throughout the country. Secondary to English would be Afrikaans and several other tribal or native languages. Those tribes that are indigenous to the country typically have their own tribal language that they utilize. The major cities in South Africa are primarily English speaking. The rural communities of Africa have several indigenous languages that the cultures speak and communicate in.
Differences in communication styles can often create miscommunication and misunderstandings when conducting business. While communication may vary from country to country and within the same country; what does remain consistent is the use of non-verbal communication. Non-verbal communication includes anything from hand gestures, body movement and eye movements. It is also not appropriate to greet someone in South Africa by using only their first name. It is expected to use a proper greeting related to their salutation such as Mr, Mrs. or Doctor. South Africans prefer to always communicate in person and avoid the use of email and phone calls in favor of in face to face interaction.
When attempting to communicate with Africans, it’s important to be interested in what they feel is important to them and in their culture. Try to see their culture from their point of view, as it will be different from your own. It will help when communicating with them if you are coming from a place of understanding relative to what is important to them in their culture. South Africans connect to others by sharing and talking about family and more relational matters. While Americans are more focused on discussing specifics about a deal or executing; this approach will fail and not be successful in the South African culture.
Religion
Christianity is the primary religion of South Africa. The African Independent Church is where the majority of South Africans attend, which is a combination of Christianity and some of their ancestry beliefs. It weakened the status quo, and brought opportunities and weakened the power of the oppressors. With Christian missions coming to this region to assist, this provided natives a chance for education and literacy. However, the spread of Christianity has also created conflicts within the cultural and traditional ceremonies of the elders. The basic foundational values and way of life are taught from generation to generation. Elders of the community have the final authority and are completely trusted and respected.
The allocation of the religions are as follows: Christian (86%), Traditional African (6%), Non-affiliated (5.2%), Muslim (1.9%), and Hindu (0.9%)
While the Muslim population is small in percentage, they primarily are concentrated in Cape Town. Due to the socioeconomics of Muslims, they all live in close proximity to one another. In addition, until they are either married or given their house, everyone lives in the same compound. For a female, when she gets married, she will move into her husband’s compound. Muslims still participate in and celebrate their holiest month, called Ramadan.
South Africans integrate religion into all aspects of their lives. While most Americans separate business and religion, South Africans do not see religion or their faith separate. It is highly entwined in their daily lives, including business.
Ethics
The standard and principles for corporate governance in South Africa are set by what is referred to as the King Reports. These reports are issued by the King Committee and establishes business ethic requirements for companies that trade on the Johannesburg Stock Exchange. The ethical values that are measured by this committee are responsibility, accountability, fairness and transparency. The business world in South Africa lacks the establishment of clearly defined ethical behavior in the workplace.
Values and Attitudes
Values in a society are accepted beliefs about what is right and wrong. This is relative to the history and environment of the culture and establishes social norms. Depending on how one conducts himself, he can be socially accepted or outcast based on his behavior in relation to the culture’s values. Attitude is the combination of one’s values, beliefs, feelings and state of mind.
The 1948 implementation of the system of racial apartheid system by the National Party saw the birth of a form of social engineering that repressed the locals (blacks) and intensified the gap between black poverty and white prosperity. Apartheid reached its peak by 1970 but eroded under the pressure from world organizations. After the post-apartheid period in South Africa, several economic prospects made themselves available. Unemployment rates decreased as a result of new businesses and increased jobs. More people had access to electricity and even televisions and cellphones in their homes.
Despite the good that was brought about by the democratic government, many South Africans still live in poverty. Particularly in rural areas and on the fringe of big cities. In addition, xenophobia appears to be on the rise, which is the fear of people from other countries.
South Africans expect you to spend some time with them in informal settings, not only during business dealings. This could include eating at their homes, tea time at work, anywhere and doing something specifically outside of work. South Africans are very gracious and will offer you food and drink when you come to their home or work. This is required of them and as such, you are required to partake in what they are offering as well. The South African may invite you over several times before they are ready to engage to discuss an actual business deal and subsequently invite you into the business office. South Africans like to talk about their family and relationships prior to engaging in any discussions related to work. This relationship should be valued and seen through.
