Global Business Environment: Impact and Strategic Direction for CAMECO

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Unit 18: Global Business Environment
Impact and Strategic Direction
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Table of Contents
Introduction......................................................................................................................................3
LO1 & LO2......................................................................................................................................4
1. An introduction to the concept of globalization......................................................................4
2. An explanation on the driving factors of globalization...........................................................4
3. The significant impact of digital technology upon globalization............................................5
4. Complete and present a PEST/LE analysis of the organisation..............................................5
5. Explain the challenges of globalization and the strategic challenges this represents for the
organization.................................................................................................................................7
6. Provide recommendations on how to overcome these challenges...........................................7
LO3 & LO4......................................................................................................................................9
Introduction................................................................................................................................10
1. Explain the structure, culture and governance of the organization and apply McKinsey’s 7S
model and checklist to illustrate an overview of the organization............................................10
2. Evaluate how the above has been influenced by global operations and how the organization
has adapted to operating in a global market. Apply Hofstede’s Dimensions of Culture to
demonstrate how the organization has been influenced............................................................11
3. Evaluate ethical and sustainable factors that the organization has to consider in a global
market........................................................................................................................................12
4. Assess how these factors have affected decision making in a global context.......................12
5. Assess which strategic expansion routes the organization took and analyze both advantages
and disadvantages......................................................................................................................12
Conclusion.................................................................................................................................13
Conclusion.....................................................................................................................................14
Reference List................................................................................................................................15
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Introduction
Globalization can be defined as the process that aids business organizations to make international
connections and expand its branches in other countries. This process aids people, government
and organizations to interact as well as integrate with each other on a globally or international
scale. It has brought people and organizations based in different parts of the world closer. In
other words it can be said that globalization has made the world smaller. Globalization has taken
place at various levels namely, economic, social and political.
In this assignment, the factors of globalization has been analysed along with the challenges that
have emerged in the global environment. The influence of globalization on CAMECO’s decision
making process has been evaluated and its impact on its structure and culture has been described.
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LO1 & LO2
1. An introduction to the concept of globalization
Globalization has paved way for the organization to develop as it has made trades on
international scale easier. It has brought people and organizations based in different parts of the
world closer. In this assignment, the factors that drive globalization have been discussed along
with ways digital technology has influenced globalization. PESTEL analysis of CAMECO has
been illustrated along with the challenges globalization has imposed on CAMECO has been
elaborated. Recommendations have been provided such that the challenges the organization is
facing can m be conquered.
2. An explanation on the driving factors of globalization
Globalization has affected the operation of every organization in the world. Various factors have
stimulated globalization and have encouraged the organization to grow. There are several factors
that drive globalization that has been explained below:
 Containerisation: The costs or the expenditures of ocean shipping have reduced as a
result of containerisation and bulk shipping (Doan and Wan, 2017). The reduction in the
cost have resulted the organizations to become stable as transportation charges have
gown down.
 Economies of scale: Minimum Efficient Scale (MES) has increased thereby aiding the
organizations to expand the as with rise in MES selling needs increased.
 Technological Change: The developments that have been taking place in the
technological field has aided in the minimisation of cost of communication and
transmission of data or information. Therefore, this has enabled the organizations to
expand globally.
 Different tax systems: The businesses have a desire to derive benefits from lower rate of
per unit labour and other factors that might prove to be favourable for production. Thus,
this has resulted in the countries to adjust the systems of tax there so that they are able to
attract FDI (Foreign Direct Investment). Consequently, various countries have indulged
in tax competition so that they can attract foreign direct investment (Fan et al., 2017).
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 Growth Strategies: The organizations are investment on its expansion so that it can grow
and increase its profitability. Globalization has aided the organizations to increase its
customer base and increase its profitability therefore as a part of growth strategy the
organizations adopt the process of globalization.
3. The significant impact of digital technology upon globalization
With developments and advancements in the world of technology, globalization has been
stimulated as the rates of communication have gone down. Not only communication or the
transfer of data or information has become cheap but along with it, the rates of transportation of
goods and products have gone down. Technical advancements have leaded the organizations to
increase the scale of market along with economies of scale (Zaitseva et al., 2016). It has aided
the organizations to exploit market in foreign countries without facing any competition from its
rivals or competitors. The use of technology will aid CAMECO to conduct proper research of the
market where it is willing to expand and to devise apt strategies so that it can take over the
market in that country.
