Finale Project Paper

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Introduction

In this paper, I choose South Africa as the country and restaurants as the industry. The South Africa restaurant industry size was valued at $2.7 billion in 2018, and it is expected to attain $4.9 billion by 2026. South Africa happens to be the biggest foodservice market in Sub-Saharan Africa, with an excellent and highly competitive hospitality industry. Despite the adverse effects on the nation’s various economic parameters, the restaurant industry is expected to experience considerable development during the forecast period. In the same way, the country has a large number of domestic on top of international restaurant chains; thus, powering the development of the fast-food sector. It is attributed to the upsurge in demand for various types of fast-food products from the target clients. The Southern Africa Food Lab reported that there had been an increase in consumption of convenience food over the past five years; as a result, the rise in availability of take-way vendors (Greenberg, 2017). According to their forecast, fast food items such as koftas, fried chips, and hamburgers are foreseeable to gain enormous popularity. Furthermore, easy availability of restaurant foods, being easy foods, is anticipated to influence the cooking practices, that is, decreasing the frequency of home cooking; thus, increasing the dependency on restaurant foods.  

Cultural/Religious Issues of South Africa

South Africa experiences the influences of both inter-nationalization and globalization and many challenges presented by cultural diversity. The cultures, heritages, and languages are diverse, multiple, and dynamic. Intersectional issues of ethnicity, gender, and race affect South Africa restaurant industry business. One of the main challenges for South Africa’s restaurants is managing diversity effectively. If diversity is effectively managed, it can propel the restaurant industry into a successful and competitive future, but if not, the growth and competitive advantage can be severely hampered. In South Africa, a well-nourished and healthy population is a central tenet of sustainable development. Cultural beliefs in South Africa and food taboos followed by some pregnant women influence food consumption, impacting the restaurant industry.   

In South Africa, culture has become accepted as a significant and constitutive element in the domain of business management, including the restaurant industry. This country happens to be a religious and culturally diverse nation where all religious, cultural, and other belief systems are accorded equal constitutional protection. However, it can hardly be opposed that, in practice, particularly religious beliefs and practices have more privileges and protection than others. The major faith practiced in South Africa is Christianity, Islam, Hinduism, Judaism, and traditional African religions. More than before, with the implementation of affirmative action and equal opportunities programs, changes occur in the workplace and in individuals’ values and norms that impact the level and style of management. 

Legal/political issues of South Africa

Whatever happens in South Africa’s world of politics had some particular effect on the business, including the restaurant and general food industry. Some of the political issues affecting the food industry might immediately be felt in the short term, while others may be felt in the longer term. South Africa’s political sector affects aspects of the restaurant industry business, including payroll, customer satisfaction, the menu, and profits. The whole restaurant industry and some restaurant, in particular, like to monitor the world of politics so that they can identify which ways incumbent and incoming politicians lean (Chipunza & Mupani, 2019). Most of them have lobbying groups and trade groups that lobby for restaurant possessors’ interests, and they fund the politicians that will cater to those interest. In South Africa, restaurants will usually support the politicians and political candidates who, as a result, offer them a voice to talk about issues that affect them and support policies that can benefit the restaurant industry.  

In terms of political issues that affect South Africa, it is witnessing another disillusion wave with the constitutional arrangement that followed the end of apartheid in 1994. As the nation progresses in the direction of the third era of democracy, the sentiment is that the constitution is a hindrance to meaningful economic development and change. It is completely criticized for placing a halt on much-required wealth redistribution following centuries of colonialism and apartheid oppression of the black minority. Politically, South Africa are sick and tired of corruption. Both workers and restaurant owners are frustrated, angry, and despondent. This nation has numerous problems, including crime, gender-based violence, unemployment, low economic growth, and inequality. The list goes on and on. Something that makes corruption the most significant threat is that it cuts across restaurants and impacts their gravity in different ways.  

The Constitution of South Africa envisages the society on social justice, democratic, and fundamental human right. The manner things are proceeding, that society is never possible to happen. For this reason, corruption has been and remains the biggest threat to any likelihood of realizing the constitutional vision. In South Africa, just other places where corruption occurs in the private and public sectors, it negatively impacts businesses, human rights and diminishing public trust in the government (Chipunza & Mupani, 2019). Corruption damages the government’s capacity to accomplish its duties and guarantees responsibility in delivering social and economic services such as clean water and social security. As a result, it affects the restaurant industry. This is because corruption diverts funds into private pockets, which delays service delivery, thus perpetuating unfairness, poverty, inequality, and injustices. The issue is worse when the government is the main culprit. 

