BEE Partner, South Africa Economy Watch

South African local Chinese are in the “black people” which is designed to benefit previous apartheid disadvantaged groups. Are they are fully black now? Do they really benefit all the advantages of BEE Act? According to the report this morning, Chinese are not fully black.
Johannesburg - The National African Federated Chamber of Commerce and Industry (Nafcoc) has slammed a high court ruling that defines Chinese South Africans as black and gives them the full benefits of affirmative action legislation, claiming the black economic empowerment (BEE) “cake” was too small to share. Read the rest of this entry »

If the South African government wants to see the country become successful in the global environment, it needs the backing not only of the citizens of the country, but also of all the other key stakeholders. These include investors, business people, the trade union movement, as well as all financial and socio-economic institutions. Strategic thinking, whether at national or corporate level, depends on the ability of a government or management team to create and then harness a willingness amongst people to participate in outmanoeuvring the efforts of other countries and/or companies. Read the rest of this entry »

It is important for a government to fully understand the competitive dynamics of the global environment if it is to successfully take the country and its people forward. A political leader who is able to think and act locally, but is unable to do so on a global basis, is a liability to the development of the country. Advancing a country’s interests is all about economic and social development. A government that cannot create the right kind of climate for coordinated development is failing in its duty — not only to its electorate, but also to every single stakeholder. More and more national stakeholders throughout the world’s nations are beginning to demand this from their political leaders. Scotland is a good example. It has a mature, service-dominated economy with a proud tradition in all aspects of human endeavour far beyond its size or population. Yet the Scottish business sector recently challenged the nation’s political leaders, who themselves often call for domestic firms to become more globally competitive, to raise their own standards and play a greater role in assisting the country to advance its global competitiveness.” Read the rest of this entry »

In the New South Africa, it is interesting to align these six points with the concept of political neutrality, at least in the short t_omedium term. As an emerging nation builds itself and seeks to create for itself a desirable position in the world’s economic rankings, its entire focus should be orientated towards that purpose. Nothing should distract it from achieving its goal. Its resources, both human and otherwise, must be channelled into creating the right kind of society that will provide prosperity to the citizens of the country Political and social distractions channel resources away from the efforts of global economic and business competitiveness. The leaders of the country must be concerned with their own nation first, before they can deal with issues in other countries. Read the rest of this entry »

Sun Tzu’s advice to make one’s position unassailable assumes critical proportions for an emerging nation like South Africa, faced with stiff global competition not only from the well-established and First World nations of the world, but also from other developing countries. The world’s more advanced and wealthy nations are deeply entrenched in the global system, and manipulate it for their own benefit. They virtually control it, and have often come under intense criticism for practising double standards, particularly in their application of such issues as, for example, international trade.’

Other emerging nations, as well as the poorer countries of the world, also want their slice of the global pie and their share of global resources. They too possess a desire to improve the standard of living of their citizens, thereby improving their position in the global (or at least their region’s) economic rankings. For any emerging nation to successfully play the globalisation game, there are a number of strategic principles, identified by Sun Tzu, that should be followed. Read the rest of this entry »

If South Africa wishes to become a highly successful emerging nation, one that can seriously challenge for position in the world economic rankings and have its business corporations develop _agreater sense of competitiveness, a change in strategic outlook at both government and corporate level is required. This aims to outline the kind of approach an emerging nation like South Africa needs in order to enhance its competitive prowess at both national and corporate level.

Before a home-grown business organisation in an emerging economy can achieve a higher level of competitiveness, the condition_sin that country have to be conducive to competitive thinking.’ Read the rest of this entry »

Wing says that, since the time of Sun Tzu, the major conflict experienced throughout the world has remained the same, namely the struggle for ideological supremacy and the control of resources.’ In nation-states, and especially in the current global environment, _competition takes place for people, materials, technology and/or financial resources. A key principle in making one’s position unassailable is for the government of the day to view its nation as a complete and interdependable entity, and to take steps to ensure it survives as such. Sun Tzu said that it is not individually, but altogether, as a single and complete entity, that the people of the world face survival or extinction.’ Read the rest of this entry »

One of the major problems facing strategic thinkers is the whole issue of competitive advantage. According to strategy guru Richard D’Aveni, in most industries the days of permanent competitive advantages are long gone, because of the nature of what he calls `hypercompetition’.² D’Aveni contends that the best one can hope for is an ongoing series of temporary advantages, and that that is wh_atstrategists should be aiming at. This has led many organisations to move from seeking immediate competitive advantage to the development of long-term relationships with customers in the belief that opportunities for the creation of advantage will arise within the relationship. Allied to this is the belief that customers are company assets that need nurturing, rather than income sources that are there to be exploited. Also, more organisations are beginning to place greater value on customer advocates than on powerful management teams. In terms of customer loyalty, greater emphasis is being placed on moving customers up the loyalty ladder, until they becom_e advocates of the company and its products.’ Read the rest of this entry »

3. Support meritocracy

Local companies coming from a previously isolated and uncompetitive economy that now find themselves competing with the world’s best need to develop a culture of recruiting and retaining the best brains available. They also have to consistently reinvest in their human capital. Global players such as Unilever, Shell, Toyota, SABMiller and the Fortune 500-listed organisations, which are pretty well entrenched in the global arena, have a larger pool of talent available to them because of the size of their operations and global reach. For home-grown South African organisations, the competition for human capital intensifies, as the brightest stars either emigrate or join the global players, who can give them access to their new employer’s global network. Read the rest of this entry »

