Global Business Environment: Key Factors, Challenges, and Influences on Organizational Governance and Functions

This article explores the impact of globalization on global commerce and trade, with a focus on the key factors affecting companies like Sasol, the challenges they face in the global environment, and the influences of globalization on organizational governance and functions. It also includes a PESTEL analysis of Sasol and the McKinsey 7s and Hofstede cultural models for the company.

Global Business
Environment

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
Part-1................................................................................................................................................4
Analysing the key factors of market, cost, competition and environment which affects the
drive of global commerce and trade............................................................................................4
Explaining the complexity of strategic challenges which is faced by company when operating
in global environment supported with some specific examples..................................................6
Part-2................................................................................................................................................7
Evaluating the influences of globalisation on organisational governance and functions,
leadership structure and culture...................................................................................................7
Evaluating the influence of sustainable and ethical globalisation on the company’s functions.
...................................................................................................................................................10
Evaluating the different ways of decision making that works effectively in the global context.
...................................................................................................................................................11
Determining and articulating the different types of routes to internalisation the company may
adopt including the barriers.......................................................................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Globalization is the procedure in which local things are placed into global marketplace through
the international network of operations and global business. In the way of globalization, all
business activities are going in a speedy and smooth ways. Global business is also facing where
is challenges of cost and operations but operation like banking, accounting software, learning
people are becoming widescale in the era of globalization of the business in marketplace. This
element brings any challenges too like local market is getting affected but this is more beneficial
for overall global market (Zajda and Majhanovich, 2021). this project is based on Sasol. This
company is fastest growing firm in energy and chemical industry. Its headquarter are in South
Africa, Cape Town. The company has international presence in many locations like Australia,
Frankfurt, New York, Gabon and Mozambique with in addition too UK. This project will cover
key factors affecting global commerce and trade like cost, market etc. and the Pestle analysis of
the company, the challenges faced by company Sasol in global environment and how company’s
functions, structure and culture is influence in the global market this will better explains with the
help of model like McKinsey’s 7s and Hofstede’s Dimensions of culture. This project will also
contain the sustainable and ethical elements how they influence globalisation functions and
different decision-making effects the global context. At the last, the various routes from which
company can adopt internationalisation and which also includes the key barriers.

P1 Analysing the key factors of market, cost, competition and environment which affects the
drive of global commerce and trade.
Globalization of commerce and trade of the firm Sasol need to analyse the environmental
factors influencing the service offering, cost nature of global business operations and the
competition within the market companies so that the organisation can maximise the profit and
benefits from the global operations (Galati, Siggia and at,al., 2020).These are some strategies of
the factors to analyse:
 Cost- The reduced cost structure incentive will help the company Sasol for the new
expansion of the business in the market. The company will get the materials in domestic
market at the lower rate so the services provided to the consumer will be in lower rate too
but this is not extended in beyond the national boundary. The reputation and
advancement in technology can lead to reduced services offering for the company.
 Market- The international market is more consumer abundance than a local market. In
the domestic market, there is impossible to have great sales rather than to has low level of
revenue in sales due to less sales units (Drahokoupil and Piasna, 2019). In the global
market, customer market and strategy are different that can offer the various group of
consumers. So international market is more profitable than the local market. The various
factors like culture, information technology, income nature etc. impacts on global scale
production service.
 Environment- This factor impacts and have a great influence on the Extension of the
company Sasol. Different countries and region of the area of operation of the firm across
the globe will motivates the company Sasol to different services according to the
strategies policies and environment.
 Competition- The online delivering company should focus on global operation than
domestic one. In the international market, there will be many companies who will have
greater capabilities and resources than Sasol. So, the firm needs to be competent in nature
by taking more challenges of competition from the firm of global market.
PESTEL Analysis of the company

