Thursday, July 10, 2008

Foreign Site and Production Analysis

South Africa

South Africa, officially called as the Republic of South Africa has an area of 1.2 million sq km with moderate climate, similar to southern California. It mainly consists of plateau, Savanna, deserts and mountains. Its population according to the 2007 census is 47.9 million. Until 1991 South African law divided the population into four major racial categories: Africans (black), whites, coloreds, and Asians. Although this law has been abolished, many South Africans still view themselves and each other according to these categories. Black Africans comprise about 79% of the population and are divided into a number of different ethnic groups.

Political and Economic Conditions
South Africa is a multiparty parliamentary democracy in which constitutional power is shared between the president and the Parliament. The third arm of the central government is an independent judiciary. The Constitutional Court is the highest court for interpreting and deciding constitutional issues, while the Supreme Court of Appeal is the highest court for non-constitutional matters.
South Africa has a two-tiered economy; one rivaling other developed countries and the other with only the most basic infrastructure. It therefore is a productive and industrialized economy that exhibits many characteristics associated with developing countries, including a division of labor between formal and informal sectors, and uneven distribution of wealth and income. The formal sector, based on mining, manufacturing, services, and agriculture, is well developed.

Monetary and Fiscal Policies
South Africa has a sophisticated financial structure with a large and active stock exchange that ranks 17th in the world in terms of total market capitalization. The South African Reserve Bank (SARB) performs all central banking functions. The SARB is independent and operates in much the same way as Western central banks, influencing interest rates and controlling liquidity through its interest rates on funds provided to private sector banks. Quantitative credit controls and administrative control of deposit and lending rates have largely disappeared. South African banks adhere to the Bank of International Standards core standards. The South African Government has taken steps to gradually reduce remaining foreign exchange controls, which apply only to South African residents. Private citizens are now allowed a one-time investment of up to 750,000 rand (R) in offshore accounts. Since 2001, South African companies may invest up to R750 million in Africa and R500 million elsewhere.

Trade and Investment
South Africa has rich mineral resources. It is the world's largest producer and exporter of gold and platinum and also exports a significant amount of coal. During 2000, platinum overtook gold as South Africa's largest foreign exchange earner. The value-added processing of minerals to produce ferroalloys, stainless steels, and similar products is a major industry and an important growth area. Primary agriculture accounts for about 4% of the gross domestic product. Major crops include citrus and deciduous fruits, corn, wheat, dairy products, sugarcane, tobacco, wine, and wool. South Africa's transportation infrastructure is well-developed, supporting both domestic and regional needs. The Johannesburg International Airport serves as a hub for flights to other southern African countries.

Culture and Ethical Conditions
South Africans are by custom polite and circumspect in their speech, although residents of the major urban centers may bemoan the decline of once-common courtesies. Africans strongly mark social categories of age, gender, kinship, and status in their etiquette. Particular honor and pride of place are granted to age, genealogical seniority, male adulthood, and political position. Rural Africans still practice formal and even elaborate forms of social greeting and respect, even though such forms are paralleled by a high incidence of severe interpersonal and social violence. Afrikaners are more direct and sharp in their encounters, more quick to express their thoughts and feelings towards others, and not given to social legerdemain. In general, despite the aggressive rudeness that afflicts stressful modern urban life everywhere; South Africans are by custom hospitable, helpful, sympathetic, and most anxious to avoid verbal conflict or unsociable manners. Even among strangers, one of the strongest criticisms one can make in South Africa of another is that the person is "rude."

Challenges Ahead
Although South Africa's economy is in many areas highly developed, the exclusionary nature of apartheid and distortions caused in part by the country's international isolation until the 1990s have left major weaknesses. The economy is now in a process of transition as the government seeks to address the inequities of apartheid, stimulate growth, and create jobs. Business, meanwhile, is becoming more integrated into the international system, and foreign investment has increased dramatically over the past several years. Still, the economic disparities between population groups are expected to persist for many years, remaining an area of priority attention for the government

