Global Business Environment

This report analyzes the impact of globalisation on SASOL, an integrated energy and chemicals company. It examines the key factors of cost, market, environment, and competition that drive global commerce and trade. It also evaluates the influences of globalisation on organisational governance and leadership, structure, culture, and functions. The report includes external environment analysis of SASOL in order to examine influenced on business. This report also includes brief analysing of different issues and challenges in the globalisation which effects operations of SASOL.

Global
business
environment
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Table of Contents
INTRODUCTION ..............................................................................................................3
LO 1...................................................................................................................................4
P1 Analyse key factors of cost, market, environment and competition that drive global
commerce and trade. ...............................................................................................4
LO 2...................................................................................................................................7
P2 Explain the complexity of strategic challenges faced by organisations when
operating in a global environment supported by specific examples.........................7
LO 3..................................................................................................................................8
P3 Evaluate the influences of globalisation on organisational governance and
leadership, structure, culture and functions. ............................................................8
P4 Evaluate the influences of ethical and sustainable globalisation on organisational
functions. ................................................................................................................11
LO 4.................................................................................................................................12
P5 Evaluate the different ways decision-making can work effectively in a global
context. ...................................................................................................................12
P6 Determine and articulate the various routes to internationalism an organisation
may adopt, including key barriers...........................................................................13
The evaluation of significant impact of digital technology upon globalisation........15
Conclusion………………………………………………………………………………... 16
REFERENCES................................................................................................................17
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INTRODUCTION
In the recent times with an increase in globalisation, the trade practices between
different countries are increasing. The global businesses environment includes various
factors present in the international marketplace that impact on functioning of a business.
It is essential for a business organisation to deeply analyse global business
environment in order to gain competitive advantage at the marketplace. Globalisation is
also considered as a major factor which has enabled different countries to perform trade
practices. Since 1990s concept of globalisation has emerged as an effective way of
performing inter-country trade practices. The globalisation is also supportive for
business organisations in enabling them to expand their business in international
marketplace. In this project example of SASOL company is highlighted for better
understanding the global business environment. SASOL company is an integrated
energy and chemicals company. The company provides services to all major industries
which are performing operations in the engineering field. The SASOL company came
into existence in the year 1950 and it is famous all over the world for products and
services like Bitumen and Greases. The headquarters of company are located in
SASOLBURG, South Africa. It provides products and services which are related to
integrated energy and chemical components. The management of SASOL has
innovated and produce various commercial technologies such as synthetic fuels,
chemicals and many more useful natural resources. The south African government is
one of the major shareholders of the firm SASOL. They are one of the leading fuel
provider companies present in south Africa. This report includes external environment
analysis of SASOL in order to examine influenced on business. This report also
includes brief analysing of different issues and challenges in the globalisation which
effects operations of SASOL.
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LO1
P1 Analyse key factors of cost, market, environment and competition that drive
global commerce and trade.
Globalisation is a major turning and positive evolution for the whole world which helps a
business to expand and grow at the marketplace. In the recent times, it is important for
a business to focus on international expansion with the help and support of globalisation
to gain competency edge. In the concept of globalisation, movement of goods which
includes functions related to exporting and importing of goods. The information and
technology are considered as a major push to globalisation which has enabled whole
world to increase and develop major trade related practices. In the development of
different dimensions of globalisation, the major organisational bodies which are present
in the international marketplace play a crucial role.
The PESTLE analysis is a major tool which is used to analyse external
environment of the country. This also helps in evaluating macro environment-based
factors which are effective in development of a business entity. The PESTLE analysis
for SASOL company is mentioned below:
 Political factors- The political factors include various corporate laws and policies
which are formulated by government. It is essential for the business entity to
focus and follow trade practices and laws developed by government in order to
lead the marketplace. In context to SASOL, their headquarter is present in
SASOLBURG, South Africa. It is one of the most dangerous countries in the
whole world regarding the political conditions. Thus, it is not a political stable
country due to this the management of SASOL can face various issues in
running their business operations.
 Economic factors- These factors are related to economic elements which are
present in a country. The main economic factors include recession, inflation and
deflation rates which create a major impact on functioning of SASOL. It is also
important for the company to follow monetary policy of economic department of
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government to perform systematic operations. In context to south Africa, it has a
dual economy system which has one the highest and persistent inequality rate in
the whole world. This in result reduce the economic growth and productivity of
the country.
 Social factors- Social factors are the most important for a company to be
considered in order to develop ethical values. In the formation of internal
environment of a business, social factors also play an important role. The
development of social factors also includes understanding of culture of a country
to formulate best business practices. In context to SASOL, it will be a very
beneficial factor because if the population of South Africa will increase then there
will be a possibility in which the demand of their fuels and energy products will
grow. Almost every individual need fuel in their day-to-day lifestyle.
