Global Business Environment: Key Factors, Challenges, and Strategies

This report analyses the impact of key factors on the global business environment, including challenges faced by organisations and strategies to overcome them. It includes a PESTLE analysis of Sasol Ltd and evaluates the influences of globalisation on organisational governance, leadership, structure, culture, and functions.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................4
Main Body.......................................................................................................................................4
P1 Key factors affecting global commerce and trade.................................................................4
P2 Strategic challenges face by organisation when operating in global environment with
examples......................................................................................................................................7
M1 Critically analyse the impact that key factors have upon the global business environment
in terms of benefits and challenges.............................................................................................8
M2 Analyse strategic challenges in context of risk and diversification strategies and the
supply chain flows.......................................................................................................................8
D1 Critically evaluate the global business environment, including the opportunities and
challenges faced by organisations...............................................................................................9
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions...................................................................................................9
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions.
...................................................................................................................................................11
P5 Evaluate the different ways decision making can work effectively in a global context......12
P6 Determine and articulate the various routes to internationalisation an organisation may
adopt, including key barriers.....................................................................................................12
M3 Critically evaluate global market influences in application to appropriate theories and
models relating to organisational functions..............................................................................13
M4 Critically evaluate the key barriers in doing business internationally and make
recommendations on how they can be overcome.....................................................................14
D2 Critique strategies that can be adopted by organisations operating in a global business
environment, making valid and justify recommendations of how they should adapt their
organisational structure and decision making processes...........................................................14
CONCLUSION..............................................................................................................................15
REFERENCES:.............................................................................................................................16
Books and Journals...................................................................................................................16
Online........................................................................................................................................17

INTRODUCTION
Globalisation refers to the process by which organisations develop their international
presence of products and services. Globalisation help businesses to grow in international market
through their technology, information, goods and job across the international cultures (Abdullah,
and Mansor, 2018). Globalisation is the process of interaction between different cultures,
companies and governments worldwide. Company expends its business beyond domestic
territory, it becomes international business. Global environment contains broad and worldwide
factors that are beyond the control of company. Global business environment refers to the trading
between international markets and communities that have different beliefs and cultures (Avolio,
Benzaquen, Pretell, 2019). Sasol Ltd is international company deals in chemicals, gases and oil
industries. The company was founded in 1950, at Sasolburg, South Africa. Sasol has worldwide
presence and has operations in more than 30 countries. In reference with Sasol Ltd, report
includes the factors affecting global commerce and trade. It further elaborate strategic challenges
faced by Sasol company in global environment with their impacts and benefits also. This report
also exemplifies the influences of globalisation on organisation in terms of ethical and
sustainability. It also includes factors that affect global market with organisational structure and
culture.
Main Body
P1 Key factors affecting global commerce and trade
Globalisation is the process of trading across the international boundaries. It represents
the exchange of innovative ideas, products, values, services and jobs in international market.
Some factors like cost, market, environment and competition affects the global trade in context
to Sasol company. Brief explanation on these factors are
Cost – It is the most important factor that affects global trade of organisation. It includes
the trade policies, barriers, transportation costs, exchange rate costs, legal and regulatory costs.
Sasol company has bear huge expenses and costs while globalising their products and services to
different countries (Bidault, José, Zanakis,. and Ring, 2018). Costs includes the factors of
manufacturing of plants, production of products, marketing, promotion and distributing channels
may vary from one country to another depends on their cultural values, economy conditions and

