Global Business Environment: Factors, Challenges, and Influence on Organizational Functions

This report analyzes the global business environment, including factors that drive globalization, strategic challenges faced by businesses, and the influence of globalization on organizational governance, leadership, culture, functions, and structure. It also evaluates the influence of ethical and sustainable globalisation on the function of the organisation.

Global business
environment

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
1. Various factors that drive globalisation...................................................................................1
2. Explanation of complexity of strategic challenges faced by businesses while operating in a
global business environment along with supporting examples...................................................2
3. Evaluation of the influence of globalization on organisational governance, leadership,
culture, functions and structure....................................................................................................4
5. Evaluation of the influence of ethical and sustainable globalisation on the function of
organisation..................................................................................................................................6
5. Evaluation of different ways of decision-making can work effective in the context of global
business........................................................................................................................................7
6. Determination and articulation of various routes to internationalisation of an organisation to
be adopted along with key barriers..............................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Global business environment refers to the environment in different sovereign countries that
consist of exogenous factors to the home environment in the organisation which creates
influence in decision making related to capabilities and use. It can be divided into two categories
into different environments including internal and external environments (Akhtar, 2018). This
project report includes analysation of SASOL which is a multinational company. It is integrating
a chemical and energy company that is based in South Africa. It was established in the year 1950
in South Africa. It is planning to expand its business in Australia which is a developed country
and has different resources in its organisation. This project report includes analysation of key
factor that contributes to globalisation. It includes the determination of strategic complexities
linked with operating in a global environment. It also evaluates ways in which the global market
creates influence over the culture, structure and function of the organisation. Moreover, it
evaluates the influence of globalisation on organisational decision-making as well as strategy.
MAIN BODY
1. Various factors that drive globalisation
Globalization is called as those aspects which are used by a business for operating as well as
developing for continuous growth of business organisation with the help of mixing and
integration with more and more countries. Globalisation is important that helps the management
in formulating various effective plans that are used in business organization as well as
implementing them during various business functions leading to growth and development as well
as productivity of operations of the business entity (Alshare and Sewailem, 2018). The
company’s concentrate on digitalization as well as maintaining good relations with another
countries and economies for the establishment of business organisation and enhancing its
performance. Some of the important factors that are explained and described as follows:
Level of economic factor – This factor is related to the global scope economies. SASOL
company are help the globalisation to run the business in free trade area. Along with it also
support to maintaining the economic union as well as economic incorporation, they support to
operating its functions in changing in dynamic environment thereby ensuing in its higher
productivity and maximum profit.
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Opportunities for trade and investment – This factor is related to the market which is
used by management for analysing and researching the current market situation. Along with it
also support the company to making decisions which is related to the investment for increasing
trade (Barr and et. al., 2018). SASOL's management expresses and implement the different plans
internally and support to influencing the investors, so that they can helps the company to
increasing trade agreements which are made by the government approval. This factor is
supporting various operations of the business activities in dynamic environment with the help of
maintaining higher performance.
Technological advancement – This is related to technology and new innovations which
is used for enhancing the personnel and the performance increasing of the business entity.
SASOL uses various advanced and latest technologies such as digital payment, robotics delivery
and many others more that are introduced in dynamic environment which helps in driving
international trade.
Market Conditions -the marketing conditions are used in motivating trading and
commercial operations with the aim of positive and great nature and behaviour towards changes
that leads to functioning of business activities in an effective way. For functioning a business in
an international market, there is a need to do market analysis with the motive to know and have
complete knowledge about customer preferences and target audience which affect directly
business activities in global market (Bhagra and Sharma, 2018). SASOL uses this in global
market by giving products by having complete knowledge about customer preferences and tastes
leading to sales increment of the business.
Competition Environment/ factor – This factor uses commercial and trading
competition and planning policies and strategies formulation in an effective way that are needed
in global market. These factors influence competition by formulating and implementing various
strategies and practices in business. As SASOL is creating plans for its international expansion in
market by aiding with this aspect which will result and lead on the business organization in a
positive way.
