Global Business Environment - Sasol Assignment

Global Business
Environment

INTRODUCTION
Globalisation means expanding the business activities at global level. The business develops
global relationship to do their business activities globally. The major reason of globalisation are
technological changes and requirement of products. In order to increase the revenue and
productivity globalisation helps the organisation to get into global market. The study will give
brief regarding SASOL company which is a chemical firm founded in the year 1950 , situated in
South Africa. The income the firm has generated is 3.11 billion dollar. SASOL company is a
rapidly growing firm which have expanded internationally. Further the study will explain
regarding the elements that directs globalisation and the advantages, difficulties also in what way
it effect globalisation. Further the study will also state in which way the globalisation effects the
organisation structure and function and contains how the decision-making effects in global
context.
LO1
P1 Factors driving globalisation
Introduction to concept of Globalization
The term globalization refers to expanding the business internationally by incorporating
and interchanging one countries government, business and technologies with another. Sasol
limited company is among the leading chemical company located in South Africa and have
expanded its business in the countries like Mozambique, Canada, Australia and Gabon. The
company is also targeting other countries for expansion for its business . For growing
internationally globalization can help the company to analyse their strengths and opportunities in
the market globally that can differentiate the company from other companies by innovative
technologies, creative skills or by modifying the strategies for the continuous growth and
sustainable development of the company globally. (Acs, Szerb and Autio, 2015)
Driving factors of Globalization
There are various drivers of globalization that can help Sasol limited in order to grow
internationally includes challenges related to market, cost, technology, competition etc.
 Technological challenge : Technology plays a very important role in this modern era of
growing economy. In order to grow globally Sasol limited company can innovate the

technology by introducing the technology that can change gas into liquid that is (GTL)
technology that will result to cost reduction, increase profitability, decrease waste, less
manpower, less transportation cost.
 Political challenge : Through liberalization Sasol limited company can trade the business
in the global market without the intervention of government rules and regulations that
will result to reduced tariffs and the company can regulate the market all over the world
that will lead to increase in the business internationally. (Amankwah-Amoah, J., 2016)
 Drivers of markets:- Through globalization the company Sasol limited can expand the
market not only nationally but also at international level. The best way for the growth of
domestic market is globalization the company which will lead to increase in the
opportunities for growth increases sales with less transaction cost, business risks
diversifies.
 Increase in competition : With globalization the competition increases worldwide.
Sasollimited company can achieve this advantage by providing unique products, by
lowering the prices, by providing quality of services, by optimizing the resources which
will lead to high increase in productivity and increase in exports and imports in order to
achieve the growth of the business internationally.
 Environment drivers : In order to grow internationally the SASOL limited company
need to change the production process according to the changing environment (Cavusgil
and Knight, 2015). With an emerging new digital era, company must use new technology
that creates positive impact on its performance by creating recycle management system or
by creating eco friendly products such that it will result to reduction of waste as well as
pollution. In order to gain sustainability of the product, SASOL limited need to change its
policies as per the environment to achieve the growth of the company worldwide.
Significant impact of digital technology upon globalisation
Technology plays an important role in expansion f business at global level. Technology
has brought a revolution in th global economy and now the technology is among the key factor
the affects the strategy of the company. Digital technology has played a major role in
globalisation. Digital technology has globalised the world, these helps all the countries to
promote their business in more ethical ways. Globalisation created new market opportunities for

