Global Business Environment - Global Business Environment - Sasol Limited

Global Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK1 ............................................................................................................................................3
P1 Key factors of cost, market, environment and competition that drive global commerce and
trade........................................................................................................................................3
TASK 2 ..........................................................................................................................................5
P2 Complexity of strategic challenges faced by organisations when operating in a global
environment ...........................................................................................................................5
TASK 3............................................................................................................................................7
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions..............................................................................................7
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions
................................................................................................................................................8
TASK 4............................................................................................................................................9
P5 Different ways decision making works effectively in a global context............................9
P6 Determine and articulate the various routes to internationalisation an organisation may
adopt, including key barriers................................................................................................10
CONCLUSION.............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Globalisation can be defined as an interaction between people, government and
organisation with outside of world. In other words, It is a process through which business
organisations develop themselves so as to operating their operations at international level. It
comprises of movements of goods, services and funds from a nation to another nation. Taken
organisation for completing this project is Sasol Limited which is a fast growing chemical and
energy organisation that's headquarters are situated in South Africa. This project will discuss
about the key factors of globalisation that drives commerce and trade along with complexity of
strategic challenges which are faced by firms while operating at global level. In addition,
influence of ethical and sustainable globalisation on functions of organisation and ways of
decision-making. At last, report will discuss routes and barriers of globalisation for organisation.
TASK1
Key factors of cost, market, environment and competition that drive global commerce and trade
Concept of globalisation is very broad that is used to define enhancing political, economical
or social interrelation across the national cultures and boundaries. This term assist the firm to
grow their business and increase movement of goods, technology, capital, flow of finance
throughout the world. After internationalisation, it becomes easy for each organisation to trade
between the nations. In context of SASOL, company is expanding their business in several
nations so that concept of globalisation can prove beneficial for them in enhancing business
operations and revenue figures throughout the world (Eden and Ackermann, 2013). There are
several factors such as market, cost, advancement in technology etc. which can affect the
company during the expansion process. These factors are given as below:
Cost factor- Variations in cost is exist in each nation that plays a role of drivers in
globalisation process. In other words, cost includes monetary valuation of material, efforts or
time that should be consider by managers of Sasol so as to globalising their business operations.
Increase in dimensions of market will support the Sasol limited in reducing their cost along with
help in making effective strategies for expansion.
Market factor- This factor defines that how the customers will get the offerings of firm
in new market places. It can also considered as the most crucial factor of globalisation because

without analysing the market trends Sasol limited will not achieve desired growth and success in
new market.
Technology- This factor should be consider by the managers of Sasol limited because
this factor of globalisation will enables them to communicate with others easily which
automatically enhances their market share and sales figures in new market areas. For example-
each firm updates their functions and operations so that desired growth can be attained in
marketplace. Therefore, Sasol should upgrade their operations by implementing advanced
technologies in it so that expansion can be done successfully in market.
Environment factor- This factor can be defined as surrounding in which the business
organisation operates their functions. It includes internal and external factors such as needs of
customers, social trends green policies of government etc. therefore, managers of company
should consider these factors and make effective policies or strategies for it so that expansion in
new market place can be done in easy manner (Ahmadi and et. al., 2014).
Competition- Nowadays, this factor is highly increasing within the market and provide
opportunities to organisations for making expansions so that customer base can be enhanced. In
addition, chemical products of company is demanding more than the headquarters so that it can
prove beneficial for company in making expansion in demanding market areas. For e.g.
company can use artificial intelligence or digital technical systems within their operations which
will provide them competitive edge in new market areas.
From the above factors, it has been evaluated that these factors should be considered by
the managers of Sasol limited effectively so that any difficulty not be arise during the expansion
process. In addition to this, through implementing advanced technology within the operations
Sasol limited will be able in increasing their efficiency of operations which will automatically
leads the firm towards competitive edge in market. Along with this, implementation of advanced
technological systems in operations unessential cost will be removed which is beneficial for firm
in increasing their trade business.
Impact of digital technology on globalisation
In present scenario technology is impacting on all business operations and functions of
the organisation. Like this aspect helps organisation to complete their work within minimum
time period. More over it also helps to develop alternative ways through which they manufacture
their good within economical way. Moreover it work as a key driver that helps to improve their

