IBMA8411: Key Strategic Impacts in Terms of Foreign Exchange Rate - International Business Management Assignment Help

Assignment Task:

Question 1 
In 2018, President Cyril Ramaphosa set a target to lure investments of $100bn by 2023 in an attempt to reignite economic growth. Overall, foreign direct investment (FDI) flows to the African continent rose to $46bn in 2018, an increase of 11% from the previous year. Growing demand for some commodities and a corresponding rise in their prices as well as the growth in non-resource- seeking investment in a few economies underpinned the rise. Investment in manufacturing and services is likely to be sustained, yet confined to a few countries in North and Southern Africa as well as the emerging manufacturing hubs in East Africa. Multinational enterprises from developing countries are expanding their activities in Africa but investors from developed countries remained the key players. 

Closer regional integration, aided by the Continental Free Trade Area (CFTA), can also draw additional FDI flows, and in 2018, SA joined various other countries on the continent in signing the CFTA agreement. This agreement aims to create a single continental market for goods and services, with free movement of business people and investments. With about 1.2-billion people on the continent, the CFTA is set to create one of the largest free -trade market zones in the world. 
“The African Continental Free Trade Area agreement will bolster regional co-operation. This, along with upbeat growth prospects, augurs well for FDI flows to the continent,” said Mukhisa Kituyi, the UN’s Conference on Trade and Development secretary-general. 

Select a global company, based outside of the African continent, that has made a significant FDI in an African country within the last eight years. In the context of the chosen company and the African country in which it has invested: 

1. Provide a critical analysis of the chosen company’s decision to invest in the identified African country through FDI, as well as the country’s decision to accept the FDI investment. Take the advantages of FDI as well as PESTEL factors into account. In your critical analysis, include an evaluation of the potential impact of the Continental Free Trade Area (CFTA) on the attractiveness of Africa as an investment destination, as well as of incentives that serve to attract FDI to this country in particular. NOTE: A full PESTEL analysis is not required. Focus on factors that contributed towards a decision to invest. 

2. Provide a critical assessment of the benefits and potential drawbacks of the chosen form of FDI for both the company making the investment, and the country receiving the investment. Include recommendations with regards to future investments based on the benefits and drawbacks assessed on this company and African country.
 
3. Discuss key strategic impacts in terms of foreign exchange rate changes if the African country was to experience a sudden increase in its inflation rate. 

4. Clearly substantiate your analyses and assessments. 
 

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