In the case study provided, there is a discussion pertaining to the confrontation of the significant liabilities that are faced by a Chinese iron and steel company, Sino Iron in Australia. The case study has been narrated from the point of view of Hua Dongyi. The company had begun initialising their project operations in the year 2007. However, the project was estimated to be operational not before 2016. This significant delay has been caused by several internal and external factors which had gradually developed since the company decided to start the project. The initial budget requirement for the project was approximately $3.5 billion. However, by 2013 that requirement shot up to nearly $7.8 billion.
The falling prices of iron in the global market complemented by bureaucratic red tape and willingness to adhere to the regulations imposed by the local government, the project has drawn significant losses (Zeng, Wang, Fan & Wu, 2016). The Chinese and Australian business counterparts just did not seem to be able to work together and had shown signs of differences in ideologies, values and work ethics. This was complemented by the fact that Sino Iron being a Chinese company was facing heavy opposition from the Australian society even though those employed by the company received numerous benefits.
The company has struggled with the Australian law and order bodies with acquiring necessary permits, emigrating labours from China as well as the ownership background of the company. The company has invested millions of dollars to develop the necessary assets and infrastructures like desalination units and power plants which after 25 years of the leased mining period, these facilities will be given up to the locals (Eklund, 2015). There is a demoralising and cocky attitude among the local workforce while the Chinese workforce faces regular hostility due to their different lifestyle and work values.
To understand the internal factors, it is necessary to conduct a TOWS matrix analysis of Sino Iron in Australia.
|
Opportunities |
Threats |
|
|
Strengths |
? Australia is very abundant in minerals and ores that is necessary for making steel. ? Australia also boasts of skilled workforce along with low-cost labour charges. |
? High capital cost and low productivity from labours. ? Requires investment in developing basic infrastructure. ? Costly lifestyle |
|
Weaknesses |
? The Australian market has low per capita consumption ? The growth of the Australian economy |
? Slow growth of the industry ? Competition from India based iron and steel companies ? Sanctions against Chinese products |
To understand the external factors affecting the company it is necessary to conduct the PESTLE analysis.
|
Political |
The Australian market is not a conducive business environment as Sino Iron had imagined and thus in order to keep functioning in the market, the company has to take significant risks in terms of investments. |
|
Economic |
There is a declining trend in the global demand in the iron and steel industry and this is further complicated by the fluctuations in the exchange rates. |
|
Social |
The Australian demography has become hostile towards the company due to periodical and considerable influence of the local powers to demonise Chinese companies like Sino Iron. The government has also imposed a basic minimum educational standard before importing Chinese labours. |
|
Technological |
The company thanks to its portfolio has been able to develop machines that will be able to minimise resource wastage and also improve the quality of steel. However, the company is constantly challenged by innovative competitors and changing industrial practices. |
|
Legal |
The company has to adhere to the labour laws of Australia and has been paying best in the industry salaries plus added benefits to the people hired by the company. |
|
Environmental |
Like every other iron and steel company, Sino Iron is also required to adhere to the CO2 emission norms. They also had to gather the necessary environment and sustainable permits from the government bodies before the project became operational. |
Based on the analysis conducted on Sino Iron in the previous section of the report, it is pretty much evident that the company needs to work on the way the Australian society perceives them (Ilankoon et al. 2018). This also means that Sino Iron has to invest in building a strong workforce in the Australian market which not only has an accountability for the quality of work they do but also have a calm head to solve occurring problems. The company also has to inculcate a feeling of belongingness as well as a sense of loyalty in Chinese organisations among the locally acquired workforce.
In order to do so, the company has provided an industry best wage structure complimented with benefits that could help in softening the hostile stance and increasing accountability among the workforce (Zang et al. 2015). The investment from the company is also responsible for bringing about urbanisation. In order to tackle the issue of non-availability of required labour and inability to import a capable workforce, the company had to invest in the world’s biggest as well as powerful rod mill.
In order to obtain the much necessary environmental permits and minimising the chances of offending the local sentiments, the company was also compelled to establish a team dealing with historical remains (Laing, Wheeler, Reeves & Frost, 2014). This team was responsible for conducting explorative studies on the project site so that the operations cannot be challenged. The company also abided by the Aborigines Land Utilisation decree to ensure that the aborigines were not displaced or made to suffer. This team was also responsible for monitoring the groundwater levels, local flora and fauna to audit the environmental sustainability performance of the company. The company was able to achieve all the necessary permits but the entire project was delayed.
