Globalization: A PESTEL Analysis of CAMECO's Global Expansion

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GLOBALIZATION
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Assignment 1
Concept of Globalization
Globalization can be viewed as the integration of many economies which is characterized
by networks of international linkages that connects people, countries, and institutions in an
interdependent global market. It involves the integration of the economy; transmission of
knowledge and ideas, transfer of policies across borders, cultural stability and discourses of
power. It is a global revolution and the formation of the global market that is free from
sociopolitical control. Globalization is facilitated by advancements in technology which permit
space utilization as well as acceleration of speed. This advancement has resulted in the rise of
global interconnectivity across space and time by expanding and intensifying social relations.
Although globalization is a multidimensional process, there are three common dimensions which
are mostly discussed; cultural, social and economic. The term has also been used as a synonym
of policies in the economic liberalization, free market, the increasing dominance of the western
and internet revolution.
Drivers of globalization include government action (taxes and tariffs), channels of
communication and lower transportation costs. International investments depend on the actions
undertaken by the government. The government actions may involve regulating the trade by
putting trade barriers or reducing trade tariffs with the aim of making the trade less volatile. The
role of the government not only involves an individual state but it also goes beyond international
organizations such as IMF or WTO who manages the issues related to global governance
(Cavusgil et al., 2014, p. 143). Some of the actions of the government that can potentially
influence international trade includes; Creation for a complex and a good infrastructure and other
facilities that can attract the investors. There is quite a wide range of services that can promote

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trade ranging from essential services such as electricity, and water to a complex system of
resolving disputes. The ability of the government to resolve the financial crisis is to influence the
growth of the capital flow. This is usually achieved through transparency in the international
financial transactions, minimizing the moral hazard, adequate supervision, and regulation of
financial markets and fewer taxes of foreign exchange transactions. The government also helps
in providing more stringent labor as well as environmental standards to prevent any party from
being overexploited. Additionally, it is its role to protect the small domestic businesses long
enough until they are capable of entering into the global market.
However, tariffs can sometimes act as a tool to protect the sensitive industries, protecting
dumping or for humanitarian purpose. In the past, tariffs were imposed to protect specific social,
cultural and economic interests. The international organizations such as the World Trade
Organization (WTO) are also committed to lowering barriers of trade. WTO provides a platform
where nations come together to negotiate about trade barriers such as tariffs. Also, the existence
of the trade barriers can be detrimental in a way that it can result in decreasing the entire
economy efficiency. In the theory of comparative advantage, free trade occurs when trade
barriers are removed. Trade barriers can have adverse effects on developing nations since they
mostly rely on imported goods
Driving Factors of Globalization
Competition. Four key factors drive globalization; costs, market, environment, and
competition. For the CAMECO to remain competitive, there is a need to intensify their
marketing strategy globally (Cavusgil et al., 2014, p. 164). To be competitive, the company
should be in a position to introduce, upgrade and distribute its products is a faster way. Also, the
company must be in a position to execute its plans faster to remain more competitive

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Cost. Global companies such as CAMECO are motivated by maximizing their
investment. To invest in a single country market is not large enough to provide economies of
scale. In considering cost, the company must make a tough decision regarding the customer
segments, market, and product positioning. Price leadership is an essential strategy where a
company such as CAMECO can sell their products at a price lower than that of their
competitors- this is only achievable when producing at economies of scale and minimizing costs
such as overhead and logistics. Another strategy may be product differentiation; Extending
business activities globally, there is need to combine high differentiation and cost containment
(Cavusgil et al., 2014, p. 107), so that they operate on economies of scale in both production and
marketing.
Environment. The rapid transmission of the information across borders, technological
revolutions, increase of wealth and mobility have contributed to increasing the demands for the
global products and services.
Market. Consumers in the developed economies are now sharing universal education,
lifestyles, and leisure services among another thing. The producers and marketers of a particular
product they find their markets in the countries with high purchasing power as well as developed
infrastructures. Having a global strategy involves deciding the best market to spend resources.
Impact of Technology in Globalization
Technology is not only a driving force of globalization but also act as a catalyst to the
business globalization. Technology has significantly participated in transforming the global
economy and has been considered as a tool for competitive in strategic management.
Improvement of communication with the help of technology in improving telecommunication,
satellites and fiber Optics has helped in the reduction of transportation costs. We are living in a

