Nikeis a transnational company that is headquartered in the US and offerstrendy and functional sportswear all over the world. The company wasfounded in 1964 and endeavors to stir innovation and inspiration toall athletes all over the globe. Even among the biggest sportsaccessory and apparel companies around the world, Nike has continuedto keep a high guard in its market that is exceedingly competitive.This paper seeks to discuss the potential future and standings of thecompany in regards to cultural, legal, economic, geographic andcompetitive aspects that have an effect of the organization in SouthAfrica.
Thebusiness community in South Africa has a history that has beenextremely conservative with a particular awareness and focuses onhierarchy as well as an accumulation of power at the top management.While conducting business in South Africa, in Nike Company theyshould understand that change is slowly introduced, in part by largemultinational corporations that made investments in the country after1994. Based on the conservative outlook, the business community ismainly averse to risk as demonstrated by the significance ofcontracts. In South Africa, agreements are usually very detailed, andverbal ones are seldom used. The specific factor that is significantin all cultures in the relationship between individuals (Silkenat,Aresty, & Klosek, 2009).An exceptional personal relationship offers a solid foundation forfurther cooperation, which makes conducting business in South Africarelatively simpler. This relationship remains particularly truewithin the government making introductions by third parties useful.It is important to note that there are clear dissimilarities inbusiness culture when making comparisons between the variousinstitutional relationships. Services offered to the public bybusinesses can vary regarding experience, but business-to-businessculture is usually very professional and satisfies internationalstandards.
Thelegal environment in South Africa is in history based on theRoman-Dutch law even though some features, especially law of evidencetogether with company law were significantly founded on English law. Universal business official practices associated with dealings alongwith the creation of commercial contracts are usually appropriate andaligned with global conventions as well as norms (Taylor& Thrift, 2013).Nike has a good position to conduct operations in South Africa sincethe country is admired all over the world for its progressiveconstitution that includes the bill of rights which is state’shighest law, regulating human rights protection and aspects thataffect legislation. South Africa’s law will further be beneficialto Nike since it guarantees its judiciaries independence. Nike willbe in a position to carry out the trade and the industry in aneconomy of free commerce and the courts treat foreigners in the samemanner conditions and terms that it treats South African citizens.However, numerous commercial disputes usually avoid the courts anddeal with them through arbitration or agreement between the parties.Furthermore, Nike will benefit from inviolability of contract, whichis safeguarded by common laws, and thus sovereign courts guaranteedeference for business obligations and rights.
Theexchange rate of South Africa’s currency puts it among the leastrich nations for foreigners to reside in and conduct business (Wood& Demirbag, 2012).Multinational corporations, such as Nike, which conduct business inSouth Africa, enjoy first world infrastructures along with improvedwelfare that ensure higher monetary value. Even though the cost ofenergy has escalated in the past few years, the government has beenplanning to satisfy the increasing energy need of the country withefficient and renewable sources. The nation’s petroleum pricescompare favorably, and multinational, and private sector oilcorporations refine and market almost all the imported petroleumproducts in the southern region of the continent. Further, costs oftelecommunication have been dropping as the government is takingnecessary measure to make sure that bandwidth capacity is less costlythrough the landing of some submarine fibre-optic cables in the westand east coasts of Africa which increased the connectivity of thecontinent to the rest of the globe. The fibre-optic project will behighly significant and beneficial to Nike’s operations and businessin South Africa regarding reaching the rest of the mainland.
SouthAfrica is among the most diverse, sophisticated and promisingdeveloping markets in the globe (Frankental& Sichone, 2005).Furthermore, it is situated strategically at the cape of the Africancontinent making it a critical investment location for commercialendeavors within the borders along with the possibilities it providesas an entry to the rest of continent. Nike is likely to benefit froma market of almost one billion people on the mainland when it usedSouth Africa as a gateway. South Africa is also attractive for Nikesince it has a lot of potential as an investment destination as aconsequence of an exceptional blend of highly developed economicstructures and a vibrant market economy that is still developing. Thenation is also among the most advanced productive and broad-basedindustrial economies on the African continent.
Africais ranked as the forty-ninth countries out of one hundred and fortyin the Global Competitive Index of 2015-2016 of the World EconomicForum. It is also the highest ranked nation in the sub-Saharansection of the continent while claiming the middle ground among BRICSnations. The government of South Africa further provides incentivesfor projects associated with value-added manufacturing, offerssupport for industrial innovation, enhanced financial access as wellas an enabling atmosphere for the development of small businesses(Sethi& Williams, 2000).In South Africa, Nike can benefit from industrial development zonesthat have been established near key ports as well as airports, whichoffer excellent infrastructure, devoted support for customs as welldecreased taxation. Further, South Africa has competition regime iswell regulated and developed founded on the best global practices.Its nations competitions abide by the European Union, Canadian and USmodels with the law placing some restrictions on anti-competitivepractices, restrictive practices like predatory pricing, price fixingand collusive tendering, as well as abuses by monopolisticorganizations which are considered to have a market share of morethan thirty-five percent.
Frankental,S. & Sichone, O. (2005). SouthAfrica`s diverse peoples.Santa Barbara, Calif.: ABC-CLIO.
Sethi,S. & Williams, O. (2000). EconomicImperatives and Ethical Values in Global Business.Boston, MA: Springer US.
Silkenat,J., Aresty, J., & Klosek, J. (2009). TheABA guide to international business negotiations.Chicago: American Bar Association, Section of International Law.
Taylor,M. & Thrift, N. (2013). Multinationalsand the Restructuring of the World Economy.Hoboken: Taylor and Francis.
Wood,G. & Demirbag, M. (2012). Handbookof institutional approaches to international business.Cheltenham: Edward Elgar.