Global Business Environment : SASOL ltd

GLOBAL
BUSINESS
ENVIRONMENT

INTRODUCTION
The term global business environment is concerned with determining and exploring the
environment of different countries. This involves factors which are endogenous to the domestic
environment of the organisation that makes use of available resources and potential (Wood and.
et. al., 2015). Thus, this will put emphasis on internal and external business environment of the
country. Organisation undertaken in this report is SASOL limited which deals in energy and
chemical sector. This is one of the fast growing company of the South Africa. This report will
concentrate on analysing the important factor which drives globalisation. It determines the
strategic complexities associated with operating in a global environment. It further measures the
operations of global market and its impact on structure, culture and functions of organisations.
The last part of the report will evaluate the influence of globalisation on organisational decision
making strategy.
TASK1
P1. Important factors which drive global commerce and trade.
The concept of globalisation is increasing at a rapid in present business world. This is the
process through which the business enterprise are able to expand their businesses in the global
market. Therefore, globalisation refers to the integration of economies, societies which has the
direct impact on the exchange of information, ideas, goods, services, finances, technologies,
workforce, etc. between different countries. Thus, with flow of all such resources, the company
is able to determine that whether the business expansion in the global market will be successful
for the company or not. Through globalisation of business, the company is able to create the job
opportunities and advancement of technologies as well.
The business organisations are pushed towards the globalisation of their business due to
the various reasons (Tregear, 2015). It includes various factors which will have positive impact
on the company's operations and helps in driving the global commerce and trade. Therefore, the
following are the points discussed below which are considered as driving factors for global
commerce and trade for the SASOL limited:
 Cost: This is one of the most crucial factor in the business organisation. The company
needs cost for different purposes so that the business operations can be commenced
properly and effectively. The company concentrates on minimising the cost for the

business organisation. There are different types of cost like labour cost, material cost, etc.
So, if the SASOL will find that the cost of labour in home country is expensive while in
another country like Mozambique the labor cost is much lower so the company will
expand the business there in order to experience the lower cost of labor. Furthermore, if
availability of material in another country is at less price compared to the home country
then this will also drive the business in the global market.
 Market: The market is the place where SASOL will be able to sale its goods and
services effectively and efficiently. If the SASOL will realize that the demand for the
products produced by the company is more in another country so in order to minimize the
import duties, the company will focus on expanding the business into the new market.
The market share and size will help the company in driving the business at global level
because the business enterprise which has huge market share at local market will
experience the good and positive impact with the help of globalization in global market.
 Environment: The business environment is focused towards identification and analyses
of internal and external business factors. This will helps SASOL in determining that
whether the environment is suitable and appropriate for the company or not. For instance,
if there is less resources available or the political business environment is highly unstable,
then the company will drives its business in the other countries.
 Competition: Every business exist in the market for the attainment of business goals and
objectives effectively and gaining the benefit of competitive business environment
(Shenkar, Luo and Chi, 2014). So, if SASOL will realize that there is higher level of
competition in the home country which has limited the level of profitability for the
company then the company will put interest in expansion of the business in the market
where there will be need for such products and and company will be able to deal with
competition effectively and efficiently. For instance, if there are less substitutes available
for the company in the global market then this will help the SASOL to attain the
competitive advantage.
Thus, all the above factors discussed has a major impact on the organizations in driving
the businesses to the global market. Such factors creates several opportunities and exchange of
different resources will enable it to develop relations with other countries as well. Apart from
this, the digital technology will have positive impact on the SASOL when the company will

operate in global market. This is because the company will be able to tap customers effectively at
lower cost and further more, the information about the company can be properly presented on
internet. This will help company in providing clear picture to the customer about the operations
and working of the company (Savrul, Incekara and Sener, 2014). It is one of the most cost
effective tool for promoting the brand in global market. The company can also expand the
business through digital technology by adopting online sale and purchase of products in different
countries.
TASK2
P2. Complexity of strategic challenges faced by organisation in global market.
Expansion of businesses in global market is not an easy concept. It involves lot of
resources and expertise knowledge. The company faces various challenges which needs to be
taken into account before globalising the business of the company. For this, the company will
conduct external business environmental scanning. This will help in identifying the impact of
outside forces on the SASOL and it will be able to deal with the challenges properly.
PEST Analyses
The concept of PEST will focus on identifying and analysing the outside business
environment and the impact it will have on the company (Salvatore, 2015). Therefore, the
following is the PEST of SASOL discussed below:
 Political factor: The concept of political factor is related to the stability of the company.
It involves factors like terror attacks, taxation policy, etc. Thus, if the rate of taxation will
be high in the global country, then this will creates a barrier for the SASOL limited in
expanding the businesses to the global market.
 Economic factor: The economic factor is related to the profitability and financial
stability of the business. It involves factors like inflation, deflation, recession, etc.
Therefore, during the period of inflation when the prices of goods and services goes up
then this will create a barrier for the SASOL limited because it would not be able to sold
the products properly. This will have negative impact on the profit and revenue of the
company in global market.
 Social factor: The social factor is in relation with the demographics, age, attitude,
lifestyle, buying pattern, etc. It depicts the social trends, tastes and preferences of the