2. Explanation of complexity of strategic challenges faced by businesses while operating in a
global business environment along with supporting examples
There are different types of challenges and opportunities to be faced by businesses while
operating in the international market. It is important for businesses to identify these challenges
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and opportunities for business on a timely basis. In order to identify these factors, a business can
conduct a PESTEL analysis which helps to identify the macro environment that creates an
impact over the business. Explanation of some of the factors included in PESTEL analysis are
mentioned below:
Political Factor: There are different types of government policy and policies risk existed in a
country. While expanding business in Australia, the business of SASOL will get different
benefits. There is political stability in Australia which provides the opportunity for the business
of SASOL (Contractor and et. al., 2019). There is also easy trade policy that helps SASOL to
expand its business in Australia without many formalities. But the government of Australia are
particular for its rules and regulations and in order to avoid interference of government in
business, managers of SASOL need to adopt different types of regulation and rules of
government in their organisation.
Economic Factor: These are the important factors as they create a direct impact on the cost of
the company. It includes factors like international exchange rate, industry growth, economic
trends, the growth rate of the country and others. The employment rate in Australia is high that
creating a threat to the business of SASOL. Due to less unemployment rate, there is an increase
in the wages rate in Australia which will result in an increase in the total cost of the company.
The economy of Australia is also developed and advanced which creates a threat opportunity for
the business of SASOL as they can access different resources without the cost of transportation.
Social factor: These can be described as factors that consist of attitude belief and other factors
for business. There is increasing health awareness among people and also employees are aware
of their rights. It will increase the total cost of the company which creates a threat for business as
it makes it difficult for businesses to compete with other people (Damarwulan and Farida, 2018).
Employees of Australia are skilled and talented which will provide a competitive advantage to
the business of SASOL. On basis of it, the business can produce their products in a more
effective manner and also it will increase the quality of their products.
Technological Factor: It is a factor that consists development of technology, upgradation and
advancement of technology. Australia is one of the developed countries which has different types
of resources in their organisation. It will create an opportunity for the business of SASOL as they
can adopt different types of technological resources in their organisation. On basis of it, they can
also make the operation of the company more automated and effective. It will create different
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types of opportunities for businesses as it assists them to get a competitive advantage in the
marketplace. SASOL company can also use digital technology and data for purpose of
understanding the needs and requirements of their business. But it will increase the threat of
cyber-attacks and data breaches for the business.
Legal Factor: It is one of the factors which consist of different types of laws to be included in a
business-like intellectual property, health and safety environment, discrimination, tax, labour,
data protection and others. SASOL is a business that is adopting health and safety at the
workplace which will help them to fulfil the laws and also to enhance the satisfaction of
employees (Dzwigol, Dzwigol-Barosz and Kwilinski, 2020). It will create a positive impact on
the company in minds of its prospective customers. SASOL is an organisation which is also
allowing consumer protection laws which helps them to get the standards of product and service
of the company at high. It is essential in order to improve the experience of customers which
creates opportunities for business. There are different types of laws to be followed in the
business environment of SASOL but it causes a delay in the decision-making process of the
company. It sometimes results in a loss of opportunity occur in the marketplace.
Environmental factors: These are the factor that are creating an impact on the environmental
condition of a country different natural resources used by the company and other things. There is
environmental awareness among people all over the world which create opportunity for business
for SASOL (Edelson, Senk and Stock, 2018). There is increasing environmental regulation in
Australia and ASOL needs to adopt all these regulations which will create a positive impact of
the company in the environment. It will also create a negative impact on the natural resources of
the company. Increasing use of natural resources by SASOL create a negative impact on its
impact and also on the future. But the company is also adopting sustainable practices in its
organisation and contributing to its corporate social responsibility.
3. Evaluation of the influence of globalization on organisational governance, leadership, culture,
functions and structure
Globalisation integrate economy of different country and due to this, it is creating different
influence over culture, leadership, organisational governance and function of business. There are
difference in different country in context to leadership style, organisational structure, culture and
other things. In order to understand these culture differences, business managers can use
McKinsey 7S Model.
