Introduction
Fortescue, one of the renowned Australian mining companies desires to move its business to Algeria. The company will face significant political and economic challenges in its efforts to settle in Algeria. The political system of Algeria has been unstable for quite a while because of mass terrorism, power struggles and regional development issues. Economically, the nation is too dependent on its mining program leading to a high level of poverty and poor infrastructural development (Willis, M. 2014, 45).
Political Challenge
One of the major political challenges that Fortescue will face in Algeria is succession disputes and internal struggle for power among the leaders. The continual fight among political parties in Algeria will derail the growth and development of Fortescue. These struggles have inspired the current government to impose heavy laws on foreign investors. The Algerian government requires any foreign company investing in the mining industry in the land to give 51% ownership of the business to the Algerians. In addition, the government owns all the iron and ore transportation pipelines, making it harder for foreign investors to export their products. According to Gekonge, C. (2014, 48), the President signed these laws as a way of showing his authority and ability to rule the nation. These issues arising from political unrest in the land will derail the growth and development of Fortescue in Algeria.
Economic Challenge
Algeria lacks the vast infrastructure necessary to carry out daily mining activities. For Fortescue to achieve the intended success in Algeria, the management team will have to incur extra costs in setting up an ideal infrastructure for the mining business. Some of the things that the company will need to invest in are better transportation systems and power supply (Willis, M. 2014, 110). Poor infrastructure attracts corruption, inequality, unemployment and slow labor productivity. All these issues put Fortescue in a precarious position as a business. For this reason, the company needs to set up strategic plans on how to manage the situation in Algeria for the good of both the host nation and the company.
Conclusion
In conclusion, Algeria presents Fortescue with a significant opportunity to expand and move into Africa. Despite the discussed challenges, the nation is trying to open its borders to foreign investment for a better tomorrow. In addition, the political unrest in the land is diminishing, making it easy for investors to grow their businesses. For this reason, Investing in Algeria now is a wise decision for the company.
Reference List
Gekonge, C 2014. Emerging business opportunities in Africa: market entry, competitive strategy, and the promotion of foreign direct investments. Business Science Reference, Hershey, PA.
Willis, M 2014, Politics and power in the Maghreb: Algeria, Tunisia, and Morocco from independence to the Arab spring, Oxford University Press, New York.