government policies. Sasol company has used cost factor efficiently in order to grow in
international market through producing and marketing high quality products and with creating
value for stakeholders.
Market – Selection of market during globalisation is much important factor as it contains
customers, their needs, values, trends, cultural beliefs and demand. Every country has different
backgrounds, cultural values makes them different from others (Buckley, and Casson, 2019). All
these factors are well researched and considered by Sasol before entering in global business
market. Market research done by Sasol before expending their business at global level helped
them in achieving maximum profitability and capturing large market area at international level.
Competition – Globalisation expends the market for business as it also leads company in
increasing competition in international market. Competition in market can be of products and
services, price, target market and customers. Sasol company has used strategies like pricing,
distribution, promotion and operations to maintain their position in global business environment.
All these strategies helps Sasol Ltd to survive in the competitive international market.
Government policies – These policies can affect interest rates and it can influence the
borrowing coats of company. High rate in interest leads to decreased in customer spending while
low interest rate attract more investment in company and increase in production rate. Sasol Ltd
has presence in many countries and government policies help them to maintain proper rules and
regulations in country. Taxation policies, legal interactions, law and legislation.
Environment – Global business affects the environment as increased in international
market leads to more production of goods, results in more use of raw materials affect
environment. Sasol deals in energy and chemical solution and works in reducing their impacts on
environment. Through like water consumption, air quality check, land use and alternative
feedbacks.
PESTLE Analysis
PESTLE Analysis is systematic method used for examine external factors that can
influence business environment. It includes different scenarios and factors that are not in control
of company (Ermasova, 2021). This strategy allows companies to generate systemic plans for
evaluation of future growth opportunities at global level business. PESTLE Analysis of Sasol Ltd
helps company in making strategic decisions regarding globalisation and growth through
international business.

Political Environment – This factor includes the government policies, taxation rules and
regulations of different countries while switching to globalisation. Sasol Ltd has strong political
structure in countries that support growth and development as global business organisation. UK
has favourable tax policies that help business to expand more easily.
Economical Environment – Economical factors like employment rate, inflation rate,
interest rates that can affect global business organisation. Sasol Ltd company has used moderate
interest rates for growth of business, as it can help in generating funds for business through
loans. Globalisation of Sasol Ltd company provides more employment opportunities for
countries citizens with positive impact on countries economy as well to companies growth.
Social Environment – It include forces like customs and traditions, health awareness,
social trends and family sizes and education of different countries. High standard of educated
young population benefit Sasol company through providing human resource with high
qualification skills. Family size and structure determines the purchasing power and their
regularity, as a result it will lead to companies growth. CSR initiatives of Sasol Ltd helps them in
creating awareness among citizens and their well being helps in maintaining their global position
in competitive environment of globalisation.
Technological Environment – This factor contains method of production, technology
infrastructure used in manufacturing plants, technological innovations, social media presence and
improvements in company (Foster, and Carver, 2018). Sasol Ltd used technological in
procedure of delivering final products to customers. UK has strong technology infrastructure and
improving in technological methods of Sasol Ltd helps in attracting more investors leads in
development of whole organisation at global level to maintain his position in international
market.
Legal Environment – It refers to the decision, law and regulation passed by government.
Every country has its own kind of rules and regulations to promote fair trades between
companies. It includes safety laws, employment and labour laws. UK has strict rules regarding
health policies of employees at work place. Sasol Ltd has health policies in favour of employees
not only for health and safety well bring of employees but for mental and emotional also.
Environmental Factor – In this natural environment issues are main focus of company
like waste management, recycle, reduce, reuse and green consumption. Sasol Ltd as energy and
chemical industry has main focus on environment sustainability. Sasol Ltd come forward with

vision of target 10% (previously) to 30% reduction in green house gas emissions (Sasol
announces ambitious emissions-reduction target, plans new sustainable solutions business,
2021).
P2 Strategic challenges face by organisation when operating in global environment with
examples
During globalisation, businesses has to face many challenges while operating in
international market (Galan Mashenene, and Kumburu, 2020). These challenges has negative
impact on organisation during globalising in different countries. Sasol Ltd as domestic company
has several strategies that can be beneficial in their economic conditions, but as expending
business in another country with same strategy can result in loss. Some of these challenges are -
Tariffs and trade fees – Tariffs are form of tax introduce by countries government on
imports and export goods. Different tariffs and trade tax applied on various products by
government of different countries. During globalisation, tariff increases the price of import and
customers would purchase less expensive product. Sasol Ltd as energy and gas dealing company
has to face many challenges like agreements, licenses and it seems difficult for them to survive
in other country. Sasol Ltd company has analysed these factors before operating in other
countries helps in overcome this challenge and growth in international market.
Cultural Identity – Every country has its own cultures, values and beliefs. During
globalisation cultural difference can be the barrier for companies. Sasol Ltd company has to face
many differences while operating in international market. Through improving relationships,
building trust among customers can help Sasol Ltd to process in different countries without
hurting their cultural values and sentiments.
Communication barrier – Language barrier is most common challenge faced by global
business. Companies require to communicate better with their employees and customers in
different countries. With differences in domestic language causes problem in smooth functioning
of business in market. Sasol Ltd has to adopt more strategies in facing these challenges and can
provide proper training to employees regarding new technologies, cultures and language of
international market.
Competition – International market has more competition than internal market. Going
global can result in more profit, but with sense of competitiveness in global market. Sasol Ltd

