Global Business Environment: Factors, Challenges, and Impacts on Organisation

This article analyses the key factors of market, cost, environment, and competition that drive global trade and commerce. It also discusses the strategic challenges faced by organisations in a global environment and evaluates the impacts of sustainable and ethical globalisation on organisational functions. The article highlights the importance of following ethical practices and decisions to maintain a positive impact on the organisation's culture, growth, and structure.

Global business
environment

Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
P1- Analyse the key factors of market, cost, environment and competition which may drive the
global trade and commerce..........................................................................................................1
M1- Critically evaluate that how the key factors influence the global environment of a
business........................................................................................................................................2
P2- Discuss the strategic challenges faced by the organisation when they operate in a global
environment.................................................................................................................................2
M2- Analyse the challenges and risks faced by the firm when they operate in the global
market..........................................................................................................................................4
D1- Critically evaluate the opportunities and challenges faced by the organisation in the global
business environment...................................................................................................................4
P3- Evaluate that how globalisation affects the governance and leadership, culture, structure
and functions of the organisation.................................................................................................5
P4- Analyse the impacts of sustainable and ethical globalisation on the functions of the
organisation..................................................................................................................................6
M3- Critically evaluate the influences of globalisation when the firm is applying an
appropriate models and theories which relates to the organisational structure and culture.........6
P5- Analyse the different ways of decision making that can work effectively in the global
organisation..................................................................................................................................8
P6- Determine the various routes adopted by an organisation to internalise and also explain the
key barriers...................................................................................................................................8
M4- Critically evaluate the key barriers to do the business internationally in the market..........9
D2- Criticise strategies which can be adopted by the organisation to operate in the
international market.....................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................10

INTRODUCTION
Globalisation refers to the dispersion of goods, technologies, information or services across the
world. Generally, it is the term which states that the products or services are spreading
internationally in the market which may gain a competitive edge across the developed nations
(Bidegain, 2020). Through the globalisation, it benefits the firm to be more cost-effective and
can attract more jobs. As there are many firms surviving internationally in the market, it is not
necessary that all the firms are getting positive effects from this. It can benefit the company to
reduce the operating costs by manufacturing in abroad and can buy more cheaply raw materials
as in comparison to their market.
MAIN BODY
P1- Analyse the key factors of market, cost, environment and competition which may drive the
global trade and commerce.
There are some factors which maintain the global trade of the organisation and these are detailed
below-
 Cost globalisation drivers- The price is the only factor which every consumer focuses
on and takes decisions about their purchasing. It becomes more complex for the firms
when they compete in the global market. To survive in the national market, the company
has to maintain their price as low as compared to their competitors.
 Consumer market drivers- It is the market where the firm expands or contracts. If the
firm is continuously surviving in the market, then it would become a competitive edge in
the market. But if the firm is not surviving in the market, it may lead to failure. The firm
has to connect to the remote areas of the globe to penetrate in the international market
(Cherunilam, 2020). The organisation has to emerged to the needs of their customers and
has to satisfy through distribution channels which may increase their global success.
 Competitive drivers- If the firm has to remain competitive in the market, they has to
intensify their marketing strategies which brings new products faster than ever before.
The firm has to give focus on the risks involved in competing and make more advanced
stage as compared to their competitors. They has to make strategies of creativity or
innovation which provides a special features to their product. If the firm invests in

research and development of their product and offers them into the global market that
may lead to raise their goodwill across different nations.
 Environment drivers- The key factor of environment impacts positively as well as
negatively to the global trade and commerce. If the firm produces eco-friendly products
or services, it may support the development and economic growth of the environment. As
if the firm takes use of inputs such as energy, water, etc., it can improve their access to
new technologies which makes their product more effective as compared to others.
M1- Critically evaluate that how the key factors influence the global environment of a business.
The key factor of market manages the global trade and commerce of business and raises the
opportunities for growth and global expansion for the firm. If the firm makes their price low as
compared to others, it may help them to compete in the market and the environment factor also
provides eco-friendly goods or services to the firm which makes them as distinctive as others. To
survive or penetrate in the market, SASOL Ltd has to connect to the needs of the customers in
the remote areas and has to meet them through their distribution channels which may increase
their success in the international market.
P2- Discuss the strategic challenges faced by the organisation when they operate in a global
environment.
There are some factors which influence the organisation to trade across the national borders
which remove to encourage the interconnectivity of production processes and capital markets
and goods and services among various nations (Darics and Koller, 2018). Through PESTLE
analysis, SASOL Ltd. can identify these barriers and can develop their market on the global
level. The discussion of PESTLE analysis of SASOL Ltd. are-
 Political complexity- The political factor consists of government stability, tax policy,
trade blocks and competitive regulation. Through this factor, SASOL Ltd face political
challenges and tries to remain stable in the long term. They tries to maintain their
competitiveness and expand their business operations regionally as well as
internationally in the market. But it should be make sure that they has to use fair play for
their products and can make their products or services easily accessible through various
distribution channels.
 Economic complexity- It is the big challenge to survive the company in the global
market, as the firm requires the moderate inflation rates which helps the firm to grow

