Unit 18 – Global Business Environment : Assignment

Unit 18 – Global Business
Environment

INTRODUCTION
Business environment is a collection of various factors that impacts the business in direct
or indirect manner (Beqiri, 2014). Such factors includes supply and demand, employees,
innovation in technology, market trends, customers preferences and so on that are are associated
with functionality of business operations. Global business environment encompasses the
environment in which different countries integrates with the purpose of making common
decisions in order to make developments on world economy. In such environment two or more
firms performs several tasks to attain mutual benefits by exchanging goods, technology, culture
and many more that enhances faster decision making along with development of economy of
nation. To under such concept in depth, SASOL Limited is chosen. The selected organisation is a
fast growing chemical and energy company who has expanded the business in various countries
such as Canada, Australia and so on. The report includes analysis of various key factors that
drive globalisation, strategic complexities that are associated with operating a business in global
environment. It further discusses about the ways global market influences structure, culture as
well as functions of an organisation. At last, it includes influences of globalisation on decision
making along with strategies of a company.
PART 1
1. Concept of globalisation
Globalisation: The integration and interconnection between people, organizations,
economy, society as well as government is termed as globalization. It involves procedures
through which the world connects with various countries by exchanging products or services
across the boundaries of a particular nation. It results in massive enhancement of trade,
communication along with exchanging technology that helps in reaching to larger customer base
across boarders. Such concept provides advantages and disadvantages to any business. It leads
towards development of society, increasing employment opportunities and many more that
provides advantages to expand the business operations. By at the same time it also results in
degradation of environment, wastage of resources, unfair condition as well as decrease in
environment growth rates.
In context to SASOL Limited, expansion of business will include expansion of crude oil,
energy products, chemical substances and so on (Esmer and Duru, 2017). The concept of

globalisation help managers to formulate provisions as well as effective strategies to promote as
well as increases awareness related to organizational products in global market.
2. Driving factors of globalisation
Key drivers that drive global commerce and trade: In the dynamic and competitive
world, there are certain factors that helps businesses to carry out operations and management of
any company should understand the nature of key drivers that leads towards driving global
commerce as well as trade. Some of them are as described:
Cost: Cost driving factors are differential costs, human capitals and global scope
economies. Globalization includes various procedures that allows SASOL Limited to opt
concentrating value added as well as dispersing value added tasks that helps in attaining location
benefits that impacts in selling existing products in order to gain economies of scale through
importing or outsourcing various commodities.
Market: The key factors that are part of market drivers are transferable marketing,
customer perception and so on that results in delivering standardized products. SASOL Limited
provides products with high standard quality to satisfy demands of customers that impacts on
increasing sales performances as well as capturing larger shares in market.
Competition: In reference to this driver, it includes actions, plans and strategies of
competing organization. Globalization has build a high competition level in which foreign direct
investment fosters SASOL Limited interdependence between countries as well as other
companies. It impacts on exposing the business operations to existing or new competitors in the
competitive world.
Environment: It includes internal environment and external environment as key drivers
that impacts on organizational operations in reference to global trade and commerce. Such driver
forces managers of SASOL Limited to integrate according to the changes in political systems.
International laws and so on.
3. Significant impact of digital technology upon globalisation.
The digital technology impacts on business operations at great extent. Such technology
includes internet to convert process data into meaningful information as well as communicate the
same by using digital mediums (Gakure, 2014). By using mediums of digital technology,
SASOL Limited faced positive as well as negative impacts. Some of the positive impacts are
expanding promotional areas, contacting with distant potential clients, making easy