the business and digitalisation has played an important role in to promoting the new market
opportunities in the competitive market (Doh, Luthans and Slocum, 2016).
Digital technology has played an important role to overcome the major problems and trade
barrier of globalisation and international trade, transfer cost, lack of common ethical standard
and delay in information exchange. Digital technology has help the Sasol Limited to operate
their business operation from one country to rest of the world.
Digital technology has played a major role in the growth of Sasol limited in global
market. Likewise, globalisation brings a key benefit that it simulates the spread of knowledge
and technology, helping spread growth potential across the countries. Digital technology brought
many benefits in business by increasing communication speeds, versatile working, automation,
transportation,financial service and it decreasing the cost for the company.
Digital technologies has created a new way towards global networks for Sasol limited.
Global networks are the networks in which all knowledge and information necessary for the
realization, maintenance and the reproduction of the system. E-commerce is the term that is
basically used for justifying the approach of technological globalisation (Frynas, and Mellahi,
2015). Digital technology had a major impact on globalisation by interconnecting the traders
digitally with Sasol limited.
LO2
P2 Strategic challenges faced by company
Pestle analysis on Sasol limited
Pestle analysis is a strategic tool which is used analyse the macro environment of Sasol
limited. pestle stands for political, economic factors, social factors, technological factors, legal
factors and environmental factors which influence the macro environment of Sasol limited.
 Political factors : political factors plays a major role in analysing the factors which can
impact Sasol limited profitability in a certain country or market. Political factors that are
to be considered while performing pestle analysis are Legal framework for contract
enforcement plays a significant role in Sasol limited. Anti-trust laws related to energy and
chemical. Pricing regulation can affect the profitability of Sasol limited.

 Economic factors : The macro environment factors like savings rate, interest rate,
foreign exchange and economic cycle determine the aggregate demand and aggregate
investment in the economy. Economic factors that are to be considered while conducting
pestle analysis are efficiency of financial market in case Sasol limited needs to raise
capital in local market funds are to be available (Ganamotse and et.al, 2017). Labour
costs and productivity in the economy is to be according to Sasol limited workings.
Factors like unemployment rate and inflation rate will affect Sasol limited production.
 Social factors : Shared beliefs and attitudes of the population plays a major role in
understanding marketers at Sasol limited. Social factors that are to be considered while
conducting pestle analysis are demographic and skill level of the population, leisure
interests, culture, class structure, hierarchy and power structure in the society.
 Technological factors : In various industries' technology is disrupting fast across the
board. technological factors that are to be considered while conducting pestle analysis are
recent technological developments undertaken by Sasol limited competitors, technology's
impact on product offering, impact on value chain and rate of technological diffusion
structure in basic materials' sector are the major issues being faced by Sasol limited.
 Legal factors : Sasol limited should determine several aspects before entering such
markets as it can lead to theft of organisation's secret sauce thus the overall competitive
edge. Legal factors that are to be considered by Sasol limited leadership are data
protection, employment law, consumer protection and e-commerce, discrimination law
and anti-trust law in energy and chemical industry (Gaspar and et.al,2016).
Environmental factors : Different environmental standards or norms are been followed by
different markets which can impact the profitability of the organisation in those markets.
Environmental factors that are to be considered while conducting pestle analysis are weather,
climate, laws regarding environment pollution, recycling, endangered species and attitude toward
and support for renewable energy are the major environmental factors been affected to Sasol
limited.
The challenges of globalisation and the strategic challenges this represents for Sasol limited
 Building the relation with in new region is a challenge for Sasol limited.

 A country also faces a problem of technological development which should be
undertaken by Sasol Limited.
 Legal structure plays a major role in globalisation. As every country having there
different laws in trade and business, it was difficult for Sasol limited to understand the
laws.
Strategic challenges of globalisation
 Trade barriers : Trade barriers are the restrictions which are generated by the
government on the export and import of goods that are done on the international
level.
 Understanding of culture : Different countries have their own different cultures.
Learning about different culture helps in understanding different perspectives within
the world (Guillotin and Mangematin, 2015). When Sasol limited interacts in cross
cultural situations, a lack of awareness can lead to bad or poor decisions.
Understanding culture helps in decreasing the poor decision-making and makes the
decision strong and insightful.
 Evaluation of taste and preference : Taste and preference of the consumers are to
be evaluated by the Sasol limited. Different countries have different preferences for
the products, so evaluation of taste and preference is to be done for prevention of
failure in the foreign market.
Recommendations for overcoming the challenges of globalisation
In order to overcome the challenges of globalisation, there are some strategic methods
which are helpful in these situations.
 Partnering up: For surviving in a international business it is necessary to have
knowledge of laws and regulations of trade of the foreign country. For overcoming
this challenge, Sasol limited can partner up with a firm based in foreign country in
order to prevent unlawful trading.
 Franchising the brand: It is a strategic way to reduce the dependency of internal
market and set the business to grow the profit internationally. Franchising helps the
Sasol limited to grow fast in the business and take less time to set in the market. Local