and work positively towards the consumer spending trends. If the firm is taking business
loan from the financial institution and the interest rate charged by them is low, it is
beneficial for the firm to grow or expand. The higher unemployment trends directly
affects the performance of the companies.
 Social and cultural complexity- It includes some social issues which the firm faces like
changes in the lifestyle trends, consumer preferences, religious beliefs, etc. If there is
younger population, it is beneficial for SASOL Ltd to allow them to a larger consumer
population base. As it the moderate to high middle class is essential for them to attract
current customers and advocates (Heise, 2018). There is one of the factors such as
education provides SASOL Ltd to make a unique competitive position or place in the
market. The family size and structure is an important tool to understand the consumption
patterns as it the company is facing largely with the nuclear families. The firm has to
introduce health aspects in their marketing which motivates the consumers to purchase
their products or services.
 Technological changes- The technological factors include its infrastructure, their use of
social media, internet penetration and investment in research and development programs.
At SASOL Ltd, there has to be a high rate of innovation which makes their company
competitive as well as progressive. They has to make their technological infrastructure
creative which attracts more foreign direct investment. The firm has to take use of the
high internet penetration to reach their customers and gathers feedback which helps them
to make their product more productive. The organisation has to invest in research and
development programs which introduce their products special as compared to their
competitors.
 Legal complexities- The firm has to make strict regulations pertaining to the health and
safety of their employees at their workplace and they has to place high importance to the
safety and health of their workers. The company practices employment laws and explain
their workers about that during their recruitment process. And the firm follows anti-
discrimination laws in all of its processes and they regularly undergo with diversity
trainings and workshops which could serve repercussions to them.
 Environmental issues- The firm has to make their product in accordance to the
environmental sustainability and recycling which may attract more customers than

before. They has to make regulations for the waste management and control which
should be followed by everyone in the organisation. The company has to regularly
engage in environmental friendly and introduce a green product line which inspires their
customers to consume. The firm has to move towards the use of renewable energy for
their business processes and operations (Williams, 2019).
M2- Analyse the challenges and risks faced by the firm when they operate in the global market.
The firm is facing political, economic, social and cultural, technological and other challenges
also when they function in the international market. SASOL Ltd face education and health
aspects to motivate their customers. To reach the consumers, they has to deal with the high
internet penetration and has to describe the employment laws to their workers during their
recruitment process. SASOL Ltd has to follow anti-discrimination laws and makes regulations
for the waste management and control in their organisation. Overall, if the firm tries to remove
these barriers, it may helps them to make strategic decisions and makes a reputative image in the
global market.
D1- Critically evaluate the opportunities and challenges faced by the organisation in the global
business environment.
Through these drivers, they can make their product eco-friendly and introduce in the market. The
key factors gives the opportunities to identify the strong competitors in the market and tries to
make more advanced strategies to compete with their competitors. It can helps the firm to bring
new innovation or creativity in their product or services by identifying the demands of the
consumers. But at the global market, the firm faces various types of challenges like political
complexities, legal complexities, environmental issues, etc. To penetrate in the market, they has
to make regulations for the waste management and control, employment laws, anti-
discrimination laws, etc. which should be followed by whole of the organisation (Jemine, 2019).
The company has to invest in research and development programs of their products or services
and has to engage in environment friendly which connects their product to the economic growth.
P3- Evaluate that how globalisation affects the governance and leadership, culture, structure and
functions of the organisation.
Organisational Governance and leadership- The firm has to focus on the competition laws,
anti-corruption laws, safety, health and environmental laws to penetrate in the global market.