has presence in many countries which leads in more competition in market, to survive this Sasol
Ltd has to make good competitive strategies to maintain their position in international market.
M1 Critically analyse the impact that key factors have upon the global business environment in
terms of benefits and challenges.
Global business environment contains various advantages and challenges in international
market at same time. Globalisation changes the nature of economic activities in different
countries, expending their trades, globally supplying their products and improving the growth
opportunities for economic growth of country in context with organisation's profit (Grenčíková,
Kordoš, and Sokol, 2019). It also help Sasol Ltd company to provide their services among
different countries with control on providing technological advancement to countries,
collaboration with resources available and increased in flow of capital in economy. Apart from
these benefits of globalisation it has some challenges also creating barriers in managing business
at international level. Cultural differences, language barriers, expenses related to globalising
business are some challenges faced by companies. Sasol Ltd company has wisely used their
strategies to overcome these difficulties by analysing PESTLE Analyses before expending their
business to other countries. Trade tariffs and tax policies imposed by government can be a major
challenge as different countries have different policies, rules and regulations. Sasol Ltd as
dealing in chemical solutions they have to make arrangement for proper agreements, licence and
evaluation of market conditions before entering in global business environment.
M2 Analyse strategic challenges in context of risk and diversification strategies and the supply
chain flows.
Global supply chain management ensures the proper delivery of final goods and services
from manufacturers or suppliers to wholesalers, retailers and distributors across the country.
Supply chain management is important for every business organisations as it includes the
producers, vendors, warehouses, transportation companies, distribution centres (Hacioglu, 2020.
Horak, and Park, 2022). Global supply chain has some challenges involved in supply chain has
negative impact on companies. Business with global supply chain faces more paper work, as
every country has its own paperwork and rules that should be filled carefully. Sasol Ltd has its
footprint in more than 30 countries, each country has its own legal paperwork, trade fees on
export import of products and tariffs policies creates risk factor to Sasol Ltd company. Increase
in freight prices, dynamic changes in customers attitudes, difficulty in forecasting demand in

target market and economic conditions in country can be risk factors involved in supply chain
management of Sasol Ltd. Companies can use diversified strategies for supply chain
management in company. Sasol Ltd company uses the strategy of diversification in supply chain
method leads in generating economic benefits among every countries included in supply chain of
company. These supply chain contributes in increased stability and popularity worldwide.
D1 Critically evaluate the global business environment, including the opportunities and
challenges faced by organisations
Global business environment has many opportunities and challenges to company.
Globalisation of company includes various factors that can be beneficial and included with
threats as well. SWOT Analyses helps company in analysing their own strengths and upcoming
opportunities, threats and limitations.
SWOT Analyses
Strength
 Long market presence
 Geographic approach
Weaknesses
 High expenses
 Insufficient advertising
Opportunities
 Market expansion
 Large no of suppliers
Threats
 Increasing competition
 Demographic changes
During globalisation, Sasol Ltd company has to face challenges like demographic changes and
increase in competition at international market. It includes population growth, age structure or
changes in mortality of every country. Through the strategies of franchising, licensing and
creating joint ventures in different countries can help them in maintaining position in
international market. Globalisation brings the opportunity to Sasol Ltd like market expansion, it
includes strategies which involves offering existing product to whole new market.
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions
Globalisation is process by which business makes influence and develop operations
around world. Globalisation benefits develop nations in compete business worldwide (Kotabe,
and Helsen, 2020). It also promotes economic growth of different countries through international