communication as well as understanding perceptions of customers. All these resulted in
expansion of operations at global level as well as generating more revenues. At the same time,
some of the negative impacts are increased dependence on digital technology, handling dynamic
demands or preferences of customers increases overload on employees along with business
operations. Following are the elaborated impacts of digital technology on operations of SASOL
Limited:
Increases productivity: By adopting means of digital technology, managers of SASOL
Limited improves their operations in production procedures as well as makes communication
faster which increases efficiency of workforce as well as delivering customer services on time
impacts on overall productivity of organization in positive manner.
Broadens customer base: Digital technology allows SASOL Limited to expand its
operations and reach emerging markets rather then delivering organizational products in local
market only that impacts on broadening customer base of the company and expansion of
operations through mediums such as retail websites.
4. PESTLE Analysis.
These are used by management to identify various components like PESTLE analysis
which states political, economical, social, technological, legal and environmental factors that
might affect the activities of an organisation (Jain and et. al., 2015).
Political factors: These factors determine the extent to which government authorities can
impact an organisation or industry. It ensures stability of policies i.e. trade, fiscal, taxation. They
include trade tariffs, corruption, inter-country relationships, grants, government term and
changes etc. SASOL Limited operates in different counties with stable as well as unstable
business environment. Due to the impact of political factors on unstable enterprise, governmental
policies will be changed which will lead in downfall of business. To prevent this practice, the
company needs to apply tax rates to its products, follow rules and regulations made by local
council, implement bureaucracy as well as provide employee benefits.
Economical factors: These factors determine the performance of an economy which will
impact the company and it's profitability. They include interest, employment, foreign exchange
rates, inflation, economical trends, import/export etc. SASOL Limited faces immense
competition for its products and services offered to the public. To overcome this, the company

should patent their goods, apply high custom duty due to which competitors will be unable to
make identical items that will help in overall growth of the organisation.
Social factors: These factors influence the social environment by identifying needs and
wants of customers in an organisation. They include cultural trends, demographics, consumer
opinions, buying patterns of people, lifestyle trends etc. By studying the way in which people
live, work and think, SASOL Limited identifies customer expectations regarding the products &
services being offered and changes the diversification of goods made. This helps in increasing
company's profitability position in the environment failing to which they might lose some
customers.
Technological factors: These factors consider the impact of any technological
development or innovation done in the society. It constitutes of emerging technology, awareness
among people, research and development etc. With upcoming changes and inventions in the
society, SASOL Limited updates its products by doing a comparative study on the needs of
people. It designs new updated machines & equipments for the goods & services offered to the
market participants by appointing well experienced staff who can deal with the complexities in
technology (Kasemsap, 2017). If they do not succeed in advancing their services, it will directly
impact the profitability of firm.
Legal factors: These factors include various compliances, rules & regulations for the
betterment of business environment. It consists of employment, health & safety law, tax
regulations, consumer protection etc. SASOL Limited implies to all the government laws which
are applied to different products. Since the company trades in a number of locations, it needs to
consider as well as apply various clauses stated under the Companies act. If the firm fails to
follow some policies it will affect the decision making power of the managers.
Environmental factors: These are the factors that are influenced by the impact of
environmental surroundings. The factors are limited to climate, weather, global changes,
agriculture etc. SASOL Limited has a wide spread environment and considers interacting with
the ecological changes in the economy. The company recycles some parts of machine and reuses
it by making some changes in it. It has set factories in outer areas of the city so that localities are
not affected by the pollution caused due to machines. For the health and safety of employees, the
company provides mask to every member of staff along with rotational shifts so that one person
is not involved in the process for too long.

5. Challenges of globalisation along with strategic challenges.
Strategic challenges: These are the issues that can directly or indirectly control decision
making of market participants and measure the success of a company. They are generally derived
from future competitors that produce identical products in an organisation. It is an external force
which can influence the authoritative power of managers involved in the technological process.
External challenges can be related to customer, society expectations, advancement in product,
financial constraints and other risks whereas internal issues relate to human resources,
organisation's capability to perform task etc.
Strategic challenges faced by businesses due to the impact of globalisation: With rising
economy a business enterprise faces various challenges due to the impact of globalisation on
society (Lee and Min, 2014). They include changes in laws & regulations made by the
government, ethical business practices, modification in the structure of organisation, public
relations, technological developments etc. Globalisation has marked its position in the society
with economies of scale, spreading awareness regarding issues among people, increasing
competition in the market etc. Due to rise in prices of products & services, SASOL Limited has
decreased the value of those goods that are trending in the industry which has helped the
company to stand out among competitors. By following this practice, the firm has marked its
position among the market participants that has assisted them in attaining global recognition.
6. Recommendations to overcome challenges.
The solutions to the overcome challenges are listed below:
With technological advancements in the society, a business develops its products &
equipments according to the needs of people. It helps in attaining customer satisfaction. The
competitors in every industry has taken their place in the market. To avoid competition,
companies should establish unique designs to goods produced as that will attract the consumer
into buying it. For this proper execution of resources, research and development etc. is required
so that any innovations made can be easily displayed. To maintain good public relations, an
organisation must consider the needs as well as wants of market participants so that all the
requirements are fulfilled. Spreading awareness regarding an issue plays a very important role as
it develops an understanding on people's mind of what is happening in the environment.

