Globalization and its Impact on CAMECO: A PESTLE Analysis

Desklib provides past papers and solved assignments for students. This report analyzes CAMECO's global business environment.

GLOBAL BUSINESS ENVIRONMENT
1

Contents
INTRODUCTION............................................................................................................................. 3
LO1................................................................................................................................................. 4
GLOBALIZATION......................................................................................................................... 4
DRIVING FACTORS OF GLOBALIZATION.....................................................................................4
IMPACT OF DIGITAL TECHNOLOGY............................................................................................6
LO2.................................................................................................................................................7
PESTLE ANALYSIS....................................................................................................................... 7
STRATEGIC CHALLENGES............................................................................................................8
RECOMMENDATIONS.............................................................................................................. 10
CONCLUSION............................................................................................................................... 11
REFERENCES.................................................................................................................................12
2

INTRODUCTION
Globalization refers to the expansion of business across the national boundaries of the
organization (Beck, 2018). Through widening the reach of the global economy, globalization has
led to an increase in the trade among the nations worldwide. Business Environment refers to
the various factors in the surroundings of a business which directly or indirectly hold an impact
on its working (Wetherly and Otter, 2014).
In this report, the concept of globalization has been studied. Through this report, factors driving
globalization in CAMECO, a chemical company from South Africa has been determined. The
report also enlightens the importance of digital technology in globalization and with the
assistance of various models; challenges faced by the organization due to globalization have
been studied.
3

LO1.
GLOBALIZATION
Globalization has been termed as the integration of the global markets. Through globalization,
all the markets of nations are enabled to increase their access to different alternatives across
the world (Smith, 2018). Businesses have expanded worldwide by tapping the potential markets
in various countries and have widened their business extensively through globalization.
Globalization has been assisted by the growth in the information technology across the globe
through which accessibility has been efficiently increased. CAMECO, a chemical company which
has been based in South America, has also expanded its reach to various countries like Canada,
Gabon, Australia, etc. and gained a competitive advantage in the market.
The evolution of globalization is yet to be clarified and is a debated subject, the concept of
globalization is suspected to be first evolved in the 19th century. Though, in the past few
decades, globalization has grown extensively and has benefited various markets across the
world (Grinin and Korotayev, 2013). Globalization has held a major impact on the economies of
the nations as opening up the domestic market to international business has not only increased
the efficiency of the domestic market but has also developed the standard of living and gross
domestic growth of nations.
DRIVING FACTORS OF GLOBALIZATION
In CAMECO, there are various factors that drive globalization, some of which are as follows:
 COSTS
One of the major drivers of adapting globalization by CAMECO is the variation in costs in
different countries. Being a chemical company, the cost of raw material required by the
organization is very high. Also, labor costs vary from country to country. With entering
into globalization, CAMECO was able to generate resources at a lower cost which as a
result decreased the cost of manufacturing (Doan and Wan, 2017). Costs of CAMECO
were also majorly impacted through the reduction in the cross-trade barriers through
4

entering into different countries. Gaining the advantage of economies of scale, cost
played as a vital driver for globalization in CAMECO.
 MARKETS
CAMECO was also driven towards globalization for gaining advantages provided by the
different markets in the world. Countries like Canada and Australia have a very open
market for international companies and there are various taxation and rules and
regulations formed by the country which assist the organization in expanding their
business in the country (Gerber, 2010). Traders in these countries led to easy
accessibility to finances and labor for CAMECO in the market and thus worked as a
major driver towards globalization.
 ENVIRONMENT
The business environment of various countries also held a major impact on the
globalization of CAMECO. The interdependence of the environment of countries
through globalization enhanced the business environment of the country through which
CAMECO was able to generate huge benefits (Hamilton and Webster, 2018). The
political environment of these countries also provided ease on various regulations to
CAMECO through it was able to establish and run the business in these countries
successfully.
 COMPETITION
Competition is a major driver for the globalization by CAMECO. Entering into the new
markets of countries like Mozambique, and Gabon, where the domestic competition
wasn’t high, CAMECO develop acceptance of its product in the market easily. In the
saturated markets like Canada and Australi8a where the domestic market already had
various competitors, the firm was able to gain competitive advantage through acquiring
raw material at a lower rate and providing the products/services at a lower rate (Gerber,
2010).
 INTERNATIONAL TRADE AND INVESTMENT
The benefits of international trade and investment have been a major driver of adopting
globalization by CAMECO. Through the establishment in the global market, CAMECO
5

