HPWS in Multinational Companies 1

COMPARISON OF SINOPEC AND DANGOTE GROUP MULTINATIONAL COMPANIES

USING HIGH-PERFORMANCE WORK SYSTEM

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 HPWS in Multinational Companies 2

Comparison of Sinopec and Dangote Group Multinational Companies Using High-Performance

Work System

Abstract

Spreading of delivery of quality services and grabbing a vast market are the main goals
set by most of the businesses in the contemporary world during their initial stages. They are also
among some of the factors that spearheaded the ramification of product sale in all parts of the
world. Heavy shipping fees from the points of production to the consumption destinations
incurred by a given company led to set-ups of their branches near to their prospective consumers
to minimize costs and maximize profits. By definition, a multinational company is an
organization that provides goods, services, or both in at least one state. A multinational company
is also called Transnational Enterprise (TNE), International Corporation, or Transnational
Corporation (TNC). A multinational company may be incorporated in one country and sells or
produces goods and services in other countries. There are two major characteristics of such a
company: it is large, and its wide-reaching tasks are centrally controlled by the main company.
Several activities are anticipated to be carried out by a multinational corporation. Firstly, an
international company imports and exports goods and services. Secondly, it makes rational and
lucrative investments in foreign countries. It is also concerned with selling and buying a license
in the foreign markets. Fourth, a multinational company indulges in contract production,
authorizing a given local manufacturer in a different country to manufacture their goods. Lastly,
an international corporation opens the requisite production facilities in foreign countries. The
magnitude of success of the international companies depends on various factors. The success of a
multinational company in China may not be as the one found in Nigeria due to various factors
ranging from the marketing strategies to competitive advantages. High-Performance Work
Systems (HPWS) is the managerial tool that is mostly used to compare two multinational
corporations in different countries.
 HPWS in Multinational Companies 3

Introduction

Nigeria is one of the developed African countries whose businesses have been taken to

the next level. From the business point of view, the population of a place affects the demand for a

given product in a country. Nigeria has the highest population in Africa, which has offered a

fertile ground for both domestic and foreign investments. Coca-Cola is one of the US

multinational corporations that found their solace in Nigeria through the high demand for their

products. Moreover, Guinness from Ireland and Chevron from the US also opened their branches

in Nigeria. In response to that, both the national government and the local businessmen also

opted to take their business activities to the green pastures. One of the rapidly developing

Nigerian international companies, which is also important in this comparative essay, is Dangote

Group. Asia is another continent whose most countries have invested in business activities. With

their products used in almost every part of the world, the Chinese have depicted their business

expertise, and this has allowed many countries to give them a chance to set their companies in

various parts. Some multinational corporation such as Huawei, CITIC Group, Lenovo, Hisense

among others are headquartered in China, but they sell their products worldwide. Sinopec, which

is the multinational company of interest in this essay, is another company in the Oil and Gas

industry in China whose products are vastly used. With substantial evidence from various

sources, this essay uses the High-Performance Work System to compare the Dangote Group in

Nigeria and Sinopec International Company regarding their managerial skills, competitive

advantages, marketing strategies, their services and products, and so forth.

High-Performance Work Systems

 HPWS in Multinational Companies 4

It is imperative to put the High Performance Works Systems (HPWS) phenomenon into

its social and historical contexts due to its long interesting history of how to improve the

performance of organization through promoting the management of both people and work, which

includes job enrichment, industrial democracy, movements of human relations, social and

technical systems, and scientific management. The notion of HPWS started in the US, which

developed due to controversial debates about the deterioration of the manufacturing

competitiveness amid its economy. It is suspected that the invention and wide use of the

Japaneses production systems called lean production, such as just-in-time inventory system,

team-based production, and quality circles techniques, acted as the major stimulus of concern in

the creation of HPWS (Boxall 2012). Japan used these techniques to improve the cost, flexibility,

delivery, and quality of its products. Japan considered the US organizational models that

restricted the abilities and discretionary bids of the works as inferior. In their immense discussion

on the ways through which the companys employees are managed in the process of production,

HPWS became one of the main agenda regarding competitive performance in the process of

manufacturing and services. Therefore, according to Laura Newberg (2015), HPWS is the

organizational design that connects people, work, information, and technology in a way that

optimizes correspondence among all these parties to execute high performance regarding

efficient and effective response to consumer needs and the environmental opportunities and

demand. It also involves management practices that bring together all pieces of Human

Resources to create a favorable environment in the company where the workers are fully

engaged in responsibilities.

