Righton's export market of frozen food is South Africa, which has recently imposed a 40% tariff on imported products of frozen food in order to protect its local industry. The imposition of this restriction means that Righton's product is no longer competitive in the South African market. At the meantime, the South African government is offering 5% grant for purchase of plant and machinery as it wants to encourage foreign companies to undertake foreign direct investment.

(i) Evaluate the advantages and disadvantages of creating more foreign direct investment presence in South Africa by using THREE (3) examples in your evaluation. (18 marks)

(ii) An assessment has to be made by Righton on the risks that the company may face when it decides to increase their foreign direct investments in South Africa. Discuss how Righton may manage political risks and other types of government restrictions that the South African government may impose. (12 marks)

Answer rating: 100% (QA)

i Advantages and Disadvantages of Foreign Direct Investment in South Africa Advantages 1 Access to Local Market By increasing foreign direct investment FDI in South Africa Righton can establish a stro... View the full answer