They has to implement the risk mitigation controls for each of the areas and has to fulfilled all
the duties and responsibilities given by the government. They has to manage their staff and
explain them about their responsibilities. The workforce of the company also being faced by the
globalisation and their needs changes in the cultural settings to operate in the international
market.
Organisational culture- Globalisation influence the organisational culture and leads to many
social changes in their national culture. The global environment not only impacts the
organisational culture but their impact is felt in the economy (Kamaludin, Xavier and Amin,
2021). There are many differences and opposing value systems which changes the
communication process and certain transformations especially in the countries in the transition to
facilitate the communication between the organisations who are dealing with the same activities.
Overall, the globalisation has certainly reflected the performance of SASOL Ltd.
Organisational structure- Globalisation affects the structure of the business. But to operate in
the market, the managers or leaders has to design an organisational structure which should adapts
the changing global market. SASOL Ltd has to adopt to the right structure which should
encourage more customers and fits according to their customer's preferences and requirements.
When the firm enter into the global market, they changed the nature of managerial work like
requiring more managers to handle the work load, increase their judgmental power for making
frequent decisions, shaping the behaviours and performance of the workers to inspire more
consumers, etc.
Organisational functions- The globalisation influences the functions of the organisation as they
has to produce that type of product or services which retains in the global market and provides a
standard of living to the customers. They has to undergo with various technologies which brings
creativeness in their product or service. They has to afford that type of products which
contributes to the economic growth. They has to balance their trade and has to adapt to the
managerial as well as social changes in the national culture (Volberda and et.al., 2021).
P4- Analyse the impacts of sustainable and ethical globalisation on the functions of the
organisation.
Sustainability is done in the business without impacting negatively to the environment,
community, or the society as a whole. To maintain the impact of sustainable globalisation in the
organisation, the firm needs to do through equitable and enduring diversification of their

commodities. They has to follow six lens framework to bring sustainable globalisation in the
business which includes technology, poverty and inequity, economic or financial, limits to
growth, geopolitical factors and the movement of talent (Karseras, 2022). Through sustainable
globalisation, SASOL Ltd can boost their bottom line and can earn more money. It can bring
more innovative strategies with the reduced business costs and leads to an improved reputation in
the market. If the firm follows sustainable globalisation in their organisation, it may helps them
to access to labour, resources, jobs, etc.
To maintain the effective and efficient working in the organisation, business ethics is required. If
the business adopts ethical practices and decisions, it may raises a positive impact on the
organisation culture, growth and structure. But if the firms adopt unethical practices and
decisions, it may creates a negative impact on the organisation culture, growth and structure.
When the business diversifying globally, it is essential for them to follow ethical conducts in
their organisation. In every country, every business has its own ethical values and these should
be followed when they operate their business in other countries. To target the issues like
pollution, health concerns, trade practices, environment welfare issues, etc., the firm has to
follow business ethics which may also raise social issues like inequality, corruption, bribery,
human rights and conflicts of interests. The board of directors forms the Safety, Social and
Ethical committee(SSEC) to check on ethical behaviour and conduct of their organisation. If the
company has zero tolerance policy for the unethical practices, it is considered as a punishable
offence for them. If the firm is dealing with business ethics, their trade has been increased and
they may promote integrity among their workers. Through developing business ethics in SASOL
Ltd, they can improve their profitability and can gain trust from their key stakeholders.
M3- Critically evaluate the influences of globalisation when the firm is applying an appropriate
models and theories which relates to the organisational structure and culture.
To determine the impacts of globalisation on their structure and culture, the firm applies
Mckinsey's 7 model which helps them to examine that how the various parts of the organisation
work together. The Mckinsey's 7 model is developed by Tom Peters and Robert Waterman, the
former consultants of Mckinsey and company in the year 1970. It is the framework which
identifies seven internal elements of the organisation to achieve success. SASOL Ltd has adapts
to this model to depict that how effectiveness can be achieved in their organisation. The first