Products with Strong Production Potentials in South Africa

Almost all essential commodities, except petroleum products and bauxite are being produced in South Africa. Key Industry includes minerals, mining, motor vehicles and parts, machinery, textiles, chemicals, fertilizer, information technology, electronics, other manufacturing, agro-processing, gold, other minerals and metals. Major markets are U.K., U.S., Germany, Italy, Japan, East Asia, and Sub-Saharan Africa.
South Africa is the biggest supplier of the fuel made out of coal to European electricity companies. It is the key exporter in the thermal coal market. It is the only country in the world that manufactures fuel from coal.
Gold, Platinum and Diamonds
South Africa has rich mineral resources. It is the world's largest producer and exporter of gold and platinum. During 2000, platinum overtook gold as South Africa's largest foreign exchange earner. Kimberly is the world’s most renowned city of diamonds
Processing industries
The value-added processing of minerals to produce ferroalloys, stainless steels, and similar products is a major industry and an important growth area. The country's diverse manufacturing industry is a world leader in several specialized sectors, including railway rolling stock, synthetic fuels, and mining equipment and machinery.
Olive oil
Olive oil from cape can compare with the best oils that Spain, Italy and Greece can offer.
Cape Town is one of the great wine capitals of the world. With new wineries opening up at a steady rate, and South African wines attract ting key markets abroad.
Astrum Jewellers Pvt Ltd.
About us
Astrum Jewellers is one of the latest branded jewellery of India started in the year 2003. Astrum has set up production and sourcing bases with thorough research of the jewellery crafts of India. The factory compiles with all labor and environmental standards. We are located in 12 cities in India with its headquarters located in Bangalore. Astrum challenges the age old jewellers like Tanishq and Gili.
A team of 3 people, with a vision and passion to venture in to jewellery market led to the establishment of the brand that you distinguish, discern and devour as Astrum today. What started off as a dream transformed into an organization, a super brand, setting high standards of excellence, with adornments that have left the consumers astounding and asking for more. We are planning to take our business overseas at Kimberly in South Africa. The various aspects of our company reviewed with respect of our new location are given below.
The major drawback of our business is the non availability of gold, platinum and diamonds for making jewellery in India. Therefore, it is better to locate the production facility at Kimberly in South Africa. It has a large, nine-carat gold consumer market. There is also a very strong market for top-end, hand-crafted pieces made from both 18-carat yellow and white gold as well as platinum jewellery. Since all the raw materials are available easily and timely, it is possible to follow the lean manufacturing process.
The manufacturing process begins with the design, which in reality means producing ideas and sketches as per required market trends, the form, functionality and salability, capturing every dot on a piece of paper and giving birth to an art that you would value tomorrow. Several versions are drawn by hand, to achieve the right aesthetic value. The design plays a very important role as it is the designers who lend their creativity to the ornaments and finish them with immense opulence. The design also, should take into consideration the actual manufacturing method and price. The designing of the jewellery is planned to be outsourced to Italian technicians with several future trainers acquiring machinery and equipment training in Italy.
Astrum will pursue a strategy to tightly manage its own supply chain and reduce the chances of supply disruptions and lower cost. Locating the production facility at Kimberly would help us in successfully enforcing this strategy as South Africa has comparative advantage in the availability and supply of gold, diamonds and other gems.
South Africa has a large, nine-carat gold consumer market. There is also a very strong market for top-end, hand-crafted pieces made from both 18-carat yellow and white gold as well as platinum jewellery. The Jewellery Council of South Africa is the umbrella body of jewellery industry and is made up of three constituent bodies - the Jewellery Manufacturers' Association of SA, representing manufacturing jewellers; the Jewellery and Watch Distributors Association, representing wholesale jewellers and importers; and the Jewellers Association of South Africa, representing retail jewellers.
Human Resource Strategy
The company plans to have a geocentric staffing policy in Kimberly, South Africa, where the best people are sought for key jobs like manager, regardless of Nationality. It also plans to follow cultural relativism in which the company adopts the ethics and work culture of South Africa. Our business will strive hard to hire people who have a strong sense of personal ethics and would not engage in unethical or illegal behavior. We would draft a code of ethics, which is a formal statement of the ethical priorities our business adheres to.
South Africa is considered to be an economic powerhouse in the African continent by virtue of its membership in the 13-nation Southern African Development Community. The country is very strong in mining and the gems and jewellery industry forms a major part of its economy. South Africa has always been one of the biggest producers of raw material for gems and jewellery worldwide.

Keeping in view the various advantages that South Africa has over other countries in the jewellery making industry, Astrum jewellers’ have been planning to intelligently place its business at Kimberly, South Africa.

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