customers. Thus, if the customers are highly dynamic and want new products everyday,
then this will create pressure on SASOL limited to regularly focus on developing new
products which will satisfy the needs of the customers. This can creates the barrier of
maximising the cost for the company (Lewis and. et. al., 2017).
 Technological factor: It is the most important and emerging factor in present business
world because with the help of advancement in technologies, the company is able to
improve the productivity and makes the work simpler. Therefore, this involves
innovation and focus on developing research and development department. Thus, if the
global market will lack the resources which are necessary for technological advancement
or if the workforce is not effective enough to operate and contribute in research and
development department of the company then this will create challenge and barrier for
the SASOL limited to operate effectively in international market.
Challenges of globalisation
From the above discussed PEST which depicts that the globalisation poses various
challenges which ultimately affects the business operations in the international market. There are
various challenges like unstable political government, which also creates the threat of terrorism
and this will limit the operations of the SASOL limited (Kasemsap, 2014). If the labour force
available in the global market is at low rate then this will create positive influence in
commencing the business but lacks of education, knowledge and illiteracy will create barrier for
the company because this will need lot of investment in providing training to the employees. The
legal and strict laws of the country create a strong challenge for the globalisation. Therefore this
will be major barrier for the SASOL limited because strict laws regarding the environment
sustainability will put burden on the company to operate effectively by following the laws
regarding the sustainable business environment.
Recommendations
The above mentioned complexities and challenges faced by the SASOL limited can be
overcome and for this purpose, it has been recommended that the company should properly
analyse the internal and external business environment of the international country. If workforce
is available at cheaper rate, then the company should provide them with proper training tools and
techniques that will develop their skills and competencies to work effectively within the
organisation. The strict environmental laws must be properly taken into account wherein the

company should focus on using renewable sources of energy and proper generation of wastage
must be done.
TASK3
P3. Influence of globalisation on organisational governance and leadership, structure, culture and
function.
Globalisation process is not confined to the analyses of external and internal business
environment of the international country (Hanouz, Geiger and Doherty, 2014). It has strong
influence on the structure, culture and functions of the business enterprise which helps in
company's governance and leadership. Therefore, SASOL limited will use the McKinsey model
and Hofstede’s Dimensions for the influencing the structure and culture of the company in global
market.
McKinsey model
The McKinsey model was developed by Tom Peter, Robert Waterman and many other
people in the year 1980. The purpose of this model was to evaluate and measure the
organisations design by taking into account the seven different and core constituents that are
properly aligned and useful for the business in achieving business goals and objectives. These 7
elements will be combination of hard and soft elements. The primary motive of this model in
SASOL limited is to enhance the changes in business enterprise, useful in executing new
strategies, to know the manner in which the respective areas can fluctuate in future and to
emphasis on merger of different business enterprise. The following are the 7 S of the model
which will used by SASOL limited:
 Strategy: In simple words, strategies are the set of plans which are created by the
organisations in order to attain the desired objectives and goals which will help in
attaining the sustained competitive advantage (Doh, McGuire and Ozaki, 2015).
Therefore, if this strategy is set alone by the SASOL limited then it will become difficult
to analyse that whether it is aligned in good order or not. Therefore, it must have proper
set of mission, vision and objectives in order to attain the competitive advantage.
 Structure: Every organisation has certain structure which makes the communication
easier and depicts that which department has to perform what set of roles and
responsibilities. Apart from this, it provides that which unit is required to communicate

and report within the company. Thus, SASOL limited will have functional department
structure in order to operate effectively.
 Systems: The system of the organisation is related with determining the every day
activities and plans of the company. It focuses on the way in which decisions are taken in
the company. Therefore, the SASOL limited has different systems in the organisation and
manager has strong focus on them during the time of changes in the business
environment.
 Skills: The skill are the set of capabilities and potential which are possessed by the
workforce in order to perform the required task and attain business objectives (Cavusgil
and. et. al., 2014). Therefore, SASOL limited have effective and efficient workforce who
are strongly focussed towards research and development and innovation.
 Staff: The staff is the set of workforce which includes all those people who are working
within and outside the organisation for accomplishing business goals and objectives. For
this, SASOL limited focus on recruitment, training, motivation of their staff members.
 Style: The style is related to the manner in which the company interacts with their
employees, their actions, etc. Therefore, SASOL limited has effective leaders who act as
a communication link between the manager and the workers. Apart from this there is
proper delegation of task which divides the work and assigns is done on the basis on
skills and capabilities of the individuals.
 Shared value: The shared value is related to the different rules and regulation of the
company which helps in directing and guiding the employees within the company.
Hofstede’s Dimensions
The Hofstede’s Dimensions model was created by Geert Hofstede and this will be
adopted by SASOL limited in order to identify and learn the cultural differences of global
countries. It is important to use this while globalizing the business because the company will be
able to know about the different nations culture, the dimensions of the culture and their impact
on business decisions. There are six dimensions of this model and they are power distance index
which relates to the degree at which the power and inequality is endure in the country. The
another is individualism v/s collectivism where in the it takes into account the extent which
integrates the societies into the groups and the detected responsibility and dependency on such
groups. Then there is uncertainty avoidance index which helps in determining the level of

