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The Activities Of Walmart In Ghana Economics Essay

Wal-Mart is the regarded the largest company in the universe in footings of its monolithic grosss. It can be found in 14 different states and has about 2980 shops world-wide offering a broad assortment of merchandises. It offers employment for a great figure of people and makes usage of the local market. Customer satisfaction is really high and covers most of America.

Wal-Mart is non really popular outside the US market. And due to its broad assortment of merchandises and sale in several states, sometimes the quality of the goods is questionable.

It makes immense net incomes while its provider ‘s net income borders are on a lower graduated table.

With the emerging economic systems, it is clear to see the increased demand for consumer merchandises. Wal-Mart can take advantage of this taking into consideration that they are largely low and in-between income earners. Most retail organisations are confronting heavy challenges with respects to diminishing disposable income. Wal-Mart can capitalise on this by virtuousness of the fact that they get merchandises from providers at really inexpensive rates.

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This enables Wal-Mart provide clients better deals than their known retail stores thereby increasing Wal-Mart ‘s client base.

More and more retail companies are come ining the International market and making competition by fiting monetary values for the same merchandises as Wal-Mart ‘s and making stiff competition. This competition will oblige merchandise permutation and lessening quality of merchandises. This could take to hapless client satisfaction and loss of clients. Besides come ining the universe market means that there is now competition on every degree from local, national to international and increased hazard i.

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e. political instability

Country Overview: Gold coast

Ghana is a low-income state in West Africa with an estimated current population of 24 million with population growing rate for of approximately 2.1 % .

It is a politically stable state and has twice shown its democracy through the peaceable transportation of power between two political parties in the past 18 old ages.

Ghana is a member of the UN, WTO and ECOWAS. Bing a member ECOWAS, it has entree to the ECOWAS market, which allows the motion of goods and services freely with its 15 member states of over 260 million people. Association with ECOWAS means Ghana benefits from the remotion of certain Customs responsibilities, revenue enhancements and duties imposed on imports and export within the part.

Ghana besides offers easy entree to US and EU markets through US -AGOA and APC-EU which have several inducements to assist hike its Economy. Ghana is endowed with cultivable land for cultivation of hard currency harvests such as chocolate, lumber merchandises, coconuts and other thenar merchandises and Shea nuts harvests. It has a comparatively rich and diverse natural resource base and exports minerals, chiefly gold, diamonds, manganese ore, and bauxite. Large measures of oil have late been discovered which should hike the economic system in the coming old ages, if managed good.

Economic Indexs

Ease of making Business

Harmonizing to the World Bank ‘s Ease of Doing Business Index, informations taken from June 2009 through May 2010, ranked Ghana as 5th in Sub-Saharan Africa and 67th compared to 183 states around the universe.

Ghana has shown important betterments in the index. Compare its place in 2006 which was 109th and dropping to 82nd in 2007 and presently 67th since June 2009 to May 2010.

GDP

The existent GDP estimation for 2009 is GHA? 827.72 million and the nominal GDP is GHA? 21,746.80 million. The alteration of existent GDP in 2009 over 2008 is GHA? 794.82 million. In other words, the existent GDP grew at a rate of 4.1 % in 2009, compared to a 7.2 % growing rate in 2008.

Fig.1 Sector Distribution of GDP

Beginning: Ghana Statistical Service

Fig.1 shows the Ghana ‘s high dependance on agribusiness. This sector, contributed the most to the GDP of the state accounting for 34.5 % of the entire GDP and entering the highest growing of ( 5.8 % ) .

Inflation

Inflation is usually in dual figures. Inflation has been worsening steadily worsening since the beginning of the twelvemonth and presently at 9.38. This downward ascent has been due to two factors ; the strength and stableness of the Ghana Cedi against the dollar and the development of Money market through the uninterrupted prolongation of the adulthood constructions of the Treasury measures, bonds etc. This has besides increased the demand for foreign investors.

Inflation is projected to drop to 8.5 % by the terminal of September 2011 if the current provinces of the macro economic conditions are kept.

Fig.2 Inflation rates from Jan 2005 to 0ct 2010

Data Source: Bank of Ghana

Infrastructures

The Bank of Ghana has continued to shoot financess into substructure such as Roads, electricity, Telecommunication therefore pulling concerns. Evidence is seen in the budget statements of Ghana.

Employment

As presented by a local Newspaper bureau, Daily Guide ( 2008 ) , Unemployment in Ghana as at 2008 was 20 % harmonizing to the 2008 World fact book ;

Mr. Abuga Pele, Coordinator of the National Youth Employment Programme ( NYEP ) , was said to hold observed that youth unemployment in Ghana is a critical issue that must be tackled dispassionately. This was harmonizing to the GNA ( 2010 ) .

It showed show that several young persons go through instruction but come out with no occupations. Wal-Mart can tap into this and make occupations for the people of Ghana and besides have skilled labors readily available to the company.

