Comprehensive Report on Global Business Environment for Sasol Limited

This report provides a comprehensive analysis of the global business environment, using Sasol Limited as a case study. It begins by analyzing key factors driving global commerce, including market dynamics, costs, environmental considerations, and competitive landscapes. The report then delves into the strategic challenges organizations face in a global context, employing a PEST analysis to examine political, economic, social, and technological factors. Furthermore, it explores the influence of globalization on organizational governance and leadership, utilizing the McKinsey 7S model to assess strategy, structure, systems, shared values, style, staff, and skills. The impact of globalization on business functions, including ethical and sustainable practices, is also evaluated. Finally, the report assesses different decision-making approaches effective in a global context and explores various strategies for internationalizing an organization, along with associated barriers. The report provides insights into the complexities of operating in the global market and offers valuable perspectives for businesses navigating international expansion and operations.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Analyse key factors of market, cost, environment and competition which drive the global
commerce and trade.....................................................................................................................1
TASK 2............................................................................................................................................3
P2 Complexity of strategic challenges faced by the organization when they operate in global
environment.................................................................................................................................3
TASK 3............................................................................................................................................5
P3 Influence of globalization on organizational governance & leadership.................................5
P4 Influence of ethical and sustainable globalization on business functions..............................7
TASK 4............................................................................................................................................8
P5 Evaluate the different ways of decision making which work effectively in the global
context..........................................................................................................................................8
P6 Different way to internationalized their organization along with some barriers....................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Global business environment refer to the various factors which affect the organization in
terms of their operational activity and decision making process. Business face the huge
challenges which influence manager decisions and their productivity as well as profit margin.
Global factors affect in term of legal, political, social, technical etc. So it is important for the
manager to analyse all the factors and then develop business strategy (Bititci, Cocca and Ates,
2016). For the better understanding of this concept, this report choose the Sasol Limited which is
integrated chemical & energy company based on South Africa. This company founded in 1950 in
Sasolburge by Bongani Nqwababa and Stephen Cornell. This report include the various topics
such as key factors which drive the globalization and explain the strategic challenges which
faced by the organization. Along with this, it includes the organizational structure, culture and
functions which influence the global market. In addition, influence of globalization on
organizational decision making process is discussed under this report.
TASK 1
P1 Analyse key factors of market, cost, environment and competition which drive the global
commerce and trade
Globalization: It is the process to connect the world with individuals, organization,
society, economy etc. In the process of globalization, countries connect with each other through
selling products & services across the nation. Here, all the interconnected or inter depended to
transfer goods, services in order to expand their business and increase their reach to the customer
across the boarder. By using globalization for the expansion of their business affect the
organization and this process also has some advantage and disadvantage. For example:
globalization provide the social development where they freely communicate regarding business
activity. It will increase the employment opportunity, free trade, flow of information is very fast
etc. In addition, it has some disadvantage such as degradation of environment, unfair working
condition, some times fails in environmental growth rate etc.
In the Sasol limited, expand their business includes the product such as crude oil, natural
gases, pharmaceuticals and other electronic items. With the help of globalization, manager build
various effective strategy in order to promote their products in the global market. Globalization
help the various corporations who get the huge advantage due to globalisation where they expand
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their reach and develop their demand in the foreign market. It further helps in reducing cost
which increase the demand, productivity as well as profitability. Manager develop the strategy to
target the market where they easily get the cheap labour and material for the production of goods
and where have demand.
Driving factors of the organization:
Cost: It is important for the organization to increase their investments in order to
motivate themselves and global company. Cost will influence the company because expansion of
business in the global market required huge investment (Daley, 2012). Along with this, cost of
marketing and various promotional activities will increase which required to bear. So manager of
Sasol limited has to estimate all the cost before entering into new market. Manager analyse the
factors and then take effective decision in order to achieve their goals & objectives.
Market: Now customers are more smarter then organization because they know that how
to analyse market and choose products on the basis of capacity. For example: they evaluate the
income, lifestyle, education etc. Global market provides vast opportunities to sustainable growth
that influence the organisation to introduce the market at global level. There is a huge impact of
market factors on business at global level as company consider these things at the time preparing
strategy which help the business in order to target the right marker of consumers. In Sasol
limited, R&D department analyse the market then further inform the manager to develop strategy
as per the research findings.
