The impact of globalisation on the tea industry, with special reference to South Africa.
There are many challenges facing business, industry and its operations, the associated service provision and the supply chain management in the global market today. Simon and Sohal (1995, p.14) acknowledge the dramatic and irreversible changes that the South African business environment has undergone over the past five years, from 1990 to 1995. Such changes are mainly shift of focus from inward-looking import substitution with substantial protection to a globally-oriented open economy. Businesses are faced with a challenge to optimise their operations to compete in the new economy. Many organisations have not survived the competition, as they lacked the necessary competitive edge. Challenges faced by these organisations varied from unavailability of suitably qualified management through to challenges with local legislation and the impacts of low-cost production imports, which led to closure of some businesses. From a community standpoint, closure of businesses poses a challenge to the socioeconomy of the inhabitants of the country. This research seeks to establish if the closure of businesses and subsequent impacts on the socio-economic status of communities was as a result of the changes during the globalisation era. Research methodology To address the objectives of the study, a population of tea "experts" was inferred from data received from DTI (2004). This inference was done through use of a ratio of 1 :60 (Manager: Labourers) due to the fact that the industry is labour-intensive. A total of 48 "experts" were identified as an adequate, representative sample for the analysis. These "experts" were from both the private tea industry and the govenunent regulatory departments involved with agricultural activities. A total of 96 questionnaires were sent to the "experts", with a return rate of 50% of these, which equated to the required sample size (of 48 completed questionnaires). Data analysis was carried out through using an Excel spreadsheet and converting frequency of responses to percentages. Objectives The objectives of the study included: • To identify issues and strategic challenges facing the global tea industry in the literature and applying them to the South African tea industry; • Analyse the tea estates in South Africa with specific reference to Magwa Tea Estate in the Eastern Cape, the old Transkei; • Identify appropriate strategies that may enhance the performance of the South African tea industry; • Assess the incentives provided by global governments to tea estates and compare them to the South African conditions; and • Examine the potential of applying some of the global success strategies into the South African tea estate industry. Conclusions While one cannot discount the phenomenon of globalisation, it has been shown that some areas in which business was devoid included capable management teams, flexibility on strategies, strengthening of the Rand and Land Claims against land occupied by the tea estates. The result was a collapse in the tea industry. The recommendations below suggest means by which the tea industry may be revived to carry its original mandate of providing jobs to the rural communities. However, the industry requires the development of sustainable competitive strategies. Recommendations • The organisation should continue to adopt a philosophy m which entrepreneurship is promoted and encouraged; • Ensure employment of a well-trained management team to develop and lead the strategy; • Encourage efficiency of operations; • Encourage government subsidies (especially in the form of regulations on imports to prevent dumping); • Employ appropriate competitive advantage strategies; • Root out corruption and mismanagement of the institution; Development of an interrelationship between the growers and retailers such that the growing of tea is sustainable; • They need to have strong communication skills which must encompass strong negotiation skills.