Global Business Environment: Key Factors, Strategic Challenges, and Organizational Governance

This report analyzes the key factors of cost, market, environment, and competition that drive global commerce and trade. It evaluates the strategic challenges faced by organizations when operating in a global environment and the influences of globalization on organizational governance, leadership, structure, culture, and functions. The report also provides insights into the impact of globalisation on decision making and strategy of SASOL, a fast-growing chemical and energy company headquartered in Cape Town, South Africa.

Global Business
Environment

Table of Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
P1 Analyse key factor of cost, market, environment and competition that drive global
commerce and trade................................................................................................................3
M1 Critically analyse the
impact that key factors have upon the global business environment in terms of benefits and
challenges ..............................................................................................................................4
P2 Explain the complexity of strategic challenges faced by organisations when operating in
global environment supported by specific example...............................................................4
M2 Critically analyse strategic challenges in context of risk and diversification strategies and
the supply chain flow..............................................................................................................4
P3 Evaluate the influences of globalisation on organisational governance and
leadership,structure, culture and functions.............................................................................4
P4 Evaluate the influences of ethical and sustainable
globalisation on organisational functions..............................................................................4
M3 Critically evaluate global market influences in application to appropriate theories and
models relating to organisational structure and culture..........................................................4
P5 Evaluate the different ways decision making can work effectively in a global context...4
P6 Determine and articulate the various routes to internationalisation an organisation may
adopt, including key barriers..................................................................................................4
M4 Critically evaluate the key barriers in doing business internationally and make
recommendations on how they can be overcome...................................................................4
Recommendation ...................................................................................................................4
Conclusion.......................................................................................................................................4
References .......................................................................................................................................5

Introduction

The global business environment are the environment that differ in every sovereign
countries. It plays major role in influencing the decision making of organisations. To perform
effectively in the market companies completely rely on understanding the market scenario in
which they host their operations. Basically the mentioned environment classified into internal
and external environment that affects every business organisation operations (Ebneyamini, and
Bandarian, 2018). In relation to this SASOL which is a fast growing chemical and energy
company which is headquartered in Cape town, South Africa.
In this mentioned report several key factors of globalisation will be discussed. Further, some
strategic complexity will be evaluated that associated with company's operations in global
environment. In relation to this the influence of global environment on company structure,
culture and functions will also evaluate. At the last the impact of globalisation on discussed
company decision making and strategy will be highlight in the report.
Main Body
P1 Analyse key factor of cost, market, environment and competition that drive global commerce
and trade
Globalisation refers to the interconnectedness of businesses and people around the world.
It gives the advantage to interact with new culture and people in several region. Through the
globalisation businesses get the opportunity to expand their operations globally. It opens the new
market and challenges for business that willing to go internationally. Globalisation is a mixture
of political, social, cultural and legal phenomenon. Every business that performs in international
market consider these phenomenon to construct their business plan and structure to operate
smoothly.
In instance to above explanation of globalisation it is conclude that SASOL need to
focus on several phenomenon in order to expand its business operations in new territories across
the globe. There are several key factors that need to take into consideration that derive the global
commerce and trade;
 Cost- In the global market the mentioned company can get the advantage of cost
reduction on their functions. In developing countries the cost of labour and raw materials
are cheaper than in compare to developed countries. Hence, organisation can easily get
the advantage of cost reduction in their operations (Katiyar, Barua, and Meena, 2018).

 Market- Every new region have different market conditions. Same polices and strategy
cannot work in every region. Peoples taste and preference are differ region to region.
Therefore the deep analysation of market condition is must to understand the situation.
Different level of economic integration also helps the business operations through their
policies such as free trade area, common market, and economic and monetary union.
 Competition- In global market the competition are way much higher due to participation
of companies. In also gives the advantage to influence the large number of audience
towards their functions. By the technology advancement in operations succours company
in order to develop strong market appearance. Companies can easily gain the competitive
advantage by reducing the cost of transportation and strong global sourcing thorough
technology advancement.
M1 key factors have upon the global business environment in terms of benefits and challenges
The above mentioned factors plays a major role in global business environment. These
factors provides several opportunity and Benefits to organisation in regard to perform its
functions more efficiently in desired market. Below are the some benefits of globalisation in
business environment that can gives an advantage to Delvieroo in performing in new countries.
 Access of new talent- By performing in the new market, globalisation succours the
businesses in order to find the ideal and skilful candidate for their functions.
Through such opportunity companies get the competitive advantage by hiring the
specialized talent.
 lower cost on productions- Globalisation open new options for companies in order
to find the lower- cost ways to develop their products. By such initiative the
mentioned company can easily enhance its functions as well as can also increase
the global competition.
 New technology and innovation- Due to interconnectedness of economies
companies can easily adopt the new technologies of any region to their operations.
Through such process organisations can reduce their operating cost which
ultimately succours into perform better functions in market (Gorondutse, and
Hilman, 2019).
 New market for operations- Globalisation plays foremost role for businesses to
acquire the new market deal. By expansion of business into new territories

