Kenya
Located on the eastern side of the African continent, Kenya is well known as both a commercial hub for the Central and Southeastern parts of Africa as well as being a prime tourist destination due to its numerous nature preserves and Safaris. As such, this has enabled the Kenyan community to thrive from multiple sources of income, with the service industry, in particular, being responsible for a large percentage of the country’s income (Ronald, 2014, 71). Due to the warm and somewhat humid climate of the country, agricultural products are one of its main exports, which consist mostly of tea, coffee, and other various types of grains. Aside from this, Kenya also has a thriving manufacturing industry that accounts for 14 percent of the country’s GDP at present (Ronald, 2014, 71).
Political environment
When examining the political environment surrounding Kenya, one of the most obvious signs of stability is connected to the country’s low CPI (Corruption Perception Index), which showed that as of 2012, the country was ranked 139th out of the respective 200 countries that were examined for corruption (0 being the highest and 200 being the lowest). Based on the work of Brännström (2012), which connected high foreign direct investments with greater confidence in a country’s government, Kenya can be considered as being well poised to take advantage of the good spring of positive sentiment directed towards it by business groups that see potential in a regional trading hub with low levels of corruption in the government (Brännström, 2012, 63).
Legal environment
The legal environment is relatively stable, with no major issues that would impede investments into the country.
Economic environment
One of the main detriments towards the continued improvement of Kenya’s economy lies in the inefficient nature of its agricultural sector, which accounts for 24 percent of the country’s GDP yet hires nearly 75 percent of its workers. In comparison, its manufacturing and industrial sector employ only 25 percent of the local labor force yet actually contributes more than 75 percent of Kenya’s GDP due to the implementation of efficient methods of production such as assembly lines and the use of advanced machines to aid in the manufacturing process (Lwenya & Yongo, 2012, 569). Further examination of the state of the agricultural industry reveals heavy usage of manual labor tools that hampers efficiency and productivity, especially when taking into consideration the possibility for crops to expire after a certain period of time after they have been harvested. The use of manual labor and inefficient production processes can be considered as one of the main reasons behind the sheer “glut” of workers in the agricultural industry and, as such, this shows one area where the implementation of new processes and equipment are needed in order to enhance the country’s economy (Lwenya & Yongo, 2012, 570).
Business environment and activities
The current business environment within Kenya is relatively conducive towards foreign direct investments as well as the development of international trading agreements between countries. This is in part due to its current orientation as a trading hub and the country’s foreign policy initiatives, which focus on developing the reach and influence of the country by making it into the “go-to” location for other countries within the eastern and central African states to go to in order to establish business deals and trading agreements (Brännström, 2012, 63). It is along this line of thought that several areas have been designated as “free trade and tax-free zones,” which encourage multi-national companies to establish their off-shored or outsourced production processes in order to expand their line of products towards eastern and central Africa.
Analysis of exports and imports
The primary export of Kenya comes in the form of grains, tea, and other similar agricultural products, while the rest of its export industry consists of products such as oil, liquefied natural gas, some industrial components (propellers, cloth, etc.) as well some minor products from its fishery and livestock industry. Aside from this, exports from the country have been growing when it comes to its manufacturing industry; however, expansion has been relatively slow as the country continues to build more positive international sentiment in order to gain more foreign direct investors (Donaldson, 2006, 136). When it comes to imports, Kenya primarily imports processed industrial and agricultural goods that its local industries simply lack the capacity to create due to the necessary factories and technologies involved in their creation.
Balance of payments and exchange rates
The balance of payments and exchange rates are relatively stable, with no apparent issues.
Social environment and demographics
Presently, there are over 42 different ethnic communities within Kenya that are scattered across various regions in the country. However, what is advantageous regarding this particular situation is that nearly 75 percent of the local population is below the age of 30 and, as such, is indicative of a prime opportunity for Kenya. The work of Lwenya & Yongo (2012) elaborates more on this by explaining that an expanding economy combined with a young population would result in greater levels of domestic labor for an assortment of local industries. This is one of the prime reasons why the services industry in Kenya has been growing at a relatively rapid pace over the past 10 years and should continue well into the future (Donaldson, 2006, 140).
Technological environment
The technological environment of Kenya somewhat lacks when it comes to its industrial capacity and the sheer level of inefficiency that has adversely impacted its agricultural industry. The inherent problem when it comes to Kenya and technology is that there is a distinct lack of sufficient government subsidies and training to provide local farmers with the type of technology needed to make their work more efficient (Donaldson, 2006, 136). It is due to this that the agricultural sector is heavily dependent on manual labor and, as such, detracts from the potential that this sector could have if more efficient methods of production could be made available. Aside from this, there has been a considerable level of development when it comes to its industrial and manufacturing sectors due to foreign direct investments through the use of tax-free government zones, which has resulted in the development of numerous supporting local industries for large companies off-shoring their facilities into Kenya (Donaldson, 2006, 138).