PART 2
1. McKinsey's 7s Model
Managers of SASOL Limited are planning to expand the operations in various other
countries. Globalization provides opportunities to expand the business in new market but affects
culture, governance as well as leadership. In order to expand the business, managers have to
comply with the changing demand of clients and needs to change their management along with
leadership styles that motivates workforce to work as per global requirements (Malikov and
others, 2015). The existing management of SASOL Limited adopts McKinsey's model to
ascertain factors of globalisation that influences functions of the business. Such model reflects
interrelationship between hard elements along with soft elements. Applicability of such model is
as follows:
Hard elements:
Strategy (Governance): Managers of SASOL Limited develops strategies that helps in
achieving organizational goals. They should opt effective rules that are required to deal with
competitive firms as to sustain in market for longer time. Applying effective strategy helps the
selected organization to evaluate various changes pertaining with business environment as well
as understanding the nature of change and accordingly opting new practices that will lead the
company towards attaining goals.
Structure: Existing organizational structure of SASOL limited is functional
organizational structure in which employees are grouped in different functional departments as
per the area or specialization as well as skills. For expansion purposes, same structure should be
followed as it provides great results. Such structure benefits managers of the company to
understand the market demands and fulfilling them with the help of functional departmental
members to enhance satisfaction of international customers.
Systems: Systems defines the patterns in which organizational activities are carried out to
achieve success. To expand the operations at international level, managers of SASOL Limited
have to upgrade their old systems with new systems. New systems includes team development
system, selection system and so on that will help in enhancing quality of chemical as well as
energy substances. Advances systems helps in smooth functioning as well as operating activities
of the organization in effective manner.
Soft elements:

Shared values: Existing management of SASOL Limited emphasis towards excellence
as well as enthusiasm with the purpose of satisfying basic requirements of members. They
provide favorable and positive environment that increases shared values along with collaboration
that leads towards performing tasks with ethics. By focusing on excellence and enthusiasm,
executives of such enterprise emphasis on employees needs that results in increasing efficiency
of workforce which leads the organization to achieve more profits.
Skills: SASOL Limited has highly skilled professions who has excellent communication
skills, technical skills, decision making skills and many more that are required for performing
duties at the time of expanding business at global level. Managerial as well as analytical skills of
employers of respective business helps in more production as well as analyzing customers
demand as to produce accordingly which results in reduces wastage of materials as well as
meeting demands of international customers in effective manner.
Style: Managers of SASOL Limited should adopt transactional leadership style along
with chaotic management style that will help in managing all operations according to the
strategies at global level (Mensi and others, 2014). By adopting effective leadership styles by
managers of SASOl Limited helps in motivating workforce to perform job roles in effective
ways so that organisation can produce and work in global business.
Staff: As SASOL Limited is planning to expand the business in different countries, for
this they require to increase their staff members. They should follow system of recruitment as
well as selection system to expand the number of staff members in organizations. Staff members
of the company are highly expertise that helps team members to perform all activities in smooth
format without any hurdles at global level.
In addition, to incorporate with changes in current work culture, management of SASOL
Limited should also consider as well as adopt to Hofstede's cultural dimension.
2. Hofstede's Dimensions.
Such framework is used by organizations to analyze significant changes that affects
operations of organization as well as influences cross culture communication. It includes
following dimensions:
Power distance index: Such dimension is defined as the level to which less powerful or
more powerful members accept as well as expect unequal or equal distribution of power. Higher
power distance index reflects clear establishment of hierarchy without any misunderstandings.

