Global Business Environment Report

This report examines the global business environment of SASOL Limited, a leading chemical and energy organization based in South Africa. It analyzes the concept of globalization, its driving factors, and the impact of digital technology. The report also includes a PESTEL analysis, examines the challenges of globalization, and provides recommendations for overcoming them. Additionally, it applies McKinsey's 7S model and Hofstede's cultural dimensions to understand the organization's internal workings and cultural influences.

Global Business
Environment

INTRODUCTION...........................................................................................................................1
PROJECT 1.....................................................................................................................................1
1. An introduction to the concept of globalisation......................................................................1
2. An explanation on the driving factors of globalisation...........................................................1
3. The significant impact of digital technology upon globalisation............................................2
4. Complete and present a PESTEL analysis of the organisation................................................3
5. Explain the challenges of globalisation and the strategic challenges this represents for the
organisation..................................................................................................................................4
6. Provide recommendations on how to overcome these challenges...........................................5
PROJECT 2.....................................................................................................................................6
1. McKinsey’s 7S model..............................................................................................................6
2. Hofstede’s Dimensions of Culture to demonstrate how the organization has been influenced
.....................................................................................................................................................9
3. Ethical and sustainable factors that the organization has to consider in a global market......10
4. Factors have affected decision making in a global context..................................................10
CONCLUSION..............................................................................................................................12
REFRENCES.................................................................................................................................12

INTRODUCTION
Global business environment can be defined as the environment in various sovereign
nations, with factors endogenous to the home environment of the company as well as influencing
decision making on resource usage and ability. It is divided into two parts i.e., external and
internal environmental factors. This report is based on SASOL Limited which is an fast growing
chemical and energy organisation based in South Africa. Respective company expended their
business into Canada, Gabon & Australia, Mozambique and soon into to other nations also.
Below mention report is going to explain concept of globalisation and key factors which drive it
as well as strategic complexities related to operation in a global environment. Apart from this,
operation in global market influences an organisation culture, structure and functions will be
identified by McKinsey's 7 Model. It also highlight influence of globalisation on decision
making and strategy process.
PROJECT 1
1. An introduction to the concept of globalisation.
The term globalisation came into popular usage in 1980's which describe increase in
people knowledge and ideas, goods and money across national borders which leads to increase in
world population, economics, politics, social and culture. It refers to process through which
interaction is done among people, companies and governments worldwide. Advancement in
transportation and communication technology resulted growth in globalisation. It is an economic
process of interaction and integration which associated and combine with social and cultural
aspects. In history of globalization and modern globalization there is a large part of conflict and
diplomacy. Globalisation involves good and services, economic resource of capital, technology
and data. Removal of cross border trade barriers made globalisation of market more flexible.
2. An explanation on the driving factors of globalisation.
There are numerous of driving factors which affect globalization , some of them through
which SASOL Limited get affected are describe below:-
Technological Factors:- Technology shaped and set foundation for SASOL Ltd. To
expand globally. Technological advancement of respective company able to enhance their
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technology through it they create e-business and e-commerce which help them in expand on
global basis.
Political Drivers:- Liberalization in trading rules and regulation leads to lowered traffic
and allow SASOL Ltd. To invest in foreign direct investment globally. The institution of GATT
(General Agreement on Tariffs and Trade) 1947 and the WTO (World Trade Organization) 1995
are example of latest development and opening in eastern Europe.
Cost Drivers:- It help SASLO Ltd. To build its self at global scale economies and
increase product development cost. Source of efficiency and cost are vary from country to
country and global firms like respective company can take advantage of this situation.
Market Derive:- The domestic market get more and more saturated due to growth get
limited, so it is opportunities for SASLO Ltd. To expand their business on global market to
overcome that situation.
Competitive Drivers:- Due to increase in competition at domestic and national market,
SASLO Ltd. Forced to expand its business on international market so that they increase
productivity and profit. Competitive drivers are supported by these three ways- strong
interdependence among countries, high two way trades and FDI actions.
