Global Business Environment: Evaluating Influences of Globalisation on Organisational Governance, Leadership, Structure, Culture and Functions

This report evaluates the influences of globalisation on organisational governance, leadership, structure, culture and functions in the context of Sasol, a globalised firm dealing in oil gas, chemicals and energy. It also discusses the different ways decision making can work effectively in a global context and the various routes to internationalisation an organisation may adopt, including key barriers.

Global Business
Environment
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Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions..............................................................................................3
Impact of Globalisation on organisational governance...................................................................3
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions.
................................................................................................................................................6
M3 Critically evaluate influences of globalisation in application to appropriate theories and
models relating to organisational structure and culture..........................................................7
P5 Evaluate the different ways decision making can work effectively in a global context.. .7
P6 Determine and articulate the various routes to internationalisation an organisation may
adopt, including key barriers..................................................................................................8
M4 Critically evaluate the key barriers in doing business internationally and make
recommendations on how they can be overcome...................................................................9
D2 Critique strategies that can be adopted by organisations operating in a global business
environment, making valid and justified recommendations of how they should adapt their
organisational structure and decision-making processes......................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
Globalisation is the term used for showing interdependency of world economies, cultures
and population. Globalisation refers to buying and selling of product across the domestic border.
Sasol is a globalised firm dealing in oil gas, chemicals and energy. It has its market range of
products in more than 22 countries across the globe. Sasol have its headquarters situated in
Sandton, South Africa and was established in September 1950. In this report, different business
models, effect of globalisation, effects of external factors on business and importance of
decision-making explained in global context.
MAIN BODY
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions.
Impact of Globalisation on organisational governance
Globalisation has enhanced the relationship between different cultures and society. As a result
of this, culture has impacted leaders across the globe that how leaders insist and govern their
organisation. Globalisation almost impacted every prospective of business (SIMIONIDES,
2022). Communications and technologies are developed which make it more efficient, thus
organisational structure, leadership, structure and cultural functions are all affected by
globalisation. In context of Sasol ltd. effect of globalisation can be understood by McKinsey’s
7's model.
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 Strategy- Organisation tries to maintain a balance between short run cost saving and
protecting it competitive advantage by delivery quality based products. Companies
customers pay for products and services which have 'Value for money'. In competition,
to cover the market share, company should try to cut the costs but ensure that it will not
result into inferior quality of product and service.
 Structure- Company should have small teams of experts, easy reporting to headquarters
and should grant permission to team take decisions on real time situations. It will help
company in becoming flexible organisation.
 Systems- Sasol ltd should adopt a system of work from home for its employees so
employees can interact online as well as physical environment and company should also
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focus on improving internal processes, Customer relationship management these factors
not only improve productivity of employee but also increase cyber security.
 Staff- Firm focus on building system for remote on boarding such as – Small group
interactions, technical presentation because COVID-19 pandemic effect all the countries
across the globe so, online working is safe.
 Skills- Sasol ltd. create a structure for providing training and development programmes
for employees who are working from remote sites. It will help in developing skills of
existing employees as well as new hires.
 Style- In management, there are different styles of leadership which requires in physical
locations and in remote area is totally different. To improve the productivity and
workflow of employees, Sasol ltd should work on common leadership style which
proves helpful for both locations.
 Shared values- Sasol ltd. has built a victorious model as per its values, vision and
mission. Sasol have not much requirement of changing its shared value component.
Organisation should focus on developing its sustainability because
Hofstede's model of culture was proposed by professor Greet Hofstede (Minkov and Kaasa,
2020). He introduced six segments of this model. This model was created by in depth research on
a large database of IBM's employee between the years of 1967 to 1973. This model is
extensively applied on management. Application of Hofstede’s model in context to Sasol
explained below: -
 Power distance- Power distance means inappropriate distribution of power. It can be said
that Sasol ltd. have an unfastened hierarchal structure. Subordinates also have power of
freedom through which they express their ideas and thoughts. Sasol ltd structure is more
democratic than autocratic because employees are encouraged to innovate new thoughts
and ideas (Battistella, Cicero and Preghenella, 2020).
 Individualism versus Collectivism- Individualism refers to a society where people more
inclined towards family rather than society. Whereas collectivism refers to society where
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people more inclined towards social groups of society. Employees of sasol have
collectivism traits and they work as a team to achieve organisational goals and objectives.
 Masculinity versus Femininity- This segment defines values of male and female in a
society. Similarly, Sasol limited includes masculinity values in its organisational culture
where employees are highly competitive.