Manners
The manner of greeting or addressing others is very casual, and they may greet each other with, “Hi” or “what’s up”. Americans appear aggressive to Africans. Americans motto is business before pleasure and to aggressively see things through to get things done. Africans often see this type of behavior as arrogant or insensitive. They are more concerned with the pleasantries and getting to know someone in order to trust them to do business with. Westerners should be slow to judge or correct as the thought process of Africans varies widely from that of Americans.
Customs
Inhabitants of South Africa are approximately forty million and three-quarters are black Africans, with 15% white Europeans and the remaining 10% a mixture of Malayan and people of Indian descent. There are different ethnic groups such as of Zulu, Xhosa, Tswana, and Bapedi, which make up the majority of the African descent.
Africans are a very diverse nation and as such are often referred to as the ‘Rainbow Nation’. The rich culture of the unique and diverse groups each brings their own sense of vibrancy. One of the cultures is named Zulu. Zulu culture, there are sangomas or visionary Africans are more relational and event-oriented while Americans are information oriented. These differences can create issues when aligning with each other. Understanding each other’s relational style will help to mitigate contention and stress in the relationship.
South Africans, due to the early colonial English settlers, observe daily scones and teas. South Africa is heavily influenced by European customs. This also extends to adopting the same driving customs as Europeans by driving on the left-hand side of the road. Despite adopting several of the European customs, South Africans have not forgotten their roots or heritage and still ascribe to traditional attire, particularly those in rural areas. The South African clothing is very vibrant colors and includes patterns that stand out. They also were very large and intricate jewelry.
A patriarchal society consists of a male-dominated society where men hold power over women. Due to this, South African women and children are the most impacted by in their fight against poverty by having fewer tools and opportunities to escape. Often times a female child can be denied education or forced into marriage. These are the resulting actions of a patriarchal society.
This helped to take back the power from the apartheid and ensure that blacks were given an equal voice in their ability.
Social Structures and Organizations
South African society is very close-knit and relational. Tasks and function are assigned to be more group or tribe like, mostly in rural areas. This differs in the way that Americans operate as very individualistic. Operating in groups or teams has created more sustenance for many tribes.
Driving in South Africa is different from driving in the United States, but similar to Europe. Drivers on the highways keep left and pass from the right. Americans keep right and pass on the left. South Africa has adopted many European customs as this is where they adopted the driving style.
This is relative to the patriarchal society that these women live in. The South African culture views women as subservient to men, less important and less deserving of power. The expectation is for the women to be homemakers and take care of the children. White women that are more affluent are in positions to pursue more of the professional jobs and positions while the blacks do not have the same opportunity due to lack of resources and wealth.
Some of the best beaches in the world are located in South Africa.
Education
A resulting legacy of apartheid is that many Africans are illiterate and innumerate and as a result find it difficult to work in the mainstream economy. The country spends a significant amount of money and resources to its education system. South Africa spends at least 6% of its GDP towards education. Despite this investment, several children are unable to pass their end of year exam.
In 2003, the South Minister of Education launched the Girls’ Education Movement (GEM) which is dedicated to giving girls a chance to become educated. GEM works to improve conditions for girls and to provide them with an opportunity to receive a higher education. In 2007, Oprah Winfrey opened a school for disadvantaged girls in Johannesburg to fulfill a promise she made to Nelson Mandela.
Since many schools were run by the British public school system, rugby became the national sport. In addition to normal educational subjects, education also addresses the cultural edification. Education is important in South Africa and primarily in business as the respect a person earns and is given is dependent on his or her education.
Communication
Understanding a local culture and being sensitive to it is critical when conducting business in a foreign country in order to succeed. It is imperative that time is given to understanding the ways in which the culture communicates. If one attempts to pursue and conduct business in the same manner in which they do domestically, it can lead to systematic discrimination. What may work in your own country can be seen as an insult in another country. Conducting business in South Africa will require effective cross-cultural communication. Depending on the area of the country that you are to conduct business in, the language used can vary widely. One must build personal trust before being afforded the opportunity to conduct business in the country. Not spending the time and investment in understanding the local culture, can end up being very costly.
