II- The characteristics of the West African business environment and the influence it could have on McDonalds
A key point that must be understood is that developing countries form the West African region. For this reason, the business environment is affected by elements that are not common in the most developed countries such as where McDonalds has started and grown its business. This part of the report focuses on those elements that shapes the West African business environment and is supported by analytical report from ECOWAS (Economic Community Of West Africa States) and literature review and interview with Sir David Santos Professor of economy at the University of Dakar.
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Problems in energy supply lead to production disruptions and higher maintenance and technology costs. In addition, a poor transportation infrastructure limits access to markets and raw materials.
The level of technology also stands out (Wall et al, 2010:344). The use of technology service in the region is low because of the fact it is mainly acquired from the most developed countries therefore; there is a need of technology transfer as well as in training the national staff. Sometimes government restricts the technology transfer by imposing high tariffs on the import of personal computers out of fear that they would displace labour (Santos, 2014). Another important point to stress is that technology is playing a significant role in the way McDonalds receive payment in more developed countries. In West Africa, the population is not use to card payment therefore the company would be vulnerable to security as well as having an extra cost to transfer its financial asset.
The second constellation of environment factors focuses on political variables (Austin, 1990: 94).
Frequent instability such as war, civil unrest in some of the West African states has put the region under treat. And authoritarian government that lack democratic responsibilities and pressures typically accompanies such situation (Santos, 2014).
The consequences of political instability on businesses are manifold; indeed they are frequently cited, as the main reason Western businesses are reluctant to enter third world markets. For McDonalds, instability would increase uncertainty, adds to indirect costs, causes planning problem and leads to centralisation of authority and bureaucratic bottlenecks.
Also, the West African governments’ ideological predilection toward the role of the state and the role of private sector and property right influences the type of political system chosen. For instance, the Ghanaian government tends to see the role of the state as being heavily involved in the economy (Santos, 2014). The perception is that such involvement will accelerate development and this gives more power and control over the society.
In a nationalistic country like Ivory Cost for example, MacDonald may have a competitive disadvantage because government may place discriminatory regulation on foreigners; local businesses may have preferential access to government decision makers, credit and market.
International relation also dominates the political environment that influences business context. For example, the French speaking countries in West Africa continue to be dependant on France in terms of economic flow, organisational ties, technical standards and business practices. Here it is important to state that theories concerning dependency and imperialism assert that the current international system cause the core industrial countries to create economic dependencies in developing countries (Santos, 2014). To illustrate, a wide variety of economic link between the West African...