three elements included in the hard elements while the last four elements included in the soft
elements. All the seven elements are detailed below-
 Strategy- It is that which every organisation builds for maintaining a competitive edge
among their competitors. The firm has to build that type of strategy which helps them to
expand their business.
 Structure- It shows that how the departments and teams of any business are organized.
The firm has to give focus that their departments and team is organized in such a manner
which should attain a sustainable competitive advantage in the market.
 System- It refers to the daily activities and procedures which is used by the workers to
done their jobs. The firm has to make sure that their workers use best activities and
procedures to done the work (Khan, 2018).
 Skills- It refers to the actual skills and competencies of the employees of the firm. The
business has to develop the skills and competencies of their employees for the better
achievement of their goals.
 Style- It states the attitude of senior employees to establish a code of conduct in the firm.
The style of leadership adopted by the firm to motivate their employees.
 Staff- It consists of all the human resources that are related to the firm decisions such as
reward systems, recruiting, training, etc. SASOL Ltd has to take decisions with the
involvement of all of the human resources in the organisation.
 Shared values- It is the main values or goals that every organisation work for. The
business has to clearly explain the goals or objectives to their employees which helps
them to achieve quickly as can.
To analyse a organisational design for them, SASOL Ltd has to adopt to this model. By adopting
this model, they can trace the performance problems in their business and tries to resolve it.
P5- Analyse the different ways of decision making that can work effectively in the global
organisation.
For every business, decision making is the essential factor for their efficient working. There are
various types of models or theories that can be used to make an effective decision in the
organisation (Liu and Yang, 2019). SASOL Ltd has studied various types of frameworks to make
an effective decision and these are explained below-
SWOT Analysis

 It is the framework that helps to determine the strengths, weakness, opportunities and
threats of the organisation.
 Through this analysis, SASOL Ltd can identify their business is performing well or not. It
can help the firm to give a competitive edge in the market.
 By adopting SWOT analysis, the firm can build their strengths, minimise their weakness,
seize their opportunities and counter their threats to make an effective decision.
PESTLE Analysis
 It is the study of external factors such as political, economic, social, technological, legal
and environmental which affects the organisation.
 It helps to guide the people to make strategic decisions for their firms.
 Through this analysis, SASOL Ltd can analyse the effect of changes in external
environment on their functioning.
Statistical Analysis
 It is also known as decision tree analysis.
 In this analysis, the graphs are used which helps the firm to determine their outcome of a
particular decision.
 Through this analysis, SASOL Ltd can evaluate the recent trend that are required for their
operations (Luyckx, Schneider and Kourula, 2022).
P6- Determine the various routes adopted by an organisation to internalise and also explain the
key barriers.
To internalise SASOL Ltd in the global market, they has to follow various tactics which are
listed below-
 Franchising- To duplicate the business in different locations, the franchising is used
which is an intellectual partnership between different business entities. SASOL Ltd can
take use of the franchising to expand their business in the international market.
 Licensing- It is the right that allows another business to sell products of another
manufacturer in our market. SASOL Ltd does licensing to build an image or to grow in
the market.
 Exporting- It is the process that produces goods in one country and sells them to the
another country. SASOL Ltd produces their goods in their country and sells it to the

different countries to expand or attract more customers as the firm is the largest producer
of oil, gas and energy in the world (Postolache and et.al., 2019).
 Joint venture- Joint venture refers to the clubbing of two or more than two parties who
are working for a same goal. SASOL Ltd has to club with other parties to reach to the
maximum markets and the parties they have clubbed should generate profits.
M4- Critically evaluate the key barriers to do the business internationally in the market.
There are various types of barriers that affects the business to operate in the international market.
The barriers that influence the organisation are language barriers, natural barriers, international
barriers, tariff barriers and many more. To penetrate in the market, SASOL Ltd has to deal with
various barriers and risks associated such as currency valuation, inflationary market prices,
foreign exchange risk, etc. They can overcome these types of risks by raising contacts in the
foreign countries, creating new rules and regulations, etc.
D2- Criticise strategies which can be adopted by the organisation to operate in the international
market.
SASOL Ltd has to adopt certain strategies to function at the global level. They has to focus on
the supply of their premium quality goods or services at the low price as compared to the
competitors in the market. The firm has also to concentrate on the CSR activities to function in
an efficient manner. The business has to plant more trees for their future expansion, formulate
better labour policies and utilise the resources in an efficient manner (Thanetsunthorn and
Wuthisatian, 2019).
CONCLUSION
In this report, we studied the key factors that drives global trade and commerce and also the
challenges or complexities faced by SASOL Ltd to function in the global market. The report also
discuss the impacts of globalisation on the organisational leadership, structure, culture,
governance and function. SASOL Ltd has also adopt various types of models to make an
effective decision and also analysis various routes to internationalise their business with
including the key barriers. At last, SASOL Ltd adopts various strategies to overcome their
barriers.

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