uncertainty being tolerated in the country (Chand and Tung, 2014). The dimension of
masculinity v/s femininity considers the preferences of the gender equality, behavior, etc. The
another dimension is long and short term orientation which are focused towards the time frame
for achieving business objectives in the societies. The last dimension is indulgence v/s restrain
which depicts the level and desire of the society to accomplish the goals and objectives. Thus, all
these factors and dimensions will concentrate on identifying and analyzing the culture of the
global market and helps the SASOL limited in expanding business and developing plans.
Therefore, the structure which is followed under SASOL limited is functional
organizational structure, the culture of collectivism and equality is adopted in order to govern the
operations of the business.
The influence of globalization on leader will be very crucial because they will need to
work closely with the team members in order to guide and lead them towards the mission and
vision of the company. They will require to regularly motivate the people within the organization
and identifies the training needs so that business can be operated effectively at global level.
P4. Evaluation of sustainable and ethical consideration on organizational functions
There are certain factors which has to be considered by the SASOL limited while
operating in the global market which will depict the ethical and sustainability of the business:
 Safe working conditions: As the company deal in chemical industry, it is very important
that it provide safe and secure working atmosphere to the workers (Botha, Kourie and
Snyman, 2014). The worker must be aware of right and wrong things which must be and
must not be done at the workplace. The company must ensure that they do not face any
kind of accidents and workers are safe and secure.
 Renewable source of energy: The company needs to adopt such methods in their
working which depicts the sustainable environment. For this, they will use renewable
sources of energy like solar plants, wind mills, etc. This will provide them with the
sustainable competitive business environment at global market.
 Legislation: Every country has certain environmental, ethical, etc. laws and regulations
and for commencing the business in global world, it is one of the most important factor.
The company must take into account this in order to assure that they are operating legally
and bound by several laws.

TASK4
P5. Different ways in which decision making can work effectively in global market.
The present business world is highly dynamic and for this purpose, it becomes important
for the SASOL limited to concentrate on proactive decision making concept. Under this, the
decisions and plans are set for every events before it actually happens. This is done by predicting
and forecasting the future occurrences (Boshyk, 2016). This is important because the external
business environment changes very quickly. In such conditions, the leader of the company needs
to use situational leadership style while devising the decisions so that the company can work
effectively and efficiently. This will help them in using the leadership style which is fitted best
for respective business situations. Under this, the leader will rapidly take decision without
wasting much time because this is very crucial to deal with changes in order to stay competitive.
Furthermore, the decision making will work better and effective in global market if the
business enterprise has worked collectively in team. When the team if formed then it takes into
account the different types of people with different knowledge base, qualifications, expertise, etc.
this creates influence on bringing innovation and new ideas can help in effective and proper
operation at the global level.
P6. Routes to internationalism a company may adopt.
For expansion of the business into the global market, there are various channels and
routes (Apăvăloaie, 2014). But the SASOL limited will adopt the diversification route where in
the company will be able to enlarge the business by maximising the product line, market,
services, stages of production, etc. The main intention of this is to enable the business enterprise
to enter into the business where the operations of business will be different from the existing
operation of the company. Thus, this will help in growth and development of the company.
Advantages Disadvantages
 With the diversification, the business
will able to make judicious use of
various untapped resources.
 Apart from this, the company is able to
increase the sale and profitability for
the company by way of entering into
 When the company has adopted to
diversify the business then this will
increase the demand for workforce.
Under this, the company needs
qualified, expertise personnel who can
implement the strategy. Thus, lack of

joint venture or mergers. Thus, this will
have positive impact on the cash flows,
borrowing capacity and profits.
 By bringing new products, exploring
new countries and targeting new
customers, the company will be to gain
significant market share which will
depict the growth and success of the
company (Adekola and Sergi, 2016).
such manpower will create a risk of
poor assessment of the strategy. Thus,
this can lead to adverse loss for the
company.
 The large number of organisations will
not be able to deal with the market
changes while diversifying the business
and this will create a risk of restricting
the innovation.
 Diversification of business successfully
will need large amount of investment
and the results are uncertain which can
affect the financial position of the
company badly.
CONCLUSION
From the above report, it has been concluded that globalisation is the most ongoing
concept in present business world. Companies are increasingly adopting this in order to expand
the business such that business can improve their line of products and profitability. With this, the
companies are able to effectively deal with the changes in the external business world.
Furthermore, the enhancement of ideas and thoughts strongly focus towards the attainment of
business goals and objectives by producing innovative products. There are major challenges
which are faced by companies in order to deal with globalisation. For this, the company has to
develop certain strategies and models.

REFERENCE
Books and Journals