 Uncertainty Avoidance- This segment refers to when people trying to avoid situations
that are unclear and difficult. Sasol ltd culture shows openness as regard new ideas and
point of views. In Sasol ltd employees do not get stressed when they face unpredicted
situation, they take it as an opportunity to do better. So, uncertainty avoidance for
company’s employees is High.
 Long Term Orientation vs. Short term Orientation- Long term orientation explained as
when employees are futuristic and more focused towards future rewards whereas Short
term approach refers to when people are related to their past and present rewards. Sasol is
following short term approach because Sasol is operating in many countries where
external factors can impact more rapidly and produce difficulties in achieving
organisational long term goal.
 Indulgence vs. Restraint- Indulgence refers to a society where one permits its members
have the benefit of natural human needs and wants whereas restraint refers to a society
where people have strict rules for not allowing quick satisfaction. (Schlegelmilch, 2022).
Sasol ltd follow indulgent culture at its working environment as employees enjoy benefits
of decent working hours and it does not affect their working standard.
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions.
Globalisation have impacted ethnicity and sustainability of organisation across the globe.
Human Resource Department have various difficulties in hiring candidates due to globalisation.
Globalised firms should use multinational standards in hiring employees. Finance department is
the main segment of every organisation. Good ethics and sustainable globalisation has directly
impacted on the finance department of an organisation. It is necessary for an organisations
survival for long term. Therefore, it should ensure that fair trading done with others, mutual
agreement on contracts between two parties, all taxes are paid and no chaos in internal and
external audit and there should not be any deliberately misleading of financial data or reports
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presented by management team. Ethical chaos arises from various kind of customer needs and
want, Proper ethical practice can be done by marketing and sales department through providing
good quality product. Sasol should ensure that customers do not get spoiled or dispensable
product. It is company’s responsibility to ensure that quality product must be delivered to
customer which is worth the money paid by the same.
M3 Critically evaluate influences of globalisation in application to appropriate theories and
models relating to organisational structure and culture.
Sasol is always focused on providing good organisational structure and culture because it
is the success factor for any organisation. Sasol may apply Mckinsey’s 7's model for providing
good organisational structure whereas Hofstede’s culture model implications can be seen in
company’s cultural environment. Organisation decent working environment help organisation in
achieving the ESG leader Award in 2021 and company expected to be recognised for Zero eject
of greenhouse gas release by 2050 and through its happy employee’s culture, it will definitely
achieve it.
P5 Evaluate the different ways decision making can work effectively in a global context.
Decision-making is a process of analysing a decision, collecting information, and
evaluating possible resolution.
Importance of Decision-making
Management is all about decision-making. Managers of an organisation are wholly
responsible for taking decisions. Decision are made according to the objectives and goals of
organisations. In global business environment, situations change very rapidly due to political ups
and downs, world crisis, weather changes and many more. Keeping all these factors in mind it is
important to choose a decision-making strategy (Kulcsár, Dobrean and Gati, 2020). Here are
some advantages of decision-making-
 Fulfilment of Objectives- Decision-making helps in achieving objectives of organisation
within the given time and budget. Sasol ltd have to plan their decision-making strategy in
such a way that help it in achieving objectives. By following best decision-making
strategy Sasol organisational goal and objectives can be achieved as per the given time.
 Employees Motivation- Motivated employees works with their full potential. Decision-
making is important in motivating employees (Koh, 2020). Sasol employees are
motivated because they get time to time incentives and benefits.
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 Full utilisation of resources- Sasol has multiple resources such as man, money, machine
etc. All these resources can be fully utilised without any wastage with the help of right
decisions taken on time.
 Choosing best alternative- Decision-making helps in selecting best alternative which is
important for every organisation because it help firms in analysing various alternatives
and selecting one from them.
 Evaluation of the Managerial Performance- Decision-making is not only help in
selecting best alternative but it also measuring mangers performance. Sasol product
quality majorly depends on how its managers took decision. So it is necessary for
enterprise to build a strategic decision-making process for not only analysing employees
performance but also managers performance.
P6 Determine and articulate the various routes to internationalisation an organisation may adopt,
including key barriers.
Sasol have multiple methods to enter into international market. The methods through
which organisation can make its presence in international market and the key barriers which the
firm may face while being globalised are as follows: -
 Exporting- Exporting refers to selling of goods those made in domestic boundary and
sold outside domestic boundary. Selling of products in foreign market is the easiest and
least risky method of entering into international market (Öztürk and Yildizbaşi, 2020).
