Globalisation and its Impact on Business

The assignment explores the concept of globalisation and its effects on business, including the integration and interaction of people and countries. It discusses the driving forces behind globalisation, challenges it poses, and strategic considerations for companies operating in a global market. The document also touches on the importance of sustainable factors in global business environments.

Global business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
PROJECT 1......................................................................................................................................1
Concept of globalization.............................................................................................................1
Driving factors of globalization..................................................................................................1
Impact of digital technology upon globalization........................................................................2
PEST analysis of SASOL organization.......................................................................................2
Challenges of globalization and strategic challenges..................................................................3
Recommendations on how to overcome these challenges..........................................................3
PROJECT 2......................................................................................................................................5
1. Explanation of the structure, culture and governance of the organisation through applying
McKinsey’s 7S model.................................................................................................................5
2. Applying Hofstede’s Dimensions of Culture to demonstrate how the organisation has been
influenced....................................................................................................................................6
3. Evaluation of ethical and sustainable factors..........................................................................6
4. Factors have affected decision making in a global context.....................................................7
5. Strategic expansion routes the organization took and analyses both advantages and
disadvantages..............................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
.......................................................................................................................................................10

INTRODUCTION
Environment refers to overarching an environment under which firm operate its business.
It consists wide range of factors which can impact on business involving politics, culture,
location, economic status of global environment etc. Global business environment refers to
environment in various sovereign countries with exogenous factors to home environment of firm,
influencing the decision making on capabilities and resource use. SASOL limited is an integrated
energy and chemical firm in South Africa. It was formed in 1950 and also build in processes
which were developed through engineers and German Chemists. Under this mention report will
be discussed about factors of cost, environment, market that drive global commerce. Inference of
globalisation on leadership structure, functions and organisation government will be discussed.
PROJECT 1
Concept of globalization
Globalization refers to process of integration and interaction among organizations, people
and governments. It is a procedure through which regional and national economies, cultures and
also societies have integrated by global network of the transportation, communication etc.
Globalization is regarded as movement of people, services, information and products from one
country to the other. Under this, main aim of globalization is to secure the socio- economic
integration as well as development of people of world by information, free flow of the services,
products etc.
Driving factors of globalization
Firms go global in order to expand their markets as well as enhance sales or profit level.
Variety of factors which contributed towards globalization process are mention below:
Technology- Sustained and rapid technological change has minimized transmitting cost
and communicating the information to SASOL company. Cheaper and faster technology in
digital global economy of Internet has broken national barrier of space and time.
Trade flows- Removing the trade barrier time and also has facilitated enhancing
development rate of world trade. Under this, new technology in IT revolution has developed the
channel of distribution for SASOL firm and it is complex to be blocked in protectionist trade
policy.
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Liberalization- IN this, strong wave of the liberalization induced through unilateral
negotiation as well as World Trade Organization (WTO) and the decisions are undertaken
through countries ion all over world.
Impact of digital technology upon globalization
Technology plays a vital role in modern form of the business globalization. It has change
global economy and also became critical competitive strategy. Advancement in the technology
helps SASOL organization to enhance development of the global market. In past few decades,
technological developments have increased in the migration, cross- border trade and investments.
Technology advancement have facilitated globalisation and the technological process has been
major forces which driving the globalisation. The technology is helpful in minimize
transportation cost as well as communication across the nations. In context to this, patented
technology is helpful in encourage the globalisation, as SASOL company owning patent that can
be exploit the foreign markets without any kind of competition. With the help of advanced
technology, SASOL firm can outsources the labour intensive services in advanced countries
from developing countries.
PEST analysis of SASOL organization
PESTLE analysis is strategic tool to examine macro environment of company. Changes
in macro- environment factors have direct affect on activities as well as operations of company.
PEST analysis of SASOL company mention below:
Political factor- This factor plays a necessary role in identifying factors which can be
affected the long term profitability of SASOL limited in certain country. It operates in Integrated
Oil & Gas in many countries and also expose itself to various kind of political environment.
Economical factor- In economic factors includes such as saving costs, foreign exchange
rates, inflation rate, economic cycle and interest rate. These are helpful in analyze aggregate
investment and aggregate demand in an economy. In this, SASOL company can have affect from
development and growth rate for an instance spending power of consumers, growth rate in order
to forecast growth.
Social factor- In social factors include tends, attitudes and behavior that effect on target
market and firm. Way of doing the things and culture of society affect culture of SASOL
company in environment. In this, it is necessary for SASOL firm to determine needs of
consumers and design marketing message for customers of main Integrated Oil and Gas Industry.
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Technological factor- This factor is variable and related to availability, development and
existence of technology. In the business, it is necessary for SASOL business firm to use the
advanced technology in business because it can be impacted on the cost structure in main
Integrated Oil as well as Gas industry.
Challenges of globalization and strategic challenges
Globalization is new contemporary development stage of capitalism over world. It is
process of the social change under which cultural and geographical barriers are minimized.