3. The significant impact of digital technology upon globalisation.
Advancement in digital technology result in smooth functioning of an organization and help
them to grow globally and earn more profit. Digital technology have various impact on
globalisation which is mentioned below:-
Data Storage:- It utilizes information technology, through it an organization save their
information and data on software through which they improve time and resource management. It
help SASOL Ltd., in sharing data on global basis because when respective company share and
save data or information on cloud portal, it can be seen by those who have excess for that portal
so by this company can share data to every branch.
Communication:- Digital technology impact on communication of company because by
it owner can contact to every one globally. Like if employer of SASOL Ltd. Want to
communicate to everyone of every branch of respective company, they can do video chant on
conference.
Effective Merchandising:- Merchandising means buying and selling process of an
organization and it can become effective by using digital technology in an organization because
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by it they can start their online portals for online selling. Such as SASOL Ltd. Start their online
portals to sell their products and by it they can cover more population on the global basis.
Provide Customer Satisfaction:- Through help of digital technology customer
satisfaction can improve because by it company can start their online customers services which
help them by doing chat. Company like SASOL Ltd. Can use this technology to improve their
customers services by developing online customer services where customers write their complain
at online portal and customer service executive solve it through doing chat.
4. Complete and present a PESTEL analysis of the organisation.
PESTLE analysis is statical too which analysis micro environment of an organization. PESTEL
stands for P- Political, E- Economical, S- Social, T- Technological, E- Economical and L- Legal.
Below PESTLE analysis of SASOL Ltd. Is give, which provide details about operating
challenges of respective company will face in micro environment:-
Political factors :- It is a factor which determine extent to which government can
influence the economy or any industry. Political factors includes tax policies, fiscal policy, trade
traffics etc. SASOL Ltd. Must closely analysis factors before investing in any market that is
given below:-
 Risk of military.
 Political stability of oil and gas sector in particular country.
 Legal law for contract enforcement
 Identify trade regulation and traffic related to materials.
 Identify taxation rate.
Economical factors:- Those factors that determine economy's performance which
directly impact on company and have long term effects. Economical factors that SASOL Ltd.
Must consider while conducting PESTEL analysis are given below:-
 Exchange rate and host country stability.
 Level of skill workforce in oil and gas industry.
 Cost of labour and productivity in that economy.
 Identify unemployment rate, inflation rate, interest rate and discretionary income.
 Growth rate of economy.
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Social factors:- This factor determine about social environment of the market which
include cultural trends, demographics, population analysis etc. Social factor of SASOL Ltd. Must
analysis factors are given below:-
 Population's demographics and skill level.
 Class structure and hierarchy structure in society.
 Culture of that country( gender role, social conventions etc.)
 Education level and education standard of employees.
Technological factors:- This refers to automation, research and development in the
market and awareness of technology in society. Technological factors of SASOL Ltd. Involves
understanding of following impacts:-
 Recent technology development of respective company
 Impact of technology on offer product.
 Diffusion rate of technology.
Legal factor:- It has both internal and external side, it contain certain law which affect
business environment. Some of legal; factors through which SASOL Ltd. Should consider while
entering into the new market are mentioned below:-
 Discrimination law.
 Copy right, patents and intellectual property law
 employment law
Environmental factor:- It include all those factors which include and influence by
surrounding environment. It include climate, weather, geographical location, global changes etc.
Environmental factors that SASOL Ltd. Consider before entering into new market are below:-
 Weather
 Climate Change
 Waste management in material sector
 Air and water pollution regulation in oil and gas industry.
5. Explain the challenges of globalisation and the strategic challenges this represents for the
organisation
Globalisation creates opportunities for many countries to experience economic growth,
increased amount of goods and services produce by an economy over time. It have arguments
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with supporting benefit of more globally connected economy. SASOL limited have faced various
globalisation challenges that are mention below:
 Ethical business practices: Ethical business practices is most sustainable challenges faced
by many organisation such as labour, product safety, environmental stewardship,
corruption and regulatory compliance have historically played dramatic role in success or
failure of global players. SASOL limited has also faced ethical issues in expanding their
business. With strong rules and regulation, laws, bribing public officials were relatively
common issues from seeking their favourable business terms.