Lower power index reflects that employees question authority responsibility relationships.
Managers of SASOL Limited has adopted high level of power distance index that helps in
accepting qualities along with inequalities at workplace. By adopting high power distance index,
managers encourages bureaucracy at workplace that results in acceptance of power differences
and inequity and to work as per the orders that helps in attaining long term objectives of SASOL
Limited.
Uncertain avoidance index: In context to SASOL Limited, managers uses such
dimension to acknowledge situations related with anxiety as well as misunderstandings at
workplace. Such dimension helps in improving morale of employees. Managers adopts low
uncertain avoidance index rather than high index that results in acceptance of regulations and lax
rules by employees that indicates working in uncertain environment by taking more risks that
helps the organizational members to deal with unknown circumstances as to satisfy international
customers demands.
Individualism versus collectivism: SASOL Limited managers believes in collectivism
and adopts dimension of collectivism that results in effective management structure as well as
relevant culture adoption. Adopting collectivism dimension at SASOL Limited workplace results
in integrating into groups as well as fulfilling obligation in order to attain collective objectives of
people, organization and society welfare.
Masculinity versus femininity: Executives of SASOL Limited prefers enhancing role of
femininity against masculinity in order to encourage women empowerment and to eliminate
gender gaps that reduces biasness as well as unfair practices at workplace. Adoption of
femininity dimension at workplace of the company results in nurturing quality of life that helps
in considering and meeting preference of society.
Pragmatic versus normative: Management of SASOL Limited focuses towards
normative approach that results in providing rights, strong conviction along with values of an
employee. By focusing towards WHAT is happening helps the organization to attain growth in
global market.
Indulgence versus resistant: In reference to SASOL Limited, managers encourages high
indulgence and provide freedom to express their thought and emotions. Such dimension focuses
towards employee happiness to work in global market. High indulgence reflects that managers of

SASOL Limited works to fulfill desires of society that helps in improving image of the company
in international market.
Thus, such dimensional model helps in changing work culture as per the short term along
with long term orientations to achieve beneficiary results.
3. Evaluation of ethical and sustainable factors.
Ethical globalisation refers to integration as well as transformation of goods, services
along with information in ethical manner while performing business operations at global market.
Sustainable globalisation results in break down of activities in order to develop sustainability
along with fundamental transformation that helps in achieving competitive advantages while
performing business operations at global context (Rönnberg, 2017). Influences of ethical and
sustainable globalisation on organisational functions are as follows:
Marketing: Marketers adopts new strategies as well as tactics to identify demands,
preferences and requirements of larger customer segment. Marketers of SASOL Limited
identifies demand of chemical products along with energy substances at new global market. Such
actions helps in implementing more effective marketing strategies to influence potential
customers to make purchase decisions. To adopt latest technologies for performing business
activities in ethical manner is very complex as well as difficult task for SASOL Limited as to
make complete changes requires much efforts and time.
Finance: Expanding the business in emerging market requires to raise huge financial
resources along with optimising financial resources in ethical manner. Managers of SASOL
Limited are required to make investments as well as performing operations in structured aspects.
Larger investments results in financial problems that hampers sustainability of business in global
market.
Social: Social factors are associated with race and ethnicity, social taboos, economic
status and hence forth. Understanding the needs of society and providing products by SASOL
Limited helps in upgrading living standards of the society. By focusing towards development of
society by implementing ethical practices results in increasing sustainability of business in
international context.
Economic: Some of the economic factors are capital formation, economic system as well
as marketable surplus. Managers of SASOL Limited carefully understanding economic systems
along with taxation rates, governmental activities that are related with different countries in order