 Political Factor- These factors includes all the government policies and actions
impacting a company. In context to Sasol, government stability is a good political
factor as it provides a stable business environment with known market trends. As the
company has various branches in different countries, each of the company have own
political tension which might affect it. The company should study the current trends
of the country in which it is going to establish its new business branch.
 Economic Factor- These are the factors including foreign exchange, inflation, labour
market conditions and others. Economic development of a country could directly
impact the economic performance of Sasol. If the country is growing in economy, it
will offer a huge opportunity to Sasol for growth. The country with high
unemployment could enable the company to have labour at lower cost which will
help the company to save its cost. The high fluctuation on local currency will also
affect the operations of company.
 Social- cultural Factor- These factors impact the organizational culture of a
company strongly. Society norms, consumers' spending patterns, demographic trends,
etc. are comes under these factors. Change in demographic pattern such as: age,
migration, socio-economic variable and others might have a major impact on a
international business like Sasol. The acceptability of the society could also impact
the business of the company. Cultural norms could affect the behaviour of consumers.
The company need to know how much youth is there in the new country.
 Technological Factor-The rapid growth in technology allow a company to take
major benefits from it. It could have some major advantages such as: increasing
working efficiency, increasing speed of work, boosting innovation and increasing
overall profit. It enabled Sasol in social media marketing and enabled the company to
have more collaborations with its customers. It enable the company to introduce
innovative ideas in the organization.
 Environmental Factor- Environmental laws and regulations vary across different
markets. Sasol should carefully avoid these factors by managing and recycling its
waste. It can get benefit from renewable technologies by investing in it to ensure long
term sustainability. The company could adopt green business practices to win the
trust of stakeholders. The company could prefer services that are green.

 Legal Factor- A company should properly analyse the legal environment of a
country before expanding its business. These are the laws a company have to follow
before and after entering another country. Sasol should protect its employees in
context to their health and security at work place. As per consumer protection law, the
company should protect the data of its customers. The company could take advantage
of intellectual property regulations law. It would help it to protect its patents and
valuable ideas.
P2 Explaining the complexity of strategic challenges which is faced by company when operating
in global environment supported with some specific examples.
When the firm like Sasol is expanding in the international market beyond the geographical area,
then the organisation like Sasol has to undergo many various strategic challenges ranges from
profit to loss. For examples:
 Language barriers: When expanding internationally, a company often faces this
challenge. Before engaging in international business, it is important for the companies to
consider the spoken language in the countries , they are going to start there new branch.
Sasol also faced this challenge when it expand its business to other countries. It was a
difficulty to hire the employees from local place, it was difficult to make understand
about the business mission and visions.
 Legal Framework- The international organisation of global business has to undergo lots
of international as well as local regulations and laws that determines the operates legally
and the boundaries to attempt. For example, Sasol after EU leaves Britain has to faces
many changes in the change of rules and laws of UK government, this legal behaviour
affected the operations of company smoothly in other foreign country. These kinds of
barriers can bring many fines and cases to the company because of the change in legal
system.
 Cultural Complexity- The established culture of Sasol in its local market will be more
gregarious if it’s compared to foreign countries. So, the strategies should be more local
consumers oriented in the international business operations as well (Brandini , 2020).
There is a necessity of being culture similar it is more needed to the business-like
international operation. So, the strategic management of the firm might consider taking

steps for training and learning the culture of the country in which business is operated.
The company should train the staff according to the international culture.
 Tough Management- The company can face more managerial complexities like
direction face-to-face orientation, physical supervision in the international business
company like Sasol. The implication of the international working can be comprehended
by the firm. Easy management is impossible because of the distance globally. Inspection
behaviours are complex in nature these days and managerial complexities should also be
improved by day-to-day trends.
P3 Evaluating the influences of globalisation on organisational governance and functions,
leadership structure and culture.
The internal factors like leadership structure, functions, cultural issues and governance motive
the international operation which also influence the global company’s environment. For
example:
 Organizational Governance- The new governing policies of the business operation are
in operative management and strategic management so the firm Sasol should follow the
new policies of the government as the pervious corporate governance might be not
appropriate on the current time (Van-Tulder and Keen, 2018). As there is growth in new
ideas, tools, attitudes, social networks and technologies due to globalization, it becomes
easy for Sasol to make calculations of its human resource, employees, customers and
others.
 Leadership- The workers and managers should be more trained up for the competition in
the global market. The company Sasol should learn about the cultural and legal system of
the operating countries and the local one too. The supervisor or manager of the workers
and the role of business have leadership which should impact the global scale of Sasol
company.
 Cultural Structure- Globalization allows the culture of any company in various ways as
it enables the company in having people of different languages and cultures. As sasol has
its branches in various countries, globalization help it having employees and customers
from different cultures.
 Functional Behaviours- As globalization allows the company to have different
technologies, the country which is more developed in technologies will function more

