An Analysis of SES’ Motives for Globalisation in Nigeria and its Effects on The Company

List of Abbreviations

Table of Contents

Abstract

The following content will consists of an analysis of SES’ reasons to grow the company with a subsidiary in Nigeria and how that can have a long-term effect on the whole corporation. Then the key elements that need to be addressed in that respect will be identified in order to examine how the company can best adapt for long-term growth. Completed by recognizing they key theories that address these challenges in order to find the key elements that can hinder the successful internationalisation of SES on globally. Findings will be gathered through discussions with SES employees in corporate management who are currently analysing the impact of their growth on the whole structure and operations of the company. Furthermore, interviews with employees who have been on assignment or have been re-located in Nigeria will be conducted and in order to receive first hand knowledge regarding the experience of working in Nigeria and the main challenges it poses for an efficient performance of employees and the subsidiary.

This allows me to find the differences between the theory and the reality and accordingly recommend how the company can process to not let operations become inefficient because of its growth.

I. Introduction

1. Scope of Research.

This research consists of primarily looking at the main differences between conducting business in continental Europe, more precisely Luxembourg, to the working environments in Nigeria. This entails identifying the main issues areas that need to be addressed when expanding in an emerging market and how this can affect the global activities of the company, relating them to academic theories about the general corporate management to assess the best possible managerial solutions.

2. Outline the Nature of the Problem.

The nature of the problem lies with the development of our world economy since it rehabilitation period post-WWII and how the re-construction our world has encouraged many different nations around the world to create alliances and negotiate common goals. It has forced many different societies and cultures to co-operate with each other to increase their trades and ties towards individuals’ and business’ own achievements of growth and wealth. However, efficient and successful multinational relationships, not only between individuals, but mostly between corporations, can become very difficult to create and maintain for a long-term period. As businesses want to expand in foreign markets, it creates many challenges, from establishing their subsidiary all the way to creating profits and growth – especially in the cases of emerging markets.

3. Rationale behind the Investigation and Personal Motivation.

The reasoning behind pursuing this investigation is to make the audience aware of the various challenges faced by companies when expanding their operations abroad.

More precisely focused on expansion challenges in an emerging market – such as in Nigeria.

Expanding operations in the Nigerian market creates many different challenges for managers, due the high differences in cultural aspects, the political and socio-economical situation of the country, the lower amount of qualitative infrastructure that can create uncomfortable and unsafe situations for domestic and international employees, and so hinder the effective functioning of business operations.

SES Satellites S.A is one of not many Luxembourgish companies to be present on a global scale in its respective industry that is not in financial services.  My motivation arises from the size and scope of this complex and competitive industry– that has started not so many years ago and is not even close to reaching its level of full maturity in its industry life cycle. Especially considering the vast possibilities of vertical and horizontal expansion strategies possible for a company such as SES – under the form of space management and exploration, media-broadcasting and digital management.

SES currently has 2 employees in Nigeria, so it is in my interest to investigate how SES can proceed towards establishing and maintain successful operations of its foreign subsidiary as it grows.

4. Aim and Objectives of the Research:

The aims of this research are to:

1. Identify the key motives of SES’ expansion in Nigeria in order to remain competitive.
2. Assess the main expansion challenges in Nigeria.
3. Recommend the best possible approach to enter a developing market such as Nigeria.
4. Demonstrate how an additional subsidiary in Nigeria can have consequences on the long-term performance of the whole company.
5. Examine how the management has to adapt its organizational structure to sustain the efficiency of activities on a global scale.

1. Globalisation

1.1 The Concept

Defined as the process of social, political, economic, cultural and technological integration among various countries around the world (Hodgetts, Doh and Luthans, 2006), Globalization is now a commonly used term in the business world, but the globalization process that has defined the world for what it is today has only really begun after WWII, when the world order and global economy started its healing process and new international relations increased and developed, not only between governments, but between individuals and businesses. Giddens (1990) defines globalization as ‘the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa’, which emphasises on the interdependence of economic actors that stems from the co-operation between individuals on a global scale.

1.2 The Drivers of Globalization

There are various reasons why companies globalize their companies with foreign expansion strategies, but it is generally the fact that the global economy offers more economic value than the domestic economy. Thus, the main reason is increasing profits by accessing new markets and capitalise on new opportunities that can benefit the business through economies of scale and reduce the proportion of cost to revenue (Perkins, 2006). Companies generally also seek for opportunities in foreign markets to gain new knowledge and experience that might not yet be present in their home market; objective knowledge that can be transferred to the home market or additional markets for future references and thus gain a competitive advantage.

Companies then use this revenue for additional projects or to protect other of their markets that are more competitive, they gain capability and capacity that their competition can’t access. The attractiveness of globalising companies lies also within the fact that in many countries labour force, infrastructures and assets can be exploited more cheaply than in the home market, giving the opportunity to operate on assignment and projects with less costs and thus less risk involved. (Beamish, Killing and LeCraw, 1991), illustrated the pressure for companies to globalise and pressure for local responsiveness varying with the industry: