Global Business Environment: Factors, Challenges, and Influences on Corporate Governance, Culture, Leadership, Functions and Structure

This report analyzes the key factors of cost, market, environment, and competition that drive global commerce and trade. It explains the complexity of strategic challenges faced by organizations when operating in a global environment, supported by specific examples. It examines the influences of internationalization on corporate governance, culture, leadership, functions, and structure, using Hofstede's culture dimensions and McKinsey's 7s framework. It evaluates ethical and sustainable factors that organizations have to consider in a global market. It critically evaluates strategic decision making in relation to risk and diversification in a global context and assesses the range of strategic global expansion routes available to the organization. The subject is Global Business Environment, and the course code is Unit 18. The case study is Sasol Limited, an integrated energy and chemical-based company.

Global business
environment

Table of Content.
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Analyse key factors of cost, market, environment and competition that drive global
commerce and trade. ...................................................................................................................1
TASK 2............................................................................................................................................4
P2. Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples. .................................................................4
TASK 3............................................................................................................................................5
P3. Examine the influences of internationalization on corporate governance, culture,
leadership, functions and structure..............................................................................................5
Hofstede's culture dimensions.....................................................................................................6
McKinsey's 7s framework...........................................................................................................6
P4. An evaluation of ethical and sustainable factors that the organisation has to consider in a
global market. ...........................................................................................................................8
TASK 4............................................................................................................................................8
P5. Critical evaluation of strategic decision making in relation to risk and diversification in a
global context...............................................................................................................................8
P6. An assessment and critical evaluation of the range of strategic global expansion routes
available to the organisation. ....................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Today's business environment is becoming so competitive as well as innovative that is
very essential for them to expand the business operation in global platform. Before commencing
any business in the global platform it is very important for the firm to understand the global
business environment as every environment have different culture, religion, beliefs, values,
customers as well as different legal and political factor (Virakul and Russ-Eft, 2019). The global
business environment is defined as different environment of countries having different factors
which can influence the decision making power as the customers preferences are different. In
this particular report Sasol limited is an integrated energy as well as chemical based company. It
was developed by German chemists and engineer in early 1900s. This report deals with various
key factors that has impact on global commerce and trade along with the PESTLE analysis of the
company. It also deals with the complexity strategic challenges faced by administration in a
global business environment. In addition this, this report also give emphasise on globalisation
culture and structure which the relevant theories and framework along with the functions of
organisation. This report also includes the different ways of decision making as well the various
route of barriers along with recommendation to overcome.
MAIN BODY
TASK 1
P1. Analyse key factors of cost, market, environment and competition that drive global
commerce and trade.
In an effort to achieve goals and success, business organisation expands its business
operation in the global platform. This will lead them to increase their customer base. But there
are some challenges which business can face while operating business function in global
economy. So, some of the factors that can affect the global commerce and trade are discussed
below:
 Cost: In context to Sasol company, with the purpose to expand the business in
international platform it needs huge amount of capital (Alamsyah, Sudirman and Hakim,
2020). They need to make investment on research and survey as it is very necessary for
the respective organisation to know about the political situation, customers, culture of the
economy in which they are going to expand their business. With the purpose to gain
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resources also lot of investment is required as while importing or exporting huge amount
of taxes are involved. To develop the products according to need and wants of the
customers it requires huge amount of cost. Along with this, lots of time and money is
required for registration process.
 Market: It is very essential for the Sasol company to understand the market in which
they are expanding the business. As when the company establish and operates its business
for the first time it has to face greater competition in that particular economy. Therefore,
the organization needs to understand the market of that nation before setting up the
business. The respective company should also need to understand the preferences and
demand of customers so that they can be more productive in order to gain competitive
advantage.
 Environment: There are various factors through which success of the business can be
determined. These factor can be influenced either by internal or external environment.
Organisation needs to make the strategies and plan according to the business environment
So that they can survive for the long term. With the purpose to improve the business
substantiality Sasol company needs to understand the taste of people, culture, political
situation as well as economy of that specific nation.
 Competition: Business environment is becoming so competitive that the organisation
should be very innovative and dynamic (Cabanelas and et. al., 2019). By providing
products according to the needs and wants they can gain competitive advantage within
the market. With reference to Sasol, the company needs to examine the market as well as
competitors available. The company needs to develop such strategies and plans which
can lead them to retain the maximum number of customer.
PESTLE Analysis of Sasol
PESTLE analysis can be defined as the framework required by the organisation with the
purpose to identify and evaluate macro environment so that strategies can be made accordingly
(Friesendorf and Uedelhoven, 2021). With the help of PESTLE analysis Sasol company can
spread out its business as well as increase its competition and ability. PESTLE analysis of the
respective company can lead them to achieve the long term objectives which are discussed
below:
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 Political factor: This factor deals in taxation policy, political stability, tariffs etc. As
Sasol company deals integrated oil as well as gas and export it to various countries. So
they face different types of political environment and system. Therefore, the respective
company needs to make strategies and plan accordingly so that they can achieve the
objectives in a productive manner. The firm can also closely analyse political
environment of the country before entering and investing in that particular nation.
 Economic factor: Interest rate, Foreign exchange rate, Inflation rate etc are included in
this factor (van Steenbergen, Ramos and Sousa, 2021). Sasol is established in a country
whose GDP is high and mostly people are engaged in some activities. The people staying
there have high purchasing power which can be advantageous for the company.
 Social factors: this factor includes of cultural trends, demographics, population change
etc. Business environment is becoming so innovative that customers demands and
preferences are also changing so quickly. So to remain competitive in the market, the
company should provide products according to the customers needs and demand. So,
Sasol company should keep on investigating the market situation with the purpose to
work according to the customers preferences.
 Technological factors: This factors involves change in technology, disruption etc. In
today's business technology plays an essential role with the purpose to achieve objectives.
The Sasol company keeps on changing its technology to work according to the consumer
demands and wants. To become innovative, technological change can help the company
to attract more customers. So, Sasol can invest more on adopting new technologies in
order to gain more profits.
 Legal factors: This involves employment laws, consumer laws, safety laws, labour laws
(Ferreira, Silva and Casais, 2022). The organization should follow and perform activity
according to laws so that they can function smoothly. The Sasol organization has to
follow legal factor so that the company can protects its patent and other valuable assets
which help them to be more successful.
 Environmental factors: This aspects includes the availability of energy, pollution,
change in climate and many more. The respective company should operate its business
keep in mind its consequence on environment. The Sasol company is a chemical industry
so it should use environmental friendly methods. Its very essential that organization
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works with respect to the environment because increasing pollution is making the health
of human beings really bad.
TASK 2
P2. Explain the complexity of strategic challenges faced by organisations when operating in
a global environment supported by specific examples.
Every business organisation expands its business operation in international platform to
earn profit and success. In international platform business becomes more innovative and
dynamic as they get exposure to new economy where the environment, people, culture are
different. But there are various challenges which the Sasol company faces while functioning its
business in the global platform. Some of the strategies challenges faced by the organization are
mentioned below:
 Culture Difference: In an effort to expand the business in the global platform, the
business has to first adopt the culture, language, tradition of that particular country. The
organisation needs to follow the culture in oredr to work in an appropriate manner (Ford,
2021). Therefore, the Sasol company needs to lot of survey to know in an effort to know
about group of people living, what are their taste and demands and many more. This can
help the business concern to work according the interest of the customers which can lead
them towards the success.
 Tax and Export fees: Many countries have adopted different tariff rates. So while
exporting or importing the resources different kinds of fees are paid. So for this, the
company should have strong financial position. If the respective organisation pays higher
tariffs then then it will direct impact resources due to which their products also become
costly. So, Sasol has to make strategy and plan accordingly which can lead them to gain
more profit.
 Managing the global teams: Business organisation faces problem while dealing with the
international staff members. As the team have people who have different culture, belief,
language who can impact the normal functioning of the business. In context to Sasol the
company should maintain a positive working environment and must provide its employee
with proper training and development programmes. The company should also select the
video conferencing method with the purpose to have more interaction.
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 Rate of currency: Every country have different currency whose value also differ. As the
business has to operate according the currency of the particular country where it is going
to expand (Biltagy and Salah, 2020). So, to deal in different currency might be very
difficult for the organisation. So, it is very essential to translate the two rates in order to
decide company's product value.
TASK 3
P3. Examine the influences of internationalization on corporate governance, culture,
leadership, functions and structure.
Business environment is affected by both internal as well as external factor. Through this
factor international operation are also affected. In addition to this, organisation aims and goals
can also be affected. With respect to Sasol, some of the internal factors that influences the
business operation are:
 Corporate governance: Every business organisation should have corporate governance
in order to achieve the success. This is considered as one of the most necessary section
through which organization is directed and controlled (Hooper and Potter, 2019). In
context with the Sasol company should follow and operate according to the dual class
voting structure where the power lies among the co-founder and chief executive.
 Leadership: With reference to Sasol, to operate the business on the global level, the
administration should provide the leader as well as the team members with proper
training and development programs. This can lead them to work according to the clients
and customers of that country. Proper knowledge about the economy, legislative system
can help the organisation as well as managers to work on a international level. This can
help the leaders to guide the employee in a productive and efficient manner.
 Cultural system: to motivate the employee, organisation should have positive working
environment and good cultural system (Tolstoy, 2019). As every business activities are
interrelated to each other. So, every aspect can affect the operation of business on the
domestic as well as international level. By maintaining good cultural environment, they
can create good brand image in the market and employee retention increases.
 Functional behaviour: Every country have different people, economy, belief, tradition.
So,functional behaviours will also vary from domestic one. So, Sasol company adopts
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wide-ranging functional behaviours as being a chemical company it needs to adopt
different formula to make customers satisfy with different products.
Hofstede's culture dimensions
This concept was introduced by Hofstede on the foundation of culture differences in
different societies. It determine different cultures and measure and leads to analyse how to do
business across such cultures. Hofstede culture dimensions theory have following major
dimensions.
 Power distance index (PDI): This aspects is the process of spreading of power between
various individuals in firm such as: CEO, managing director, worker and others. High
PDI means having good attachment among the people of an organization which is less
hectic for worker to work. In contrast to this, low PDI is vis versa. Sasol has low PDI. It
states that the organisation have strict regulation for its workers.
 Individualism v/s collectivism (IDV): It display the duty of a company over its family,
or social group (Bougie and Sekaran, 2019). Individualism can be defined as less
responsibilities over others it state that it gives concentration at itself and its owns.
Whereas Collectivism display more duty for others and the company who follow this has
to give focus at its worker. Sasol has medium IDV. It state that company is self
responsible.
 Masculinity v/s femininity: If a organization wants financial help and act as attention
seeker, have ego issue then it can be masculinity and if it is kind towards people, helping
them, then it state to femininity. Femininity is there in Sasol company. It means the
company take care for its employees.
 Uncertainty avoidance index: It permit firm to evaluate either to face adverse condition
or not. Whereas low uncertainty index will lead the company to be more responsible
towards the adverse conditions. Organization having higher indexes are not able to face
complex conditions. Sasol has low uncertainty avoidance index. It states that company is
more accountable to its employees as well as it can cope up with adverse conditions.
McKinsey's 7s framework
McKinsey's 7s model in 1980s that help in examining and evaluating the factors affecting
internal operations of any organisation. This model also defines the effectiveness of a company
through seven elements. These element are also accountable for the future development and
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success of the firm. These elements are interconnected and depended upon each other. In order to
make strategic planning this model can be used. Following is the McKinsey's framework for
Sasol:
 Structure: The structure refers to hierarchy where every individuals duty, obligation and
authority are known so that their efforts can be coordinated to accomplish the goals. As
being a chemical company, it follows flatter structure that assist them to make decision
faster. Through proper structure the company can use its available resources in an
appropriate manner. This part also assist in increasing coordination among various
departments so that organisational goals are achieved properly.
 Strategy: Every organisation have different strategies that helps them to achieve success
as well as assist them to develop good brand image (Aithal and Aithal 2019). If proper
strategies are made by the organisation then it help them to develop proper competition in
the market. The Sasol company have fixed as well as specific plan and strategy that aid
them to run the business very effectively. The action of the organisation is also gets better
through which adaptability, competitive pressure, ability is increased.
 Systems: This is the procedure that assist organisation to reach the goals on a daily basis.
It is assistive in successful transaction within the company. This will lead in less dispute
and conflicts in the organisation. The Sasol company have correct method through which
it function its daily operation smoothly.
 Shared values: The firm should have proper communicating methods that assist views
and opinion which can be shared within the organization. This allows employees to
perform very productively as well as they get know more about the team members. The
Sasol organization have one common goals that provide assistance in motivating the
worker.
 Style: According to the Sasol company it choose participate leadership style that assist
organisation to add motivation and self-confidence among the worker. This leadership
style allows worker in decision making process that helps them to reach the
organisational goals in an appropriate manner. This permit worker to communicate on a
regular basis due to which there is less chances of developing disputes and conflicts.
 Staff : In Sasol organization there are skilful and enough number of staff who can
perform in global level. The organization should have to regularly give trainings and
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developmental programs so that employee can raise their knowledge and skills. This will
help them to work more actively. Through this worker can get familiarize towards the
administration culture, norms and plan of action.
 Skills: with the purpose to gain success, the worker should be very productive and should
have right knowledge and ability to execute the definite task (Svensson and et. al., 2018).
