Business success in Emerging Markets: A case of South African firms expanding into Africa

Abstract

ABSTRACT Background: Business in Africa is often associated with uncertainty and hence, risk, in light of significant growth opportunities. Gaining an understanding of how to effectively develop strategies and an approach tailored for emerging African markets is crucial for success, mitigating hurdles embedded in the continent. A case of South African firms entering these markets is a limiting perspective offered in literature and forms the significance of this study. Aim: The purpose of this study is to facilitate a change in the way South African firms view other African markets. In this way, the study aims to promote foreign impact investment and liberation of the continent as a prime investment hub. Setting: The study assessed South African firms which have expanded into Africa within the mining, infrastructure and retail sector. Methods: A qualitative assessment was performed, employing semi-structured interviews of 10 South African based firms, covering major industries in Africa. A purposive sampling method was utilised, using grounded theory as the foundation for data analysis. Results: The findings indicate that the compelling factors to venture into business outside South Africa include risk mitigation, growth opportunities, gaining a competitive advantage and improving productivity of the business. There are however, barriers to entry include which political, social, infrastructure, legislation and incorrect definition and implementation of a strategy when entering foreign markets. Key elements to success involve localisation, effective risk management and leveraging off regional advantages where relevant. Conclusion: The fundamental aspect associated with business initiatives in Africa can be attributed to a localisation effort which encompasses a deep market understanding of legislation, customers, clients, government and infrastructure of the host nation. A definition of an entry strategy that will realise a successful, sustainable and impactful investment will be influenced by these factors.