Overview of Dangote Group and Sinopec Multinational Companies

Dangote Group
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The Dangote Group Multinational Corporation is located in Nigeria. It was founded by

Aliko Dangote, who got $3,000 as a loan from his uncle (Dangote Group 2016). At the start, this

company commenced as a major supplier of some foods like rice, but it finally expanded to

importing and shipping cement. Today, Dangote Group has become a diversified conglomerate

whose headquarters are found in Lagos, Nigeria. It is the largest company in the conglomerate

industry in West Africa and one of the top largest corporations in Africa. This company has more

than 26,000 employees throughout its branches in Africa (Dangote Group 2016). The key people

in this company are Aliko Dangote and Sani Dangote, who are the Chief Execute Office (CEO)

and the Vice President respectively. The major products of this company include; salt, sugar,

cement, Oil and Gas, steel, fertilizers, and telecommunications. It has its branches in Zambia,

Ghana, South Africa, Benin, and Cameroon.

Sinopec (China Petrol and Chemical Company)

Unlike Dangote Group Multinational Corporation that belongs to the conglomerate

industry, Sinopec is specifically in Oil and Gas Industry. It was formed out of the joint entity

under the Sinopec Group in 2000. Sinopec was again listed in New York, London, and Hong

Kong later in the same year. The listing in Shanghai was completed in the middle of 2001.

Analysts claim that this company produces more oil products than PetroChina and it is the largest

refiner in Asia. Unlike Dangote Group that is privately owned, Sinopec Corporation is a state-

owned company in China, and its headquarters are located in Chaoyang, Beijing. Like Dangote

Group, Sinopec Corporation produces and sells fertilizer and fertilizer chemicals. Other business

activities carried out by Sinopec include; exploring, refining, and marketing oil and gas;

producing and selling chemical fibers and petrochemicals; storing and pipeline transportation of
 HPWS in Multinational Companies 6

natural gas and crude oil; and importing and exporting all products mentioned above. It has its

affiliates in Gabon, Sudan, Ethiopia, Cameroon, Canada, Brazil, and Nigeria.

Comparison of Dangote Group and Sinopec Corporation Using HPWS

As stated in this essay, HPWS comprises of the managerial practices and skills that are

used in a given company to make it succeed in its activities. It was also stated that the success of

a given company leans upon the decision made by the top managerial team in an organization.

The path that Aliko Dangote (the CEO of Dangote Group) and other top officials use to develop

their company is not the same highway that Fu Chengyu (the CEO of Sinopec Corporation) and

his management team use to run their company. The management practices under the HPWS

range from the strategies to the application of Information Communication Technology (ICT)

within the organization.

Management Strategies

One of the HPWS that the management team adopts is management strategy. A high

performing company should have competent, visionary, futuristic, and creative leaders who will

propel it towards the right and constructive direction. Dangote Group has also adopted a

management strategy called Niche Domination Strategy (NDS) that it uses as a high-

performance system. It is one of the strategies that the small business enterprises should use to

grow fast. Dangote Group has used this strategy to hold the West African market to ransom for a

long time. Such as strategy has also helped it to fully understand the commodity market. Through