 Public relations: Public image and branding are critical components of most successful
businesses. It become difficult for SASOL limited to build strong public relation in
countries where they are expanding their businesses. They face enormous challenges,
both in effectively localising with high capital expenditure.
 Legal and regulatory structure: Every nation has unique laws and regulation in governing
business. It is necessary for an firm to country laws and comply with applicable
regulations. SASOL limited were successful in monitoring the rules, laws of their
expanding countries before entering a new market. Moreover, they chases strategic
decision to expand their business as well planned effectively to ensure profitability.
Strategic challenges: Strategic challenges refers to those pressures that are exert a decisive
influence on organisation's likelihood of future success. Some of the strategic challenges faced
by SASOL limited are as follows:
 Language and culture barriers: Language and culture barriers, are most common strategic
challenges faced by an organisation in expanding their business globally. SASOL limited
have faced languages and culture barriers in expanding their business in different
countries. Herein, languages and culture of doing business differ from county to country.
 Local competition: SASOL limited also faced local completion in expanding their
business in different counties. They have to very keen in monitoring need and wants of
customer so as to remain competitive in market.
6. Provide recommendations on how to overcome these challenges
There are several challenges faced by the organization because of globalization and strategy
in this situation manager of SASOL Limited must have to proper strong awareness about the
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local as well as international process of chemical and energy products. Thus, organization can
turn these challenges as future opportunity for them. Whereas, while doing business at global
level enterprise should have to do proper market research for identifying culture, religion, taste
and preferences of particular country. As well as strategy of the company should be align with
other factor so required goals and objectives can be achieved.
PROJECT 2
1. McKinsey’s 7S model
For being successful organization in business environment it is important for them to
have good understanding of the internal workings. The 7S of McKinsey's framework provides
understanding of all these factors and hard as well as soft elements. Out of which are Strategy,
Structure and Systems, whereas remaining are the soft elements i.e., Style, Shared Values, Skills
and Staff. Explanation of these are as follows :-
Illustration 1: McKinsey 7s Model, 2018
(Source: McKinsey 7s Model, 2018)
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 Strategy – It is important factor developed by the SASOL Limited for remaining in
competitive industry and market area. Although, it is the responsibility of respective
organization manager to align strategy with other elements in proper manner so desired
result can be achieved. For instance, short term strategy is not good for business but if its
is aligned with other elements then it have chances to give better result. Structure - It represents the divisions of business as well as how other units are organized
and involving the information related to accountability of employees. In simple term it
can be said that structure is the organizational chart of firm. SASOL Limited is using
hierarchy organizational structure in which decision are taken by top level department
and other staff members follow that. Systems – This term can be define as the process or procedure of an organization, that
reveal daily basis activity of business as well as decision making process also. Mainly
system is area of SASOL Limited which identify how business is done and manager is
the one who focus on overall system at the time of implementing changes. Shared Values – it is the core of McKinsey's 7S model because there are some norms as
well as standards of every organization same as SASOL Limited also. All these must be
share with employees of same company so they can do work by keeping in mind all these
factors. Skills - These are the abilities or capability of every employees who perform work very
well. It is important for manager of SASOL Limited to ensure that after analyzing skill
and knowledge of every employees work should be assign to them. Style – It is the term which shows the way of managing this which is done by top level
department of SASOL Limited. Style involves way of interaction within each other in the
company, taken taken by managers as well as other symbolic values. In simple word, it is
the management style of SASOL Limited leader. Staff – they are the important part of an organization required for meeting day to day
activity of the business. It is duty of Human Resource manager of SASOL Limited to
determine what kind of staff members are required and in how much quantity. Along
with deciding their recruitment, training, motivating as well as rewarding process.
Checklist of McKinsey's 7S Model :-
Strategy
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In what kind of market area does the organisation compete and how these markets get modify?