If at all possible, learn the language of the people that you will be doing business with. Understanding the language is the ‘door’ to their culture. It is common to use a handshake for the greeting. To begin a conversation, Americans will generally talk about the weather, sports and nothing personal. South Africans feel very strongly about the soccer teams that they support and they avoid discussions about religion or politics. They are also keenly interested in talking about their family.
Cross-cultural barriers can impede the ability to properly communicate. In particular, jargon and slang typically do not translate well into other cultures and therefore should not be used. The same holds true for acronyms. Another major cross-cultural communication variable to consider is context, high and low context. High context cultures communicate in a way that relies on non-verbal and subtle cues. Low context cultures communicate rely mostly on the use of words to convey meaning. South Africa is a high context culture where they are more relational and thoughtful. The United States is a primarily low context culture and favors the use of verbal communication. These differences in context do not mean that one is more effective in terms of communication over the other. These differences simply need to be understood and internalized so that the proper approach is taken to communicate effectively for the intended outcome.
Religion
Religion is often a topic that can be misunderstood. Business professionals should understand this important cultural aspect. Religion influences the way that South Africans look at and view work. It also determines their attitude towards work. South Africans do not separate their faith from their daily work. Family and relationships are important to them as it relates to business. There is no difference or delineation for them as they all work to exist coherently.
Ethics
Ethics in business can be defined as the discerning difference between good and bad with moral duty and obligation in decision making. This concept is clear in the United States where many corporations have an ethical aspect included in their credo and governing rules of conducting business. When applying this concept cross-culturally, it can be difficult as one culture may deem something as appropriate while the other deems it as unethical. However, there are certain universal values that do exist such as killing, lying and cheating. These are considered wrong across all cultures. South Africa business has a reputation for being unethical. Investors will need to understand the risks involved in investing in this type of environment and society. This society is often times subjected to a continual corruption, wage strikes and even protests. This type of unethical behavior also extends to the government as well. The main reason why the unethical behavior is occurring domestically is due to the lack of equality between the blacks and the whites.
Another type of ethical difference can be seen in child labor. South Africa has nearly 1/3 of its population under the age of 15. This makes the children more susceptible to child labor. Poverty is rampant in the black community due to the 30%+ unemployment rate. This situation creates a dire need to use any means necessary to make money, including child labor and even prostitution. It is estimated that 1 out of every 4 children under the age of 15 are engaged in some sort of labor. This is partly due to need. With the high rate of AIDs, several families only have one parent. Therefore if the child is able to find work and not the parent, then they will work in order to survive. There is a large social inequality in South Africa between very wealthy whites and very poor blacks. The wealthy whites often have house workers to help tend to their house, pool, garden, etc. This creates demand and jobs for younger females. By accepting these jobs, they also forgo their opportunity for an education and likely the cycle continues.
Companies operating in foreign companies should also be socially responsible. This includes reinvesting back into the community that they are benefiting from and ultimately leaving it better off than it was when they originally entered the market. This will provide the needed support for the community when exercised properly.
Values and Attitudes
A company should seek to understand the culture’s values and attitudes so that they can understand how this may impact decision making, negotiating and operations in the foreign country. The more that the company can educate and edify themselves, the more successful that they will be in conducting business in this foreign country. Understanding how to integrate the existing culture into the new one will be key to long-term success for the business. Understanding the dynamics of business deals in South Africa will be crucial. Ensuring that you are meeting with and discussing negotiations with the proper person is key. Often times mid-level managers are unable to approve or strike a deal and are only acceptable at the executive level.
A strong correlation exists between poverty and corruption. Addressing either of these issues within the culture will have a positive effect on the other.
Manners
Gift giving is not the norm in South Africa when conducting business. If a gift is presented,
it should not be done so with the left-hand. South Africans do not operate in the same way as Westerners as it relates to the sending of gifts and thank you’s.
South Africans also tend to not appreciate directness in emails and certainly not a demand on a timeline. The expectation is a warm greeting where a timeframe can be recommended that allows them time to socialize it with their team. It is always a good idea to personalize the message by asking about their family. It is also never ok to point or wag your finger at someone, even the menial workers. This is a viewed at as unnecessarily rude.