NDS, Dangote Group has been put in control of almost 43% of the Nigerian commodity market;

a nation that blows its horn of a population that is over 150 million (Dangote 2017). The main

aim of this group is to control every part of the ecosystem it operates. To achieve this goal, they
 HPWS in Multinational Companies 7

have bought over 3500 new trucks, increased their level of production, and advanced their

distribution networks (Dangote 2017). The NDS has also helped it to sell their products easier

and faster than their competitors at the same market price. Unlike Dangote Group, Sinopec has

adopted a management strategy called Unique Pricing Strategy (UPS). Because Sinopec faces

stiff competition from the other companies that produce and deliver the same goods and services

such as Sinochem Group, Yanchang Petroleum, and China National Petroleum Corporation, Fu

Chengyu came up with UPS to make the company be the industry leader. Chengyu, together with

his top managers and board of directors opted to apply the pricing strategy as an arsenal to

overcome the competition they face from their competitors. Today, Sinopec is successful because

of its good work performance and made high-quality goods feasible at a lower price and paying

its workers high wages.

Marketing Strategy

Marketing is another factor that heightens the performance of a company. Workers who

always dream and think about how their company could sell more and grab the vast market

makes an admirable and hardworking staff members. Each company has its marketing strategy

depending on the demand for the product, consumption of the product, and the level of market

competition. Dangote Group has its marketing strategy called Experiential Marketing. Such a

company has specific open days and exhibitions where the company representative travel to the

market to give free samples, educate their customers on the benefits of their products and allow

them to experience not only the product and but also the care and the attention the company

shows them. Dangote Group realized that fun demonstrations and games, as well as provision of

free samples, gifts, and prizes draw many people from a significantly big geographical area and

keep the customers singing about the product and days experience for several months.
 HPWS in Multinational Companies 8

Experiential Marketing strategy, through the competent and high performing staff members, has

improved the social responsibility image of Dangote Group. On the other hand, Sinopec

Corporation has adopted its marketing strategy called Marketing Mix Strategy. In this strategy,

the company considers four basic aspects that they term as 4Ps: Price, Promotion, Product, and

Place. In the product part, it looks at what it produces (petrochemicals, lubricants, and fuels) and

explores the market. In the place part, Sinopecs marketing and distribution segments have

promoted its operational quality and capability by upgrading and optimizing the current networks

and distribution channels. It has changed some policies that provide the pricing strategy

recommendable to the investors and consumers (Bhasin 2016).

Competitive Advantage

A company that has a competitive advantage signifies a high work performance. HPWS

has been discovered to be beneficial to the companies that apply it in such a manner that they

gain a competitive advantage. By definition, competitive advantage marks the superiority

obtained by a company when it offers the same amount of goods and services as that of its

competitors at a relatively lower price or high prices through the provision of differentiated

goods. The brand popularity is one of the factors that has kept Dangote Group in the market for a

long time. The high demand for both steel and cement in Nigeria, Zambia, and Ghana have given

Dangote Group a competitive advantage. Its good reputation has also earned it the competitive

advantage through selling authentic and high-quality products. On the other hand, Sinopec has

not earned a genuine and outspoken competitive advantage because of its low volume

production. Sinopec Corporations level of production fluctuates due to erratic sources of raw

materials and high importation charges because of high import tax. Therefore, such factors make
 HPWS in Multinational Companies 9

Dangote Group have a better competitive advantage than Sinopec Corporation although some of

their products are not the same.

Importance of HPWS to an Organization

Employee Security: One of the advantages of HPWS to a company that adopts it is employee

security. The managers that indulge in this practices have improved the bottom line of their

companies through creating a real partnership with their employees.

Selective Hiring: It helps the HR department to evaluate the candidates with skills, for example,

marketing techniques and creativity who would be an important asset to the company.

Decentralized Decision-Making: Companies that embrace HWPS culture becomes cognizant of

the vitality of coherent identification of objective and goals. In the implementation of goals,

HPWS helps the company to delegate decision-making all over the organization.

High Compensation Based on Results: It enables the organization to develop a compensation

system, which aims at rewarding the corporation workers at all levels when it achieves some of

its goals.

