Sasol Company - Human Social and Intellectual Capital - Case Study Example

Company reports Author Institution Business plan Sasol Company, established in 1950 holds South Africa’s coal, gas and oil. The company in the early 90’s focused on synthetic fuel but this focus has shifted to petrochemical products as they seek to be competitive in the global market. Having focused on energy and chemical production, Sasol produces low-carbon electricity, liquid fuel and high-value chemicals. The company prides itself in having 293 service stations, 87 Exel branded service stations and seven integrated energy centers all within South Africa. The company also prides itself in exports made to other countries. The company has reported an upward trend on its annual turn overs. In 2012 it reported a turnover of 159,114 million Rand, 2013, it reported 169,891 million Rand and in 2014, 202,683 Million Rand. The company is environmentally cautious as it looks into the strategic plans for the future. They are keen to extract the coal, oil and gas keep in mind the safest practices for the environment. Sasol Company Source: Sasol, sustainable development report, 2013. Identified as the second largest tobacco group, the British American tobacco has come a long way from when it began in 1902. The focus of the company when it was formed after the merge of the UK imperial Tobacco Company and the American tobacco company was to produce the most superior tobacco product. They also planned to have it at the lowest priced with the best employees to make and distribute sales. Today, the company has 250 brands that are not only sold in the UK and the states but in 180 countries worldwide. The company receives 400,000 tons of leaves from which 80 percent comes from farmers in the growing markets. In terms of share of group revenue, Easter Europe, Middle East and Africa have a 28 percent share, Asia- Pacific has a 27 percent share, Western Europe, 23 percent and America has 22 percent shares. The company reported a decline in volume in 2014 from 676 billion in 2013, to 667 billion in 2014. The revenue in 2014 was 13,971 million euros which was a decline from 15,260 million euros in 2015. The company opted to suspend a 1.5 billion euros buyback plan in 2014 (BAT, 2014). The company aims at sustainable production while still focusing on creating value for all stakeholders. British American Tobacco company business model Source: British American Tobacco Annual Report 2014 Engagement with stakeholders Sasol has a global Stakeholder Management Strategy that emphasizes on healthy relations between the management and the stakeholders. Regular reviews are carried out to assess the relationship that exists. The company also has research set aside to gauge the perception of the stakeholders on the performance of the firm. All records are made available to stakeholders upon their request. The firm has also set out ways on how they can meet the stakeholder’s expectations and how in return the stakeholders can contributed to value creation. The recognition of vital organs such as the unions, the employees, the customers, organized business and industry, the community and the media in the role they each play to bring about the success of the company has also enhanced the trust of the stakeholders. The company relies on the government to issues them with licenses to enable their operations. The media has the mandate to create awareness of the company’s strategy, the services it provides and its distribution channels. The community is responsible for raising environmental concerns and be the whistle blowers (Sasol, 2014). British American tobacco acknowledges the various stakeholders such as the investors, NGOs, scientists, consumers, regulators, local communities and the public health communities. By engaging the stakeholders, the company has been able to identify ways in which how its policies affect them and how the policies can be used in running their work in efficient ways. The company also carries out customer surveys that give them feedback on the product quality. The company also provides the contracted over 10,000 farmers wit agronomy support. It recognizes the need to guide the suppliers and to help the wholesalers and distributors manage their businesses. The company has also initiated efforts that are geared towards dialogue on various environmental concerns such as dealing with gas emissions and on low carbon energy use. Trade offs In efforts to create value, resources are often interdepend. This relationship allows for trades-offs to occur as a company seeks to strike a balance while still making profits. Sasol admits that its natural capital is nonrenewable. Decrease in coal led to decrease in GHG gas emission. However, increase in crude oil and natural gas led to increase in liquid effluent. The human capital stood at 33,000 employees in 2014. The company has to ensure that the employees are healthy, knowledgeable and the leaders are empowered. Moreover, the company invested 901 million Rand in trainings that were aimed at skill development. The impact on capital experienced was that 25 billion rand was used to pay wages. 