In addition to all of this, the development and application of strategic thinking is dependent not only on the manner in which the manager views his or her company, industry and competition, but also on how he or she actually views business per se, and the world in general. All organisations function within the greater universe. How a manager views our universe will have an impact on how a strategy is developed. For example, if business is seen purely as a means of making money, then one’s overall thinking will reflect that view. If, on the other hand, a broader context is applied, such as a business as a means of providing employment and/or making a contribution to the development of one’s community or country, then broader-based thinking will result. Read the rest of this entry »

Much strategic thinking in this country is also one-dimensional in nature. Many managers often go ahead and develop what they term a ‘strategy‘ from one perspective only — usually their own, and in terms of what they would like to achieve. The result is often a set of glorified objectives, or a vision established in emotive terms with scant regard for the opposition. Managers may take into accou_ntcertain aspects of the business environment, but few know how togather and utilise the information required to move their organisatio_ninto a position of superiority. The result is strategic myopia. Read the rest of this entry »

2. Global reach

Q Is South Africa’s reputation as a nation to buy into — whether the customer is a foreign investor, a tourist, a potential immigrant or from one of the other customer categories — strong and solid throughout the world? In this context, can branding be a powerful tool? Finland, for example, embarked on a successful campaign to enhance its image and position as a country associated with hi-tech innovation. It wanted to assist its companies to become more competitive in the United States, and used branding to improve its image. Read the rest of this entry »

The domestic investor is yet another class of customer. In June 2004, Allister Sparks, veteran journalist and political commentator, asked the following question: ‘Why do our business leaders seemso reluctant to invest in the new South Africa?’ In marketing terms, his question was really, ‘Why don’t our domestic investors want to buy South Africa, the product?’ Sparks quoted a figure of R392 billion — nearly a third of South Africa’s GDP — which is sitting in the balance sheets of South African corporations and that could be invested in the country. The truth of the matter is, as a custome_rof the country, a domestic investor is going to weigh up the kind of returns to be received and the risk to be faced before this ‘product‘ is consumed. Read the rest of this entry »

In each of the customer segments mentioned above, the ‘product’ has to be right so that the customer has a great experience of the country relative to the experience that can be gained elsewhere. For example, tourists not only want to enjoy the natural beauty and amenities of our country, but want to know that they will not be mugged on Durban’s beachfront, or attacked in their hotels in Johannesburg. They will also expect to be treated properly by customs officials at the various points of entry and exit. Should they embark on a tour of the country, they should feel confident that their lives would not be at risk owing to unscrupulous tour companies who put unroadworthy vehicles driven by inexperienced drivers on the road. Read the rest of this entry »

A well-known marketing adage states that a bad product will not last very long in the marketplace. No amount of sales, advertising or promotional effort will do it any good if people simply do not want to buy it. As any first-year marketing student knows, and in the words of famed marketing guru Philip Kotler, the marketing concept states that ‘the key to achieving organisational goals consists in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors’: In today’s bitterly contested global marketplace, countries have customers and competitors too. South Africa is no exception. Read the rest of this entry »

SUGGESTIONS FOR THE FUTURE

A number of salient issues and suggestions have emerged, which could form the basis of debate on the future of our country’s prosperity in the global arena:

Suggestion 1

Make The Art of War compulsory reading for all South African political and business leaders. It should also be part of the curricula in our business schools and universities, to help teach students to think strategically and competitively. Read the rest of this entry »

Scenario No. 5

At the end of 2004, Singapore announced that it would be increasing its technical assistance to Cambodia, Myanmar, Laos and Vietnam by approximately US$30 million. Viewed by its government as part of the Initiative for ASEAN Integration, an initiative launched in 2000, Singapore will be providing assistance of a technical nature, in which it has the expertise. Why should Singapore take su_ch step, and what are the implications for global competitiven_ess.

Firstly, Singapore has an interest in the stability and welfar_{e o}f its neighbours, since these poorer countries, along with Singapore help to comprise the region. Read the rest of this entry »

Scenario No. 2

During 2004, the likelihood of a pan-Asian integrated economic and free trade arrangement came a step closer to fruition. At the Association of South East Asian Nations (ASEAN) summit in Laos, a number of important linkages took place, which will have far- reaching ramifications for the intensification of global competition between nations, and globalisation in general.’ China signed a Free Trade Agreement (FTA) with ASEAN (which consists of Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) at the summit. This will soon be followed by Japan, India and Korea. Japan, Korea and China are also considering an FTA amongst themselves, whilst India is contemplating an FTA with China. What appears to be emerging is an FTA between Japan, ASEAN, China, India and Korea, or what is being touted as JACIK. Analysts are predicting the expansion of ASEAN into a broader Asian economic community. Read the rest of this entry »

There are signs everywhere for South Africa’s government, its business corporations and its people concerning the trends in and the effects of globalisation. These signs point to the steps being taken by other nations to help them cope with global competition. In other words, clues are emerging on what others are doing to become and remain globally competitive. Everywhere one looks, the indications are that global competition is not only intensifying, but that it is also accelerating at an ever-increasing rate. This adds to the extreme pressure that already exists for the world’s governments and companies to perform and to add value to the lives of their constituents and customers. Read the rest of this entry »

The endogenous determination of the interest rate

In a boom, banks will lend more and will seek to create new deposits or issue additional notes. To support these activities, they will have to attract additional reserves. This will lead them to bid up interest rates, as they seek to attract idle reserves from one another and from hoards. In a slump, they will issue less and lend less, and will seek to shed reserves, lowering interest rates. In other words, while long-term average rates are determined by costs and competition, current interest rates reflect the balance of supply and demand in the market. They move pro-cyclically.

This is illustrated by a simple model. On the one hand, the rate of interest (in relation to the rate of profit), is likely to affect investment inversely, and investment, in turn, will have an impact on prices and employment. Changes in prices and employment will call for changes in reserves. Read the rest of this entry »