Mode of Strategic Entry into South Africa

There are a number of ways in which restaurants in South Africa can enter a foreign market. No one market entry strategy works for all international markets. Direct exporting of restaurant products might be the most suitable approach in one market, whereas, in another, it might require setting up a combined venture, and in another one might well need licensing. There will be a number of choices that will influence the choice of strategy, including but not limited to the degree of adaptation of the restaurant product needed, tariff rates, transportation, and marketing costs. When the restaurant industry has made a decision to enter the overseas market, there are several options to open it. The options vary with risk, cost, and the degree of control that can be exercised over them. The easiest way of entry is exporting using either a direct or indirect method such as countertrade, in the latter case, or an agent, in the former’s case. Those that are more complex include truthfully worldwide operations that might comprise combined ventures or export processing zones. Upon deciding on the form of export strategy, decisions have to be made on particular channels. Numerous restaurant products of a raw or product nature use distributors, agents, or involve Government, while processed products depend more profoundly on more sophisticated access forms. 

Franchising is one of the modes that can be used. It is a typical north American process for market expansion that is attaining traction in other parts of the world. It can function well for the South Africa restaurant industry since it works well with a reputable business model such as food outlets that can be easily transferred to other markets. Partnering is another mode that can be used for strategic entry. It is nearly a necessity when entering foreign markets, and in some parts of the universe, it might be needed. Partnering can consist of a variety of forms, from simple co-marketing arrangement to a sophisticated strategic alliance for the restaurant industry. The last mode is piggybacking. It is majorly a unique method of entering the international arena. Restaurants in South Africa that have particularly interesting and unique food products that sell to large domestic businesses presently involved in foreign markets might want to approach them to see if their food products might be included in their international inventory markets.  

Acceptable Strategies for the Location

The South African administration or regime acknowledges that the restaurant industry could be a significant driver of economic growth and has called for developing a comprehensive strategic framework to export and promote this country’s sectors. South Africa happens to have around 7,000 restaurant owners with about 250,000 employees, 10,000 shebeen permit holders, 34,500 licensed tavern owners, with more than 200,000 dependents, and 2,700 independent liquor store owners employing 25,000 staff (Greenberg, 2017). Eco-friendly restaurant industry trends like plant-based menu items and zero waste kitchens will interest conscious clients ready to spend their hard-earned money in like-minded institutions. An effective global idea is one that acclimatizes to local cultures and tastes. It is essential to make sure that the menu will translate into the culture in which a restaurant is introducing it. If there is a surplus of health-conscious consumers or vegetarians in the region, the restaurant should tailor the menu accordingly; this can help suit the location (Mukwakungu et al., 2019). The restaurant should also stay up to date with cultural events and pastimes. Many global fast franchisors get involved in the event and sponsorship on a local level. 

It is essential to pick the right partners for global expansion. As particular restaurants in South Africa moves outward from the home country, they will realize that foreign markets can be challenging to crack. Other strategies include adopting a transparent approach for the food product, reinvesting in the restaurant business, leaning into a new market, and thinking proactively.  

Conclusion 

The restaurant industry global expansion strategy can be thought of as a formal business plan for expanding the reach of its operations into many nations all over the world. For the restaurants in South Africa to be global, they must extend their reach to all major continents all over the globe, not just one or two countries (Otterbach et al., 2017). Global expansion happens when a fast-growing restaurant takes its operations into lucrative overseas markets. The business can look forward to reaching the next level of growth and create a presence in new nations across the globe. In what is believed the last continent for significant development in the restaurant industry, more than a few chains find that expansion into South Africa will be somehow more challenging than expected. Food imports, infrastructure costs, and meat shortages have resulted in high prices at numerous quick serve restaurants across the country. 

Reference

Chipunza, C., & Mupani, H. (2019). Environmental influences, employee resourcing strategies and small and medium-sized enterprises performance: Case of South African small restaurants. SA Journal of Human Resource Management, 17(1), 1-11.

Greenberg, S. (2017). Corporate power in the agro-food system and the consumer food environment in South Africa. The Journal of Peasant Studies, 44(2), 467-496.

Mukwakungu, S. C., Lumbwe, A. K., Niati, D., & Mbohwa, C. (2019, October). The importance of quality management system and leadership in the South African restaurant, fast food, and catering sector-case of the Gauteng region. In Proceedings of the Fourth North American International Conference on Industrial Engineering and Operations Management, Toronto, ON, Canada (pp. 23-25).

Otterbach, S., Oskorouchi, H. R., Rogan, M., & Qaim, M. (2021). Using Google data to measure the role of Big Food and fast food in South Africa’s obesity epidemic. World Development, 140, 105368.