Sasol initially have to start exporting its products in foreign countries which will help
Sasol in building relation with foreign countries and open ways for enterprise to enter
into international market but high taxes and rules and regulations of foreign country may
work as barrier in exporting.
 Licensing- Licensing refers to permitting another organisation in your target nation to use
own property. Property normally refers to intangible product such as techniques of
production or patents. Sasol may follow this path for entering into International market.
Licensing requires very small investment and provide high return. If a company giving
license to other company and any misconduct done by second party than it will effect
brand image of parent company.
 Franchising- Franchising and licensing have only minor differences. In franchising rights
of cognitive property are sold. In franchising, rules for carrying out business activities are
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strict. Sasol have to start giving its franchisees in other countries which helps
organisation in entering to international market. Less control over the brand is a major
barrier in giving franchisee to foreign country.
 Joint Venture- Joint venture refers to an enterprise, undertaken by two or more parties
with same motive. Sasol is an oil & gas, chemical energy company. Sasol should try to
looking for foreign companies which dealing in the same and interested in tie-up with
Sasol. It will help in understanding foreign market and this is an easy way to enter into
international market (Hamilton and Webster, 2018). Less familiarity with foreign markets
rules and regulation, customer preferences work as a barrier in joint venture.
 Foreign direct investment- FDI refers to when an organisation directly invests in foreign
countries market. For doing FDI huge capital investment requires to cover the costs like
as premises, staff etc. Sasol can enter in international market by doing foreign direct
investment. In FDI major barrier is that it requires high investment and high risk taking
ability.
M4 Critically evaluate the key barriers in doing business internationally and make
recommendations on how they can be overcome.
Sasol have faced many key barriers in doing business internationally such as exporting, in
exporting company facing difficulties in paying high taxes so, company should try to doing
business with countries where borders are liberal or taxes are very low. Joint venture might cause
changes in policies and objectives of company. Sasol should look out for those foreign
companies which have same product line and have same objectives and goals. This will reduce
chaos and conflicts between companies and they can focus on achieving their goals and
objectives rather than solving chaos and conflicts.
D2 Critique strategies that can be adopted by organisations operating in a global business
environment, making valid and justified recommendations of how they should adapt their
organisational structure and decision-making processes.
Sasol should develop its international strategy by considering global operations such as
scope of operations, resource collection, competitive advantage etc. Sasol should follow an
integrated organisational structure which focuses more on each other, rather than, one
component. Organisational structure consists of division of product on the basis of geographical
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areas. Situations in global market changes very rapidly because of world crisis, inflation,
political instability, currency appreciation and depreciation so, keeping these possibilities in
mind, Sasol should make a strong decision-making strategy which provide high return to the
concerned business entity.
CONCLUSION
It can be concluded that global business environment plays a crucial role in effecting
organisations culture, decision-making process and objectives of a firm. Global environment
reflects very quickly due to external factors such as changes in exchange rate, environmental
changes etc. these given factors effect organisation globally. So globalised firms should follow
business strategies as per the market situation and should ensure that employees working in a
healthy working environment. It will boost employee’s morale and also provides support in
tackling global uncertainty.
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REFERENCES
Books and Journals
Morrison, J., 2020. The Global business environment: towards sustainability? Bloomsbury
Publishing.
Zajda, J. and Vissing, Y., 2021. Discourses of globalisation, ideology, and human rights.
SIMIONIDES, E., 2022. Strategy within business environment redefining the strategy position in
the mckinsey 7s model. Proche-Orient Études en management, 33(2), pp.25-38.
Minkov, M. and Kaasa, A., 2020. A test of Hofstede's model of culture following his own
approach. Cross Cultural & Strategic Management.
Battistella, C., Cicero, L. and Preghenella, N., 2020. Sustainable organisational learning in
sustainable companies. The Learning Organization.
Schlegelmilch, B.B., 2022. The Global Marketing Environment. In Global Marketing
Strategy (pp. 19-49). Springer, Cham.
Kulcsár, V., Dobrean, A. and Gati, I., 2020. Challenges and difficulties in career decision
making: Their causes, and their effects on the process and the decision. Journal of
Vocational Behavior, 116, p.103346.
Koh, J., 2020. The importance of context in predicting the motivational benefits of choice, task
value, and decision-making strategies. International Journal of Educational
Research, 102, p.101579.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Öztürk, C. and Yildizbaşi, A., 2020. Barriers to implementation of block chain into supply chain
management using an integrated multi-criteria decision-making method: a numerical
example. Soft Computing, 24(19), pp.14771-14789.
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