to manufacture products as per the ethics of the country with the aim to improve the
sustainability in global market.
Human: Humans are key factors of SASOL Limited therefore managers should hire
fresh as well as experienced humans to implement practices in order to attain sustainability of the
company. All the plans and practices related with humans should be ethically formulated as per
the preferences of employees.
Environmental: The managers of SASOL Limited should consider environmental
factors such as climate change and many more. Producing and delivering non hazardous products
in ethical manner helps the organization to attain long term sustainability in international market
place.
As per the evaluation, it can be stated that making improvements in existing functions
provides benefits to Mangers of SASOL Limited in order to perform functions in international
market in ethical manner that aids towards sustainable position for longer time period.
4. Assessment of factors affected decision making.
In order to attain success at global level it is very important to formulate effective
decisions as it can guide achieve growth. Managers and leader have vital role in this process as
they are responsible to take best suitable decision for organisation. For this purpose managers
and leaders in SASOL Limited are required to take training and guidance from top level
executives as they can help to assess success of their actions(Santoro, 2015). Some of the ways
for decision making are as follows:
Visionary: In this way of decision making managers of SASOL Limited can set a long
term vision for the business which is going to be accomplished in future. In order to reach to it
they share it to the employees so that they can contribute to organisational success. With the help
of it staff members can analyse the achievement which is going to be acquired y entering in a
new marketplace.
Guardian: This way of decision can help managers of SASOL Limited to formulate
healthy decisions to achieve success at global level. By using such type of decision making
managers of SASOL Limited effectively considering statistics as well as fact based data or
information at the time of making decisions related with development plans that helps the
organisation to effectively work at global context.

Motivator: This method of decision making guides managers of SASOL Limited to use
such factors for the attainment of long term business goals which can motivate staff members.
Using such decision making helps managers to consider numerous factors that results in
motivating as well as encouraging workforce to work as per the requirements of changes.
5. Strategic expansion routes to internationalisation.
Different barriers which could be faced by SASOL Limited while expansion are as
follows:
 Financial barrier: One of the major barrier will be lack of financial resources as it
requires huge funding to internationalise the business.
 Human resource barrier: Another barrier which can affect the organisation is
human resource related problems as new employees are required to be hired by
company from the country where business is going to be expanded.
 Managerial barrier: On the barrier that SASOL Limited faces in insufficient skills
within managers to handle uncertain situations at international level as managers
lacks communication skills, problem solving skills and technical skills which is a
barrier for the company to work for business expansion.
 Market based barrier: Due to the uncertain and dynamic market, at the time of
functioning at global level some of the emerged barriers are inappropriate trends
knowledge, changing customers demands, dynamic situations of foreign market are
some of the barriers to expand the business at global level.
In order to overcome the above described barriers it is vital for SASOL Limited to form
appropriate strategies which can help to respond to them appropriately (Virglerová, Dobeš and
Vojtovič, 2016).
There are various routes to enter in an international market. Some of them which could be
adopted by SASOL to enter in the global market is as follows:
Licensing: In this type of method SASOL Limited can give license to another company
which can execute business in the internation market by taking its name. Managers in SASOL
Limited can charge royalty from the other party which is going to operate business at global
level.
Merger and acquisition: It is also a method of internationalisation in which SASOL
Limited can merge with other company to operate business at global level or acquire an

organisation and execute business at global level. It will be best suitable method of
internationalisation in which SASOL Limited can expand its business at global level by merging
with a well established company (Wu and Huarng, 2015).
Joint venture: One of the way to go international is joint venture in which two or more
organisations forms contractual agreements to join business activities or operations for defined
time period. It results in sharing skills, funds and assets of the company with other company and
at the same time both are equally responsible for costs, losses as well as profits. SASOL Limited
can jointly form venture with other companies in same business as to attain targets in effective
manner.
Franchising: It is an arrangement in which one party grants rights to another party in
order to use trade name along with systems of the existing company for the production of
products as per the certain specifications. It provides benefits to both companies that are the
brand owner as well as franchisee. SASOL Limited can also adopt such route to go
internationalisation by making contractual agreements of franchise with another company in
another country.
Hence, by adopting the above stated ways SASOL Limited can expand its business
operations in numerous countries in future.
CONCLUSION
From the above report it can be concluded that managing business operations in global
business environment provides various benefits to organisations. Key factors includes cost,
competition, market and environment that impacts on global trade and commerce. Digital
technology results in positive as well as negative impacts on globalised business. Pestle analysis
helps in understanding the impact that external factors have on business organisations. Hostede's
Cultural dimension is used by managers for the evaluation of cross cultural communication at
global context. Organisations faces various barriers and at the same time adopts ways routes to
internationalization.

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