Encourages Training by Commitment: The organization that has embraced HPWS stresses on

training by commitment as compared to the organizations with the control-oriented system.

HPWS allows training the employees on how to deal with various issues that may emerge within

an organization.

Reduction of Status Barrier: HPWS takes the assumption that organizational improvements and

ideal ideas come from all employees across all levels. Some activities that signal inequality such
 HPWS in Multinational Companies 10

as wage inequality and racial and religious discrimination impart the organizations hierarchical

status to some workers instead of treating them equally.

Sharing of Important Information: Sharing of important management skills, styles, concepts,

and marketing strategies are made easy in an HPWS organization. In addition, sharing of

performance, financial, and strategic information shows the employees that they are important

and trusted in the company.

Conclusion

The success of the company leans upon the strategies used by the management. A

corporation with incompetent and irresponsible leaders is likely to collapse and not achieve the

goals it set at the beginning of the business. When a company grows and realizes that its products

have high demand in the market, it decides to expand its supply of goods and services by having

branches all over the country and even outside the borders. When a companys service delivery

goes beyond the borders of its native country, it becomes an international corporation. Several

companies across the world started as a small business enterprise, but they have grown to

international companies. Nigeria is one of the most developed countries in Africa whose business

companies have been lucky enough to serve more than one nation in Africa. The essay focused

on Dangote Group, which is owned by Aliko Dangote and gave out various factors that led to its

expansion. As one of the largest corporations in Africa, Dangote Group delivers its goods and

services majorly in the West African countries such as Ghana, Zambia, Benin, and so forth. On

the other hand, Sinopec Corporation is a Chinese international company that sells the

petrochemicals and petroleum products to several countries. These two companies differ in terms

of products, management strategies, marketing strategies, and competitive advantage due to

 HPWS in Multinational Companies 11

different ways of application of HPWS. HPWS comprises of the management practices that

incorporate work, employees, information, and technology in a manner that will lead to high

work performance and productivity. In the management strategies, while Dangote Group uses

Niche Domination Strategy, Sinopec uses Unique Pricing Strategy. In the marketing strategies,

Dangote Group uses Experiential Strategy while Sinopec Corporation uses Marketing Mix

Strategy. Lastly, Dangote Group has a better competitive advantage than Sinopec because it has a

good reputation and its constant supply of the products in the market.

Recommendations

Dangote Group should look for the ways of penetrating the world market so that it can try to

compete with some international companies from other developed countries such as the US, the

UK, and Japan.

Sinopec Corporation does not have a competitive advantage because the production of its

products is erratic. Therefore, it should try to better its means of transporting its raw material to

allow constant petrochemical production in large volume.

Both of the companies should try the Strong Brand Management Strategy. It is the strategy that

allows the company to produce many products, but it puts more effort into one product to make it

take a competitive advantage.

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Reference List

Bhasin, H. (2017). Marketing Mix of Sinopec - Sinopec Marketing Mix. [online] Marketing91.

Available at: https://www.marketing91.com/marketing-mix-sinopec/

Boxall, P. (2017). High-performance work systems: what, why, how and for whom?.

Dangote Group (2017). Dangote Group::: HISTORY. [online] Dangote.com. Available at:

http://dangote.com/aboutus/history.aspx

Dangote, A. (2017). 7 Successful Business Strategy Models You Must Emulate |

MyTopBusinessideas.com. [online] Mytopbusinessideas.com. Available at:

http://www.mytopbusinessideas.com/successful-strategy-models/

Kalu, U. (2017). Example of Companies with Sustained Competitive Advantage |

MyTopBusinessideas.com. [online] Mytopbusinessideas.com. Available at:

http://www.mytopbusinessideas.com/example-companies-competitive-advantage/

Newberg, L. (2017). High-Performance Work Systems. [online] Slideshare.net. Available at:

https://www.slideshare.net/LauraNewberg/high-performance-work-systems-48203610