 Technology factors- The technology-based factors include information and
technology-based tools and techniques which are significant for a business. IT
factors helps a business to perform to quick and accurate operations which are
beneficial for whole company. SASOL also use the application of customer
relationship management software to manage relationship different customers.
The technology factors also include usage of internet, software and advanced
computers in performing business operations.
 Environmental factors- In the functioning of a business at the marketplace, the
environmental factors play a major role. These factors help a business entity to
conduct sustainable business at the marketplace by following environmental
policy. The environmental factors also include laws and regulations developed by
government in order to control the pollution. In context to SASOL, they have to
maintain various safety precaution such as reuse, reduce and recycle in their
business operation. They convert natural resources into fuels and chemicals
which are one of the major components that can impact the global warming
The driving factors of globalisation are essential to be taken into consideration as
they play a crucial role in increasing business strength. The driving factors of
globalisation are also important for promoting trade practices related to export and
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import. Major driving factors related to globalisation which affect the functioning of
SASOL company are mentioned below:
 Partnership between countries- The partnership between different countries is
emerging as a major technique which helps in promoting trade between different
countries. All major companies in the international and national marketplace
should focus on increasing trade between different countries. The SASOL
company take advantage of trade partnership between USA and South Africa. It
is known that the South Africa is the largest trading parter of U.S. They are
operating total two-way goods trade of $17.8 billion in the year of 2019. approx
600 businesses operates in South Africa and many of these use the Africa as a
regional headquarters.
 World Trade Organisation- This is the major body of United Nations which
performs different rules and regulations. World trade organisation provides
increases in trade opportunities and also control major trade practices. The WTO
is involved in development of various trade practices which are helpful in
increasing legal trade between different countries. With this Sasol can benefit
themselves for international trading and ensures the higher profitability and
revenue.
During globalisation, a business has many opportunities that help them to establish their
business. But have also face some challenges which are mentioned below:
Opportunities
 Access to the customer in new country.
 Licensing and franchising.
 Easy access to the new resources such as skilled labour and natural resources.
 Access to the cheaper and new sources of the finance.
Challenges
 Requires fund to establish business.
 New competition for the existing customer within domestic markets.
 Cost of meeting the multitude of national and local laws and regulations. African
contract law, Supreme court of appeal (SCA) are some kinds of laws present in
South Africa.
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 Fluctuations in the exchange rate. Exchange rates refers to the change occurs in
the currency of different nation. An increase in the value of money can increase
the selling cost of the product and services whereas the reduction in value can
decrease the cost of the product.
LO 2
P2 Explain the complexity of strategic challenges faced by organisations when
operating in a global environment supported by specific examples.
The globalisation and its dimensions also bring various complexities for SASOL which
impacts on its overall functioning. The different challenges and complexities which
globalisation can bring for SASOL are discussed below:
 High investment- There is a need and demand of huge amount of investment in
the global operations. It is the responsibility of a company of to focus on financial
management for increasing the management of financial transactions. All major
companies in the international marketplace should focus on contributing high
amount of share to development of focused approach. This means that every
business who are operating in the international marketing must focuses on taking
more part in investment activities so that they can easily get the expansion in the
new market.
 Handling a large number of operations- In the international marketplace, there
are huge number of operations. There is a requirement of professional
management in international marketplace in order to handle different level of
operations. All functions in the international marketplace of SASOL require the
help of top-level management and strategic management.
The risk present in international marketplace is very high and dominant which
negatively impacts on different business operations. The decision-making should be
developed with help of strategic management in order to develop effective practices.
SASOL company always takes assistance of strategic management and board of
directors to formulate key decisions. In the recent times, it is recommended for all major
business entities to develop and formulate decision making with help and support of
strategic management to gain desired success at the marketplace (Hamilton, and
Webster, 2018). The Resource based view model is a kind strategic management
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theory which is present in a company also helps the business to formulate key decisions
in a quick manner. In order to minimise risk associated with different operations, it is
necessary for a company to involve participation of strategic management. Also, the
strategic management of SASOL focus on implementation of democratic leadership
style for formulating major decisions of the company in order to increase employee
participation.
The company SASOL has started to operate their business function worldwide which
can help to earn more revenue. Through these transactions the overall economy of the
country will increase. As they will trade in various country which in result enhance the
global economy of the world because they will have to pay taxes in each and every
country. The management of SASOL has comprised all its national market into one big
market place which helps them to build a strong market position all around the
world(Salimo, Buur and Macuane, 2020).
The global stock market helps the organisation to identifies the current economic
condition of the country where they are operating their business. After analysing this
market, they can take the effective decision such as price, quality regarding their
products and services
LO 3
P3 Evaluate the influences of globalisation on organisational governance and
leadership, structure, culture and functions.