Environment: In order to increase the wealth of consumer, mobility, share information
across the nation these all are the benefits of globalization. With the help of latest technology.
Demand of the product will continuous increase in the business environment. It will further
extend and provide economic development. Existing players of the environment increase trading
regions and adopt new technology. Manager of Sasol limited get influenced by environmental
factors and then proceed further for the effective outcomes. There is a major impact of
environmental factors upon business of respective company as in case if they are unable to
Competition: Globalization lead the competition where business introduce their
activities, upgrade and distribute the new products in the market for the competitive advantage.
Here, organization have to analyse the market and its related risk in order to develop innovative
idea and survive in the global market in order to maximise the profit. Manager of Sasol limited
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get influenced by the competitive global environment and they hire skilled people to give tough
competition.
Impact of digital technology upon globalization:
With help of digital technology, globalization will effectively implemented because
transfer of funds, goods & services requited to use technology. For example: China and India
both are benefited economy because they are using air plane, ship to export their goods to US &
Europe and for import as well. With the help of E-commerce, organizations communicate with
each other and transfer the goods & services. Virtual business do not have any barrier or
restriction but for the physical transfer have barriers which is called trade barriers.
In the Sasol limited, manager uses digital technology helps in maintaining website which
contain lots of information. Along with this, social media marketing or promotion help the
manager to expand their reach and develop the awareness among the customer who live in
abroad as well (Elbanna, Andrews and Pollanen, 2016). Globalization make the trading more
easy because now customers are more friendly with the technology such as smartphones and
laptop. Digital technology work as bridge for the buyer and sellers which reduce the distance.
For this, business has to be develop plan and then execute in effective manner.
TASK 2
P2 Complexity of strategic challenges faced by the organization when they operate in global
environment
PEST analysis of the organization:
With the help of PEST analysis, Sasol limited measure the factors which affect the
business and it further impact the productivity or profitability of the organisation which is
discussed below:
Political: This factor includes the participation of government where they develop
various policies such tax, trade restriction as well as political stability which affect the
performance of organization. In Sasol limited, company expand their business from South Africa
to another countries. So it is important to analyse the government policies, regulations regarding
tax before diversification (Alkhafaji and Nelson, 2013). If policies are in favour than it positively
affect the business which further increase the productivity.
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Economic: Economic growth, market demand, inflation rate, exchange rate etc. all are
the economic factors which impact the operations and decision making process of the
organization. It is important for the Sasol limited to formulate effective business strategy in order
to face these factors when they occur in front of the company. Manager has to analyse the
economic cycle which is important for the global market. Demand and supply of crude oil, petrol
or pharmaceutical items will affect the business in terms of their productivity or profitability.
Social: This factor include the age distribution, lifestyle, career attitude, personal
behaviour, culture, population growth etc. With the help of these factors manager of Sasol
limited determined the current trends of the market which further helps in developing strategy in
order to increase their productivity or profitability. They offer friendly fuel rather than making or
use dirty fossil fuel which include coal, shale gas, oil sands etc. It will positively impact the
business.
Technological: Change in the technology help the organization to develop new product
which is innovative or cost effective. Sasol limited use the automation and enhanced oil recovery
for fuel which drive the innovation. Along with this, business use the innovative technology
which help the manager to perform well in the market in order to increase their demand (Amran,
Lee and Devi, 2014). Use of technology will reduce the cost and helps in increasing productivity
which automatically maximise the profit margin.
Challenges of globalization:
Globalization is beneficial for the organization but at the time of implementing they face
various challenges which become barrier for the business in order to implement effective
strategy for the successful results. Some of the challenges discussed below:
Mobility of jobs: Globalization increase the employment in the other countries but they
hire skilled people in their business. Still unemployment remains in the country due to low
skilled workers which is the biggest challenges. Because globalization increase the employment
but not able to give the guarantee to each person to get employed. Due to this reason, labours are
more exploit in the organization.
Cost of expansion: Either organization is large or small, they have to bear the cost of
expansion and it will motivate the organization to give their efforts in order to maximise their
market share. Business required huge investment in order to implement their strategy but this can
lead to increase the case of non-performing asset.