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century where there is a high speed of the information flow, and also transportation of products
across boundaries is fast as well as efficient. Efficiency is made possible due to technology
advancements which act as the core of transportation and communication globalization. For
instance, transportation would not have been faster and efficient if the steam engine was not
invented in 1796. The incorporation of the knowledge of the steam engine to streamline ship
through propulsion technology as well as the invention of Aircraft in the 1950s helped in
transforming the global economy which has led to increasing of movement of labor across
boundaries.
Technology has led shrinkage of traveling distance thus enabling expansion of the
worldwide economy. The constant improvement in transportation and introduction of
containerization has facilitated the movement of heavy goods to move from one place to another
as well as from one continent to another. The shipping port also has cranes which allow lifting of
the container more efficiently which cost. As a result of technological globalization, counties
such as China and India have benefited through technologies such as container ships and airplane
has made China transport its products to other countries such as the United States and Europe
and Vice versa. The low costs of transport have to lead to factories in China to manufacture
Barbie dolls with Japanese hair, American colorants, and Taiwanese plastics and ship them to its
customers worldwide.
The introduction of the internet is the biggest thing that ever happened in the information
and technology sector. The Internet has transformed the availability of the information as well as
how it is passed which have helped to create the economy based on knowledge. The Internet can,
therefore, be viewed as a decentralized global communication platform encompassing the World
Wide Web of interconnected networks and computers. It has allowed individuals from different

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regions to communicate instantaneously economically; for instance, e-mail has provided a
medium in which people communicate instantaneously through the help of the World Wide Web.
Also through these different platform countries can trade with each other. Trade is made possible
due to cost-effective and advancement in communication allowing the fast exchange of
information.
Technology has also led to the establishment of E-commerce. This is a kind of business
that is carried out through electronic communication networks. E-commerce has led to dynamics
in the global economy where a business can be established and conducted globally with no
presence of barriers. For instance, Amazon and eBay have grown as a result of the internet. The
Internet has really changed how nowadays small business carries out their operation, and every
individual is given a chance to enter into the global market. E-commerce is a cheap alternative
which speeds communication between organizations as well as their consumers globally. People
can also trade 24/7 through the utilization of the electronic system. Additionally, things like
phone and satellites have enabled people to communicate with each other regardless of their
location through calls, emails, and texts as well as video calls.
PESTEL analysis provides insights about operating challenges CAMECO will face in the
prevalent macro environment.
Political Factors That Impact CAMECO.
It is significantly important to consider political factors when assessing the factors that
can impact CAMECO long term profitability in a particular market or country. In its
international operations, the company is exposed to different types of political environments as
well as political system risks. To achieve success the company needs to analyze several factors
before their entry in a new market.

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• Taxation - tax rates and incentives
• Wage legislation – this involves minimum wage and overtime
• Level of corruption - especially levels of regulation in the industrial sector.
• Bureaucracy and interference in the industrial industry by government
• Trade regulations & tariffs related to energy and chemical industry
• Pricing regulations – the presence of any pricing regulatory mechanism for
manufacturing industries.
• Mandatory employee benefits
• Bureaucracy and interference in the industrial sector by the government.
• Product labeling and other requirements in Transportation
• Industrial safety regulations in the Transportation sector.
• Political stability and importance of the industrial sector in the country's economy
• Intellectual property protection
• The legal framework for contract enforcement
Economic Factors That Impact CAMECO
Factors such as interest rate, economic cycle, foreign exchange rate, inflation rate, and
saving rates are Macroeconomic that determines aggregate demand and investment in any
economy. On the other hand factor such as competition norms is a microeconomic factor that
influences the competitiveness of a corporation. CAMECO can use factors such as inflation rate,
growth rate, and economic indicators to determine the growth trajectory of the organization. The
following are economic factors that the company needs to consider
• Type of economic system in countries of operation as well as other countries it wants
to extend its services- this involves the type of economic system and its stability.

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• The comparative advantage of the country that is hosting the company
• The level of skill possessed by the workforce
• The economic growth rates
• Education level in the country
• The quality of the infrastructure in the manufacturing industry
• The government intervention in market liberalization
• Inflation rates
• The costs of labor and the productivity of the economy
• Interest rates
• The efficiency of the financial markets
Technological Factors
Technology an integral part of any industry; over the past few years, the manufacturing
industry is transforming very fast. As the company conducts technological analysis, it is
necessary to assess the speed at which the technology brings in the disruption in the market.
Technology analysis will involve understanding the following components;
• The rate of technological diffusion
• Impact of technology on product offering
• Recent technological development by CAMECO competitors.
Environmental Factors That Impact CAMECO
Operating in different countries, the company is normally exposed to various norms or
environmental standards which can potentially impact the profitability of a company in those
markets. Before the company enters into the existing market, there is a need to assess the