Customs
When considering conducting business in an international market, one must be concerned with the following three major culture paradigms: ethnocentric, polycentric and geocentric. It might be secondary for Americans to have this thought when operating in a foreign market towards the native culture. One should be open to the native culture and not arrogant or dismissive if they want to conduct business in the market. They will likely be reliant upon locals to support their business and should therefore not have ethnocentrism towards this culture and should rather operate as polycentric. Polycentrism is the opposite of ethnocentrism. It supports and promotes openness towards other cultures, their opinions and way of life. This is how the South Africans would expect Americans to conduct business as. The third culture paradigm is geocentrism which requires collaboration between both headquarters and local subsidiaries that establishes a universal standard, but with local variations that ascribe to that particular culture. This is likely the most effective paradigm for the company to conduct business, collaborating with the locals. Traditional leaders still continue to exercise their power and functions in the new democratic South Africa.
The South African government has an interest in foreign investments. As a result, they are making strides to make it easier to do business with. There has been much improvement in the way of the transportation infrastructure in order to ensure the needed support should a U.S. company want to invest.
Social Structures and Organizations
Corporations looking to do business in South Africa should consider the cultural structure of their social institutions. A traditional institution would include family, religion, politics and education. A nontraditional institution would include science, technology, mass media, medicine, sport and military. Within social institutions are social groups that can be categorized by their status, ascribed or achieved. An ascribed status is a social status assigned at birth or given late in life. This ascribed value cannot be earned; if born into a wealthy family, then your value would be based on the economic advantages and gains that one would have from being born into this family. An achieved status is one that can be earned and given based off a person’s ability and merit.
South Africa moves at a slower pace and is sometimes referred to as ‘African Time’. Speaking the English language will help to build rapport and trust. This will assist in being able to engage in business affairs and dealings. Because they prefer a slower speed, it’s important not to rush business dealings as they are very casual. It is important to understand that the United States is a low-context culture and does not allocate time for personal details that build relationships during business transactions and South Africa is a high-context culture that value the personal relationship first.
In addition, South Africa has been making changes to make it easier to do business with them. However, South Africa still encounters a heavy amount of socio-economic issues. The government has made it easier to do business with in order to help propel and propagate this type of collaboration with foreign investors. Most foreign investors have been too intimidated to operate in South Africa due to the high crime rate and instability of the country. To help with this, South Africa set up a corporate governance group to assist in ensuring that businesses are operating both ethically and morally. Management in the U.S. has a more positive view towards corporate social responsibility while South African managers feel that it is the society’s responsibility.
South Africa workers are fairly laid back, want to work their shift or schedule and anxious and eager to get back to their families at the end of the day.
South Africa has poor logistics in some areas that provide a real need and opportunity for business. One example of this is in the Lagos area, the electricity is unreliable and as a result most businesses usually own up to three generators that will require gas. This is an opportunity for suppliers to meet this need.
South Africans view women as subservient and as such may impact the workforce and recruiting opportunity of the business that is working to establish itself within the country. The applicants may likely be mostly male as a result of the culture and the way that women are respected in the workplace.
Education
Foreigners investing in businesses and the South African market must consider the labor force available in the region in which they are going to conduct business in. This can be concerning due to the condition of the schools and education. Private schools have increased in the more affluent areas and will produce educated employees that will assist with the labor pool, depending on the job opportunities offered.
Hofstede analysis
Hofstede analysis created a baseline for which to better understand national cultures. Through this research, he was able to define 4 characteristics that are similar to each nation as it relates to its people. Two additional characteristics were added to the original 4 through additional research from other researchers. The 6 characteristics are: 1) power distance index; 2) individualism vs collectivism; 3) masculinity vs femininity; 4) uncertainty avoidance index; 5) long-term orientation vs short-term normative orientation; 6) indulgence vs restraint. The stats listed below are primarily relevant to the white population of Africa. As such, they are not necessarily represented of the entire country. Particularly not the rural areas that have a higher black population concentration.
Power distance indicates that all individuals in society are not equal and assesses how cultures deal with inequalities. The power distance index (PDI) for South Africa is forty-nine, and the United States stands at forty. South Africa accepts a hierarchical order where everyone has a place and needs no further justification. South African society respects order and will take direction without issue. The Unites States is more concerned with equality and being considered an equal instead of doing whatever they are told to do.