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Customer relation: It is very difficult for the organization to develop customer relation
when they globally expand their business. It is the biggest challenge for the organization to make
people aware about their products and brand name (Cheng, Green and Ko, 2014). It will generate
the pressure which further can affect the organization in positive as well as negative way. So
manager of the corporation has built strategy in order to develop their brand image in front of the
customer.
In the Sasol limited, manager analyse all the global factor which affect the business in
terms of their productivity or profitability.
Recommendation to overcome the challenges:
 Organization has to build strategy after analysing the market and other factors with the
help of PEST analysis.
 Sasol limited have to analyse the environmental factors in context of providing
employment to each level of worker.
 Regular market research will help in garbing future opportunity which is beneficial for
the organization.
TASK 3
P3 Influence of globalization on organizational governance & leadership
McKinsey’s 7S model: This model helps the organization by improving performance as
per the business situation. It helps in implementing strategy, determined the area for the change
and provide the facility to merge the organization (Coltman and et. al., 2015). Here, some of the
areas which required change and it will have divided into hard & soft area which is discussed
below:
Strategy: It is a plan which develop by the business in order to get the sustainable
competitive advantage and achieve their goals & objectives. Manager of Sasol limited develop
the effective strategy to sustain in the market for the longer duration.
Structure: It include the division of departments or units which is required to do for the
effective implementation. So each division is responsible or accountable for their action.
System: Organization have to follow the system in order to complete their task and it will
help in understanding the work. With the help of this, manager focus on the organizational
change as per the requirement.
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Shared value: This step includes the various rules & regulation which required to follow
by the organization to take further actions according to it (Dubihlela and Sandada, 2014).
Style: It is represented that how top level manager, manage the business activities and
their symbolic value. Basically which type of leadership style follow by the leader in the
business.
Staff: It is focus on how many employees required in the organization to perform their
task and what are the procedure to recruit and provide further training.
Skills: It includes the various skills which required in the employees in order to perform
their task in well manner. Along with this, it includes the capability or competencies which is
required for the change in the organization.
In the Sasol limited should adopt this model, in order to change in the organization by
following steps. With the help of this mode, manager analyses the requirement and then build
strategy according to it.
Hofstede’s Dimensions:
This framework designed to analyse the change in the organization which affect the
business and influence cross culture communication (Eden and Ackermann, 2013). It will further
affect the society's culture and behaviour of the staff members and it include the six dimension
which is discussed below:
Power distance index: It is refer to the inequality which is exist in the people who have
power or not. High score PDI, indicate the centralised power of the individual who have decision
making authority and it will extend the gaps due to distribution of power. On the other hand, low
PDI represent that, supervise and staff member consider the same where authority do not matter.
In the Sasol limited, manager follow the hierarchical structure which provide the high PDI in
order to achieve the business goals & objectives.
Individualism Vs Collectivism (IDV): It represent the relationship between the
individuals who have high or low IDV. Sasol limited have low IDV, it means employees
continuous increase their skills and get motivated with their work in order to enhance their
performance and able to achieve business goals & objectives.
Uncertainty Avoidance (UPI): It includes the ability to anticipate the market and try to
control the chances of uncertainty because it will affect the business in term of productivity
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profitability. Sasol limited have high score of UAI which help the manager to predict the future
price of product which is set by the government (Okeke, Onuorah and Jakpa, 2016).
Masculinity Vs Femininity: It is refer to the distribution of work between male or
female. Male have strong ego problem or they perform assertively in comparison to the female.
On the other hand, females are more relationship oriented who try to maintain their relation for
the longer time. So manager of the Sasol limited recruit both male and female in order to get the
desire results or complete their organizational task.
Long Term Vs Short term orientation: Long term orientation people are more modest
and they always wonder about the truth. Short term orientation people have strong belief and low
willingness to compromise. Sasol limited have short term orientation people to achieve their
goals quickly and then focus on next one.
Indulgence Vs Restraint: High IVR motivate the individual and majorly focus on their
emotions. It can be a mixture of happiness or sadness and it will followed by the Sasol limited
instead of high control which reduce the motivation.
