Article #1
Starbucks Opens First Store in South Africa
Seattle-based coffee chain seeks access to Africa’s growing consumer
markets
By
ALEXANDRA WEXLER
Updated April 21, 2016 4:39 p.m. ET
JOHANNESBURG— Starbucks Corp. on Thursday joined the deluge of international food and
retail chains establishing a presence in South Africa, in an effort to tap the continent’s expanding
consumer class.
The Seattle-based coffee chain is the latest in a string of big-name franchises and retailers of
everything, from pizza to skinny jeans, to open doors in the continent’s second-largest economy
after Nigeria, long seen as a gateway to African markets. South Africa was historically underpenetrated by international brands, which avoided the country due to international sanctions
during apartheid rule, which ended in 1994. But recent decades have seen an influx of
investment into the country’s major cities, which draw well-to-do shoppers from elsewhere on
the continent because of well-developed roads and a comparatively wide range of retailers,
from mass-discount stores to high-end international brands.
Prince Ndlovu, a 26-year-old music artist manager who heard about the opening
on Facebook, waited more than two hours for his Grande cappuccino. “For a beautiful thing,
you need to wait,” said the Zimbabwean native, who on Thursday tasted a Starbucks coffee for
the first time.
The move aims to give the coffee giant a firm foothold in a region replete with opportunity and
risk. Executives see South Africa as a steppingstone into a continent that housed three of the
world’s five fastest-growing economies in 2015, according to the World
Bank. But Starbucks’ move comes at a time when South Africa is struggling to grow its
economy amid myriad issues ranging from government missteps to social unrest and
drought.
South Africa itself still presents many challenges. The country grew an anemic 1.3% last
year and is expected to grow just 1.4% in 2016, according to the World Bank. In
December,
President Jacob Zuma replaced the country’s finance minister twice in a four-day period,
sending
South Africa’s rand currency plunging to all-time lows against the U.S. dollar and British
pound.
That put additional pressure on businesses, including retailers, which rely heavily on
imports.
Foreign direct investment in South Africa plummeted from 62.6 billion rand ($4.38
billion) in
2014 to 22.6 billion rand last year. Currency weakness has also sparked higher inflation,
which
means consumers have less money to spend on things like sweaters and pumpkin-spiced
lattes.
Question 1
This lecture is all about external factors affecting the strategic course of the firm. We
learned that firms have general and specific environments. Pick one of the factors from the
General Environment of the firm and discuss the challenges Starbucks’ South Africa location
may face. To provide a well-written analysis, you may want to seek additional information
about South Africa
– its economic, political, and demographic states. If you do decide to use additional
resources, please cite the resources in your text.
Polish apple farmers bear brunt of EU-Russia economic
war
Henry Foy and Zosia Wasik in Warsaw
Laden with fruit, the boughs of the apple trees in the orchards run by Poland’s
EUROSAD sag with what will be a record harvest for the country, Europe’s largest
apple producer. But while nature has rewarded Poland’s farmers this year, geopolitics
has not.
Caught on the front line in the economic war between the EU and Russia that was
declared after
Moscow’s invasion and annexation of Crimea in 2014, Poland’s apple farmers are cursing
a bumper crop this summer, inundated with hundreds of thousands of tonnes of fruit with
no one to sell it to.
“The situation in the Polish apple market is rather difficult,” said Anna Staszewska, an
export specialist at Eurosad, a conglomerate of apple growers with more than 30 farms and
700 hectares of orchards in Poland. “Poland’s growers have been hit hardest by the [Russian]
embargo.”
After Brussels reacted to the annexation of Crimea with trade sanctions against Russia,
Moscow responded in kind with bans on food imports from the EU, cutting off a trade
that accounted for more than half of Poland’s apple exports, and roughly one-fifth of all
production.
That, combined with an expected 10 per cent increase in production this year, according
to
Poland’s official government statistical agency, to a record 3.5m tonnes, has driven
prices to unprecedented lows, leaving many farmers facing painful losses in a country
that grows roughly a third of all the apples produced in the EU.
“On one hand the higher harvest is a success,” said Grzegorz Rykaczewski, a food and
agribusiness analyst at Bank Zachodni WBK in Warsaw. "But at the same time, it poses
a huge challenge for Polish farmers?.?.?.?There is no profit with the market in this
situation."
In June, a kilo of dessert apples on the Polish market cost just 1 zloty per kilo. Industrial
apples, used in juices, cider and other processed foods, were changing hands at 0.23
zloty per kilo. That is about 20 per cent lower than a year previously, and half the price
it fetched in 2011.
"We feel anxious about the situation," said Marcin Hermanowicz, owner of Fresh Fruit
Services, a trader. “[If] the situation continues, and there will be a lot of apples and the
prices will be low, I think that farms will start to go bankrupt.”
Sanctions against Russia have become increasingly controversial with each six-monthly
extension, as countries with better relations with Moscow, such as Greece, Italy and
Hungary, argue that they are counter-productive and are failing to impact the conflict in
Ukraine. Poland has been one of the most vocal countries in demanding their
continuation, despite the pain for the country’s farmers.
Initially, a government campaign to eat apples “against Putin” led to an increase in
domestic consumption, but demand has retreated to average levels. An EU aid
programme to buy apples and distribute them for free offered some respite but not
enough to make up for an end to Russian sales. Attempts to find new export markets
have had some success, but demand from those new markets remains low.
©AFP
The Russian food import ban plus falling apple prices has left many Polish
farmers facing painful losses
“The process of acquiring new markets is not that easy and I would risk the statement
that it is impossible to fill the gap of Russian market by any other market,” said
Miros?aw Maliszewski, head of the Association of Polish Fruit-Growers.
Complicating efforts to offset the withdrawal of Russian demand is that Polish orchards
have been calibrated to serve Russian tastes. A quarter of Polish production is of the
Idared variety — apples liked in Russia but not particularly popular in the rest of the
world.
“Changing varieties takes time, and high costs. And low prices means there’s less money
around to invest in changes,” said Mr Rykaczewski.
“Next season, prices will probably fall further. So it is likely that many farmers will not
invest in their orchards,” he added. “And frankly, they need investment if they are going
to offer global markets the products they want to buy.”
Polish traders have had some luck reaching Russia via re-exporting apples through
countries unaffected by the embargo, such as Belarus and Serbia, but volumes are
low. And while new trade routes to countries such as India, China and the Gulf have
had some success, volume is paltry.
“There is a crisis,” said Mr. Maliszewski. “And some farmers will not survive it.”
Question 2
For this question, apply Porter’s Five Industry Forces of Environmental Threats. Based
on the article, it is clear that Poland’s farming industry (apple growing sector of it in
particular) has been going through some harsh times. Identify which environmental
threat/threats has/have materialized for Poland’s forming industry and provide evidence
of your reasoning from the text and lecture presentation.