Individualism is the degree of interdependence a society maintains among its members. South Africa is considered to be individualist society, caring for themselves and their immediate family. Collectivism based on Hofstede’s theory is a concept where individuals are part of a group. Americans are open to change and embrace innovative ideas and opinions from anyone. They are willing to try anything new or different ranging from technology, food or new business ventures.
Masculinity as a dimension is driven by competition, achievement and success. A masculine characteristic is what motivates people wanting to be the best, a female characteristic is liking what you do. South Africa is considered to be a masculine society in where people live in order to work. South Africa has a high degree of gender differentiation. Males dominate in society and power structure, including over females. Both South Africa and the United States have a score of sixty-two which is considered high relative to behavioral patterns that address business, school and attitude towards work.
Uncertainty avoidance has to do with the way that a society envisions the future and the extent to which the culture can deal with ambiguity. South African culture has a low preference for avoiding uncertainty and has a more relaxed attitude and work with a more flexible schedule. The Uncertainty Avoidance Index is low for both the U.S and South Africa, which indicates that firms are more averse and willing to take on additional business risks in the hopes of advancing the economy.
Long-term orientation is how societies maintain some links to their past while dealing with the challenges of the present and future. South Africa maintains great respect for traditions, small need to save for the future and focus on achieving quick results.
Indulgence is defined as the extent to which one can control their desires and impulses, specifically based on the way that they were raised. Weak control is considered indulgence and strong control is considered as restraint. South Africa is a culture of indulgence as they place a high degree of importance on leisure time. They do not suppress gratitude and enjoy their lives and having a good time.
Analysis of facts from prior three questions
A large part of the post-Apartheid business landscape is regulated by certain laws. One of which is BEE, Black Economic Empowerment which is an affirmative action program launched in 2003 by the South African government to provide employment opportunities to the non-white population that were previously disadvantaged. Though there is a shortage of skilled individuals at a managerial level, South Africans are opposed to foreigners taking jobs away from South Africans. The BEE can make it difficult for a white person to secure employment due to this program primarily selecting the candidate of color often times.
SWOT Analysis
Strengths
The economy of South Africa is regarded as the second-largest in Africa, behind Nigeria. It accounts for approximately 24% of the Africa’s gross domestic product (GDP). South Africa has the world’s biggest stock of manganese and platinum and among the highest reserves of gold, diamonds, chromite ore and vanadium. As a result, the South Africa economy is built on mining these resources. The mining industry is one of the significant reasons for South Africa’s advanced economy. While there is a large demand for miners to work the mines, it is a dangerous job to pursue.
The weather is mild and consistent year round. This makes it less difficult for companies to operate as they will not encounter extreme or harsh weather that could negative impact on operating expense.
South Africa’s peaceful transition to democracy is recognized as a major milestone for the country. This was an amazing transition and provides assurance for the future of the country. South Africa also has several shipping ports.
South Africa’s political environment is young, relatively stable democracy and governed under one political party. It has the most developed and sophisticated economy in South Africa with high-class companies in real estate, manufacturing, wholesale, retail trade, and finance.
The South African government is very interested in attracting foreign investors. The government has removed all exchange controls on non-residents have been removed. Investors can freely take their money out of the country at any time.
Weaknesses
South Africa’s five major cities including Cape Town, Johannesburg, and Durban are all located on a coast. This is a demographic risk as any issue relative to the ocean or natural calamity could create an issue for the economy. If this were to occur, it would take an inordinate amount of time to recover and restore the infrastructure as South Africa is not a country setup to be able to readily bounce back.
South Africa lacks in technology advances and as a result, fails to utilize their natural resources effectively. This also impacts the ability to hire employees that have been properly trained to support a technical infrastructure.
One of the most challenging problems for the country is the contraction of AIDS; both for the government and the business community. Another concern is that AIDs will likely reduce the life expectancy and have a negative impact on economic progress.