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McKinsey 7S model can be described as a tool which assists to analyse the design of the
organisation. It is model which aims to identify ways in which the effectiveness of organisation
can be identified on a different basis. It includes strategy, structure, shared values, staff
members, skill, system and styles. An explanation of all these components in the context of
SASOL is mentioned below:
Structure: It is a way in which companies can be organised in content to the chain of command
as well as accountability relationship which form organisational chart. SASOL is an organisation
that is adopting a flatter organisation structure which allows them to include flexibility in
business and also it provides support to the learning and progression of organisation (Hartono
and Kusumawardhani, 2019). There is effective coordination among different department of this
organisation which helps them to attain goals of company with mutual efforts and coordination.
Strategy: It can be described as business plan which enables companies for the development of
action plan for attaining competitive advantage for business by following the mission and values
of company. SASOL is defining clear strategy in their organisation that assists different people
to understand what they need to expect in business. It is developing a strategy that will motivate
employees to focus on the attainment of goals. These strategies also create competitive pressure
over competitors of the company and allow them to get success in business.
System: It is one of components which consists of the infrastructure of the company for
developing workflows as well as chains for purpose of decision making of the company. SASOL
is a large organisation which is working in systematic manner. It is one of the organisation which
has different department and all these focusing on their specialisation. These department includes
finance, human resources management, information and technology, marketing and sales and
other department. There is proper control of the company over these departments which assist
them to work towards path of success.
Style: It can be described as an attitude of senior employees towards the new employees which
develops a code of conduct with different ways of interaction and also it symbolises decision
making of the company that develops the leadership style of the management (Huang and et. al.,
2022). Management of ASOL is adopting a democratic leadership style as they include
employees for purpose of the decision-making process of the company. It allows them to build
trust and good relationships with the employees of the company.
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Staff: It consists of talent management and human resources in content to the decisions of the
company like a reward system, recruiting and training. SASOL is one of organisation that is
hiring skilled and talented employees in their organisation who are dedicated and committed to
their goals and objectives (Kasemsap, 2020). It is a company which is hiring employees from
different countries. It is important for the company for the purpose of maintain skilled and
diverse employees in their organisation.
Skills: It can be described as competencies and capabilities of the company which allows
employees for purpose of attainment of goals. Employees of SASOL organisation possess
different types of skills in their employees as they have effective leadership, decision making
capabilities, communication and other skills required in their field.
Shared values: It consists values, objectives and objectives of organisation which form the
foundation for the business for the development of the effective design of the organisation. It is
include different values for their employees and customers. On the basis of these values, they are
forming positive environment in their organisation and on basis of which business is able to
retain their employees.
On basis of above discussion, it can be analysed that SASOL is one of organisation that is
operating business at the global level. This globalisation creates an impact over the culture,
leadership and structure of the company. It is focusing on developing a positive environment for
the employees which assists them to retain employees for the long term.
4. Evaluation of the influence of ethical and sustainable globalisation on the function of
organisation
Business ethics can be described as a form of applied ethics which examine ethical principles a
well as ethical problem arise in business. It can be applied to different business conduct and is
important for individual and organisation (Khajeheian, Friedrichsen and Mödinger, 2018).
Sustainable globalisation is one of term that focus on the legitimacy of international rules which
enable economic as well as social model in context to competition which provide stability to
business.
Both of these terms are creating influence over business of SASOL and its function in different
manner which are mentioned below:
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 SASOL is one of organisation which is adopting fair practices for purpose of completing
with their rivalry companies. It helps them to maintain ethics and also helps to maintain
image of the company in the markets.
 It is not including false information for purpose of advertisement of the company. It is not
claiming somethings that they are not fulfilling.
 SASOL is also fulfilling the corporate social responsibility of the company which is
important in order to fulfil the expectation of member of society. It can be done by
company by contributing money over social development activities (Kokodey, Gnezdova
and Lomachenko, 2018).
 It is also a business that is also adopting sustainable practices in business and does not
create negative impact over the environment in order to balance different components.
5. Evaluation of different ways of decision-making can work effective in the context of global
business
The Decision-making process enables the firm to make an important decision in business in
content to the global market. These decisions are related to product and service, new technology,
employees, the promotional strategy of the company and others. In order to make the decision-
making process more effective, businesses consider some of the different ways which are
mentioned below:
 Including employees in the decision-making process assists the firm for purpose of
increasing the effectiveness of the decision-making process of business. It provides more
choices to businesses and also helps them to think from different perspectives.