missioned on meeting the requirements of customers globally and generating profits
out of it. Also, the firm invested in the international market and generated high profits
over the different interest rates in different markets.
IMPACT OF DIGITAL TECHNOLOGY
With the enhancement in the information technology over a few decades, globalization has
been majorly impacted through the same. CAMECO has been benefited hugely through the rise
in digital technology and its impact on globalization (Westerman et al., 2014). The advancement
in digital technology has eased the process of communication followed by CAMECO. Operating
from various countries, it is essential for CAMECO to maintain a strong communication system
in its organization to reduce the possibilities of various hindrances. Use of digital technology in
the communication system of CAMECO assisted the organization in acquiring the resources
easily. Also, through the digital communication platform, ideas and problems can be quickly
communicated to the superiors and its implementation can be done immediately.
The digital technology has also assisted CAMECO in adopting various tools through which the
firm can store large data and generate relevant information out of it as and when required
(Narula, 2014). The digital technology also keeps the organization updated about the changes in
the environment so that the firm can take actions accordingly. It also assisted the research and
development department of CAMECO through it can efficiently estimate the changes in the
future and predict the demand accurately.
6

LO2
PESTLE ANALYSIS
Pestle Analysis is a framework which is adopted by the organizations to determine and examine
the factors in the macro environment of the organization which holds a major impact on the
organization's performance (Cadle et al., 2014). CAMECO also implements this tool to study the
factors which can affect its performance. PESTLE Analysis comprises of six factors being
Political, Economic, Social, Technological, Legal and Environmental factors. Following is the
PESTLE Analysis of CAMECO:
 POLITICAL FACTORS
Political factors include the extent to which the government of the nation has an impact
on the performance of the organization. It includes the policies, rules, and regulations
implemented by the government on the business environment (Policy, 2016). The
political environment of CAMECO is mixed and holds both positive and negative impact.
The organization relishes the advantage of being an international organization in some
countries but also decreases its access to the domestic advantages in those countries.
 ECONOMIC FACTORS
Economic factors determine the performance of the economy of the country (Paul et al.,
2014). There are various economic factors holding an impact on CAMECO. Having a
globalized business, CAMECO has to deal in various currencies. For currencies of
countries like South Africa, the rates are also low because of which it has to be paid
higher to compensate with that of the exchange rates of other countries. Also,
differences in interest rates across the nations have a mixed impact on CAMECO.
 SOCIAL FACTORS
Social factors determine the cultural and demographic characteristics of the nation
(Cadle et al., 2010). With the rise in the difference between the currencies of the
countries, the purchasing power of the people also varies and thus leads to a vital
influence on CAMECO. In countries like Australia, where the population is very low, their
7

acceptance towards international organizations isn't high. Though, due to the low
employment rate in various countries, the establishment of CAMECO as benefited their
economy.
 TECHNOLOGICAL FACTORS
Technological factors determine the favorability of the nation towards technological
advancement (Policy, 2016). CAMECO has been hugely benefited by the technological
innovations adopted by the various countries where it operates. Though countries like
South Africa hold a low budget towards technological advancement, the firm relishes
several benefits form the innovations in the technology used in Australia and Canada.
 LEGAL FACTORS
Legal factors determine the legislation followed by the nation (Ladeur, 2017). The
legislation in the nations where CAMECO has been established varies from each other.
The labor laws and the taxation systems are vividly different from one another because
of which the firm faces issues commonly.
 ENVIRONMENTAL FACTORS
Environmental factors determine the remaining factors in the environment of the
business which hold an impact on the organization’s performance (Cadle et al., 2014).
The environment of all the countries in which CAMECO has marked its presence is very
supportive and holds a positive impact on its business. With the implication of
globalization, the level of investments has been increased, resulting in benefits for
CAMECO.
STRATEGIC CHALLENGES
The implication of globalization has numerous advantages which have been relished by the
economies worldwide. However, with the powerful impact globally, there are various
challenges that are being faced by the organizations due to globalization (Lane, 2017). CAMECO
has also faced various challenges, some of which are as follows:
 Risk in Development of Strategies
8

