Global Business Environment : McKinsey's

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT. .........................................................................................................................1
TASK 2 ..........................................................................................................................................1
1 Explanation of structure, culture and governance by applying McKinsey's 7S model............1
2 Hofstede's Dimensions of culture to analyse organizational influence ...................................2
3 evaluation of ethical and sustainable factors in global market...............................................3
4 Factors are affecting in decision-making in global context.....................................................3
5 Strategic expansion routes for organisation.............................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6
.........................................................................................................................................................6

INTRODUCTION
Global business environment is related to activities of business in many countries, It
helps organization to expand business activities and operations in other countries by providing
their offerings to customers in other countries (Alqahtani and Saba, 2013). This report is based
on SASOL Limited, it is a chemical company based in South Africa. Company develops and sell
technologies, synthetic fuels and manufactures electricity, chemicals and liquid fuels. This
project includes McKinsey's 7s model for explaining structure, culture and governance. It also
includes Hofstede's dimensions of culture, sustainable and ethical factors and their impact on
decision making in global market.
TASK 1
Covered in PPT.
TASK 2
1 Explanation of structure, culture and governance by applying McKinsey's 7S model
McKinsey 7s model evaluates organization designs, it includes 7 internal elements:
strategy, structure, system, shared values, style, staff and skills. These 7 dimensions represents
soft and hard areas of business. In context to SASOL Limited, they should adopt this model to
understand structure, culture and governance of their organization. These are described below:
Strategy( Governance): It is a plan created by managers of SASOL Limited as they are
focusing on expansion for achievement of sustainable competitive advantages for growth. This
provides long term benefits to the company. SASOL Limited consider both risk and opportunity
factor by considering external environment for expansion.
Structure: It defines organizational hierarchy, business division of SASOL Limited
(Black, Morrison, and Gregersen, 2013). The company's structure is based on two upstream
business units, three regional operational hub and four consumer facing SBU. These all works
together by maintaining coordinating for performing their activities (McKinsey's 7S model,
2013).
Skills: Managerial employees of SASOL Limited have capabilities to perform assigned
tasks in an efficient manner. It includes talent and knowledge of employees. Team members of
company has good communication skills, positive attitudes, participate in decision-making etc.
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Systems: This includes processes and procedures of SASOL Limited. It explains
activities and decision making of business, System of company like HR, Finance and marketing
will work on focusing the expansion of organization. These function evaluate and monitor the
activities related to expansion.
Staff: It is related to kind of employees SASOL Limited needs to conduct their business
activities. Staff in an organization includes line workers, managers, team leaders etc. in case of
expansion company needs to increase number of staff for conducting business activities.
Style: It represents how top level manager of SASOL Limited manage their business for
accomplishing their organizational goals. leaders of company can use their leadership styles to
motivate, influence employees and they provide required training and development opportunities
for improving their performance. (Black, Morrison and Gregersen, 2013).
Shared values(Culture): These are the shared norms and standards of SASOL Limited
which influence the behavior of employees and management. company should use corporate
culture so that ethics of the organization are not compromised. This will help team to perform in
an valued and ethical manner.
2 Hofstede's Dimensions of culture to analyze organizational influence
Hofstede cultural theory is a framework of cross cultural communication and it is
developed by Geert Hofstede. It analyses the impact of society's culture on values of employees
of organization. As SASOL Limited is expanding day by day so for them it is very necessary to
understand the cultural aspects of different nations. It is also important for them to meet global
standards for operating in other countries. As per this framework there are several dimensions of
culture which can influence their operations. The dimensions which influences SASOL Limited
are explained as below:
Power distance index: It refers to the inequality which exists and accepted by people
with and without power. This is perceived by lower level employees or management. In SASOL
Limited employees with low power index does not support inequality in organisation. For
reducing this management should involve employees in decision making process and should
assigns more duties and responsibilities to them. As the company is focusing on expansion in
other countries, so they have to maintain equality among all employees.
Individualism versus Collectivism: It refers to the mutual relationships and ties among
the individuals in organization. In individualism individuals does not have relations with others
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in company. In SASOL Limited, individuals with low IDV makes interpersonal relationships
with other employees and they are more loyal and take more responsibilities (Cavusgil and et.
al., 2014).
Masculinity Versus Femininity: Organizations which focuses on masculinity overlap
the the role of women and men have to complete all the tasks and roles. In feminine society,
women do majority of work, they create relationship with management and working staff.
SASOL Limited focuses on low masculinity as it is relationship oriented and focuses on quality
of their products and services. In globalization making good relation is very important for quality
products..
Uncertainty Avoidance Index: It explains how well people in an organization deal with
anxiety. In SASOL Limited, individuals are Low with UAI as globalization needs innovation,
openness to change, always keen to learn, helps and participate in decision making.
Pragmatic Vs Normative: SASOL limited adopts normative culture as it is focuses on
creating value with employees.
Indulgence Vs Restraint: Company focuses on High indulgence culture as it provides
employees and other individuals freedom of speech and increase personal happiness.
3 evaluation of ethical and sustainable factors in global market
Business ethics establish many principles on the bases of norms, working culture, experience,
mutual understanding and assumptions. In respect of SASOL, ethical codes are conducting to
honesty, social responsibility and fairness which aim to ensure long term business growth in
market. Company should maintain standards safety, ethical nature, proper internal power and
relationship with suppliers. Those consideration leads to commitment, fair and transparency in
decision-making process within an organization (Ferraro and Briody, 2013).