Different challenges related to globalization mention below:
Organizational structure- It is an ability to effectively as well as efficiently incorporate
the new regions in corporate structure and value chain. Under this, international expansion needs
more capital as well as development of particular strategic business units to manage operations
of SASOL.
Leadership- It is complex for SASOL organization to determine better organizational
leadership with appropriate skills as well as knowledge to approach provided geographic market.
In order to attract the talented or well experienced managers is a difficult step in creating global
strategy.
Ethical business practices- It is a main challenge which SASOL company face. The
ethical business practices can be in areas for an instance environmental stewardship, regulatory
compliance, labor etc. have plays a necessary role in failure and success of the global players. In
order to this, maintaining highest ethical standards at the time of operation in any nation is
essential consideration for SASOL business firm.
Recommendations on how to overcome these challenges
It has been recommended from above given detail that SASOL business firm should
develop the better organizational structure in the other countries so that business operations of
this company can be conducted in an effective or better manner. It is necessary that company
should hire the well experienced and knowledgeable person that helps in developing an effective
global strategy and also helpful in conducting the business operations in significant manner. On
the other hand, SASOL company should conduct the CSR (Corporate Social Responsibility) to
maintain the better public relations that will helps to firm in perform the task in significant way.
Company can adopt the ethical practices and also perform its activities by following the
ethical principles, practices, rules and regulations etc. Before conducting business in to other
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country, it is necessary to SASOL to know about the culture as well as language. It will be
helpful in deal in other country in better way. Under this, firm requires to look for the managers
which have strong awareness as well as insight in to international and local processes of industry.
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PROJECT 2
1. Explanation of the structure, culture and governance of the organisation through applying
McKinsey’s 7S model
The McKinsey 7s model is one of the most important frameworks in business
organization as it involve seven factors that categorized in two elements like Hard and Soft
elements. In this, Hard element is relate with strategy, structure and system. On the other side,
soft elements are includes skills, values, style and staff of the business. By using this model,
manager of SASOL Limited can easily understood organisational status, culture and governance
as well (Ferraro and Briody, 2013). With the assistance of this, company can easily improve their
overall performance level at market place. As this model can be understood by following points:
Hard element: It is an important element which determined by management of organization in
order to identify the strategies, system and structure of the company in effective manner. In
SASOL Limited, Hard elements describe below:
 Strategy: Under this element, top level management of SASOL Ltd develop various
strategies with the aim of expanding the business in another new country for establishing
their positive brand image.
 Structures: It is relate with organizational structure which is followed by the SASOL
limited. In this, company categorized into small sections which are help in performing
specific task in effective way (Kankaanranta and Salminen, 2013). As it includes
functions like marketing, HRM, finance and many more.
 Systems: This element is relate with the working pattern of the workers which perform
their task in effective manner. In addition of this, employees of SASOL limited work as
per requirements of the project to accomplishing final goals.
Soft element (Culture): It is also an important element which directly influenced with the
organizational culture. As this element is also play vital role in overall success of the company. It
also includes various components like skills, staff values and style as well.
 Shared value (Culture): It is relate with business ethics which is determined by SASOL
limited. Mainly the culture of the company is highly based the corporate culture. Along
with this, workers are perform their task with organizational ethics.
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 Skills: In this SASOL limited hire skilled and capable workers so that they can easily
perform allotted task.
 Style: Under this role, SASOL limited follow democratic leadership style in which leader
of the company provide equal opportunities to their workers and also include them in
decision making process. With the assistance of those workers get motivated and also
perform well at workplace.
 Staff: Mainly, SASOL limited has approx 30100 workers in which all the employees are
well educated and also able to perform at international market.
2. Applying Hofstede’s Dimensions of Culture to demonstrate how the organisation has been
influenced
Hofstede Cultural Dimensions is an effective model that developed bu Geert Hofstede in
1970. Mainly, it is related with different cultural dimensions at international level. In addition of
this, SASOL limited is expanding their business in new countries with the aim of attaining
success in market. With the assistance of this, company can easily understand that how cultures
views is different aspects of company aid a manager to navigate the international business
market in appropriate manner (Kasemsap, 2015). As it includes various type of dimensions
which directly influenced the SASOL limited:
Power distance: This type of dimensions determine the degree which represents the
inequality (High v/s low). In this high power distance relate with strong hierarchical relationship
whereas low power show the equality can be perceived. In context of SASOL limited, workers of
company has low scored power distance (Popescu, 2013). Thus, it is important for company to
deal with new workers with equality at the time of expanding their business is new countries. In
this, by providing equally training to their employees can easily get trust of the workers towards
the company.
3. Evaluation of ethical and sustainable factors
Ethics is related with the principle, norms, rules standards and many more that directly
contribute in making organization freedom possible. This will help business organization to
execute their programmes at international level. For example, if SASOL limited not follow ethics
and sustainable factors that they fail in reaching at higher level. In addition of this, ethics can be
help in making positive environment at workplace which is related with the culture of the firm.