 Considering cultural factors is also a way that helps me in global business to improve the
effectiveness of the decision-making process. In international business, business does not
only need to consider domestic country culture but also consider other country’s cultures.
It is important for business as things which are acceptable in one culture may not be
acceptable for another country (Loucks and Ozogul, 2020).
 Transparency is another important component that enables the firm to develop effective
decisions for the business. it is important for businesses in order to ensure effective
decision making in business.
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6. Determination and articulation of various routes to internationalisation of an organisation to be
adopted along with key barriers
There are different methods to be adopted by the business for purpose of internationalisation.
These methods assist businesses in the purpose of expanding their business operation to another
country. SASOL is an organisation that is expanding business in Australia that creating
opportunities to business. These methods for international expansion includes franchising,
licensing, merger and acquisition and others. Explanation of some of these methods for business
expansion in content to SASOL is mentioned below:
Exporting: It is one of the methods for purpose of expansion of business. It consists of
marketing as well as direct sales in business which assist them for purpose of expansion in a
foreign country. It is a traditional method for purpose of business expansion (Orji, 2019). In this
method, businesses produce products at a large scale and sell it to other countries. Adoption of
this method for SASOL helps them to export products by entering in the foreign market in less
time. It also consists of lower risk in business. Adoption of this method also creates
disadvantages for businesses as it consists low degree of control. It will increase the cost of the
company for transportation.
Franchising: It is a method that consists arrangement in which the franchisor offers all the rights
and authorities to the franchisee. It is used by businesses for expanding business to different
countries in less time. It is a method that is adopted by SASOL for purpose of expansion of
business in less time. Also, it will diverse risk present in the business. This method also creates a
disadvantage for business as it results in less control over the business (Uluskan and Godfrey,
2018). Mistakes of franchisee also create threats to the business as it results in a negative impact
over the image of company.
Merger and acquisition: It is also a method that also create opportunity for the business by
allowing them to merge its operation to another business. The acquisition is another method that
allows the business to take over of other businesses. Both of these methods help business to
expand in international market in less time. Adoption of this method allows SASOL business to
merge with other business that allows them to share their resources. It is also an important
method that helps to diversity risk present in the business. It is a method that also creates a threat
for the business which consists of high investment opportunities in business and also includes
different issues in business.
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On basis of the above discussion, it is can be identified that there are different methods to be
available by a business for purpose of international expansion. Among these, franchising is one
of the best methods for purpose of international expansion for the business of SASOL. It is
important as it will diversity risk present in business and also it does not require much cost.
There are different types of barriers also present in the international market for purpose of
internationalisation. It is important for the business to identify these barriers before ensuring
expansion in international business. Explanations of some of these barriers in the context of
SASOL are mentioned below:
 Language barrier: Language is one of the barriers to international business as there are
different types of languages to be spoken by different people in different countries. It is
one of the barriers for a person at the time of expanding business to foreign countries
(Wei, Thurasamy and Popa, 2018). In order to ensure successful expansion, business
needs to hire employees who have knowledge of foreign countries.
 Cultural differences: It is one of the important components to be considered by
businesses at the time of international expansion. There are different cultures and
different countries which make all people different and unique from others. It is one of
the Barriers that SASOL needs to face at the time of international expansion as things
which are acceptable in one culture might not be acceptable in another culture.
 Management of global terms: There are different times of global terms are made by the
government of different countries and business needs to accept these conditions while
operating at the international level. There are different international business terms that
are to be considered by the business of SASOL which waste time and resources of the
company.
 Foreign policy: Foreign policy are those which is developed by the host country and
business needs to follow these policies for purpose of operating in these host country.
SASOL is a business that is to be considered foreign policy of Australia that results in an
increased cost of the company.
CONCLUSION
From above mentioned project report, it can be concluded that the global business environment
is one of the important components for the business. It includes two types of environment in
which internal environments are those which include different factors like employees, resources,
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organisational structure and other factors whereas external factors include political influence,
economic development, laws and legislation, cultural awareness, environmental awareness and
other components. All these factors create threats and opportunities for the operation of the
business.
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