The application of McKinsey's 7s model which is helpful in providing solutions to the
company. For SASOL company, the following are elements based on McKinsey's 7s
framework are explained below:
 Strategy (Governance) – It is related to those part of the organisational plan
under which the management has develop different types of strategies after
analyse the impact of different environmental factors. The management of
SASOL has used competitive pricing strategy in their organisation under which
the company charges lower prices of their product in comparison to their
competitive firms. (Matheson, and Sutcliffe, 2018)
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 Structure: It is related to the hierarchy developed by the management in the
workplace so that all the functions of the business are completed systematically
(Buckley, Enderwick, and Cross, 2018). The management of the SASOL limited
has developed divisional structure in their organisation under which the whole
management are divided into different divisions.
 System: It refers to the pattern of work followed in the organisation which helps
the employees of the organisation to achieve their aims and objectives in the
organisation. The management of the SASOL limited has followed effective
system in their organisation so that most of the functions can be made simple. In
context to SASOL, they have adopted GTL technology process system for the
working of their business operations. They have innovated this system which can
help them to reform natural gas with the help of oxygen and steam in order to
produce useful gas.
 Shared values: It is related to the approach of the SASOL limited which helps
them to make the performance of their employees effective.
 Skills: It refers to the skills and abilities used by the managers and employees of
the SASOL limited in their working (Kouznetsov, Kim, and Wright, 2019). It helps
the management to achieve possible outcomes.
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Communication- They employees present in the organisation of SASOL have effective
communication skills which can help them to convey their message and ideas clearly to
their co-workers and managers.
 Style: The managers of the SASOL limited has used autocratic style of
leadership under which every decision of the organisation is taken on collective
aspect(Louw and et. al., 2021).
 Staff: This term is related to the group of persons working in the organisation
such as employees, managers and top-level employees. The management of
SASOL should follow various safety measures in their organisation such as job
security for the employees, proper fire extinguisher set-up, easy to use and safe
working equipment’s. They can conduct various training programs for their
employees which will help them to upgrade their skills according to the modern
world.
Applying the dimensional culture through Hofstede model
The Hofstede model of culture is a major aspect of developing precise culture in
the organisation. There are several business entities which follow this concept in order
to lead the marketplace. The application of this model for SASOL is mentioned below:
 Power distance- The concept of power distance helps a company to focus more
on minimise the gap between top level management and lower-level
management. The power distance also helps a company to develop decision-
making related to culture. In the organisation, it is major duty of management to
ensure minimum gap between different levels of management. (Dörrenbächer,
and Gammelgaard, 2019)
 Individualism versus community- The SASOL company should focus on
development of individual employees as well as teams. This will help the
company to deliver best practices in order to increase productivity of the
employees. As of now, they are focusing on the overall working of the community
and contributing to the growth of the business.
 Masculinity versus femininity- All major companies should treat man and woman
with maximum equality for systematic development (Nam, and Bao Tram, 2021).
The company must also follow ethical practices in maintaining equality at the
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workplace for systematic development. The different types of favour which a
company perform like nepotism and woman rights infringement should be
stopped immediately.
P4 Evaluate the influences of ethical and sustainable globalisation on
organisational functions.
The business entity should consider ethical and sustainable factors which are important
for overall development of organisation in a short span of time. In the current scenario
importance of ethical and sustainable factors is increasing day by day (Knudsen, and
Moon, 2017). The following are sustainable and ethical factors which are taken into
account by SASOL in order to enter international marketplace:
 Follow environment policy- This is the most crucial sustainable factor which
should be taken into consideration by a company. The environmental policy
formulated and designed by government helps a business to follow major
sustainability-based practices. In context to SASOL, they have to follow Section
24 of constitution of South Africa which states that an organisation will not
conduct any of the activity which can badly impact the lives of people living in
their nation. The company should always convey the message in which they
promote the conservation of environment to their user and customers.
 Workplace safety and management- The workplace safety should be provided to
employees in order to seek their faith towards the business (Prud’homme, 2019).
In order to manage safety of employees, it is crucial for a business organisation
to follow employment legislation developed by government. This will help in
making organisation legal and ethical at the marketplace. The management of
SASOL should follow various safety measures in their organisation such as job
security for the employees, proper fire extinguisher set-up, easy to use and safe
working equipment’s. They can conduct various training programs for their
employees which will help them to upgrade their skills according to the modern
world.
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The global business strategies will influence on structural image of a business
operation and necessity to reshape the organisational culture and structure will give
instruction. SASOL can choose ADKAR model to reshape influence analysis of global
market.
In this model, respective company takes action to create awareness in staff to reshape
the measures of global necessity. Workers are asked for the desires about situation for
global expansion of that industry. Knowledge of reshaping and changing methods and
ways of benefits maximization will introduce the strategics’ abilities.
LO 4
P5 Evaluate the different ways decision-making can work effectively in a global
context.