The introduction of World Wide Web or www has aided to decrease the delay that used to take
place earlier for making business deals. The sellers and the buyers have been enabled to make
transactions anytime they want from any place of their choice (Shah and Nawaz, 2015). The
developments in technology have made it possible for developing countries to combine
technology with labours at low rate. Therefore the developed countries outsource their work to
developing countries so that their work can be completed at low cost.
4. Complete and present a PEST/LE analysis of the organisation.
CAMECO is Chemical and Energy Company based in South Africa. The organization has
expanded its branches in several countries nevertheless the management of the organization is
planning to expand its branches in several other countries. Nevertheless, in order to expand it is
necessary for the management of the organization to analyze the external factors or macro-
environmental factor that can affect its operation in the areas or places it is planning or willing to
expand. PESTLE analysis of the areas where the organization is planning to expand (United
Kingdom) would aid the organization to evaluate the impact of the forces on the organization in
the following ways:
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 Political Factors: The political stability of the country where an organization is willing
to expand plays a key role in determining its success. The management of CAMECO
needs to consider the political factors of the area where it is willing to expand like the
intervention of the government in the operation of any organization, the stability of the
government, tax policy, corruption, labor law, foreign trade policy, restrictions on trade
and environmental law. These factors affect the operation of an organization therefore it
is necessary to asses these factors in order to determine the success factor in the potential
market (Business-to-you.com, 2016). However, United Kingdom is politically stable thus
CAMECO can expand in this country and earn profit.
 Economic Factors: The economic growth of the country is of prime importance as it
determines the success rate of the organization. The other economic factors that have to
be considered before expansion are rates of inflation and interest. The exchange rates,
unemployment rates and the consumers’ disposable income are other factors that have to
be considered because it aids to determine the prices at which the products can be offered
as it signifies the purchasing capacity of the customers. United Kingdom is politically
stable thus; CAMECO can expand here and earn profit.
 Social Factors: The trends that the population of the area where CAMECO is willing to
expand will affect its growth in that particular area as it will aid the marketers to target
the potential customers. The demand of the product in that country is an important factor
that affects the success rate of the organization in that area.
 Technological Factors: The technical advancement of the country or the area where an
organization is planning its expansion as it affects the decisions made by the organization
that actually determines the future of the organization (Widya et al., 2018). This way an
organization is helped as it is prevented from launching any sort of technology that might
become obsolete soon. The innovations in terms of technology affects the market,
therefore, it is necessary that CAMECO consider the technical factors of the countries
where it is willing to expand. United Kingdom is technologically advanced thus
CAMECO can expand in the country and operate profitably.
 Environmental Factors: Nowadays, the countries have become alert regarding the
degradation of environment; thus, they are taking several steps to make the world a better
place to live. However, this affects the operation of the organizations in those locations
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therefore, it is necessary that any organization operating in such areas adhere to the
environmental policies formulated by the government of that area. The management of
CAMECO needs to figure out the environmental laws pertaining to that area and needs to
follow it strictly for its efficient operation.
 Legal Factors: The legal factors that affect the operation of an organization in a country
are the employment laws, discrimination laws, consumer protection laws and antitrust
laws. Health and safety laws also affect the operation of an organization. Therefore, it is
necessary that the organizations have proper knowledge of the legal factors of a country
so that it can carry out the trades ethically in that area such that the organization can grow
without any hindrance. The government of the United Kingdom does not intervene in the
operation of an organization thus; CAMECO can expand its branch here.
5. Explain the challenges of globalization and the strategic challenges this represents for the
organization.
Globalization has brought people closer and has made the world smaller as it has bridged the
gaps that used to exist earlier. However, there are several challenges that have imposed threat
and needs to be tackled effectively so that the issues can be resolved. The challenges of
globalization are that it is not mandatory that the process benefit every country in the world at
the same time. It has to clarified especially for the developing countries that globalization leads
to instability. The fear that the developing countries have regarding globalization has to be taken
care and eradicated (Yang et al., 2018). The other challenge of globalization is that the industries
fear that globalization will adversely affect the employment practices, wages of the laboursa and
their rights along with the environment at their workplace.
CAMECO must make sure that its employees are satisfied that the organization makes and must
do proper analysis of the area where it is willing to expand. Globalization has increased the
emission of carbon dioxide and has made the resources extinct as it has increased the pace of its
user (Bretos and Marcuello, 2017). It has increased the price of oil and has been more fruitful for
developed countries.
