SOUTH AFRICA – A SUB-SAHARAN MANUFACTURING PARADISE? : A STUDY ON SWEDISH-RELATED MANUFACTURING COMPANIES

Abstract: BACKGROUND: The general comprehension of the populace is that the continent of Africa is very deprived. However, South Africa, the economic powerhouse in the Southern African region, has a stock exchange that rates amid the twenty largest in the world. With a well-developed infrastructure as well as democratic political system, the area has become increasingly more unwavering for companies disposed to invest. Reasons are cheap labour and availability of natural resources where South Africa has an abundant supply. However, there are also drawbacks to consider before investing in South Africa. Examples can be high criminality, high HIV-prevalence, lack of skilled workers and huge socio-economic disparities. Increased foreign direct investments and developed international trade can be means for South Africa to accelerate growth and employment and thereby contribute to a changed distribution of wealth and income in the country. PURPOSE: The purpose with this thesis is to explore entering strategies of Swedish-related manufacturing companies that have entered South Africa. As a purpose extension our intention also includes exploring the organizational structure used in the subsidiary and whether any cultural circumstances affect the business climate. METHOD: In our thesis the method chosen is a qualitative approach with in-depth interviews of people in, and associated to, Swedish-related manufacturing companies in South Africa. An interpretivistic and abductive perspective is used throughout the completion of the thesis. CONCLUSION: Our study indicates that motives for investing in South Africa are merely on behalf of market penetration and utilization of the nation as a springboard towards the Sub-Saharan market. The entering strategy most frequently used is acquisitions and the organizational structure is multinational with an ethnocentric staffing approach. No cultural divergences between Swedes and South Africans interfere in the day-to-day business environment according to our study.