P4 Influence of ethical and sustainable globalization on business functions
Ethical or sustainable globalization also affect the organization because at the time of
expanding their business in the global market, internal employees or top management have to
follow the international rules & regulation (Khan and Khalique, 2014). With the help of this,
corporate maintain the interest of stakeholders through sharing information and become
accountable for each actions. Sustainable development refers to take interest of society by their
actions which not affect any people of the society.
In the Sasol limited, business perform various organizational function in order to achieve
their ethical or sustainable globalization. In order to enhance their performance, manager have to
hire skilled people and this function perform by the human resources department. To expand
their business, marketing function required to perform and develop marketing and promotional
strategy in order to increase the demand as well productivity. By following all the activities in
order to complete their task provide the ethical globalization (Noble and Nwanekezie, 2017). If,
it is not happening in proper way then organization not able to provide sustainability where
business serve their services to the society.
Ethical or sustainable globalization influence the organization along with its functioning
department which further affect the productivity as well as profitability. In context of
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globalization most of the factors are not measurable. For the better sustainability organization
have to analyze external factors such as economic, environmental and social and then manager
have to develop strategy and take effective decision to achieve organizational goals & objectives.
Along with this, for the global growth business have to follow their ethical practices where
organization have to follow government rules, regulation, relevant legislation and organizational
rules and standards.
Social responsibility and ethical practices will help the organization to build their strong
image in front of stakeholders. If any business done social contribution which comes under
ethical practices where organization have to contribute in the community for the sustainable
development. It will increase demand which impact the organizational functions and operations.
Similarly, ethical practices helps in improving quality of product which further increase demand
productivity and profitability as well.
TASK 4
P5 Evaluate the different ways of decision making which work effectively in the global context
Decision making helps the organization to develop strategy which further helps on
achieving business goals & objectives. In order to increase productivity or profitability, manager
have to perform in right direction. Manager of the Sasol limited adopt effective strategy where
they have to analyse the market trends or customer demand. In the Sasol limited, manager
analyse the situation and various factors which affect the organization. Along with this,
globalization affect the manager’s decision where they have to research about foreign market for
the expansion of their bushiness in order to expand their operating functions in the various
countries (Liu and Wang, 2014). Every country has different tax policies, custom duties and
trade restriction which required to analyse before developing strategy for the expansion.
It has been critically evaluated that in the organization there are different ways of
decision making such as command, consult, vote and consensus. These are the ways but it will
totally depend upon the management that which method they will used. Most of the organization
follow the command way where employees involvement does not included. Decision totally
based on the top management. In context of Sasol limited, command method will be used to take
decisions where no suggestion or worker's participation involved.
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With the help of Strategy diamond, organization able to evaluate different ways of
decision making which impact in global context. It include arenas (which core technique used,
targeted market, product category etc.), vehicles (How organization get their through
Acquisition, joint venture, internal development etc.), differentiation ( How to capture market )
and staging ( what is the speed of moving in the market for the development). These factors
influence the way of decision making which helps in expanding business in global context.
P6 Different way to internationalized their organization along with some barriers
When organization wanted to expand their business in order to achieve high market share
or potential growth. So business use the various strategy which helps in expanding their business
but they have to face the barriers which affect the business:
Exporting: It is also one of the strategy to expand their business, with the help of export
organization sell their products across the nation which develop the demand of their products in
the foreign country. Sasol limited export their commodities in the international market which
helps in expanding their operational functions and further helps in taking effective decision
(Kirchoff, Tate and Mollenkopf, 2016).
Advantage
 With the help of export system, organization increase their sales and demand provide the
benefit of economies of scale. It will mitigate the chances of risk through exporting in various countries rather the
operate in a single country.
Disadvantage
 It will work as a barrier for the organization because it is difficult to follow the different
regulations of the different countries.
 High tariff or trade barriers affect the profit margin.
Licensing: It is the agreement which is taken by the business from the another
organization to expand their operational functions. Sasol limited use the licensing technique to
solve the problem of funding because staring new business will required huge capital investment.
Advantage
 It is the biggest opportunity to maximise their profit margin (Owolabi and Makinde,
2012).
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