includes new customers and revenue streams for businesses. Hence the respective
company can get the advantage to perform their successful business venture in
region to increase its revenue and customer base.
Globalisation offers various benefits but also includes several challenges for businesses
in order to perform their function in global market. The competition are much higher due to free
trade boundaries for companies. Big giant organisation can easily manipulate local market with
their higher investment and through competitive strategy. Another challenge that can face by
SASOL is regard to the trade polices of different countries. If a country have Higher tariffs and
import duties in their economy. It will ultimately increase the cost of production and products for
companies that want to perform in such economy.
P2 complexity of strategic challenges faced by organisations when operating in global
environment
SASOL performs its operations in various countries with vast number of customer base
with their operations. There are several external factors that enforced on the mentioned company
which changes according to their functions in region to region. Every country has its own
political political and trade policies that puts major impact on company functions. In relation to
this factors such as supplier, government, cultural, legal, competitor as well as environmental
factors that impact their business. Below are the inclusion of external factors that used by the
company in order to understand the business environment for their operations. Managers of firms
majorly used such model in order to evaluate their strategic challenges that can faced by them.
Political- The political factor is one of the crucial aspect for every company to perform their
functions in any region. Government can easily influence decision making of companies through
their political polices. SASOL performs its functions in various region that shows the interaction
of governments in its functions. The respective company performs in Belgium (Kasemsap, 2018)
According to the Worldwide tax summaries, 2021 Belgium levied the tax rate of 25 % for
the international companies in order to perform their functions in the market. Hence, in future the
trade slab can increase due to political instability.(Corporate- Taxes on corporate income, 2021).
According to The LOCAL, 2021. SASOL faced the lawsuit in France due to not declaring the
large number of jobs. The mentioned company also announced to exit the Spain market after the
implication of labour law by government (SASOL France to face court over ‘undeclared labour’
2021).

 economic- The economic factors plays major role in company operations. The mentioned
company performs its functions in several economy at which peoples prefers to order
offering from online sites rather than going to stores from home. In relation to this the
Energy industry is one of the emerging sector in worldwide economy. Therefore the
mentioned company have the opportunity in regard to enhance its operations and increase
its sales. Another factor that impact the respective company operations is labour cost. The
mentioned company performing its functions in both developed as well as developing
economies. In instance the labour cost are way much lower in developing countries in
compare to developed countries.
 Social- People in developed countries are busier due to their engagement in economic
activities. Due to such habits they generally prefers to eat in restaurants. Hence the
mentioned company has several factories that can easily fulfil the demand of these
audiences smoothly. Moreover, in every region people celebrate carnivals and festivals
according to their ritual. On Christmas people generality prefers to eat out with their
loved ones. Hence such social behaviour succours the mentioned company to boost their
sales.
 Technology- Through the use of technology the mentioned company can easily enhance
its business. There are several technology available in the global market that used by
companies such AI technology, big Data etc. through these techniques the respective
company can easily track its order more efficiently and deliberately as well as through the
use of big data SASOL can classify its potential customer needs.
 Legal- There are several laws and regulation imposes by countries in order to formed a
systematic criteria for business. SASOL performs in several countries in which
government has imposes the law such labour protection law and data protection law.
These laws need to be followed by company according to the government guidelines.
Any breaches in such laws can impact the company functions. Therefore SASOL should
focus on these law and polices more seriously to avoid the lawsuits and fines (Kim, Joshi,
and Lee, 2019).
 Environmental- The respective company planned to reduce its plastic waste and carbon
footprints in its operations. Hence, by developing the sustainable approach in their
business operations can safeguard them from environment exploitation. The mentioned

practice can also helps the company in order to attract the environment enthusiast
towards using their operations.
M2 strategic challenges in context of risk and diversification strategies and the supply chain flow
From the operational analysis of SASOL it is evaluated that the mentioned firm performs
its functions in several regions that arise the strategic challenge in context of risk and
diversification. In relation to above factors the mentioned company have the opportunity in
order to enhance its supply chain flow by using the new advancement technology in their
functions. Through the use of AI technology the discuss firm can easily increase its productivity
and can reduce its operational cost. Through the upgraded supply chain plan company can form
effective relation with their supplier through which raw materials can be bought at reduces
prices. The accuracy of deliveries can also be rectify through focus on app development and on
time tracking system on their apps.
P3 Evaluate the influences of globalisation on organisational governance and
leadership,structure, culture and functions
The term globalisation refers to the convergence of preferences of buyers in the market around
the world. In different market economies, there are different ways for which operations of a
business firm are being governed or regulated. Managers of various business organisations with
their difference in structure, leadership and functions operate to fulfil desired demands of a
consumer and attain their respective goals and objectives.
In context of chosen firm i.e., SASOL, managers of the respective firm take
considerations to Mckinsey 7S model in respect to relate the influence of globalisation policy on
respective organisational governance. This model forms the basis of effective performance in the
corporate firm and enable better strategy of the respective firm while competing in the
competitive business environment (Houbenova, 2019).
Mckinsey 7S model