Corporate Social Responsibility: SASOL managers maintain harmonium relationship
with their buyers as well as suppliers which address to business success. They are providing
better guidance to workforce for improving skills and ultimate supports to industry. SASOL
practices on educational programmes throughout the group cluster such as Combre-Fondel
Elementary and Emerson. These partnership plays a major role for their employees by engaging
in life skills sessions. Company also involve in Louisiana based firm to identify regional impact
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of capital expansion. Moreover, SASOL gathering information about new plans for different
countries by analysing small business resource guide and voluntary property purchase programs.
Legislation: This aspect consider on consumer protection, government policy regarding
competition, environmental laws. As SASOL company performing at global level, manager must
know about these legal limitation such as employment law which entitle for safety and health to
employees. This understanding provide guidelines in making business plans and its expansion in
different countries. Every constitution has several laws which may interrupt to business
activities. So company need to know and follow these Govt. regulation in respect of every
countries (Kasemsap, 2014).
4 Factors are affecting in decision-making in global context
This study provide thorough guidance during decision-making process.
CSR can be defined as responsibility of an organization towards their society in which they
operates. In SASOL Limited, mangers seek appropriate command on cultural aspects so that they
can make effective decisions. It helps company to employ right employees for their business. It
affects decision making in different situations like company is producing their by following
same process in all the countries. The same process may be suitable to environment or cultural
aspect of one country and in another it is not allow. So the company has to make decision
accordingly by considering all cultural and economic conditions.
Moreover, legal regulation also play a crucial role to matching business terms and conditions for
further decisions. At global level company should follow different rules, due to export import
implementation. It is addressed to several risks and environmental affects so management need
to concern those details in their production decisions. Experts analyses all legal terms in order to
accomplish budgeting plans which provide assistance in future growth. For example: If company
do not gather accurate and required legal information, it may lead to difficulties during decision
making process which is necessary for successful expansion (Laudon and Laudon, 2015). By
following these aspects, company can make strategic decisions and implementation without any
risk. Those adequate decisions fascinate to their consumer at global level which increase growth
as well market share.
5 Strategic expansion routes for organization
Company needs to expand in order to be successful. In context of SASOL Limited,
company needs is planning for expanding in other countries. For globalization every company
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needs to make have strategic expansion routes. These routes will help company to make effective
expansion of their business, so that they can do business operations in other countries. For
expansion SASOL Limited should follow the following routes:
Merger and acquisition: Merger is the process of expansion in which two companies
combined to create one firm. In acquisition one organisation is overtaken by other business. By
this or more organizations come together to make more value and perform their operations and
business activities in an productive manner which help in generating more profits.
Advantages: It provides synergy effects to enhance business performance, it helps
company to achieve economies of scale to provide goods and services at efficient cost. It also
provides competitive advantage to organization (Lee, Olson and Trimi, 2012).
Disadvantage: It tends to decrease in number of jobs and bad consumers of one company
become part of new company.
Franchisee: It enables other companies to carry out their business. It is a suitable method
in order to business expansion. It include a franchiser who receives a license relation to
conducting a corporation which is offered by franchisees.
Advantages: It provide business success, increase market share, brand recognition, compete to
rival and financial assistance in many cases.
Disadvantage: It receives some issues that may related to cost, selling difficulties, monitoring,
market restrictions and so on. So company must concern on these factors during franchisees.
CONCLUSION
It is concluded from above report that globalization helps organization to expand their
business activities. Strategy, structure, skills, systems, staff, style, shared values impact
organizations in globalization. Corporate social responsibility and legislation of other nations
have impact on decision making process of organisation. Company can expand their business by
merger & acquisition and Franchisee.
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REFERENCES
Books and Journals
Alqahtani, F. A. and Saba, T., 2013. Impact of social networks on Customer Relation
Management (CRM) in prospectus of business environment. Journal of American
Sciences. 9(7). pp.480-486.
Black, J. S., Morrison, A. J. and Gregersen, H. B., 2013. Global explorers: The next generation
of leaders. Routledge.
Cavusgil, S. T. and et. al., 2014. International business. Pearson Australia.
Ferraro, G. P. and Briody, E. K., 2013. The cultural dimension of global business. Upper Saddle
River: Pearson.
Kasemsap, K., 2014. The role of social networking in global business environments. Impact of
emerging digital technologies on leadership in global business. pp.183-201.
Laudon, K. C. and Laudon, J. P., 2015. Management Information Systems: Managing the Digital
Firm Plus MyMISLab with Pearson eText--Access Card Package. Prentice Hall Press.
Lee, S. M., Olson, D. L. and Trimi, S., 2012. Co-innovation: convergenomics, collaboration, and
co-creation for organizational values. Management Decision. 50(5). pp.817-831.
Ramamurti, R., 2012. What is really different about emerging market multinationals?. Global
Strategy Journal. 2(1). pp.41-47.
Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a
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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.
Solomon, M. R. and et. al., 2014. Consumer behavior: Buying, having, and being. (Vol. 10).
Pearson.
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.
Wetherly, P., 2014. The business environment: themes and issues in a globalizing world. Oxford
University Press.
Wild, J. J., Wild, K. L. and Han, J. C., 2014. International business. Pearson Education Limited.
Zhang, A. and Huang, G. Q., 2012. Impacts of business environment changes on global
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Online
McKinsey's 7S model, 2013. [Online] Available through:
<https://www.strategicmanagementinsight.com/tools/mckinsey-7s-model-
framework.html>
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