Expansion of U.S. Companies in Africa Essays

Expansion of U.S. Companies in Africa Essays Expansion of U.S. Companies in Africa Essay Expansion of U.S. Companies in Africa Essay Expansion of U.S. Companies Introduction Over the years, America has developed various companies in some African countries. The companies are aimed at increasing the economy in the U.S. while strengthening its resources overseas and enhancing international relations. Some of the companies in Africa have influenced politics in America and the related countries to allow smooth business operations. If a country’s economy is strong, it increases its wealth and promotes good business relations with the outside world. Expansion of companies shows the growth of a business. This leads to opportunities that benefit all people and countries associated with the company. Expansion mainly increases employment opportunities, which in turn improves the development of a nation. Expansion of a company is usually triggered by the need to increase market and maximize profits. However, it has various effects on the development and economy of a country. The issues, effects and significance of expansion are an important topic for discussi on especially in the growing world economy. Several U.S. companies have expanded in Africa and the implication of their growth on stocks, government policies, employment and the development of America. Issues Recently, the U.S. developed an interest of conducting business in some African countries. These interests were triggered by factors such as the nature of land, good climate and availability of resources in the countries. However, the establishment of Chinese companies in Africa has hindered efficient expansion by the U.S. As a result, some companies have grown in Africa but have faced many barriers during expansion. Despite the barriers, some companies have taken advantage of the loopholes to increase the economy. Examples of these companies that have expanded immensely are, Coca Cola Company, General Motors, Isuzu Motors Limited, Ford Motors and Cummins Incorporation. The growth of these companies has affected America and Africa in many ways. The need for expansion of companies in Africa by America was fueled by the rise in China’s economy. It led to an urge by American companies to compete for market with China. The market opportunities in Africa influenced the struggle between China and America to dominate business. Cummins Incorporation, which is an American company that deals with the supply of trucks and engines, has taken drastic measures of increasing sales of its products in Africa, to restore stiff competition between America and China. Last year, it was noted that China had gained much more popularity in South Africa from the design and production of truck engines and equipment. Another measure that America has taken is generated from a company like Caterpillar Incorporation, which deals with making construction products. The company has invested funds used to train personnel and build infrastructure to accommodate its workers in countries like Mozambique and Zambia. General Electric Company, which deals with the supply and manufacture of aircrafts, has developed an aircraft-leasing administrative center in Ghana as another measure. The administrative centre serves as the company’s headquarters for the west and central part of Africa. All these measures were aimed at improving the stock value and economy of the U.S. Analysis The measures outlined above show the main reason behind the expansion of American companies in Africa. It is evident that the Chinese rapid growth in economy affected the market of many products in the U.S. China developed companies that shared the same goals as American firms, but both countries were competing for market and exploration of resources in Africa. China discovered opportunities in Africa before the U.S. and utilized them to strengthen the economy. The strong economy in China influenced an increase of stock value by the U.S. in order to bridge the gap in the economy between the two countries. However, increasing the stock value has negative effects on market. This forced the U.S to develop interests in Africa to maintain balance. Worldwide statistics show the interests of other continents in Africa are extremely high. This is because Africa is the largest source of market and it is developing rapidly in terms of resources and infrastructure. There are many changes being made in Africa currently that will make it a market hub. Improvement of infrastructure has influenced the growth and expansion of many companies in various countries. In South Africa and Nigeria, for example, the development of sophisticated buildings has led to the expansion of existing restaurants and hotels. A restaurant such as KFC has led to imports of poultry products by the U.S to Africa. Good climate, agriculture and tourist attractions in countries like Kenya and Ethiopia have played a major role in expansion of U.S companies. This is because these factors are influential in determining the location of a company. The healthy climate gives favorable working conditions and China has focused most of its development there by building large telecommunications networks in Ethiopia. America was aimed at expanding more in Asian countries that lacked these resources. Upon the discovery of Africa’s potential, America reevaluated its plans and focused more towards expansion in Africa. China has also developed equipment for processing products electronically in Africa. Products such as pharmaceuticals and processed perishables have gained a vast market in Africa, therefore, increasing China’s economy. By producing and marketing these products in Africa, China incurs minimal costs of production while creating opportunities for Africans such as employment and training. China is also a leading developer of mobile phone networks through Huawei Technologies Company. This is due to the development programs established in Africa that provide the Chinese with contracts for installing networks in various areas. However, America has not taken advantage of these opportunities, and this has not fully exploited its potential in developing technology. Some American government policies affect relations between the U.S and Africa. Since most African countries have one-party governments, establishing strong business relationships with America is difficult. However, the Chinese government has less strict policies, which facilitate smooth interactions with Africa. The African growth and opportunity act of 2000 of America allows trading between African countries that are viewed to be developing politically, socially and economically. This act affected the development of some companies in remote countries that have good land and favorable climate. However, China had no such policies. In fact, the state council of china encouraged mutual gain when conducting business in Africa with the aim of promoting social progress. American companies have faced some challenges in expanding in Africa. The development of infrastructure in the past years has led to congestion in countries like Nigeria. This has made it difficult to arrive on time in various working places due to the perils of traffic. As a result, it has forced American companies to construct on the outskirts of Nigeria, which also poses a challenge for workers in a company in terms of transport. This challenge is faced because America delayed in establishing its companies in Africa due to the lack of knowledge and confidence in the continent. This enabled China to take time to develop appropriately especially with the availability of oil in Nigeria. Conclusion According to the article, it is evident that America is struggling maintain competition with China. China has exploited Africa, and as a result, stocks in America are reducing in value. This has forced many leading companies in America to expand in Africa because of its rapid growth and available resources. The delay in discovering potential market in Africa by the U.S. is highlighted as a threat to the economy of America. Currently, the U.S. is struggling to keep up with China economically, and this has led to the rise of companies in Africa. 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