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1. Trade forces, physical elements and factor endowed factors: Trade theory discusses 3 forces, which are relevant; so we applied it here for S. Africa.

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Presentation on theme: "1. Trade forces, physical elements and factor endowed factors: Trade theory discusses 3 forces, which are relevant; so we applied it here for S. Africa."— Presentation transcript:

1 1. Trade forces, physical elements and factor endowed factors: Trade theory discusses 3 forces, which are relevant; so we applied it here for S. Africa (and compared it with Switzerland). - the natural advantages; acquired advantages & endowed factors of strength– forces:S. Africa: Switzerland: natural = dry semi deserts & good soil; natural care, precision, skill – tradition from winter resources; ‘country similar’ to Holland acquired= skill in agriculture & ‘saambou’products & skill in high added value precision products management. They are well organized, needed due to a mountenous country due to being a protestant country; Factors = to capitalize on skilled labour & ‘scarcity’ to capitalize on skilled labour and precision technology. Capitalize on complex industrial technology. processes. Are skilled for the service sector.

2 The ENDOWED factors of S. Africa & Switzerland Physical elements (four) are particularly significant for the business as it has developed. - location, geography, climate and natural resources - factor: S. Africa: Switzerland: Location = isolation it affects agro-supply to the E.U. in winter; a short distance to the rich E.U. market of the Cape a big size= affects high transport costs & supermarkets; mountains: needs low value/volume imports climate = affects a tradition in wool & ‘french cuisine’; a tradition in lace, cuckoo clocks… in winter natural = huge: it endowed S.A. with multi nationals none: it forced the Swiss into manufacturing resources in mining, beer & paper industry. processes, which are adding a high value.

3 The ENDOWED factors of S. Africa & Switzerland Also ‘factor endowed factors’ of the S.African or Swiss culture & tradition determined the nature of the economy. - resulting from the relevant trade forces and physical elements- Know to organize, Care, skills, precision, added value, skills, stability high added value, & consensus reliability complex industrial processes & reputation; scarcity technology (e.g. water) They give S. Africa focus & specialisation in Africa: they give the Swiss their focus it is a comparative advantage (C.A.) in trade. & specialization: it is a C.A. in trade.

4 2. Cultural and political factors as … endowed factors: Even cultural & political factors affect trade and economic choices deeper then ‘the trade forces itself and the physical’ elements. - We discuss which elements of the above factors determine why Banking/ insurances are key industries which fit well in these two countries - in the Cape province - in Switzerland – Culture : relevant for banking is care, a reliable Care, reliable, precise, reputation. reputation in Africa; it reduces the risks. political elements are relevant in case of ‘banking’: a key A key is stability, Swiss effective govern- is the isolation of the Cape, stability, governments’ effecti- ments, effective institutions, a well functio- ve institutions, a functioning infrastructure, no wars due ning infrastructure, no wars, neutrality, to the Karoo semi-deserts ( its isolation); constitutional constitutional guarantees for banking. guarantees in the West CAPE. Together it reduces risks. Economic : low risk gives trust in a save return (r.o.c.). A low risk gives trust in a save return on capital.

5 3. The ENDOWED factors … on co-operation compared: There is enhanced trade between the E.U and S. Africa since the political change in S. Africa. - --Well, the political changes in S.Africa brought new opportunities ; The same for the trade between Hungary and Austria since the change in 1989- - S. Africa - Austria/Hungary (more relevancy) - -. It is a ‘bridge’ between Africa & E. U.;. a ‘bridge’ between West & Central Europe; -. new markets are opened to both sides;. new markets are opened to both sides;. same ‘Dutch’culture. So, ‘country similar’. a short distance; so, ‘country similar’; -. more financial flows & more traffic is trade up. low transport costs & more traffic is trade up; -. HQ’s for financial intermediary & M.N.E.. HQ’s for financial intermediary & M.N.E.; -. low wage costs in S. Africa; skilled staff.. low wage costs in Hungary; skilled staff. - New collaboration (relation/ knowledge) networks emerge; This applies for S. African multinationals and agro industries; it applies for the Swiss industry of precision machines- S. Africa –E.U.Switzerland – E.U. -. N etworks are popular for a ‘win-win’ due to a. Joint ventures are popular for a ‘win-win’ due sharing of resources & functions in a best way to a sharing of resources and functions as well. between S.A.’s HQ and a local E.U. market: e.g. It helps the Swiss with the E.U. rules. help with E.U. rules; care for a Dutch’ ‘non-adap- ted’ culture. There is no easly fit.. License of parts produced in the E.U. for import. Licensing in order to produce parts in the E.U. into S. Africa for further use in a local production and import it into Switzerland for further use process, e.g. car assembly for the export to in their production processes with the precision the E.U. machines. It preserves their secrecy of know how.

6 The ENDOWED factors of S. Africa and co-operation in trade There are assumed problems in all alliances. We discuss proposals for applied ‘management control’ measures in those large and complex international structures. Problems Management control In a co-operation between e.g. S. African & So, pro-actively train staff & bring them together, set a Dutch machine factories in chemical & textile proper structure; co-ordination must be precise; update production businesses we assume quality & ‘embroidery’ willingness continuously during decision ma- problems in culture, complex structures, co- king processes on tactical & top management level be- ordination & in styles of leadership. tween partners. Be aware of a danger of ‘culture shoc’ brought by the Dutch; Evaluate afterwards the possible problems caused by different styles of leadership (S.A’s are ‘Belgian-like’ & Dutch are direct, without ‘power dis- tance) - Concluding points as to factors that endow S. Africa and Hungary with strength in trade- S. Africans 1. They are well educated, with language skills; they know information technology/ Internet well; we refer to how it applies white and black S. Africa (isolation, but now bridging the gap). They have traditional strength in ‘french cuisine’ & supermarkets and in building Economic Zones now in Oos Londen/Transkei & Nelspruit/ Komatipoort areas. They have a lot of land for agriculture & capitalize on skilled labour. That is why many multinationals go there using S. Africa as a bridge to Africa. Another reason is the international orientation of managers in S. Africa and the availability of highly professional managers; Southern Africa, with people that are in their culture very familiar to our culture. 2. J.V’s, license & franchise are popular ways of co-operation. 3. Preferences: wood, agro, chemicals, textile, cars & ‘high tech’ multinationals to focus on. 4. There are natural resources in abundance. Hungarians (as a reflection) Also well educated; they know information technology/ internet well. Traditionaly they have a strength in diary and pharmacy. Hungarians (mid Europe) are very familiair to our West European culture.

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