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For attaining success, there are some ethical and sustainable factors of international market
which have to follow by the SOSAL limited. This can be understood by following points:
Corporate social responsibilities: It is one of the important factor that needs to follow by
every business organization to maintain their positive image at global market. In context of
SASOL limited expand their business at global level. Thus, it is important for organization to
follow CSR activities and to sustain at global market for longer period of time. With the
assistance of this, company can easily attain success at market place.
Legislation: It is also an important for business organization to follow all the legal rules
at the time of expanding their business at international level. In context of SASOL limited, they
have to follow every type of legislation that relate with global market. With the help of this,
company can easily reduce the chances of arising issues at global level.
4. Factors have affected decision making in a global context
In this, number of factors are directly affect the decision making process of business at
international level. Thus, it is important for SASOL limited to effectively focus on cultural
values, social responsibilities and all the legislation. For example, if SASOL take decision to
expand their business in UK than they have to consider all the roles, values of living (Savrul,
Incekara and Sener, 2014). With the assistance of this, company can easily established their
positive brand image at market place. For attaining the same, firm develop strategies to
improving their customers base by following their values and culture of UK customers. In
addition of this, society of UK is totally different from Africa so that it is important for business
organization to develop alternative ways and activities relate CSR activities to improve their
performance level (Simic and Dimitrijevic, 2012). Thus, all the changes are appropriate among
decision making process of the company as it highly related with CSR activities. With the
assistance of this SASOL limited can easily expand their business at global level and also sustain
for longer period of time.
5. Strategic expansion routes the organization took and analyses both advantages and
disadvantages
In case of expansion of business, it is important for SASOL to includes role of
globalization which help in expanding business on international market. In this, expansion
strategies are helps in effectively established their business at global level. All these are as
follows:
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Merger and acquisition: When two companies combine to form a single is called
merger. Similarly, means when one company purchase another is called acquisition (Yu and
Ramanathan, 2012). Merger and Acquisition helps in the expansion of business at domestic and
international level. It carries both advantages and disadvantages which are following:
Advantages
Merger and Acquisition helps in financial resources, achieving scale of economies,
increasing capabilities and market share, reducing cost labour and improving talent, company's
performance, eliminating competition and tax benefits.
Disadvantages
Merger and Acquisition carries some drawbacks which can be high cost, lower stock
price, high legal issues, increment of opportunity cost, losing job opportunity, decrease in
productivity.
Franchising: In simple words, franchise means when the owner of the product or
services give authority to third party to sell their products under their brand name so that they
can capture the market and make money from that (Voegtlin, Patzer and Scherer, 2012).
Advantages
 Brand name is already established by the owner so less focus on marketing.
 Mentoring and support given by the owner of the product.
 Prior knowledge of business is not required.
 Rate of success is high as compared to another business.
Disadvantage
 Huge amount of money is asked by the owner as a royalty.
 Part of earning is also given to the owner other than royalty.
 Huge money is invested in the beginning and there is no guarantee of getting back the
money.
CONCLUSION
It has been concluded from above mention report that globalisation explains way people
and countries integrate and interact. In this mention report discussed about the globalisation and
their driving factors. Challenges of globalisation and strategic challenges has been also discussed
in this report. Structure, governance and culture of SASOL has been studied in this assignment.
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There has been discussed about the sustainable factors which company has to consider in global
market.
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REFERENCES
Books and journals
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leaders. Routledge.
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environment: Knowledge management and knowledge management technology.
Elsevier.
Chand, M. and Tung, R. L., 2014. The aging of the world's population and its effects on global
business. Academy of Management Perspectives. 28(4). pp.409-429.
Ferraro, G. P. and Briody, E. K., 2013. The cultural dimension of global business. Upper Saddle
River: Pearson.
Kankaanranta, M. and Salminen, L. L., 2013. " What language does global business speak?"-The
concept and development of BELF. Ibérica: Revista de la Asociación Europea de
Lenguas para Fines Específicos (AELFE). (26). pp.17-34.
Kasemsap, K., 2015. The role of cloud computing adoption in global business. In Delivery and
adoption of cloud computing services in contemporary organizations (pp. 26-55). IGI
Global.
Popescu, G. H., 2013. Macroeconomics, effective leadership, and the global business
environment. Contemporary Readings in Law and Social Justice. 5(2). p.170.
Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a
globalizing business environment. Procedia-Social and Behavioral Sciences. 150.
pp.35-45.
Simic, V. and Dimitrijevic, B., 2012. Production planning for vehicle recycling factories in the
EU legislative and global business environments. Resources, Conservation and
Recycling. 60. pp.78-88.
Voegtlin, C., Patzer, M. and Scherer, A. G., 2012. Responsible leadership in global business: A
new approach to leadership and its multi-level outcomes. Journal of Business Ethics.
105(1). pp.1-16.
Yu, W. and Ramanathan, R., 2012. Effects of business environment on international retail
operations: case study evidence from China. International Journal of Retail &
Distribution Management. 40(3). pp.218-234.
Zhang, A. and Huang, G. Q., 2012. Impacts of business environment changes on global
manufacturing outsourcing in China. Supply Chain Management: An International
Journal. 17(2). pp.138-151.
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