trades and integration of global capital markets. Global business has indirectly impact on
governance through peace and stability. Globalisation spreads the new ideas, technological
innovations and tools. Globalisation has affected organisations structure, work culture and
compel leaders to change their decision making strategies with how effectively they respond to
them. McKinsey 7S model used well being and future success of business. This model contains
hard and soft elements impacted by management of company. Evaluation of this model in
relevance with Sasol Ltd company are
Hard elements:
Strategy – This plan is developed by the organisation to remain stand in competitive
market or industry. It clearly communicates the objectives set by company and work in long term
strategies sync with other elements of McKinsey's model. Sasol Ltd company analysed their long
term goals and strategies that can help in maintain their position in competitive international
market. Strategies used by Sasol are effective in terms of long run objectives like satisfying
customers around world and creating level return for all stakeholders in company.
Structure – Organisation is made of hierarchy, chain of command and divisional areas
that drive operation in different departments. Sasol Ltd company is well structured, have
organised department including accountability of workers. It helps in analysing future aspects in
terms of globalisation and can adopt new technologies and tools to survive in global level
business environment.
Systems – It refers to the daily procedures, techniques, work flows and decision making
on daily basis at operational level. Sasol Ltd is company dealing in energy and chemical
solutions, systematic chain of command and hierarchy helps smooth functioning at lower level
functions of organisation to achieve goals at international market.
Soft elements
Shared values – These values are standard and common norms within the company that
influence behaviour of the employees and management. Sasol Ltd has detailed guidelines
regarding staff behaviours at workplace. This element helps Sasol Ltd to ensure their ethics and
values in international market for better business opportunities.
Skills – This element contains creativity, talents and capabilities of management at global
level, these skills can decide the type of strategies and objectives company can achieve. Sasol

Ltd has numbers of skilled person working together in direction of growth and success at global
level business environment.
Style – This style represents the performance, productivity and cultural approach of
management in company. Sasol Ltd should adopt this element as it shows the decision making
power of leaders and their code of conduct. Sasol is global organisation, its communication style
makes business different among others.
Staff – It shows the human resources in company. Sasol Ltd company operating at global
level has large workforce in around many countries. It has well trained and motivated staff
working together in achieving organisation goals. Sasol adopted for some training session,
reward systems and appreciation post helps in motivating staff for more productivity.
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions.
Organisations functions is core process of activities implements within different
functional areas of organisation. It includes operations, marketing, human resources, customers
services and finance departments (Mbaye, A.A. and Gueye, 2018). Sustainable globalisation are
more principle centred and follows foundational values, where as ethical globalisation refers to
the morale, values and objectives that are based on human activities. Globalisation is process of
expanding business to global level market and has impact on different functions of organisation.
Sasol Ltd company also has some influences of ethical and sustainable globalisation on
organisational functions these are
Marketing Function – Global business has improved the concept of marketing through
business to business projects. Globalisation break down the borders between countries and
expending customers at global level. It increases the accessibility of products in global market,
results in increasing competition also. Sasol Ltd sustainable and ethical globalisation helps in
improving relationships with customers at global level. Marketing ethics of Sasol Ltd help in win
trust and loyalty of customers.
Operation Function – Globalisation offers companies trade opportunities by reaching
new customers around world, in return upsets how company manages their operations to be
successful in international market. Sasol Ltd has global presence means expand of market result
in great competition as well. Sasol has environmental standards which helps in achieving ethical
and sustainable globalisation in different countries.

Finance Department – Global business environment stimulates the growth of finance
department and also economies of different countries. Ethical globalisation of Sasol company is
to provide balance, protect and preserve stakeholders interest in company. It includes code of
ethics in management, employees, partners and stakeholders.
P5 Evaluate the different ways decision making can work effectively in a global context.
Decision making skills support the ability in manager to make solution to challenges
faced in globalisation (Nguyen, and Pham, 2020). Good decision making can help management
to get the work done by employees with value of work and interest in mind. Effective decision
making strategy of Sasol company provides smooth functioning in organisation. Decision
making is important in any organisation whether it is operating at global or domestic level.
Decision making strategies helps in growth and development of company at global context.
Proactive decision making strategies refers to the predictions of event that can affect
organisation. Reactive decision making is concerned with making quick decisions based on
problems that have occurred. Both these decision making strategies help Sasol company in
identifying solutions to predicted events and on problems that already happened. This strategy is
needed to be taken in consideration for achieving growth and success in international market.
P6 Determine and articulate the various routes to internationalisation an organisation may adopt,
including key barriers
Internationalisation includes the process of outline the product to satisfy customers need
around different countries (Nieri, and Giuliani, 2018). It is the process of planning, implementing
products that can be easily adopted to specific culture or local languages. There are various
forms of internationalisation are
 Exporting – In this context, businesses that sell their good and services to different
countries customers by exporting them. Manufacturing country producing goods then
shipping them to another. Sasol has coal mines used for exporting for its own operation in
different countries.
 Joint venture – This is combination of more than two parties working together in
enterprise for its development, sharing ownership, risks and profits. Internationalisation
Joint venture occurs when two business from different countries work together in a
partnership. Sasol Ltd has benefits from stakeholders from different countries helps in
providing more capital for future investments.