leadership of business will result in more productivity with profitability as the dealer
has the knowledge of environment of the particular market place.
 Joint venture: Joint venture is a strategy where Sasol limited can get partnership with
the other company of foreign market, which helps the company to sell the products in
the market and they divide profits equally. In joint venture strategy both the
companies work differently and help each other in business market to grow there
business.
LO3
P3 The influence of globalisation in organizational governance, leadership, structure, culture and
function
Sasol limited believe in a market strategy in which the company is more focused on the
end results . The company only hire those candidates which are competitive in nature because
they are more effective then the other employees and achieve their goals faster the others
(Hamilton and Webster, 2018) . This culture of the company has made the employees more
competition and productive leaders
McKinney's 7S model :
 Strategy : One of the biggest problems faced by the company is the issues
related to the environment. Sasol limited is an organisation which operate in
chemicals. The company have to produce their goods in such a way that the
environment is not harmed. Sasol limited can use nuclear energy or solar energy
to produce electricity which will minimized the damage to the surrounding
 Structure : The structure that Sasol follows a vertical structure, in which the
information in the organization flows from the top level to the bottom level this
helps the company in implementing new strategies, it also helps in achieving the
goals of business and influencing globalisation.
 System : In Sasol the top level management assign the work to the employees and
expect them to finish their work on time and the company gives them monetray
and non monterary rewards according to their work.
 Shared Value : The Company is using natural and nuclear energy to less harm
the environment thus gives the value to the society

 Style : The main aim of the company is to grow fast in the international market
so it they follow the leaders who's leadership style is more visionary
 Staff and Skills : The company major operation are in chemicals, so the company
hire those candidates who have proper knowledge in these field
The above theory has highlighted that company has high power distribution in authority
and the information flows from top level to bottom level and employees work in systematic
manner and centralized way (Heisig and et.al, 2016) Some employees of the company are more
introvert. These people don't share information. Sharing information within the company
improves the quality of work. Company has low avoidance of uncertainty because it is a
chemical company thus it has to be updated, little ignorance can be very dangerous.
P4 How organizational function is influenced by ethics and sustainable globalization
As the company is operating in global market, it is very important to for the company to
follow business ethics in their workplace.
 Provide healthy environment : The Company Sasol provides very healthy environment
to its employees so the employees' can easily archive their targets. Company also gives
motivation to the employees by monetary and non monetary ways, this boost their
confidence and increase the level of performance (Rezaee, 2016.). It is good for the
company to retain employees as long as they can.
 Corporate social responsibilities : It is a major responsibility of every firm to undergo
CSR activities, which is beneficial for both company and the society. Sosal limited is
trying their best to remove all the harmful things which damage the environment.
Company uses renewable energy and nuclear energy to save the environment. Sosal
limited contribute to CRS in many ways.
 Dynamic environment : the change is economical, political, social and legal
environment affect the organisation. Change in those factors influence the Sosal limited
to change its planning process, policies and strategies. To sustain in the global markets it
is necessary to have a look on these factors.
 Knowledge management : To maintain their position in global market it is essentials to
update the employees with new skills, techniques, knowledge and approaches. To operate
and compete in global market Sosal limited need to learn about the new approaches and