Conclusions
A manager who oversees the foreign operations of a company in the global marketplace can be termed as a global business manager. With globalisation becoming the pressing issue, talented individuals take up the mantle of global managers who are responsible for integrating the various activities of a company as well as coordinate the resources in different nations. These people need to be sensitive as well as responsive to the distinctive consumer tastes as well as rules and regulations of a specific country or state. In the present case study, Hua Dongyi comes off as a very effective global manager who balances the stakeholder requirements of the foreign as well as the home country.
One of the recommendations that can be suggested is to clarify and distinguish between the global driving factor and the locally managed assets. In order to make a global business like the Sino Iron a success, it is necessary to take into account the local market and develop plans that are specific to the market. In order to boost the efficacy of the global and local management, it is necessary to simplify which areas of operations and functions will be monitored by whom (Fan, Cui, Li & Zhu, 2016). Leaving the entire job to local management may lead to hurdles in future as evident from the case study. This recommendation is specific, achievable and realistic.
In order to remove the negative image surrounding the company, it will be necessary to understand the local market by taking assistance from the local management so as the company may be able to develop a collaborative approach. It is necessary to devote time to understand the local cultures, values and behaviours before undertaking decisions as this may backfire. Sino Iron was slow to understand the market and the way the government operates which resulted in a delay of almost a decade. It was critical for the company to get to know the local management and build trust and loyalty. This recommendation is achievable, realistic and timely.
It is also advisable for global managers to understand that it is vital to develop a plan which is efficient and yet at the same time aggressive and ruthless. Hence, to act upon such a recommendation it is necessary to appoint a skilled individual who is able to make sure that the involved deadlines, deliverables, as well as responsibilities, are clearly communicated to the necessary units (Bowen, 2017). They are also responsible for acquiring permits and confirming the completion of deliverables. This recommendation has been actively followed by Sino Iron as it appointed Hua to oversee all the possible planning and implementation. The current recommendation is specific, achievable, realistic and timely
One of the primary reasons why the Sino Iron company was delayed because they were not able to utilise Chinese expats to speed up the delayed work. These expats had no grip over the local language and similarly, the cultural differences were also widespread. Moreover, Sino Iron made assumptions that people who were successful back at home would be able to manage in the foreign country. This decision is solely based on the necessary technical skills and not on the fact whether the individual is comfortable to accommodate and get acclimatized to the cultural differences (Eriksen, 2018). If the company was willing to provide an opportunity to appropriate individuals to develop leadership skills and knowledge transfer, there would have been fewer complications.
References
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Eklund, E. (2015). Mining in Australia: An historical survey of industry–community relationships. The Extractive Industries and Society, 2(1), 177-188. Retrieved from: https://www.sciencedirect.com/science/article/pii/S2214790X14000689
Eriksen, T. H. (2018). Scales of environmental engagement in an industrial town: glocal perspectives from Gladstone, Queensland. Ethnos, 83(3), 423-439. Retrieved from: https://www.tandfonline.com/doi/abs/10.1080/00141844.2016.1169200
Fan, D., Cui, L., Li, Y., & Zhu, C. J. (2016). Localized learning by emerging multinational enterprises in developed host countries: A fuzzy-set analysis of Chinese foreign direct investment in Australia. International Business Review, 25(1), 187-203. Retrieved from: https://www.sciencedirect.com/science/article/abs/pii/S0969593115000049
Ilankoon, I. M. S. K., Tang, Y., Ghorbani, Y., Northey, S., Yellishetty, M., Deng, X., & McBride, D. (2018). The current state and future directions of percolation leaching in the Chinese mining industry: Challenges and opportunities. Minerals Engineering, 125, 206-222. Retrieved from: https://www.sciencedirect.com/science/article/abs/pii/S0892687518302760
Laing, J., Wheeler, F., Reeves, K., & Frost, W. (2014). Assessing the experiential value of heritage assets: A case study of a Chinese heritage precinct, Bendigo, Australia. Tourism Management, 40, 180-192. Retrieved from: https://www.sciencedirect.com/science/article/pii/S0261517713001234
Zeng, L., Wang, B., Fan, L., & Wu, J. (2016). Analyzing sustainability of Chinese mining cities using an association rule mining approach. Resources Policy, 49, 394-404. Retrieved from: https://www.sciencedirect.com/science/article/abs/pii/S0301420716300496
Zhang, A., Moffat, K., Lacey, J., Wang, J., González, R., Uribe, K., … & Dai, Y. (2015). Understanding the social licence to operate of mining at the national scale: a comparative study of Australia, China and Chile. Journal of Cleaner Production, 108, 1063-1072. Retrieved from: https://www.sciencedirect.com/science/article/pii/S0959652615010264
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