South Africa has a high cost for higher education. This makes it difficult for someone poor to get a higher education degree and therefore is also a driver of the high unemployment rate. High unemployment rate leads to a high corruption rate as those who have no means to provide to their families will often turn to illegal means to make a living and be able to survive. Local law enforcement does not do much to support the public and can be inadequate.
Opportunities
Despite the issues that South Africa experiences, there are still opportunities within the country. The growth that exists is in investment opportunities such as technology, retail, healthcare, and private education. Technology has a lot of opportunity due to the lack of development in the country. Access to the internet in the country is expected to double in the next five years. This will make way for several opportunities for those households gaining access to the internet. One of the opportunities would be online selling due to the increased number of users accessing the internet and being able to make purchases online. In addition, the government has invested in open source software which is saving money on software licensing fees.
American companies looking to do business in South Africa have an opportunity to succeed and must weigh the benefits and risks associated with investing in this country. They will need to mindful to properly navigate the social norms of the country and ensure that they are not following Western customs in their business dealings. South Africans must relate to you prior to engaging in business with you.
Opportunities for tourism can be increased, specifically as it relates to the perception of South Africa. Issues of corruption and safety primarily are concerns for tourists.
South Africa also has an opportunity to increase their renewable source of energy. They have the ability to build the cheapest source of energy (solar) which would be useful in developing an industrial economy. It would also allow goods to be produced at lower prices and with economies of scale.
Threats
Threats to the South African community are several to contend with, particularly if looking into for investment purposes. Several issues that need to be contended with, such as: crime, racial issues and unstable economy.
Cape Town is known to have one of the highest crime rates in the world for assault, rape and murder. In South Africa, the majority of the crimes occur in the rural areas. However, the affluent areas can also be impacted by crime. This intimidates foreign investors in investing in these areas that are prone to high-risk.
Until recently, the country’s racial separations were imposed due to the government’s official policy of apartheid. Despite the apartheid, racial issues continue to exist. The power is now with the majority of its residents and the whites are now facing discrimination. This was not the intent of Mandela; which dreamed of an “ideal” and “free” society, which unfortunately it is far from. The current government officials are highly corrupt and favor situations where it will improve their position, usually at all costs.
Another concern for the country is the health care. Specifically, the health care workers can be unintentionally targeted when responding to calls and emergencies. The healthcare sector is not protected by the government and is therefore at risk.
Foreign Direct Investment (FDI) has played an integral role in the development of the
economy in South Africa. This is a direct result of South Africa’s government making it easier to do business with and ensuring laws and governances that support this. In addition to changing laws, it has been proactively working on addressing infrastructure needs and other issues within their economy.
South Africa has been known to be a country that is difficult to do business with. Primarily due to the corruption that exists within the marketplace, primarily in the government. Foreign businesses and aid are hesitant to invest or provide an aid to a country that has a high rate of corruption for fear that the funding provided or reinvested into the community is not being used for the right reasons or for the right people. Either way, the people of the country that need the help are the ones that are negatively impacted when the funds aren’t appropriately allocated. Strikes occur often and are common among the workers in South Africa. In 2014, South Africa reported 88 labor strikes that had an economic impact of over $500 million. The reason the workers are striking is due to compensation disputes, wages, and bonuses.
The European Union accounts for 90% of total FDI inflows. Convincing other countries to do business with South Africa will be somewhat of a challenge. There is opportunity in terms of a labor force due to the high unemployment rate. While South Africa has focused heavily on education, there is a still a highly unskilled workforce. In addition, the unemployment rate is not getting any better. The FDI investment allocation is as follows: 36% Finance and Services, 34% Mining, 24% Manufacturing, 4% Trade and Accommodations and 2% Transport and Communications.
Due to these stats and intricacies of this market, the United States has a smaller share of investments in South Africa than other countries. China began investing in Africa in 1998 and by 2012, has invested in more than 49 African countries. While opportunity exists for increased investments with South Africa, the United States is still hesitant to add more value and volume to this country. There are too many issues and risks when investing with and operating in an unstable economy. In recent surveys crime has been reported as the #1 constraint for investors. Followed closely by the labor regulations, skills shortages and cost of labor. South Africa has low levels of domestic saving and investment and as a result, higher FDI inflows will be critical for growth.