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Managing Environment - A report on investing in Ghana.

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MILPARK BUSINESS SCHOOL Managing Environment (MEN) Individual Assignment A report on investing in Ghana. By Craig Rosewarne - (MBA Part-time 2003) SYNOPSIS The Managing Director of Gateway Communications, Mr Mike van den Bergh, requested the Author to investigate setting up an operation outside of South Africa. A detailed report covering the following points was required: 1. Firstly, a possible country that promised a favourable return on investment was to be selected. The Author was to provide sufficient evidence to support his decision. 2. An analysis of the key international management environment factors, relevant to the Author's decision. A PESTLE analysis was conducted on the selected country. 3. An explanation of globalisation, regionalism, e-commerce and "international terrorism". Discuss how these trends are likely to promote, or undermine the new business operation in the country selected. The Author firstly decided on Africa as a continent and then narrowed the options down to three countries: Mozambique, Nigeria and Ghana. Various factors such as stability, competition, market potential, country incentives, neighbouring country penetration, existing relationship with South Africa, language, infrastructure etc. were considered and compared. Ghana, in West Africa, was selected as the country best suited for Gateway's expansion into Africa. After an in-depth analysis on Ghana, the Author finally submitted a recommended strategy to begin operations in that country. TABLE OF CONTENTS 1. Introduction 4 2. Company Background 7 Electronic Commerce 7 Managed Networks 7 3. Selecting an Africa country 8 4. Ghana Analysis 10 Introduction 10 5. PESTLE analysis 11 * Political 12 * Economic 13 * Social 16 * Technological 18 * Legal 19 * Environmental 19 6. Globalisation 20 7. Regionalism 21 8. E-Commerce 22 9. International Terrorism 23 10. Conclusion and recommendations 25 11. References 26 12. Appendices 27 INTRODUCTION A key challenge for Africa in the 21st century is to develop an enabling business environment. This is a clear objective of the New Partnership for Africa's Development (Nepad). ...read more.


Ghana is well endowed with natural resources and has twice the per capita output of the poorer countries in West Africa. Even so, Ghana remains heavily dependent on international financial and technical assistance. Gold, timber, and cocoa production are major sources of foreign exchange. The domestic economy continues to revolve around subsistence agriculture, which accounts for 40% of GDP and employs 60% of the work force, mainly small landholders. In 1995-97, Ghana made mixed progress under a three-year structural adjustment program in cooperation with the IMF. On the minus side, public sector wage increases and regional peacekeeping commitments have led to continued inflationary deficit financing, depreciation of the cedi, and rising public discontent with Ghana's austerity measures. A rebound in gold prices is likely to push growth over 5% in 2003. Economic Data GDP purchasing power parity-$33.6 billion (1998 est.) GDP-real growth rate 3% (1998 est.) GDP-per capita purchasing power parity-$1,900 (2000 est.) GDP-composition by sector: agriculture 36% industry 25% services 38% (2000 est.) Population below poverty line 31.4% (1992 est.) Budget: revenues $1.39 billion expenditures $1.47 billion, including capital expenditures of $370 million (1996 est.) Labor force 9 million (2000 est.) Labor force by occupation agriculture and fishing 61%, industry 10%, services 29% (1996 est.) Unemployment rate 20% (1997 est.) Exports $1.5 billion (f.o.b., 1997) Exports commodities gold 39%, cocoa 35%, timber 9.4%, tuna, bauxite, aluminum, manganese ore, and diamonds (1996 est.) Exports partners UK, Germany, US, Netherlands, Japan, Nigeria Imports $2.1 billion (f.o.b., 1997) Imports commodities capital equipment, petroleum, consumer goods, foods, and intermediate goods Imports partners UK, Nigeria, US, Germany, Japan, Netherlands Source: Ghana Information Services Department 2002 As can be seen by the information above, it appears as if Ghana's economy is growing at a steady rate. Although there is not huge growth it is constant and consistent. Ghana is furthermore currently trading with South Africa and is slowly becoming more dependant on its imports from SA. ...read more.


16 8 19 43 Europe 42 2 2 5 5 The Americas 44 1 1 2 3 Middle East 14 4 4 29 11 World Totals 192 37 29 15 100 The definition of an armed conflict as indicated in the table above is: A political conflict in which armed combat involves the armed forces of at least one state (or one or more armed factions seeking to gain control of all or part of the state), and in which at least 1,000 people have been killed by the fighting during the course of the conflict. An armed conflict is added to the annual list of current armed conflicts in the year in which the death toll reaches the threshold of 1,000, but the starting date of the armed conflict is shown as the year in which the first combat deaths included in the count of 1,000 or more occurred. Since the unfortunate bombings in America on September 11th 2001, the world is on a terrorist standby. Businesses now understand that markets around the world can be severally affected by acts of terrorism. Fortunately (hopefully) Gateway Communications will not have to contend with terrorists acts in Ghana but precautions should always be taken to ensure the safety of both staff and their families. CONCLUSION & RECOMMENDATIONS The Author believes that the company should seriously consider acting on the advice contained in this report. Ghana appears to be an opportune country to invest in, especially the Information Technology market. The next step of action could possibly include a business trip to the country with a view to identify opportunities or potential partners. The diagram below suggests various options when considering opening an operation in Africa. The Author strongly suggests an initial joint venture with a local company that understands the market & the "unwritten" rules of the country. The Author has submitted an example of an actual Ghanaian Information Technology company, SiliconPro, requesting a foreign investor for expansion. Figure 4: Options for investing in Africa. ...read more.

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