or resale by registered traders may be exempt fromVAT. 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 taxablesupply (FedEx)

5. Customs duties (FedEx)

Import DutiesAs a result of its market access offer for the Uruguay Round, SouthAfrica has significantly reduced its number of tariff lines and bound

most to World Trade Organization binding levels. Duty ratesrange from zero to 30% with a few exceptions- notably in clothing andtextiles and motor industry products. The general trend has been for

tariffs to be reduced to encourage industries to become morecompetitive and also to reduce cost structures.

Antidumping

South Africa levies antidumping duty on the imports of certaincategories of goods from certain countries and in some cases from


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specific factories within those countries. Details of what products aresubject to antidumping duty can be found in the South African Customs

Tariff.

Excise DutiesSpecific excise duties are levied on luxury goods, alcoholic and

nonalcoholic beverages, tobacco/tobacco products, mineral waters,some petroleum products, and motor vehicles. Ad valorem exciseduties are levied on office machinery, photographic film, and luxury

consumer goods such as cosmetics, home entertainment products, andmotorcycles.

M. Extent of economic activity not included in cash income activities

We were unable to find any information on the extent of economic activity thatwas not included in cash income activities, therefore, there are no keyimplications.

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, thechances that we will be able to find a reliable and profit concious vendor forour 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 phonecontracts, so our pre-paid mobile phones are the perfect subtitute.

1. Size (Central Intelligence Agency)

y17.79 million economically active

o Agriculture: 9%o Industry: 26%o Services: 65%

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

y 23.6% in June 2009O. Inflation rates (U.S. Department of State)

y 5.8% inflation ratey Implications: No immediate implications

IV. 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 telecommunicationsinfrastructure, however this comes with a high cost and very limitedcoverage for the rural areas. This is also true for other technology such as


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computers, televisions, and modern machinery. They are available mostlyto urban South Africa. (U.S. Department of State)

y Implications: The fact that there is a lack of telecommunicationsinfrastructure to much of rural South Africa, our pre-paid mobile phonescould 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 GNPinvested in research and development and the technological skills of the

labor force, therefore there are no key implications.

V. Channels of distributionThe main channel of distribution is South Africa is through retailers. Wecould 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 are56,748 outlets. This would be where we would sell our pre-paid mobilephones, so the fact that they have high value and a multitude of locationsis very beneficial for us.

1. Number of retailers (GMID)

y Store-based Retailing - Retail Value RSP: 441,355.6y Store-based Retailing - Sites/outlets: 116,707.0


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y Mobile phone retail volume: 8,157,900 (GMID)y 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)


5. Scale of operation (large/small)


6. Role of chain stores, department stores, and specialty shops


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, andnewspapers. Because the amount spent per capita on information andcommunication 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 isthat 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


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expenditure per capita in U.S. dollars is $503.854 (Nation Master.com,2005)

1. Television

y Households with televisions: 59.2% (Nation Master.com, 2005)y Television receivers per capita: 127.058 per 1,000 people (Nation

Master.com, 2005)

2. Radio

y Radio stations available: AM 14, FM 347 (plus 243 repeaters),shortwave 1 (Nation Master.com, 2005)

y Radio receivers per capita: 0.336 per capita (Nation Master.com,2005)

3. Print

y Newspapers per 1,000 people: 25.41 (Nation Master.com, 2005)

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 phonessell 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


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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 pre-

paid 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


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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

InfoSudHuman 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:



InternationalTrade 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-gini-

index&b_map=1

South Africa: Country Factfile. (n.d.). Retrieved October 25, 2009, from GMID - Global Market

Information Database:



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. Appendixes

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