efficiently. Globalization enabled Sasol in providing more efficient services in the
countries which are technically more developed.
The McKinsey 7s model recommend for Sasol. The model is a tool which is strategic and
framework that will help the businesses and managers to assess the company’s performance
(Bilan, Kot and et,al., 2020). The McKinsey 7s model is to identify 7 elements for the company
that needs to align and focus for the successful change in processes of management as well as the
regular performance enhanced.
 Strategic- The strategic direction in the all-business strategy of the company Sasol. It has
flatter organisational hierarchy being followed via which over the coarse of years they
have exhibited great level of coordination and interdependency between different
functioning departments in the company.
 Structure- This is also known as Organisational Hierarchy. Sasol the start-up company
of food delivery is on the Expansion Spree; this has a flat hierarchy of the company that
is supported by progressive and learning companies. The company has less managerial
levels and has more access of the leadership and senior management, the workers feel
more confident and secure and also has the higher access of the company’s information.
This flatter hierarchy is more like quick decision making and increased processes.
 Systems- The company has well-defined demarcated systems that ensures the operation
of the firm managed effectively and there is no disputes and conflicts. This company
largely departments which includes sales, finance, operations etc.
 Shared Values- The company Sasol core values are on an Expansion Spree are well
communicated and defined to create and support the structure of the company that also
allows to enhance the workers motivation and company’s commitment and also the
workers to perform optimally. Although the core values are not limited to Honesty,
Transparency, creativity and Accountability etc.
 Style- The management and leadership style of the Sasol company involves decision-
making and managerial decision processes. This helps to interaction between the
employees and leaders of the company which helps to resolve conflicts easily and take
feedbacks from the workers.
 Staff- The company Sasol has sufficient workers in number across the world for the
international operations. Workers have different positions and job roles while hiring

externally as well as internally (Peters and Waterman, 2011). All the responsibility and
roles are fixed as their skill required for the position. Although sometimes external
training and in-house training is required to enhance the skills more as per the
requirement.
 Skills- The start-up food delivery company Sasol has skilled, experienced and with high
capability workforce to work for the business operations. The hire professionals and also
provide training for further development and growth.
The Hofstede cultural model for the company Sasol- Sasol has used this model for culture
of the organisation. This reflects the broader global culture, which will also present the practised
and present internally different offices and locations.
 Power Distance Index (PDI)- This is referred to degree of inequality and intensity that
should be in between groups of people, individuals inside the company which is based on
the power which they hold. In Sasol there is more low power distance in culture at large.
 Individualism vs Collectivism (IDV)- This is referred as the nature of job activities and
tasks in company. Individualistic company like Sasol focuses more individual
achievement, challenging tasks for the similar goals. This done with motivating them
with monetary gains and better performance (Minkov and Kaasa, 2021). The collective
company, turns that employee should work together to achieve the goals.
 Masculinity vs Femininity (MAS)- This is referred how the tasks and roles are been
distributed between female and male members of the company. Sasol company on an
Expansion Spree has low score of MAS. That means job responsibilities overlap between
them and job descriptions are not stereotypes or gender-biased.
 Uncertainty Avoidance Index (UAI)- The company have high uncertainty avoidance
and more control on the knowledge of everything. These cultures do not promote
creativity and innovation at large but the company will have tight risk control. The Sasol
has mixed culture practices.
 Long Term Orientation Vs Short Term Normative Orientation (LTO)- The long-
term orientation is the pragmatic and thrifty. They focus on future and displays the long-
term implications. The short term is value-driven in nature opposite to the long-term.
Long term focus is on development of the firm and short term is more related to
execution of the activities.

 Indulgence Vs Restraint (IVR)- The company has focus on culture to be healthy mix
with both inclination to indulgence. The higher indulgence score is referred to more
effective culture towards the needs and happiness of people. The restraining culture, this
indicates the culture more rules and social norms is governed.
P4 Evaluating the influence of sustainable and ethical globalisation on the company’s functions.
 Globalization is the procedure of cresting the international services and goods which are
transferred in the global market and are also influenced by the global presence
(Rodrigues and Franco, 2019). This process has sustainable and ethical are for the
betterment of the human kind and business across the world.
 Sustainable globalization of the operations and services of the chemical industry will
lead to the perfect and unquestionable image of the company by the goodwill and quality
chemicals. The company should get better number of consumers by thinking best for
them.
 The ethical approach of the globalization in the food industry of the company Sasol will
consider the welfare and betterment of the individuals and environment of the working of
the company. When the firm creates more kitchens in the global areas. The ethical
consideration will always inspire the firm to take more projects which are not harmful
and bad for the overall environment of the business.
P5 Evaluating the different ways of decision making that works effectively in the global context.
In the global environment, any company’s business can be more precise in nature than local
environment. So, the decision making is more variant which may be like these below:
 Major decision- The decision making in the democratic way is where the organisation
can take the strategic decision and operative decision based on the major role of the
process of decision making (Singh, Uniyal and et,al., 2019). The major opinion will
opinion in the whole process of making decision will be best treated. The minor part of
the with respect will be better contribution in the decision-making effectiveness.
 Logical decision- The decision-making process might be not fruitful for the chemical
company as it do not have best interest, when it beat the opinions and decision of the
members of the process.
 Expert thinking- When the decision is not correct by the logical and major think, the
time for expert member of the process will come across the determination of the decision

