Country Size and population
South Africa is among the largest countries in Africa, and according to a study conducted on the economic history covering five hundred years, from the period preceding the European settlement to the post-Apartheid era, it has the biggest economy as compared to other countries in the region (Charles 2005, p.12-16). It has a comparative advantage in manufacturing, mining, and agriculture. It has a population of 48 million people comprised of four main ethnic groups. They include blacks who constitute 79 percent of the total population, whites who account for 9.6 percent, colored constituting 8.9 percent, and finally the Indian /Asian who account for 2.5 percent. With this kind of a mixture, the economy tends to become livelier as a result of the tendency of each group to concentrate on a particular income, generating some activities and thus specialization involved.
Trade agreements in the market
World trade organization (2012) reveals that South Africa has been a member of WTO with numerous trade agreements with the EU and the rest of Africa since January 1, 1945. Numerous infrastructure projects have been undertaken and trade agreements have been signed-in a bid to attract direct foreign investments. However, it has limited ties with Asia and is not a member of ASEAN or APEC. With increased trade agreements with other countries, any company is welcome to invest in the South African market with reduced trade barriers. As a result, Mr. Simple selling to South Africa will not violate new entry regulations established in the country.
Exchange rates and the GDP
South African Reserve bank is the principal bank in influencing the exchange rates of South African Rand and US dollar (South African Reserve Bank 2012). In the year 2009, it had purchasing power parity of 4.8 Rand per US dollar. This is influenced by GDP, which stood at 562.2 billion dollars by the year 2011. This represented a 3.1% increase in DP when compared to the previous year.
Influence of population growth and age
Population growth rate in South Africa is estimated only at 0.412% in 2011, which is not quite a high rate. Therefore, focusing more on high growth rate to determine the feasibility of South African market would misguide Mr. Simple. Instead, the business should embrace stratified marketing by considering the trends and preferences of the specific age group. South African Reserve Bank (2012) reports that, about 25.8% of the total population consisted of children aged 14 years and below; 65.8% were people between 15 to 64 years and 5.7% were only comprised of people aged 65 years and above. The same approach is applicable in education levels where 44.6 percent of students constitute bachelor holders and 28 % are college level students. The rest are high school, Master’s and Doctor levels. Very few people are below high school level indicating high literacy levels in South African market.
Labour and Unemployment in South African market
There is high unemployment rate of 25% in the South African market. Of the total unemployed people, 70% of the unemployed fall between 14 and 35 years, according to Erasmus, Swanepoel and Schenk (2008, p. 71-73). It would be better to target at people above age 35 who are employed and thus have high spending on goods and services in the market than focus on youths characterized by high level of the unemployment rate as it would yield good results for Mr. Simple’s business.
Another aim for Mr. Simple is to focus on the working population, which constitute 70% and target their products at each age group. This will give Mr. Simple a clear view on which age group has higher spending on their products, therefore aiming at meeting the expectations of that group.
References
Charles, F 2005, An economic history of South Africa: conquest, discrimination and development, Cambridge university press, New York, NY.
Erasmus, B, Swanepoel, B, & Schenk, H 2008, South African human resource management: Theory & practice, Junta and Company Ltd, Cape Town.
South African Reservee Bank 2012, South Africa exchange rates, Web.
World trade organization 2012, South Africa and the WTO, Web.