So, the Sasol company hires its worker based on certain qualification and virtue. This aid
them towards the development and improvement of both organisation and worker.
P4. An evaluation of ethical and sustainable factors that the organisation has to consider in
a global market.
To run the business concern in a effective manner, it is very essential for the organization
to view all the essential, ethical and sustainable aspects that help them to operate business
globally also (Monfared and Akbari, 2019). Working regulation and conditions, outsourcing,
trust, integrity, human rights, child working class etc are some of the necessary ethical and
sustainable factors that organization should take into the consideration while operating its
business. This can lead them to achieve the long term objectives and success. This will assist the
business concern to realize the economy, market, people very well which can make them more
efficient.
TASK 4
P5. Critical evaluation of strategic decision making in relation to risk and diversification in a
global context.
It can be monitored that with the purpose to expand the business in the global platform
business needs to make and implement the strategic planning so that they can get exposure
towards the risk as well as opportunities (Wilson, Uddin and Wright, 2022). It is very necessary
for the company to make strategic plan while they modify the business operation in global
platform. This will assist them to accomplish the goals and objectives when the risk is reduced.
Through strategic plan the company can mitigated the risk that helps them to find new
opportunities which can be explored. The two types of decision making are mentioned below:
 Reactive decision-making: This decision making process involve rapid and immediate
decisions that is based on difficulty that have occurred. In this process the decisions are
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normally made under pressure. This form of decision is helpful when the demand of it
arises.
 Proactive decision making: This kind of decision making is normally done on a
continuos basis that assist individual to form decision in broad context. This is one of the
most essential form of making strategical decision. This permit Sasol company to form
best use of this procedure so that they can have solution to the difficulty which arises in
the normal running of the business concern.
P6. An assessment and critical evaluation of the range of strategic global expansion routes
available to the organisation.
There are various channels for the business which they can choose in order to operate the
business on the global level. With reference to the Sasol company, they have taken several
alternate ways through which they are capable to come in the foreign market. Some the ways are
identifies below:
 Exporting: This method is considered as one of the best method to enter the global
market as the company sells products in different country (Koster, Vos and van der Valk,
2019).. By choosing this method the business faces low challenges and risk as the
products are produced in the domestic country and then they trade good to the global
market for the purpose of selling. Here the Sasol company don't have to spend in
production activities in the selected country which form the business more cost effective.
In vary to this, the cost of exportation can be enhanced in the near future.
 Joint venture: In this method two business concern come in collaboration and set up a
business. This form of business concern helps in serving a new business with the new
administration teams. Through this organization is benefited by the sharing the spending
and can add knowledge of the local market also if the person is from local market.
 Licensing: In this method the organization in the new global market issue license in order
to use the property patents, trademarks, copyrights. Through this organization can have
high benefits and net income but they have to make definite amount of investment.
Barriers to expand business into international marketplaces:
 Ethical barriers: The business operating in global platform might face issues affiliated
to society, tradition, standard, values at any stage of business activity. There are various
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beliefs, social and culture tradition of the people that differs country to country. So, it is
very essential to remain alert while operating the business.
 Language barriers: Here the company cannot underestimate the spoken language being
used in that particular market where the business is functioning. If the business concern
are incapable to deal and speak in that particular language then it will limit the business
ability to function in that specific country. Due to this business management will not be
able to link the people. So this will lead to the unproductive and inefficiency of the
business concern.
 Industry specific barriers: This obstruction is one of the most crucial barriers that
business firm faces while entering in global market. Due to the enhanced competition the
new entrants, competitor, company's demand, supply, goods and services are affected.
So, it is challenging for the company such as Sasol to compete in the global environment.
Recommendation
The business should realize and do proper research as well as survey before entering in
the global platform. The business will face lot of challenges such as barriers related to culture,
language, competitors, new economy that impact the business operation. So, its very crucial for
the business enterprise to study the market, economic system, taste and preference of the
individual to survive for the long term. The Sasol company should render trainings and
developmental programmes that aid employee to work according to that economic system where
the business is going to function.
CONCLUSION
From the above report it can be concluded that globalisation is expanding so rapidly. By
running the business enterprise in the global platform it can have various benefits such as new
market, new customers, adoption of different machinery that helps them to be more advanced
and much more. But while operating the business in the international platform it have to face lots
of challenges and issues. In addition to this there are different internal factors also such as
organisational structure, corporate governance, leadership and many more. So, the managing
director should ensure that they adopt various models and method to accomplish the
organisational goals. Different methods and channels can be adopted by the business concern for
global trade. But they have to face lots of barriers and challenges while dealing in global context.
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