Cultural Environment
Due to the numerous cultural groups that exist within Kenya, the country has a rich tribal history that continues to thrive, as evidenced by various attempts at preserving the local culture by the Kenyan government. Aside from this, various nature reserves and humane safari’s (i.e., shooting with cameras and not guns) have been highly promoted by the local government, which has helped numerous indigenous tribes to supplement their way of life by providing tourists with a glimpse into their culture. While there has been a significant encroachment of modernity into Kenya (as evidenced by its numerous cities), the fact remains that its cultural heritage is considered to be one of its most valued resources and, as such, has been placed under numerous protections by the government for future generations (Lwenya & Yongo, 2012, 575).
Hofstede’s Country Characteristics
Power Distance Index
The score of Kenya, in this case, is 70 based on the apparent hierarchical nature of its society and the people’s acceptance of it.
Individualism/Collectivism
With a relatively low score of 25, Kenya can actually be described as a collectivist society where tribal culture and family play important roles in the lives of the locals.
Masculine/Feminine
Kenya has a score of 60 and, therefore, is considered to be a masculine society with a high degree of internal competitiveness.
Uncertainty Avoidance Index
Kenya has a score of 50 and, as such, has no clear preference when it comes to the UAE.
Long-Term Orientation
The long-term orientation of the country is towards being a hierarchical and competitive society.
Realistic idea
Most of the products focus on food processing and agriculture, as such, this is indicative of a potential trade opportunity given the lack of significant local industries that focus on exploiting the country’s rich natural resources and oil reserves.
Rationale and support
Support for this idea is based on relatively low investments so far in natural resource extraction in Kenya.
Argentina
As the eighth-largest country in the world, Argentina is well known for its wealth of resources and is an exporter of agricultural products and beef. It is the largest Latin speaking country in South America and was actually one of the most developed countries during the early 20th century and was considered the 7th wealthiest at the time due to its local industries (Country Reports – Argentina, 2014, 3). Unfortunately, due to significant political instability, which led to numerous economic issues, this resulted in the country degenerating when it came to social and economic development.
Political environment
Despite a significant level of political upheaval that occurred during the early 20th century, Argentina has made grade political strides when it comes to implementing strong checks and balances system in order to deal with the issue of government corruption and mismanagement that had set Argentina back significantly in the past (Country Reports – Argentina, 2014, 4).
Legal environment
The legal environment is relatively stable, with no major issues that would impede investments into the country.
Economic environment
Argentina is an export-oriented economy that has focused extensively on its agricultural industry through the sale of wine, tobacco, and other similar natural resource products (Wylde, 2011, 438). While there are some protectionist measures in place when it comes to various imported products, the local economy is relatively conducive towards investments that focus on developing the country’s industrial capacity. Some of its primarily industrial products come in the form of the production of farm equipment and chemicals that help in the efficient production of various types of crops (Schwardt, 2011, 433).
Business environment and activities
Argentina focuses primarily on the sale of agricultural products and manufactured goods along with considerable investments into natural resource extraction.
Analysis of exports and imports
The exports of the country are primarily agricultural products with some manufactured goods. One of its growing industries, though, has been its mining and petroleum industries, which have gained momentum over the past few years due to new developments in technology as well as foreign direct investments, which have helped to support the development of this industry. Imports, on the other hand, are mostly manufactured goods that cannot be produced locally, such as rubber, metals, etc. (Country Reports – Argentina, 2014, 5).
Balance of payments and exchange rates
Balance of payments and exchange rates are relatively stable, with no apparent issues.
Social environment and demographics
In terms of population size, Argentina is actually the largest Spanish speaking country in South America and has adopted a considerable level of European influence in both its architecture and the way people dress. A large percentage of its population is of European descent, however, there are some minorities such as Asians and Mezzo-Americans within the greater whole of the population (Price, 2014, 8).
Technological environment
As one of the largest economies in South America, Argentina enjoys a considerable level of technological development, which manifests in its export-oriented manufacturing industry that produces an assortment of goods such as farming equipment, chemical, processed food, etc. (Price, 2014, 8).
Cultural Environment
The cultural environment has a considerable European influence, and this reflects in the architecture, food, and styles of clothing of the locals. However, there is a strong Latin American presence as well by virtue of the country being located in South America (Salvatore, 2008, 756).