motivate employees to adapt changes and learn new strategies to enhance their business
activities.
LO4
P5 Different types of ways of decision-making in global context
These are all the factor which are used to enhance the growth of the business of the
organisation in the new market in global level and it helps in decision-making these are the
different ways of decision-making in global context.
 Social factors : Social culture factors impact on the culture of the company's
environment. Sasol limited is a company which operate globally and they have
checked all social factor like age factor, population, gender groups and career attribute of
the area. Population of the country plays and major role in deciding the total sales of the
product of the company whereas the age factor helps to decide that which product is more
suitable and favourable for the market. Theses factor help to understand the requirement
of the people of a specific country and also helps to understand that which product is
more effective on the country. This helps the company to growth their business in global
level
 Economic factors : This is the most important factor for a company. Sasol company
analysis of the all economic factor like economic growth of country, exchange rates,
foreign exchange, disposable income of consumer, etc in detail. Economic growth of a
country helps the company in growth of the business in the global level. If the
government taxes levels are low in the country then it helps the company to generate
more profit. Exchange rates places a major role in setting the rate of a product, if
exchange rate is high then the cost of the product is higher whereas if exchange rate is
low then the cost of the product will be cheaper comparatively (Hooper, 2016). These all
the economical factor which helps a company in decision making.
 Environment factors : The Environmental rules and regulation differ from country to
country. Each and every time Sasol limited want to a start new business at the global
level, the company need to check the environment rules and regulations like air pollution
rules, noise pollution rules, water population, waste management rules etc. After going
through all the environment rules and regulations then company decide to open their

business in new market of any country. Sasol limited is a company which operates in
chemical, so environment rules are more important for the company in decision-making,
which help the company in setting their business in an easier way, this will also help the
company to grow fast in. this helps the company to expand their businesses at global
level.
These all are the major factors that helps Sasol limited in decision-making at global level.
P6 Routes an organisation can adopt for globalization
Globalisation for an organisation means how an organisation enter the foreign market
with following all the legislations in order to start a new business on different nations. There are
several methods through which Sasol Limited can enter into new market which includes joint
venture, franchising, direct exporting, etc. (Hopkinson and et.al, 2018).
 Franchising : It is a strategic way to lower the risk of dependence of local market and
setting the business to generate more revenue and increase profitability all around the
world, this also helps in expansion of the business worldwide. It is a way in which
company depends on the local partner which is handling the business with the same name
and is decreasing the level of risk. It is the most convenient way to enter into a
international market as it have involvement of a local partner which help the company to
approach a good customer base.
 Direct exporting : Direct exporting of product and services is a major strategy which is
being used commonly by most of the companies. It is a kind of strategy where company
directly export their goods and services to the foreign purchasers. In direct exporting
strategy the company gets more profits and they also have their command on the
customers. There are several disadvantages of direct exporting strategy which includes
the prices of product is higher due to lack of marketing, dependency on some regular
customers.
 Partnership : Partnership is a globalisation strategy in which the company gets a partner
in the foreign country, which helps the company to understand the market situation and
the market strategy (Kasemsap, 2016). It also decreasing the chances of failure because
of the goodwill of the foreign company. The demerits of this strategy are the image of the
foreign company matter a lot and total dependence of the new business in on the
performances foreign company.

 Joint Venture : In this globalisation strategy, two companies from two different
countries agree to be partners. In this strategy, if a company wants to enter a global
market then it has a best alternative of choosing this alternative as it is the most effective
way through which a company can enter into a new market by involving a local partner
who is well known of the market and help to attract a large number of customer base
because of local involvement.
 Buying the company : This is the most easy strategy among all the strategies for
entering the foreign market. In this strategy of globalisation, a company take over a
whole organisation in order to expand its business in new market with the existing name
of the company which was being operated before and this is done by paying all the
goodwill and assets and subtracting the liabilities of the company.
The Strategies that Sosal limited should use is joint venture for globalisation. This will
help the company to perform their business in the foreign countries by getting a partner company
from foreign country in foreign market that will help Sosal limited in settling down at initial
stage of the business. This is the most effective way for Sosal limited to enter in global market.
CONCLUSION
From the above study it has concluded regarding the essential elements for globalization
and the plan of action as well as difficulties that is faced by the company to get into the
international market. The effect of ethical and sustainable globalization and leadership, structure
and the different ways of decision making in global context and various routes of
internationalization. Further it has also explained about the different routes for SASOL limited to
expand the market internationally and its benefits and drawbacks.