6. Provide recommendations on how to overcome these challenges.
CAMECO can overcome these challenges by devising effective plans and implementing it in the
organization. The management of the organization must make sure that its employees do not fear
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from the strategies the organization implements and the decisions it makes. The increase in the
prices of oil has to be dealt by decreasing its use. The organization must make sure to devise
plans so that the emission of carbon dioxide can be reduced and the resources are utilised
effectively. It has to work on the strategies it adopts and implement it carefully.
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LO3 & LO4
Executive Summary
CAMECO wants to expand its branches in order to increase its customer base and profitability.
In order to attain this it is necessary that the management of the organization considers Mc
Kinsey’s 7S model and Hofstede’s Dimensions of Culture so that it is able to make its decisions
properly. In this way, the organization will be enabled to function properly and achieve success.
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Introduction
CAMECO has its branches in various countries like Canada, Australia, Gabon and Mozambique
and wants to expand in other countries like United Kingdom in order to develop and increase its
profitability. However, in order to expand it is necessary that the management of the organization
adopts certain procedures and follow it to achieve success.
1. Explain the structure, culture and governance of the organization and apply
McKinsey’s 7S model and checklist to illustrate an overview of the organization.
Globalization has improved the way of interaction among business organizations all across the
world by integrating culture, society and politics. The way the organizations used to operate has
changed with the advent of globalization. It has affected the planning strategy of the
organizations as based on the situation of the market the firms make decisions and implement
them. Globalization has introduced several changes in the global market that has affected the
operation of every company in the world. CAMECO has been affected by globalization as it has
planned to expand its branches in several countries. Mc Kinsey’s 7S model that is a model of
management developed in 1980’s by Tom Peters and Robert H. Waterman. As per Mc Kinsey’s
7S model the effect of globalization on the operation of CAMECO has been described below:
Structure: In order to expand the organization it is necessary that management takes care of the
structure of the organization, that is, how the employees to coordinate with each other in their
work and how and to whom they report their work.
 Strategy: It is necessary that the management of the organization devises proper strategy
and implements it properly so that it can gain competitive edge over other organizations
in the market in the area where it wants to expand (Cox et al., 2018).
 Systems: It is of utmost importance that the activities of the employees are monitored on
a daily basis so that the job is completed properly. The management of CAMECO must
pay proper attention on this matter.
 Skills: CAMECO must take care that the employees it recruits in the new venture that it
is willing to undertake are skilled so that its objectives can be attained.
 Style: The management must look after the leadership style that is adopted in the
organization so that the organization can operate effectively (Ravanfar, 2015).
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 Staff: The employees that CAMECO will recruit must be trained at regular intervals so
that their level of performance can be leveraged.
 Shared values: The culture and the values that CAMECO has adopted play a key role in
determining its success.
2. Evaluate how the above has been influenced by global operations and how the
organization has adapted to operating in a global market. Apply Hofstede’s Dimensions of
Culture to demonstrate how the organization has been influenced.
CAMECO has its branches in various countries like Canada, Australia, Gabon and Mozambique.
However, it wants to expand its branches in several other countries but in order to expand it is
necessary that its management assesses the factors affecting that place and devise apt plans to
achieve success. Hofstede’s Dimensions of Culture is used to describe the effect of culture of
society on its members and analyses its effect on their behavior. Since, CAMECO wants to
expand in the United Kingdom its operation can be analyzed using Hofstede’s Dimensions of
Culture in the following ways:
 Power distance index (Low): The United Kingdom has low PDI thus, it has flat
organizational structures thus CAMECO’s structure must be flat.
 Individualism (High): The United Kingdom’s IDV is high as the privacy of people is
respected thus, CAMECO must ensure that the employees are rewarded and their privacy
is respected
 Masculinity (Medium): The country has medium MAS as women in the country have
equal rights as that of men. CAMECO must give equal opportunities to every individual
irrespective of gender (Beugelsdijkb et al., 2017).
 Uncertainty avoidance index (Low): The United Kingdom has low UAI as it supports
innovation thus CAMECO has to lay emphasis on innovation.
 Long/ short-term orientation (Long): In the United Kingdom modesty and virtues are
emphasized thus the management of CAMECO must make sure that it makes sure its
employees follow it (Deephouse et al., 2017).
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