Hofstede’s Country Characteristics
Power Distance Index
Argentina has a relatively low PDI ranking at 49 due to the influx of migrants into the country. There is a considerable level of inequality within the country, as seen in the divide between immigrants from Costa Rica and those from Europe.
Individualism/Collectivism
At a score of 48, Argentina can be described as being somewhat individualistic. However, there is still a feeling of obligation (i.e., care and association) for individuals that are part of a person’s extended family (i.e., aunt, uncles, etc.).
Masculine/Feminine
At a score of 58, it can be stated that Argentina is driven more on competition rather than the quality of life standards.
Uncertainty Avoidance Index
Argentina scores an 86 on the UAI based on the implementation of elaborate legal systems with an assortment of rules.
Long-Term Orientation
The long term orientation is towards a competitive society that is highly divisive.
Realistic idea
Though not as advanced as Germany, the U.S., or Japan, Argentina continues to develop a variety of innovations when it comes to farming and the extraction of natural resources. As such, it could sell farming equipment to country’s that need it.
Rationale and support
The rationale behind this idea is based on Argentina’s industrial capacity and Kenya’s need for better farming equipment.
Conclusion
When examining the data that has been presented thus far, it was noted that Kenya could definitely benefit from trading with Argentina when it comes to farm equipment and chemical-based fertilizers. As it was explained in the country profile of Kenya, one of the main detriments behind the development of its local agricultural industry comes in the form of its dependence on manual labor (nearly 75% of its workforce is in the agricultural sector yet only yields 25% of the GDP). Simply put, the country lacks the needed tools in order to streamline the planting and harvesting process to make it more efficient. It is due to this that Argentina, with its local industries producing farming tools and various chemical based fertilizers, would act as the perfect supplier for Kenya when it comes to addressing that country’s specific need. By providing the necessary farming equipment and chemical fertilizer and training the locals on how to utilize them effectively, this would result in a far more efficient agricultural process for the local economy, which should help when it comes to increasing the overall yields produced by farms within the region.
In the case of Argentina, one of the best business deals it could gain in association with Kenya comes in the form of investing in Kenya’s burgeoning energy industry. As explained in the overview that was given earlier, Kenya has slowly been allowing foreign entities to invest in the country, with one of the potential avenues of investment coming in the form of the country’s oil and gas fields. Extraction within this location has been relatively minimal due to the lack of local technological capacity as well as the technical know-how to actually accomplish it. While there have been small investments that have yielded substantial returns for international investors, there is still a considerable amount of room for other foreign entities in this sector that is still in its infancy. It is with this in mind that one avenue of approach that Argentina could take would be to offer its expertise, technology, and experience in natural resource extraction to help Kenya utilize its natural resources through a profit-sharing program. Argentina would provide the necessary material and expertise while Kenya would merely have to provide the necessary labor and permission to operation with the location that has been deemed as appropriate for oil extraction.
Reference List
Brännström, I. (2012). Gender and digital divide 2000-2008 in two low-income economies in Sub-Saharan Africa: Kenya and Somalia in official statistics. Government Information Quarterly, 29(1), 60-67.
Country Reports – Argentina. (2014). Argentina Country Monitor, 1-22.
Donaldson, K. (2006). Product design in less industrialized economies: constraints and opportunities in Kenya. Research In Engineering Design, 17(3), 135-155.
Lwenya, C., & Yongo, E. (2012). The Fisherman’s Wife: Vulnerabilities and Strategies in the Local Economy; The Case of Lake Victoria, Kenya. Signs: Journal Of Women In Culture & Society, 37(3), 566-573.
Price, J. (2014). Is there light at the end of the tunnel in argentina’s economy?. Latin Trade (English), 22(4), 1-12
Ronald Hope, K. (2014). Informal economic activity in Kenya: benefits and drawbacks. African Geographical Review, 33(1), 67-80.
Salvatore, R. D. (2008). The Unsettling Location of a Settler Nation: Argentina, from Settler Economy to Failed Developing Nation. South Atlantic Quarterly, 107(4), 755-789.
Schwardt, H. (2011). The Development Trajectory of the Argentine Economy Since 1976: An Ayresian Perspective. Journal Of Economic Issues (M.E. Sharpe Inc.), 45(2), 431-438.
Wylde, C. (2011). State, Society and Markets in Argentina: The Political Economy of Neodesarrollismo under Néstor Kirchner, 2003-2007. Bulletin Of Latin American Research, 30(4), 436-452.