The stated models reflect towards the analysis of the company’s organisational design for
which effectiveness of business operations can be enabled with respect to changes in a business
operational environment. This model is inclusive of both hard and soft elements that are
categorised by business managers as follows;
Hard elements
These elements in model reflect those
segments in business operations that are easy
to identify. These components in business
functions are tangible in nature and could be
directly controlled by the management and
leadership of the organisation.
Soft elements
Under these elements, factors of business
operations are included that are less or not
tangible in nature. In addition to this
management of the business firm have less or
no control for such elements, therefore, higher
attention is paid off by the management team
of the business firm.
Shared values
Strategy Skills
Structure Style
Systems Staff
 Structure: SASOL adopts inter-departmental coordination in respect to dealing with
fluctuating business environment conditions. In the context of globalisation policy that
results in high fluctuations in prices of raw materials, adopting this structural format of
working aid towards the effective working of respective firm (Bechara, and Schuch,
2020). Strategy: The provided company complies with all their actions and operational activities
with respect to goal-oriented process. This guides a positive working environment in the
business firm and also copes with competition as one of the negative impacts caused due
to globalisation policy.
 System: All functional departments of the chosen firm are well-coordinated. This allows
the business firm to avoid situations of being in conflicts and related unproductive
activities in the workplace. In respect to globalisation policy systematic approach is being
followed that ensured effective approach of the business firm in terms of completion of
business goals and objectives (Leimgruber, and Chang,, 2019).

 Skills: Various operations in the business firm are being regulated with respect to skilled
management of the business firm. This included operating with professional attitudes and
developing a productive business environment in the operational firm. Through this,
professionalism in the working structure of the business firm can be promoted and also
wastages of resources while approaching to desired goals are being carried. Staff: Provided company employs a large number of employees to regulate the frequent
flow of business operations in their logistic services. The policy of globalisation had
come to rescue respective firm in this provided context.
 Shared values: Managers of a respective company takes key considerations to core
values which are being delivered along with the completion of operational goals of the
company. This includes; Honesty, Creativity, Accountability, Trust, etc.
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions
The ethical and sustainable approach is one of the foremost important practice that should
be used by the organisation in performing their functions in global market. By such initiative an
effective and favourable business environment can be concluded I global environment. Through
such practice several benefits can arises as well as new opportunists can be developed that would
beneficial for businesses and economy in terms of revenue generation as well as employment.
Below are the some practices that should be followed by the mentioned company in order to
from such ethical and sustainable environment in tier functions.
 Labour standards- By performing the ethical practices in business operations the
mentioned company need to be follow the guidelines of labour law and reforms in their
operating regions. By developing such ethical trade and polices company can create
effective operational environment for their employees that ultimately helps into
contributing the values in their life (Liska, 2018). International agreement- The international agreement conclude the understanding and
commitments between two economies. The agreements includes the factors such ethical
environment polices, trades reform, exercise duties etc. Hence, the mentioned company
need to adopt such polices in their functions to perform more smoothly. national laws- Every countries has their own rules and regulations to perform operations
in their territory. As discussed in the above report SASOL performs its functions in
several region. Therefore, through follow the national laws and policies the mentioned

company can easily performs the functions smoothly or vice versa. For example some
countries strictly concerning about the environment. Hence, the respective firm has the
responsibility in order to develop such practices in their functions.
 Ethical operational functions- The mentioned company should follows the ethical
operational polices in their functions. Such as form the favourable environment for
employees, salaries according to the government laws, uses sustainable approaches in
their operations. According to several surveys it is concluded that many companies
breaches the taxation law in global market in order to save the taxes. Hence, by following
the ethical policies in operational region company can gain several advantage such as
good market image, loyal customer base as well as support of government (Tingey-
Holyoak, Pisaniello, and Buss, 2021).
M3 Critically evaluate global market influences in application to appropriate theories and models
relating to organisational structure and culture
From the analysis of the application to appropriate theories and models relating to
organisational structure and culture, it can be said that key considerations can be made with
respect to the core development of the business firm. This is inclusive of taking key
considerations to business functions and exploring leadership functions of the corporate firm in
respect to the changed working environment of the business firm. In respect to changes that were
observed due to the upcoming globalisation policy, the model i.e., Mckinsey 7S model was being
applied. This in turn supports organisational culture and promotes better structural format of the
business firm while operating in business market with full of competition and changes in market
conditions (Steers, and Osland, 2019)
.
P5 different ways decision making can work effectively in a global context
The decision makings plays a vital role in organisation in order to shape their global
market appearance. The respective company operates in various region of countries that shows
the enforcement of several market forces on their operations. Hence, through the effective
decision making can succours the Delvieroo in order to shaped their business functions in global
market. To demolish the effectiveness of such forces on business several decision making can