to end. In global operation and promotion, the workers are an expert decisive to think to
take the global decision-making process.
P6 Determining and articulating the different types of routes to internalisation the company may
adopt including the barriers.
There are various routes of internationalisation and the company Sasol can adopt on the service
like food offered by the company. Such as-
 Global Strategy: The way by which Sasol can offer more service to more consumer as
per the local taste, interest and preference of the global scale. The strategies of the
globalisation will focus on the economies of scale. The global standards goods will be
focusing on the strategy. Perceptions, Cultural difference about the people and available
resources are the major barriers which the firm like Sasol is facing.
 Economies of scale- There is believe that to make the company in greater size or the
minimum efficiency scale on the MES that is Management Execution System. This is the
complex framework of the information that is about the production line floor. The main
objective of MES is to compel all the guaranteed assembling activities and then to create
improved yield this is all related to the specific company. The MES is different for every
country. This kind of techniques and tools is differently used by every sector of the
company.
 Transactional Strategy- The company focuses more likely on the large services to keep
up the standards of the low-cost structure. The company also face the cross-cultural
efficiencies that can introduce the diversity of cultural in way of service of globalisation.
The company Sasol is on an Expansion spree that will more focus on the low-cost
structure and training the workforce for better performance.
 International Strategy- Through importing and exporting service the company Sasol
can expand its operations on the international level. Licensing as well as franchising and
more fee-oriented mode of export and import service is followed by the strategy (VA,
2018). The company Sasol operates in chemical items in many territories and countries
which covers many developing and developed target market that will have effect on
many of their consumers.

 Multinational Strategy- With the help of this strategy, the company Sasol can extend its
business operations and the functioning to different and many more countries with the
exact same model of the business.
There are some of the barriers like trust issues and communication issues in the units of
operations of the firm and performance should be maintained in other countries is also a barrier.
The country culture, the legislation law, geographic distribution of resources and facilities,
governance, information technology and infrastructure. Some of them are described below:
 Technology- The changing of innovation and technology on the global business
environment has reduced the cost and information can be communicated easily. Some
examples of technology can be corporate social media like skype, online electronic
signatures. These applications help the firm to connect and communicate meeting easily
from anywhere across the world. But understanding and directing of technology is
difficult some of the workforce needs training. This can increase cost of the company.
 Culture- The culture can be barriers which is difficult to crack for any firm going
globally (Contractor, Lahiri and et,al., 2019). The Sasol may face this barrier as chemical
of every foreign country is different and not easy to make. Mixing of culture can loose of
certain distinctive features of global diversity but this also brings unique society together.
 Export Fee and Incurring Tariffs- Another challenge can be UK and US tech leaders.
There is report of increasing export fee and tariffs approximately 29%. This can be a
major challenge for many businesses going global. The company Sasol is looking to sell
its goods like chemical items in abroad, and promote these items overseas can be
expensive. This is totally dependent on the market place.
 International Recruitment- After EU left Britain. These was various changes for the
company Sasol when it comes to recruiting people. As the company has recruited many
students because many people shifted from the country UK. The cost will increase as
company needs to recruit more and more trained people.

CONCLUSION
This project can be concluded as the term globalisation is the process from which firm Sasol can
go with their products globally, the key factors affecting in the trade and commerce like market,
cost etc. This project will also show the pestle analysis of the company Sasol and what
challenges its facing in global environment and how organisation functions, the culture and
structure influence the working of the company. This has been elaborated by the model used by
the company McKinney 7s and Hofstede’s Dimensions of the culture. This project also explains
how firm sustainable and ethical elements influences the functions of globalisation followed by
different decision-making effects on the global context. At the last project has the route by which
company can adopt internalisation and the key barriers.

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