performance by increasing value in their products. Apart from this it also helps to increase their
market share through approaching their products at global level. Impact of digital technology is
very high in expanding business operations therefore, managers of Sasol Limted have to
consider these influences while expanding their business operations at global level.
Some of the negative impacts that can be faced by firm during the expansion such as
theft of sensitive informations, ineffective communication structure etc. apart from that, positive
impact of digital technology on globalisation is that cloud data protection or classification of
data so that sensitive informations like shareholders details, operations procedures etc. can be
secured in effective manner. Additionally, Up-gradation in communication structure and
encrypted mails will be enables the firm in improving their efficiencies and competencies
through which desired goals will be achieved in given time-frame.
TASK 2
Complexity of strategic challenges faced by organisations when operating in a global
environment
Globalisation can be defined as an exchange of technology, information, products or
services across the international cultures and borders. Globalisation increases modernisation, job
employment opportunities within the nation that automatically supports economic development
within the nation. At the time of globalising the business several challenges can arise that can
enhance complexities within the operations (Piscitello, Alcácer and Cantwell, 2016). It includes
global trade, economics of globalisation and its environmental impact in terms of challenges that
can affect the whole profitability and operations of firm in negative manner. Sasol Limited is
engaged in chemical business therefore, there are several problems or difficulties such as global
supply chain management, increase in demand of sustainability etc. for understanding these
challenges in more effective manner company can use PESTLE analysis which is defined as
below:
PESTEL Analysis of SASOL Limited:
PESTLE analysis is an effective tool which is used by organisations for identifying the
external factors that can influences the whole profitability of organisation in adverse or
favourable manner. Some of this factors and their influence are given as below:

Political Factor - This factor includes changes in trade policies, ruling government, tax
rates etc. that can influence the growth and profitability of firm in positive or negative manner.
In South Africa, government is more stable than other nations and rules and policies are constant
due to which Sasol is getting benefits while performing business operations in the nation.
Whereas, high tax rates on chemical products or week regulations on chemical industry can
affect the business operations negatively. Therefore, managers of Sasol limited have
responsibility to analyse each rules and regulations which are related with their business
operations effectively so that any kind of difficulty not be faced by them.
Economic Factor - This factor consists of inflation, exchange rates or per capital
income within a specific nation that can affect profitability of firm. For example- government of
South Africa is more focusing on forming good infrastructure within their nation which is a
positive sign for SASOL limited's growth and sustainability. Apart from that, exchange rate of
country is very high which can affect negatively on overall growth of Sasol limited.
Social Factors - It consists of culture, beliefs, taste and preferences of societal
individuals that can affect the profitability of firm in positive or negative manner. As Sasol is
operating their business functions in chemical industry then negative affect from the behaviour
of societal individuals can be faced by company during the expansion. Whereas, establishment
of industries in outside of society can provide benefits to company at the time of expansion.
Technological Factor - This factor includes technological innovations, advancement in
technologies etc. that can affect the whole growth and profitability in positive or negative
manner. In context of Sasol limited, they have implemented several systems such as TQM, JIT
so as to removing unessential activities from their operations. That can be considered as a
positive sign of technological factor for company. Whereas, cost of implementation of these
systems have increases the cost of products of company which can restrict the growth and
success of firm at global level (Boateng and et. al., 2016).
Environmental Factor - This factor comprises of weather conditions, natural
climacterics that can restrict the organisation in gaining desired growth and success in
marketplace. In South Africa nation, government is more strict about nature due to which green
policy is invented by government of nation. As SASOL Limited is operating business operations
in chemical industry therefore, it can be considered as a negative sign of environmental factor
for the company. In order to overcoming these kind of negativity management of SASOL

limited have to conduct several CSR activities such as plantation, campaigns for supporting
green policies of nation etc.
Legal Factors - These factors includes legislations related with health and safety of
employees, pollution etc. that can pose impact in positive or negative form on the growth and
sustainability of business organisation. Sasol Limited is following copyright laws, employment
laws effectively which are made by government of South Africa that is a positive sign of this
factor for the company. Apart from that, water pollution and chemical pollution is highly
increasing due to presence of these organisations that can restrict the firm in enhancing their
market share within the South Africa.
TASK 3
Evaluate the influences of globalisation on organisational governance and leadership, structure,
culture and functions
Globalisation is a process that provides opportunities to the organisations in moving
business into new market areas but it can influence adversely on the organisational governance,
leadership, culture etc. corporate governance is refers to a set of certain rules and norms that
enables the firm in controlling or monitoring each activities or functions of business. In Sasol
Limited, globalisation process will be prove beneficial for company in maintaining their
corporate governance with international laws which leads the firm towards competitive edge in
marketplace. Organisation is following flat organisational structure in their workplace so that
any kind of conflicts will not arise at workplace and organisational objectives can be achieved in
marketplace. In addition to this, company should also make considerations on modifying the
leadership styles so that efficiencies or competencies of employees will be improved and they
will work hard for making success and growth of firm at international level (Coltmanand and et.
al., 2015). For analysing other factors of globalisation that can affect the profitability of business
Mckinsey's 7s model can be used by managers of Sasol Limited which is given as below:
 Strategy: This is the main factor for each organisation as it enables the firm in
achieving desired objectives or goals within given time-period. This factor will be
helpful for Sasol limited in framing plans so that competitive advantage can be
gained over their rivals.