Kind of Customers
Local Market
Regional Market
Global Market
Structure
What is the hierarchy?
SASOL Limited is following Hierarchy organizational structure in which decision are
taking by top level department and authority also given to lower as well as middle level
employees by them.
Skills
Special Management Challenges
Multi-Product Line Management
Acquisition Management
Resource Deployment
Divestment
“Privatization”
Shared Values
Does management give much importance to the firm’s culture and shared values?
Systems
What are the most important management processes that top management uses to run this firm?
Annual Strategy and/or Performance Review
Monthly or Quarterly Operating Reviews
Capital Investment Approvals
“Kitchen-Cabinet Sessions”
“Management by Walking Around”
Style
How does top management seek to motivate employees?
Orders
Compensations and perquisites
Personal relations
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Hoopla
Participation and team spirit
Internal competition
Staff
What are the demographics of the management group and how are they changing?
Functional and business unit experience within the company
Educational background/professional discipline
Experience outside the company
Religion, political party, age, sex, regional factions
2. Hofstede’s Dimensions of Culture to demonstrate how the organization has been influenced
Hofstede’s cultural dimensions theory is the framework related to cross-cultural
communication which is introduced by Greet Hosfstede. This model explain effects of society
cultural on the values of its member as well as their relation with behaviors, utilizing the
structure derived by factor analysis. It in clued six dimensions explanation of these are as
follows:-
 Power distance index (high versus low) –
 Individualism Versus Collectivism – In this dimension personal needs as well as goals of
SASOL Limited are prioritized versus the requirement and goals of respective company.
 Masculinity versus Femininity – Masculinity is the society which have various rules for
women’s and men’s. whereas, feminist is the culture describing that social gender roles
overlap.
 Uncertainty Avoidance Index (high Versus low) – It is the extent to which member of
respective culture feel threatened with some uncertain or unidentified situations.
 Long versus Short-term Orientation – long term orientation is better because it include
planning for future, perspective and perseverance values versus short term involve
present orientation or any short duration.
 Indulgence Versus Restraint - Allowing satisfaction of basic needs related to enjoying life
as well as having fun versus regulating it through strict social values.
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3. Ethical and sustainable factors that the organization has to consider in a global market
SASOL Limited has to consider several ethical and sustainable factors while they are
doing business at global level. Some of them are as follows :-
 Legal and regulatory – when SASOL Limited is doing business in several nations it is
necessary for them to follow all the rules and regulation of that particular nation. Such as
labor and employment law, trademark requirement, tax laws on production and so on.
 Culture – It is necessary to consider culture of every nation while manufacturing
products. If offerings of SASOL limited will not add value or fulfill requirement of local
market then it will result in failure for business.
 Foreign government consideration – SASOL Limited is going to expend business in other
nations also so for them it is much important review stability of respective nation
government.
4. Factors have affected decision making in a global context
Decision making is the conscious and human procedure which involve both individual as
well as social phenomenon which is based upon facts and values. There are several issues which
may affect decision making of SASOL Limited At global level these are as follows :-
 Organizational issues – There are some internal issues also which may affect decision
making of same company such as at some level conflicts rise within employees and they
start thinking that propriety is given to some and other not.
 Change in customers demand – Modification in the demand of customers affect decision
making process of SASOL Limited because they have to consider changes demand and
then manufacture goods as well as services.
 Social and cultural influence – Every nation have their own culture and some social
values. So respective organization have to take decision after keeping in mind these two
factors. Thus, they can provide better services to their customers and make them satisfy.
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CONCLUSION
From the above assignment it has been concluded that global business is increasing now a
day’s which create wide competitions for other organisations also. SASOL Limited is the
company which is doing business at global level in several nations and trying for expanding in
many other also. There are mainly internal and external factors of global business environment
which affect working of other enterprises.
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Wetherly, P., 2014. The business environment: themes and issues in a globalizing world. Oxford
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Online
McKinsey 7s Model, 2018.[Online].Available Through
<https://www.strategicmanagementinsight.com/tools/mckinsey-7s-model-framework.html>
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