 Licensing – It is the official agreement between the companies of another county, which
gives permission to manufacture their products. Sasol Ltd had many licensing agreements
with companies in different countries generating more profits and revenue with them.
Barriers in Internationalisation :
Financial barriers – Internationalisation of organisation had financial barriers includes the
charges and trade fees charged by different countries market. Sasol Ltd has to take necessary
steps for making large investment in international market.
Market barriers – International market contains different types of customers, taste, values
and beliefs that is huge barrier for going global level trading. Sasol Ltd has to deal with
employees and customers with different attitude and values, creating barrier in international
market.
M3 Critically evaluate global market influences in application to appropriate theories and models
relating to organisational functions
Globalisation affects every aspect of business organisation (Ogrean, and Herciu, 2020).
Proper communication and technology awareness makes it more efficient in blending with
various cultures and companies. Hofstede theory is used by Sasol Ltd for better analysing the
impact of globalisation on organisational structure. It include factors like
Power distance – It refers to the inequality that existed and accepted by people. UK has
low power inequality acceptance. Sasol has to analyse this factor before expending business in
countries.
Individualism and Collectivism – This culture is concerned with how individual in
society prioritize their work culture with relationship.
Masculinity and Femininity – It shows the ambitions, wealth acquisitions and different
gender roles among citizens. Femininity cares about nurturing behaviours, equality in sexuality
and awareness about environment. Sasol should keep these terms before entering in new market
at global level.
Uncertainty avoidance index – It describes how good people can manage their anxiety.
Usually people make life more predictable and controllable but uncertainties can happen any
time. This factor can help Sasol in analysing the factor that is unpredictable in international
market.

Long and short term orientation – Long term focus on future goals and short term
orientation promotes dignity related to past and future. Sasol Ltd has both short term and long
term orientation programs.
Indulgence versus Restraint – It represents the culture with high level of satisfaction in
accordance with human needs. Restraint refers to that society has reliefs in relevance with needs
by strict social norms.
All these factors of Hofstede theory in analysing future goals, needs of society based on their
behaviours, priorities and cultures before expending their business globally.
M4 Critically evaluate the key barriers in doing business internationally and make
recommendations on how they can be overcome.
There are many barriers in expending business at global level (Shukla, and Pattnaik,
2019). Financial barrier is main major challenge, as it requires huge capital and it can be solved
with the help of stakeholders, attracting more investors to the company and deduction in long
supply chain management of company. Cultural differences are also important factor that
influence the company at global level, as customers have different tastes and values. Through
proper market researches and learning new culture can be beneficial for globalisation (Varshney,
2020).
D2 Critique strategies that can be adopted by organisations operating in a global business
environment, making valid and justify recommendations of how they should adapt their
organisational structure and decision making processes
Global business strategies refers to the plan that developed by companies for expending
their business in global market. These strategies can help increasing their sales around world
wide (Ślusarczyk, and UL HAQUE, 2019). Sasol Ltd can adopt global business strategies like
domestic exporter, multinational, franchiser and transactional for adopting global level business
environment. Sasol has to work in facing the challenges for better acquire business at global
level.

CONCLUSION
This report concluded that, Global business environment has many factors that affects
business in important aspect and have challenges that company has to face during expending
their business at global level. Many models and theories like PESTLE, SWOT Analysis and
Hofstede models should be performed before entering international market. These can be
beneficial for company as they help in analysing important criteria which are used for
development in international market. This report also evaluates the different routes of entering in
global market and barriers also like licensing, joint ventures. Therefore, report shows that
company should take major precautions before expending business worldwide, and need
strategies that can help in surviving the competition at international market.

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Online
Sasol announces ambitious emissions-reduction target, plans new sustainable solutions business,
2021. [Online]
Available through: <https://www.news24.com/fin24/companies/industrial/sasol-announces-
ambitious-emissions-reduction-target-plans-new-sustainable-solutions-business-20210922>