Trade

Ghana ‘s export and import spouses are listed in the tabular array 2.1 and 2.2 severally.

As stated in Salvatore D. ( 2010 ) , “ The Gravity Model postulates that ( other things being equal ) , the bilateral trade between two states is relative, or at least positively related, to the merchandise of the two states ‘ GDPs and to be smaller the greater the distance between the two states. ”

This is seen to be non precisely true with respects to merchandise with its neighboring states as seen from the tabular arraies. Trade with Togo, Ivory Coast and Burkina Faso does non even compare with the trade with China, US and South Africa in the yesteryear.

The difference between the per centum of the export and import goes to demo that Ghana has a comparative advantage in Agricultural green goods. See Table 3 and 4. And comparison with the Export and import spouses in Tables 2.1 and 2.2.

This shows that it trades in labour intensive goods for capital intensive 1s.

Ghana is rich in natural gifts, such as Arable Land for agric production and makes usage of its rich labor to bring forth labour intensive merchandises and export. While importing capital intensive green goods, merely as Heckscher-Ohlin theory provinces.

Initially Ghana a trade scheme after independency was import permutation industrialisation, a scheme that was aimed at cut downing the economic system ‘s dependance on trade. 2004-2007 saw the trade shortage addition from 23.96 % of GDP in 2005 to 26.94 % of GDP in 2007, a tendency due to a mounting import measure.

Corruption index

The latest study by the Transparency International, an international anti-corruption organic structure, ranked Ghana as the 7th least corrupt state among 47 African states and 62nd among 178 states. Ghana scored 4.1 out of 10 in the latest consequences of the Corruption Perception Index. The mark was antecedently 3.9 in 2009.

Resilient Economy

The planetary recession did non hit Ghana ‘s economic system as much. Strong trade good exports in footings of robust chocolate and gold export monetary values softened the impact and of the tight policies and low remittals from migrators abroad experienced during the period.

The mentality for the remainder of the twelvemonth remains positive and hinges strongly on the continued betterment in the macro basicss.

By the terminal of October 2010 the Gross international Reserves was a GHA? 3,973 million, transcending three months of import screen. Unlike 2008 when the Gross international Reserves was GHA? 2,036.2 hardly covering 2 months import.

Energy Industry

From table 1 we see that the energy sector saw the production and distribution of energy grow by 7.5 % . The state relies on two signifiers of electricity coevals which are Hydro and Thermal. Hydroelectric coevals went up by 11.1 % while thermic electric production fell by 2.9 % . High dependance on the hydroelectric coevals which besides relies on adequate rainfall throughout the twelvemonth is non the best. Low rainfall consequences in deficit of distribution of electricity to all parts of the state. As a downside Wal-Mart may hold to put to a great extent in Generator workss.

Budget deficit/surplus

For the past 40 old ages Ghana has ever had a budget shortage. Datas on the 2009 budget, from the Bank of Ghana, indicated that Government financial operations resulted in a shortage, on a hard currency footing, of GHA?2.1 billion ( 9.9 % of GDP ) compared with GHA?2.6 billion ( 14.5 per cent of GDP ) for the same period in 2008. The shortage was said to hold been mostly driven by a deficiency of prudence in public disbursement and misplaced precedences in investing undertakings.

This lessening in shortage was due to the success of the Fiscal asceticism bundle imposed in Ghana in 2009.

Positive Mentality

As Ghana continues to go a preferable finish for tourer, this could farther enrich Wal-Mart ‘s client base since the tourer will be more familiar with Wal-Mart than the local retail supermarkets.

Entree to the Ghanese market will supply entree to more export spouses and increase net income borders.

As a consequence of good and prudent policy reforms, the economic system of Ghana has shown a positive growing. Examples of these reforms are cautious financial policy direction, good managed debt and international trade Regime, all coming together to make a good concern environment attractive to investors. Effectss of these reforms are seen in the low involvement rates and economic growing.

Hazard

Competition from similar retail shops seeking to take advantage of the emerging economic systems such as Massmart of South-Africa. Duty exempt and protection of little industries by the Government may intend certain infliction and limitations in the puting up of Wal-Mart in the state. High resistance from trade brotherhoods are besides anticipated to function as barriers to entry into the market.

Conclusion/ Recommendation

Entering foreign markets is ever a hazardous proposition for a company. Wal-Mart should closely analyze economic indexs such as GDP per Capita, and trade shortage, in order to custom-make its entry into the Ghanese market. Wal-Mart ‘s failure in Germany was due to a high grade of ignorance of the mark market, buying behavior of consumers, and the underestimate of rivals. Understanding the Ghanese economic system would enable Wal-Mart do better determinations on the goods to transport in their retail shops, pricing of goods, designation of favorable supply, and the effectual usage of ready human capital in the state.

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The Activities Of Walmart In Ghana Economics Essay. (2020, Jun 02). Retrieved from https://studymoose.com/the-activities-of-walmart-in-ghana-economics-new-essay

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