12,500 construction jobs were created by Secunda and Sasolburg projects and a further 29,000 in the plant shutdown opportunity. In social and relationship capital, the company created a collaborative relationship with its consumers. Moreover, the company strived to keep a good relationship with the unions and the workforce. However, less trainings were held and less campaigns on energy efficiency were held. In the British tobacco company, focused on increasing its intellectual capital. The increase created a gap that led to the decrease in manufacture. The decrease was experienced as purchases made on raw materials and consumable goods decreased from 3,348 million euros in 2013 to 3,088 in 2014. Moreover, as the intellectual capital increased, the human capital decreased. New employment opportunities were not created. It led to benefits payment reduction from 2,384 million euros in 2013 to 2,194 million euros in 2014. Human social and intellectual capital Intellectual capital for Sasol has evolved as the global economy becomes more demanding and the market becomes more competitive. The company has had to evolve intellectually to device ways of raising its workforce diversity, becoming more competitive and how to run its geographically dispersed operations. Knowledge has become more vital and as a company dealing with oil, coal and gas, case studies and research is an important tool to their success. The company has invested in software’s, copyrights, technology patents, procedures and protocols as well as licenses that make it possible to carry out operations and give them a competitive kick start. Human capital is a high complement in guaranteeing the successful execution of intellectual capital. BAT has employed over 57,000 people across the world in its various branches. The company focuses on its employee’s skills, experience, excellence, productivity level and their ability to be diverse. Sasol appreciates and recognizes the importance of their employees as they form the base for the foundation of the organization. As the company seeks to venture into an investment, they focus on seeing if they have the needed skill and if they are able to acquire any specialists needed locally. For Sasol, social capital focuses on growing the market for their products and at the same time maintaining a good relationship with its stakeholders. The organization strives to keep its suppliers, employees, unions, the communities and the government happy with its product and in upholding the set policies. By so doing they believe that investment opportunities are created (Sasol, 2014). The British American Tobacco company prides itself in its trademarks, its computer. The importance of its trademark and all reserved rights are significant to the consumer. It is said that 600 billion cigarettes are traded illegally. These cigarettes may pause a health issues to the consumers. The retailers and regulators also suffer losses due to these trades. Human capital, the company recognizes the impacts of growth to their employees and the effort needed in meeting the growing demand. The employees are encouraged to share in the company’s success through Sharesave Scheme, Share Reward Scheme and also Partnership Share Scheme. The company provides training and development programs for the employees to equip them with knowledge and increase their efficiency. Recognizing the benefits of a healthy work force, the company has programmers that promote health and lifestyle initiatives to their employees and their families. Social capital focuses on the integration of the industry, government, regulators and law enforcers who play a role in curbing vices that lead to illegal trades. Policies and regulations also play a role in maintaining the required standards. The company periodically reviews their route to market. It helps build a relationship with wholesalers, logistic providers and distributors. Creating greater value Both companies need great efforts towards creation of a sustainable environment. The America British Tobacco company reported to have geared efforts towards creation of a sustainable environment in 2014. The company says it has helped its farmers build a profitable business and at the same time encouraged them to grow a wide range of crops. Furthermore, the report says the farmers have been helped to gain access to technology that has geared up their growth. The involvement of the company in community based developments as they seek to develop infrastructure and tackling human evils such as child labor and violation of human rights. The company sees to it that it abides to the requirements set out as well as the international marketing principles. It has set out youth smoking prevention campaigns and 99 percent of the market places were reached in 2014. In terms of carbon emission, the company seeks to achieve a 50 percent reduction by 2030. In 2014, the company reported a 0.84 intensity per million cigarettes equivalent that is 45 percent lower than the 2000 baseline. Sasol has also reported growth. The company has geared its efforts in practicing safety performance reaching a record low of 0.35. The company has been able to reduce its carbon emission by 3 percent. The product transportation risk has been reduced by 30 percent in the last five years. Energy efficiency has also improved by 15 percent in each unit produced. Research on how to carbon capture and storage solution are still ongoing. The company still strives to increase the growth of gas to liquid production, improve and expand upstream businesses and develop low carbon power generation. The company has allowed the freedom to whistle blow on a breach that occurs on codes of ethics by any employee to relevant forensic teams. This ensures accountability (Sasol 2013). Having compared both companies, though of different industries I am of the view that Sasol Company creates a greater value. I had to consider various factors in making this claim. The British Tobacco Company has severally been accused of not involving stakeholders in most of the decisions. With the size of the company and the growth it has experienced, BAT would have done more in terms of dealing with the high carbon emission rates. This is not to say that their recent drop is not commendable, however, they would have made more strides as a giant company with years of experience. Reference Sasol Sustainable Development Report, 2014, Governance for sustainable development British American Tobacco Annual Report 2014, delivering today Investing in tomorrow, Pureprint Group. SAP consumer success story, 2014, British American tobacco complying with impending international “track and trace” laws. SAP NetWeaver, vol. 50:102 Sasol Sustainable Development Report, 2014, our investment criteria: Investing effectively to create sustainable value Sasol, 2013, Sustainable Development Report 2013. Sappi Triple Green Matt Read More