 Structure: This factor defines that how an organisation have organised its resources
and capabilities. In context of Sasol Limited, company have applied flat structure in
their workplace which will increase the contribution of employees in achievement of
organisational goals.
 System: This term of model defines process or methods that are used by specific
organisations for gaining success in market. In context of Sasol Limited, their
managers should manage their systems in an effective manner so that energy or
chemical products can be provided to the customers in better manner.
 Skills: This factor defines that employees of firm should increase their capabilities or
efficiencies so that higher position can be grabbed by firm in marketplace. In Sasol
limited, dedicated employees are working so that managers of company have duty to
provide regular training to them so that their better contributions can be gained in
achieving desired growth in marketplace.
 Staff: This factor is related with employees of firm and their specific requirements so
that through fulfilling them they feel respected or motivated while working within the
workplace. This will beneficial for Sasol limited in making expansions of their
operations in new market areas.
 Style: It is related with management and leadership styles which are using by
manages of Sasol limited for controlling or monitoring the business functions of firm.
In addition, it defines the way that how company is managed or employees are
interacting with each other.
 Shared value: This factor defines beliefs, values of organisation that has to be
followed by each employee so that work should be done in an effective manner.
Hofstede's model
For an organisation culture barrier act as barrier to communication in order to overcome
from this Hofstede's model is implemented which is mention as follow:
 Power distance index- This aspect show the degree of inequality which exist in the
society. In context of Sosal high PDI exist between the society of countries in which they
are operating their business. As it helps them to sale their goods in different places
through a easy approach.

 Individualism versus collectivism- This aspect states the strength of people that holds
by the other in a community. For Sasol this is important skill as high IDV indicates that
management does not take more responsibilities to complete the action.
 Masculinity versus Femininity- It is beneficial to divide the roles between men and
women. Like Asian countries are masculine therefore men are expected to complete
work which contain more risk.
 Uncertainty avoidance index- This index show that how society residents cope up with
anxiety. In context Sasol limited this factor help them to recruit those persons which are
not certain to avoid risk. Further they find solutions of different problems.
 Long versus short term orientation- The organisation which are operated their business
in different areas need to complete their work with more efficiency. Moreover it is
essential for them to complete their work within specified period.
 Indulgence versus restraint- This aspect is related with the country. It determines that
country with high IVR score allow more organisation to complete their goals. Sasol need
to make countries which are useful to implement more culture in organisation.
From the above model it has been analysed that Sosal should adopt this model as this
will prove beneficial for them in managing their functions along with achieving desired goals or
objectives. In addition to this, company can also use Hofstede model of culture so as to
maintaining effective culture at workplace. This model consists of power distance, masculinity
V/s short-term orientation, Indulge v/s restrain etc. which will prove beneficial for respective
firms in making changes in culture as per long-term or short-term for earning high benefits
(Elbanna, Andrews and Pollanen, 2016).
Evaluate the influences of ethical and sustainable globalisation on organisational functions
Ethical globalisation can be defined as a procedure of moving goods and services at
international level in ethical manner so that desired goals can be achieved in given time-frame.
In this process, respective company have to establish appropriate corporate governance by
considering interest or needs of stakeholders which will helpful for the organisation in running
business operations in effective manner. In addition, sustainable globalisation defines that
respective company have to develop their sustainability in current operations before expanding
in new market areas so that desired growth can be gained in new market areas. For this purpose,