With introducing business at different locations in the world, the most common
challenge faced by CAMECO was the development of different strategies. Due to the
huge variation in political and cultural factors of all the locations, CAMECO is frequently
burdened by the development of different strategies for different locations. The
development of standard strategies for all the locations was not found appropriate and
effective because of which the firm is constantly involved in the generation of different
strategies for different locations because of which higher costs are incurred by CAMECO.
 Risk in Management of Resources
Another major challenge faced due to globalization by CAMECO is the management of
resources. There are various countries like South Africa where resources are readily
available and the firm has to incur lower costs for its acquisition (Cascio, 2015). On the
other hand, developed countries like Australia and Canada incur a higher cost for
acquisition of resources for CAMECO. Also, acquiring resources at lower costs and for
transferring them to required locations also lead to a high cost to CAMECO.
 Maintaining Relations in Supply Chain
Dealing with people from varied cultural and maintaining healthy relationships with
them is again a commonly faced challenge by CAMECO. To deal with the suppliers and
retailers of different countries, CAMECO has to face language barriers in its supply chain
(Monczka et al., 2015). For maintaining public relations and to carry out social
responsibilities by CAMECO, the cross-cultural dimension has been a major challenge.
 Implication of Policies
For every different country from where CAMECO operates, there are different
legislations applied. Therefore, for the efficient operation of the business, the firm has
to develop strategies in accordance with the legislation applied to it in the respective
country. This has caused a huge challenge for CAMECO because different policies of
different countries don’t allow the firm to maintain harmony among its operational
decisions and regulations (Evans, 2017).
 Diversified Environmental Issues
9

Bringing the solution to the different environmental issues caused by CAMECO in
different countries is another challenge faced by the organization. Managing the waste
produced by the firm, improving the functions, adopting sustainable development are
the certain major challenges faced by CAMECO in different countries due to
globalization (Crane and Matten, 2016).
RECOMMENDATIONS
To overcome the aforementioned challenges by CAMECO, the firm is required to carry out a
detailed study of the business environment of the nation and its adaptability towards
globalization. CAMECO is also required to understand the working culture of the environment
and then develop strategies that would satisfy the aims and objectives of the organization.
CAMECO can also divide the labor according to the work to manage the time and cost invested
upon them (Bowen et al., 2015). The organization is also required to develop policies so that it
meets the legislation implied upon and creates the minimum of environmental issues.
10

CONCLUSION
Hereby it can be concluded that globalization holds a major impact on the business
environment of an organization. It has been studied how different factors have driven CAMECO,
a chemical company of South Africa towards globalization and how it has to work among the
business environment in different countries. The impact of digital technology on the
globalization of CAMECO has also been examined and its benefits have been noted. Through a
detailed study of the macro environment of CAMECO, it has been found that there are various
factors which positively and negatively impact the performance of the organization. The various
challenges faced by CAMECO while the implication of globalization has also been studied and
various recommendations for the same have been made.
11

REFERENCES
1. Beck, U., 2018. What is globalization?. John Wiley & Sons.
2. Bowen, H.P., Baker, H.K. and Powell, G.E., 2015. Globalization and diversification
strategy: A managerial perspective. Scandinavian Journal of Management, 31(1), pp.25-
39.
3. Cadle, J., Paul, D. and Turner, P., 2010. Business analysis techniques: 72 essential tools
for success. BCS, The Chartered Institute.
4. Cadle, J., Paul, D. and Turner, P., 2014. Business analysis techniques. Chartered Institute
for IT.
5. Cascio, W.F., 2015. Managing human resources. McGraw-Hill.
6. Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
7. Doan, H.T.T. and Wan, G., 2017. Globalization and the labor share in national income.
8. Evans, M., 2017. Policy transfer in global perspective. Routledge
9. Gerber, D., 2010. Global competition: law, markets, and globalization. Oxford University
Press.
10. Grinin, L.E. and Korotayev, A.V., 2013. Globalization and the world system evolution.
Evolution: Development within big history, evolutionary and world-system paradigms.
Yearbook, pp.30-68.
11. Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
University Press.
12. Ladeur, K.H., 2017. Public governance in the age of globalization. Routledge.
13. Lane, J.E., 2017. Globalization and politics: Promises and dangers. Routledge.
14. Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and
supply chain management. Cengage Learning.
15. Narula, R., 2014. Globalization and technology: Interdependence, innovation systems
and industrial policy. John Wiley & Sons.
12