work deliberately. In relation to this through research and development practice the mentioned
company can easily identified the need and requirement of such specific region. It will helps the
respective company in order to understand the marketing functions of such territory (Lam, and
Zou, 2018).
By creating the effective supply chain and production network the mentioned company
form the effective business environment in their operations through which they can create good
relation to their supplier and can reduce the cost of their operations. This process will also help in
order to gain the competitive advantage in global market. Through following the ethical and
systematic approaches in business such as ethical environment policies, systematic selection of
employees, ethical business polices company can reduce the risk of lawsuits as well as can
generate the effective operational activity in their business through following such approaches.
P6 Determine and articulate the various routes to internationalisation an organisation may adopt,
including key barriers
According to the business operation of SASOL that is energy and chemical company.
The mentioned company can adopt the below routes to expand their business in international
boundaries smoothly. Through such implications the mentioned company can easily create
effective business operations as well as can form the strong communication in between their
management. Create joint venture- Through establishing the joint ventures in business can help out
the mentioned company in order to get the best result in new market. In instance
Delvieroo can take the advantage of such collaboration in setting its strong brand image
in market by giving offers and proper market promotions of their operations. Hence due
to such collaboration company can also gain the advantage of financial support in to
business.
 Develop local leadership- All the regional market have different needs and requirement.
The way of working is slightly different in every market. It includes several rules and
regulation, language differentiation and cultural expectations. Hence, by the
appointment of local leader in operational activity can easily help out the respective
company in order to communicate with their potential customer as well as help them in
achieving their goals (Goods, C., 2021).

Below are the some major key barriers that can be faced by the SASOL in expanding their
business in international boundaries;
 Communication barrier
 Unfamiliar culture
 Human resource
 currency exchange and inflation rate
M4 Critically evaluate the key barriers in doing business internationally and make
recommendations on how they can be overcome
To perform any business in new international boundaries arise several barriers and issues
regarding to their functions. Several rules and regulations as well as other factors were influence
the business operations. As per the above report below are the evaluation of such barrier that can
influence the business operations of SASOL. Communication barrier- One of the biggest barrier that arise in every international
organisation operations in performing globally is communication barrier. Due to lack of
proper communication in between the staff and the company can impact the business
operations of company. Due to ineffective system company can face the issue in tracking
the efficiency of their global employee
 Unfamiliar culture- When company enters in the new market one of the major challenge
that faced by firms is cultural differentiation. Peoples of every region have different
requirement and needs. Hence the mentioned company cannot rely on same products and
strategy in order to attract the customer of different regions.
Below are the some recommendation according to the company operations;
 Hiring ideal management- By hiring and selection of skill full employees in company
operations can help them in order to form effective team management. Through creating
the communication system in management company can track their progress
(Dissanayake, 2020).
 Effective research and development- The respective company can easily understand the
market demand and needs through research and development practice in their operations.
It will gives the overview of market scenario.

Conclusion
From the above discusses report it can be concluded that a firm highly pays its focus
upon the business enhancement through different organizational culture, governance as well as
leadership. This helps companies in successful achievement of business objectives as well as
competitive advantage at global level. The report further acknowledges various terms that assists
company in taking effective business decision by considering factors at global level. This
provides helps in accumulating knowledge related to the application of McKinsey model in order
to understanding governance, structure & culture that is present within the organization due to
which a company is able to maintain efficiency and effectiveness while taking global business
decisions. Further the above mentioned report also provides a detailed analysis of sustainability
as well as ethics that is needed to be present at global level operations. There are different modes
through which a company can enter into global market such as licensing, exporting and many
others. Selection of best route is highly essential for business as this can effect the global
presence & the company's sustainability in such market.

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Online

(Corporate- Taxes on corporate income, 2021) [Online] Available
at :<https://taxsummaries.pwc.com/belgium/corporate/taxes-on-corporate-income>
SASOL France to face court over ‘undeclared labour’ 2021. [Online] Available at:
<https://www.thelocal.fr/20210921/SASOL-france-to-face-court-over-undeclared-labour/>

https://taxsummaries.pwc.com/belgium/corporate/taxes-on-corporate-income