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environmental standards that are needed in conducting business in those markets. The
environmental factors to be considered are
• Climate change
• Weather
• Air and water pollution regulations
• Laws regulating environment pollution
The legal impact that impact CAMECO
In many countries, the legal framework is not robust to protect an organization’s
intellectual property rights. Therefore, there is a need for the company to analyze such issue
before venturing in a country. The following are some legal factors that need to be analyzed
• Copyright, patents / Intellectual property law
• Discrimination law
• Consumer protection and e-commerce
• Health and safety law
• Anti-trust law in the manufacturing industry.
• Employment law
Globalization Challenges
Ethical business practices. The most diversified challenge of globalization is ethical
business practices. The challenge is even more experiences in the developing countries as
compared to the developed ones. Most of the multinational corporations like CAMECO have a
challenge of establishing themselves in countries that are yet to develop tight rules gorverning
multinational corporations. globalization is geared towards promoting the business brand
internationally while at the same time improving the living standards of the local people through

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creation of employment (Gurnani, 2015, p. 118). In most nations’ child labor is prohibited.
However, in most Asian countries the practice of employing children is not illegal and the
governments there takes the issue very moderately (Rode et al., 2015). A business that is not
ethically guided will end up embracing in the same cultural believes and practices when
established in these countries.
Globalization creates corporate responsibility of promoting the living standards of people
which brings the company closer to the government where the issues of bribery, corruption,
philanthropy and taxation may arise. The most exploited business ethic by globalization is
employment. In most developing countries employees from a multinational corporation are not
given the same pay structure as compared to those from the parent country with poor working
conditions. With the new complex world environmental ethics are more focused by most
countries and states. ethics in environment majorly deals with the human relationship with the
environment (Kennedy, Welch and Monshipouri, 2015, p. 124). during production of goods for
the market most of the raw materials are generated for the environment and its only ethical if it is
protected from degradation and pollution.
Infrastructure. If CAMECO is determined to start operations in the developing
countries, it should put into considerations the poor infrastructure in these countries.
Infrastructure involves the physical planning of transport network and the structures developed
for a society to operate and the country’s economy to thrive (Dunning, 2014, p. 13). Cameco
should be worry of undeveloped infrastructure especially in towns far from the capital cities.
Also, poor road conditions in the capital cities create traffic jams which would not be the best
working conditions for companies that involve a lot of transport for raw materials and goods
produced to the market. With poor transport infrastructure companies are forced to incur an extra

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cost and risk as a result of delays in traffic jams. The chemicals produced by CAMECO would
need to be supplied to the dealers on time. Due to the predetermined delays coursed by traffic
jams the company would be required to increase the number of distributors and spend more on
fuel for the distributing vehicles. Sometimes in developing countries power is not sufficient for
the countries demands. This results to power rationing which can significantly limit the
company’s production capacity (Courses.lumenlearning.com, 2019). It therefore becomes
difficult for such a company to grow and compete locally with other established companies
producing similar products.
Legal and regulatory structure. Every country has its legislation policies that regulate
business practices. For example, in most Europe countries child labor is illegal while in Asia few
countries prohibit it (Rode et al., 2015). Lack of adhering to the states business laws can attack
heavy fines and even lead to its closure. Some of these countries even regulate the payment
structure and at times when the company does not exploit its full capacity losses would be
inevitable.
Leadership. Different regions in the world have their unique culture and language.
multinational corporations would require to recruit operation managers who have the appropriate
business knowledge to approach the market from these regions successfully. It is difficult for
multinational corporations like CAMECO to find a leader who would spearhead the company
operation a region.
Recommendations on How to Overcome Globalization Challenges
CAMECO should develop ethical codes of conduct and embed them to all their
subsidiary companies in the countries of existence. A quality research on company’s

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environmental requirements in the specific country a multinational cooperation seeks to start
operations should be done in order to avoid conflicts with government (Gurnani, 2015, p. 118).
In addition, it is important for CAMECO to be driven by ethical business practices over the drive
of making profits for this is what create a good reputation for its brand. It is also important for
CAMECO to do a thorough research on whether the target country meets the infrastructure
development threshold before the start operation. At times CAMECO has been forced to develop
roads a responsibility that is supposed to be done by the government.
Studying the Legal and regulatory structure of a country before starting operations is
pivotal to a company’s success. as discussed above some regulations are very harsh to the
company that can even harm the brand reputation worldwide. Care should be taken by
CAMECO not to over step its licensed business operation requirements. Finally, it is only a
brand reputation that can pull best managers to a company. CAMECO should purpose to produce
quality products and provide an appealing pay structure for it to attract these managers.
Question 2
McKinsey 7s model is the most popular strategic planning tool. The model is used to
show how the 7elements; Staff, Style, Skills, Systems, Structure, Strategy, and Shared values can
be incorporated together to achieve organization’s effectiveness (Ravanfar, 2015). The seven
elements are interconnected meaning that a change in one factor will also require a change in the
entire firm to ensure that it runs smoothly.
Strategy. The strategy of the CAMECO is focused on three objectives; first is doubling
the annual uranium production. Second is to invest in their fuel services business to foster growth
in the nuclear market. Lastly is maintaining a steady flow of electricity. The company is also
determined in establishing a strong customer base and global marketing presence