The management of the organisation has to focus on different internal and external
factors while operating their business in international markets. There are different types
of companies are operating their business in effective manner (Dana, 2018). There are
different factors are given below which influence the decision making of organisation:
 Political fluctuations- The government of the respected country has developed
different policies in their country which creates fluctuations in business market
(Kourula, Pisani, and Kolk, 2017). These fluctuation impacts the business of the
organisation in different manner such as positive or negative. The Republic of
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south Africa is a parliamentary representative democratic republic country. The
president is elected by the national assembly that includes lower house of the
south Africa and must retain the confidence of the Assembly in order to remain in
office. The president of south Africa serves both as head of the state as well
head of the government.
 Technological development- Today new and advance technology came in the
market regularly which impacts the business of SASOL limited in positive
manner. It helps the organisation to attract new customers towards their
organisation. It helps the employees of the organisation because it involves the
reduction of human efforts on business because of automation.
 Global business climate- The growth of the market is negatively impacted by the
covid pandemic as most of the economy negative growth (McWilliam, and
Nielsen, 2020). The negative growth of the market is not beneficial for the
management of the SASOL limited as they make many difficulties by the
management to operate their business. In context to SASOL, the ongoing
pandemic has badly affected the overall operations related to their business. The
drastic drop in the price of fuels and chemical imbalances their supply and
demand due to this they have to face a huge loss in their revenue.
P6 Determine and articulate the various routes to internationalism an
organisation may adopt, including key barriers.
In the working of a business, there are various types of expansion routes available
which can be chosen by SASOL:
 Licensing- This can be described as an agreement between two or more
companies, in which a company sells products of other company. In other words,
this practice can be described as a major way of acquiring rights to sell already
developed products in the marketplace.
 Franchising- This is the most crucial method of global expansion which can be
adopted by a company to expand operations in the international marketplace
(Hooper, and Holtbrügge, 2020). The franchising is related to products and
service of franchisor who is developing trademark of business, is distributed and
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franchisee who is paying fee for taking right to carry out business understand
name of franchisor.
In internationalisation, there are various key barriers which are faced by
business. These barriers can take place during any stage in the process of
internationalisation. These barriers include market-based barriers, financial barriers and
industry specific barriers. In financial barriers firm should make sure that they have
sufficient capital within foreign market. In order to overcome from challenges of
competitors, considered organisation need to make more invest in the technology
department for reducing pressure of competitors as it helps the company to increase
their productivity level.
If an organisation wants to enter in international market, then the firm should
have some strategies including global strategy and transnational strategy and many
more. By adopting this strategy, company can keep their cost low and also focus on
economic scale. For this they need to take effective decision in order to implement this
strategy that make enable the firm to grow their business at international level.
Organisation has adopted strategic alliance and investment strategy in which they
improve their product line for developing and edge over rivals. In this, the value
investing requires the company to remain in this for a long time period by implemented
their efforts to the stock selection. The organisation of SASOL, has adopted Resource
based view theory which can help them to find their competitive advantage in their
respective operational area. Resource based view theory identifies the internal
capabilities of the company. This strategy helps them to distinguish themselves with the
other companies present in fuel industry.
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The evaluation of significant impact of digital technology upon globalisation
The corporate world is majorly affected by the impact of globalisation as there
are different advantages and disadvantages. Digital technology is a major element
which focus upon major tools and techniques. There are many different companies
which also install the application of information and technology for performing fast and
accurate operations. The major impact of information and technology to SASOL is
mentioned below:
 Business development- With the help of information and technology, the
expansion and growth of whole organisation is affected in a positive manner. All
major companies like SASOL in the marketplace focus on application of various
IT models like Subscription, Freemium and On-demand model in order to
manage big data. SASOL is using analytics and data in the cloud to create and
deliver the cost effective energy across the globe(Mondliwa and Roberts, 2019).
 Reach customers- The development and application of information and
technology, helps a business to reach large number of customers. A business
can have access to provide services all across the globe in a short period of time
or to reach target customers. With the increase in information and technology-
based practices, a company can perform major operations in an advanced and
quick manner.
 Privacy and data handling- The privacy and data handling are two major tools
which can be used by a company with the help of information and technology.
There is various software which can be used by SASOL to maintain privacy and
data security of the customers. This software is HIPPA and GDPR which are
considered as professional tools in management of data and its interpretation.
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CONCLUSION
From the above stated report, it can be concluded that, it is essential for a
SASOL to take into consideration application of Hofstede and McKinney’s 7s framework
for development of culture. It can be also concluded that most of the successful
business organisations in the international marketplace focus on culture development in
order to maintain effectiveness in operations by which SASOL also increase its
profitability and efficiency. The above analysis concludes it is major role and
responsibility of a SASOL to include sustainability and ethics in its operations for long
term growth. This report also concludes the decision-making and its significance for the
SASOL in long, short and medium run.
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