Global Business Environment

Social, cultural, economic, legal and political differences among nations have had an important impact on the international business activities of Africa. While many in the international business community feel that Africa is a potentially huge emerging market, many concerns hold back investors. An understanding of these concerns is vital in both promoting Africa as an international business opportunity, and understanding the inherent risks and rewards in business in Africa. Social differences between African nations and the international community often act as a barrier to business transactions.

Business, like any other human activity, is conducted within the realm of human interactions. As such, social differences can make or break a business deal. For example, African attitudes toward women are often more 'macho' and less liberal than in North America, and an understanding of this difference can ease social concerns. Cultural differences, which are often closely tied to social differences, can also have an enormous impact on international business.

For example, cultural values like family and work times and attitudes the importance of family in daily life may differ significantly between Africans and Europeans. Culture may even impact the effectiveness of organizational structure in Africa, and international businesspeople must be aware that there are often strict rules regarding social interactions that are based on color and race in many African countries, especially South Africa in the wake of yeas of Apartheid. European and North American corporations must clearly understand the unique cultures within Africa in order conduct business effectively.

Economic differences among the larger international community and Africa have largely limited investment in Africa in the past. Factors such as exchange rates, foreign competition, import-export balances, and competitive advantages are all important factors in how Africa responds economically to international businesses. Further, there has been a great deal of discussion about how to integrate Africa's economy in the global marketplace. This discussion and solutions are especially important as globalization sweeps the world, and Africa is left behind.

Legal issues are profoundly important in Africa's relationships with the international business community. Among these, free trade agreements provide legal barriers and incentives for trade with Africa. In addition, the applicability of agencies like the SEC are important in understanding the legal issues involved in trade or business transactions with Africa and other nations. Africa's traditional political instability has often worried international investors. Many of Africa's well-publicized current tribal differences have only further exacerbated this feeling.

Political instability is often associated with and compounded by additional problems such as inadequate infrastructure, extensive networks of political corruption and important shortages of both considered a significant business risk within the international business community, and is skilled and educated workers. Political stability is thus considered a significant business risk within the international business community,.