Development of a generic execution framework for transnational mining corporations establishing a business in Africa

Abstract

Africa is the second biggest continent on earth with 30 million km² of land. The continent has the largest reserves of precious metals with over 40% of the gold reserves, more than 60% of the cobalt, and 90% of the platinum reserves. The mineral industry in Africa is one of the largest in the world with gold being the main mining resource. For many African countries, mineral exploration and production constitute significant parts of their economies and are central to their economic development. The global demand for resources has led to Transnational Corporations looking at Africa's mining industry for investment and growth. Doing business in Africa presents unique challenges, and the ability of the Transnational Corporation to establish and maintain a viable mining business is critically important. Some of the most pertinent challenges include resource nationalism, poor country infrastructure, low skill levels of Nationals, regulatory challenges and community expectations. A successful collaboration between the Transnational Corporation, Government, Host Community and other relevant stakeholders is required to unlock the benefits of future direct investment in the applicable African country and community. These benefits materialise in economic growth, sustainable job creation, and long-term social development. The policies and strategy of the Transnational Corporation to achieve this goal provides the direction of the activities undertaken in this endeavour. The potential consequences of an unsuccessful business venture include a loss of capital to shareholders of the Transnational Corporation, loss of revenue to the applicable government in the form of taxes and royalties, loss of jobs to the host community, social insecurity and negative environmental impacts. Transnational Corporations will also have a reduced appetite for future investment in the area concerned. In many Transnational Mining Corporations, a chasm exists between the development of strategy and its successful execution. The current literature consistently points to this dilemma and the need for a multi-disciplinary, holistic execution roadmap to address this gap. The primary objective of this study was to develop a grounded theory of the situation explained here and a resulting generic execution framework for Transnational Corporations seeking to establish a viable and sustainable local mining business in Africa. To achieve this, the specific objectives of the study are to investigate the impact of business strategy, project management, and management of diversity as it pertains to the execution thereof in this situation and context. This research project will, therefore, address the following concern as indicated in the problem statement: The degree of utility of the Transnational Corporation's strategy execution in establishing a local business entity in the mining industry in Africa. The research question this study aims to answer is consequently the following: How can the degree of utility of the Transnational Corporation's strategy execution for the establishment of a local business entity in the mining industry in Africa be improved? The answer to the proposed research question emerged from the research and consists of a theory that elucidates the concepts, core variables and their causal relationships to each other. The research methodology employed is a qualitative research methodology based on grounded theory. The findings that emerged from implementing the Grounded Theory methodology produced five core variables that expound the behavior over time of the degree of utility of the Transnational Corporation's strategy execution in establishing a local business entity in the mining industry in Africa. The core variables form the basis of the grounded theory developed in this research. They are a business strategy; Greenfield project execution; management of diversity; the degree of country specific constraints; and the degree of organizational capability to establish a mining business in Africa. It is recommended that Transnational Corporations seeking to establish a mining business in Africa should consider developing a fit for purpose execution framework to guide its leadership in successfully executing the strategy of the organization. This research investigated how to transform the dynamics and relationships between a Transnational Corporation and the African context when establishing a new business. The unique contribution of this research is to provide an understanding of the fundamental issues faced in this context through the developed Grounded Theory and to improve the viability of a business undertaking through the application of the generic execution framework presented