Sasol Limited have to make some changes in their internal functions so that desired objectives
can be achieved in given time-frame. Some of these changes are given as below:
Human resource management – Workers can be considered as the lifeline because
without their contribution any firm can't take growth or success in market. Therefore, it is very
important for Sasol Limited to recruit experienced and skilled employees at workplace so that
long term goals or objectives can be achieved effectively. For this purpose, it is also very
essential for managers of Sasol to provide rewards or extra benefits to their workers so that they
get retained and provide better contributions in achievement of organisational goals.
Environment- It is an another function where advanced technologies like digitization of
supply chain system, tracking of activities etc. will be helpful in identifying demand of chemical
products in new marketplace. This would also helps in framing effective marketing strategies for
attracting customers towards the offering of company. But modifications in existing
infrastructure or marketing functions increases cost of operations which is not beneficial for
current operations and functions of firm (Lewis and et. al., 2017).
Economical- In order to expanding business operations in new market, it is very
essential for Sasol Limited to raise funds from international market or financial institutions like
banks, mortgage loan etc. so that entire operations or functions would be carried out in well
manner. Along with it, for running business functions in ethical manner company have to make
heavy investments which will arise issues in managing financial resources.
Social- This aspect includes all the factors that are related with the society. In this factors
it engage activities such as behaviour, culture, and value that are followed by societyindividuals.
In context of Sasol this factors helps them to make effective communication in the society which
benefited them to develop positive relationship with other countries society individuals.
From the above analysis, it can be said that through making modifications in current
structure Sasol can easily achieve desired growth or success in marketplace. These process will
also assist the firm in performing each functions in an ethical manner.
TASK 4
Different ways decision making works effectively in a global context
Decision-making is an effective process that helps the managers of organisation in
choosing best solution for problem. It comprises of managing or controlling several things such

as participation of employees, interest of stakeholders etc. so that their contribution can be taken
for making success of decisions. There are some ways which can be used by Sasol limited for
taking decisions. Ways are given as below:
Command- Leaders in Sasol should consult with their team mates while making
decisions so that through controlling risks desired objectives can be achieved in given time-
frame. The term command is more beneficial as it helps them to complete their goals by
involving people in the organisation that provides more benefits to organisation. Along with this
it also helps them to complete their task within minimum time period.
Collaborative- Leaders should take collaborative decisions by considering suggestions
and opinions of team members. Through this, effective decisions will be made which helps the
Sasol Limited in making expansions. Collaboration is the most important factor for an
organisation who operates their business at global level, as this helps them to complete their
work within minimum time period because of effective collaboration between other countries.
Convenience- In this method, managers and leaders of Sasol Limited have to provide
responsibilities to their senior employees for making decisions as per their capabilities or
demand of situations. Through this, they feel motivated at workplace which will be prove
beneficial in removing issues or challenges from the workplace (van der and et. al., 2012).
Determine and articulate the various routes to internationalisation an organisation may adopt,
including key barriers
Numerous factors can create barriers in front of Sasol limited during the expansion process
which can restrict the firm in earning high profitability. Some of the barriers are given as below:
 Financial barrier – Lack of financial resources can create major barriers in expansion of
company in new market areas.
 Managerial barrier – If changes will be done in whole working functions then the cost
of operations will be enhanced due to which barriers will be arise during the expansion
process.
 Market-based barrier – Inappropriate knowledge about the market trends and demand
of customers can arise the barrier in gaining high profitability in marketplace.

For removing these barriers, it is very important for the managers of Sasol Limited to
select best route for moving their operations in new market areas. Some of these routes are given
as below:
Routes to internationalisation:
Licensing: It can be considered as a best route for Sasol limited in globalising their
business operations. In it, they have to make agreements with existing firms who are already
existing and operating business functions in new market. Through this, cost of expansion will be
saved which helps the firm in spreading their brand name across the world.
Merger and Acquisition: This can also determined as a best route for overcoming the
barriers as this will support the managers of Sasol limited in understanding the new market
trends and demand of customers which will automatically leads the firm in making expansion in
new market locations.
Joint ventures- The joint venture work as a partnership between two organisation or
individuals. Their are different ventures through which they are link up such as investment,
operations etc. It determines that they are operated and engage each other functions with
business activities. While it is not mandatory that they share their work with equal weight age.
The main agenda of them is to work as a specific venture.
From the above routes, it can be said that managers of Sasol have to chose merger and
acquisition methods for overcoming the barriers as this will help them in globalising their
business operations without any difficulty (Zhang, Duysters and Filippov, 2012).
CONCLUSION
From the above discussion, it has been concluded that globalisation is an important
concept which leads the firm towards growth and sustainability in marketplace. It helps the
organisation in enhancing productivity and profitability through making modifications in current
functions in internal or external manner. Several challenges are also faced during the
globalisation process for which company have to chose effective route so that negative impact of
these barriers can be overcome in easy manner.

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