Global Business Environment: Opportunities and Challenges for SASOL

This report analyzes the primary components of cost, market, environment, and competition driving commerce and trade globally. It also assesses the strategic difficulties faced by businesses globally and measures the effects of globalization on organizational governance and leadership structure, culture, and functions.

Unit 18 – Global Business
Environment

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................4
PART 1............................................................................................................................................4
P1 Examine the primary components of cost, market, environment and competition driving
commerce and trade globally.......................................................................................................4
M1 Evaluate effects created by fundamental factors globally with various opportunities and
challenges....................................................................................................................................6
P2 Assess the strategic difficulties faced by businesses globally................................................6
M2 Determine the challenges regarding the risks and expansion strategies and supply chain
flow..............................................................................................................................................7
D1 Assess the global business environment relating to the opportunities and challenges
handled by a business..................................................................................................................8
CONCLUSION................................................................................................................................8
PART 2............................................................................................................................................9
P3 Measure the effects of globalisation on organisational governance and leadership structure,
culture and functions....................................................................................................................9
P4 Assess the impact of ethical and sustainable globalisation on business functions...............11
M3 Evaluate the impact of globalisation with respective theories and models regarding
organisational structure and culture...........................................................................................12
P5 Explain the diverse ways decision making can work effectively globally...........................12
P6 Ascertain diverse routes to internationalization along with obstacle concerned..................13
M4 Criticise the primary barriers for performing business internationally and provide solutions
for overcoming them..................................................................................................................14
D2 Give the strategies that could be used by businesses on a global level regarding
organisational structure and decision-making processes...........................................................15
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Globalisation is termed as the dismissal of trade barriers across national borders to
facilitate integration, interconnectivity and interdependence among various national and capital
markets to assist flow of capital, resources, goods and services from various different nations.
SASOL is a multinational organisation growing at a rapid pace in chemical and energy industry.
It has capacity to expand its operations in global markets while also being able to generate high
profits and revenues (Belyaeva, 2018). In this report, an analysis of all challenging factors of
SASOL will be explained while giving an overview of influence that globalisation has on
organisational leadership and governance, culture, structure and functions. In the next part of the
report, an overview of the sustainable and ethical influences on the functions of the business are
given. The various decision making theories along with the McKinsey's 7S model has been
explained to assist SASOL in the process of development in the global markets along with ways
of internationalization that it can utilize.
PART 1
P1 Examine the primary components of cost, market, environment and competition driving
commerce and trade globally.
There are various different factors which act as driving forces enabling nations and
domestics businesses to initiate global trade and commerce. The key factors that drive global
commerce and trade in today's times are:
 Cost Drivers: The cost drivers in global business scenario hugely affect the way global
commerce and trade is performed in various countries. In cost drivers, sourcing efficiency
and costs are different in all countries and various global businesses tend to make a
benefit of this fact. Other drivers of cost assisting globalization are opportunities
provided to build global economies of scales and high product development cost in
present times (Kasemsap, 2018) . With help of these factors, SASOL enjoys benefits of
reduction in cost due to increase in the units to be produced while transporting their
goods across the globe in mass numbers which will assist reduction of production cost as
well as increase profit margins.
 Market Drivers: With the internal markets becoming highly saturated, the domestic
businesses are provided with limited opportunities for growth and further developments

purposes. In this situation, it becomes necessary that organisations look for other ways
where they can grow their businesses. There occurs the opportunity of global expanding
provided through globalisation of commerce and trade. The ordinary needs and
requirements of customers and opportunity given to utilise global markets and marketing
channels are an incentive for the organisation to work globally (Wei, Thurasamy and
Popa, 2019). SASOL should target upon identifying new customers and work on
satisfying demands in an effective manner as this will works as a motivator for
performing international commerce and trade.
 Environment Drivers: The environment drivers which acts as an incentive for
organisations to initiate global commerce and trade are the increased level of dependency
of companies on some of the nations for providing a respective essential product
necessary in the production of the overall business product. This interdependency makes
it requisite for businesses to begin commerce and trade globally to assist and occupy the
necessities of production world-wide. Also economies of scale are key environmental
driver to assist businesses commence global trade as it involves reduction in wastages
occurring in production and hence achieve environmental benefits for nations. SASOL
requires to work upon framing such policies which will help the company in attaining
sustainable production with an intent of less wastage during production, utilise
packaging’s involving minimum wastage.
 Competitive Drivers: The Competitive drivers that work as a motivator for businesses to
begin global dealings and trade is the competition between inter firm defined as
competition in between the firms increases in global market and hence the businesses are
constrained to perform international commerce and trade. Other drivers in competitive
terms are the powerful interdependences in between various countries and even high
amount of trades occurring between any two globalised business organisations
(Khajeheian, Friedrichsen and Mödinger, 2018). Also the actions of FDI also supports
this driver of global business. SASOL functions in various locations and faces vast
competition in the market at global level.
PESTLE Analysis of SASOL as an organisation:

 Political factor: This refers to the government authoritative control and influence over
the business and the economy of the nation. With respect to SASOL, the government of
UK is firm and enforces less tax that has a positive impact on the organisation globally. Economic factor: These have a long term impact over an organisations growth in the
market and influences the company's pricing policies (Usunier, 2018). Since SASOL
functions globally it hence prefers countries that have a strong economic background. Social Factor: These are factors such as demographics and culture that can affect the
business environment by affecting peak buying periods, purchasing habits, and lifestyle
choices. In SASOL, the management pays high focus on necessities and demands of
people in society and provide quality product acceptable by them. Technological factor: These have a direct influence on the effectiveness and business
innovations. As SASOL runs their businesses internationally they utilise advance
technologies for performing business functions. Legal factor: These affect the internal and external legal and regulatory environment of
businesses in a country. SASOL focuses upon various laws of women empowerment,
equity along with paying enough attention on healthy payroll and business safety of its
employees.
 Environmental Factor: It considers factors relating to physical and general environment
for their protection requirements. In SASOL, the management is requisite to provide care
on formulation of policies and strategies for the business.
M1 Evaluate effects created by fundamental factors globally with various opportunities and
challenges.
The key factors of global environment include both opportunities as well as challenges
dealt by businesses performing their functions globally. The opportunities that are available to
firms globally include advancements in technology, presence of wider customer groups,
economies of scale (Krivogorsky and Ballam, 2019). These opportunities assist businesses to
perform their functions effectively at a larger scale while helping them in executing productions
aiming for higher profit margins. The global challenges are various such as cultural differences,
management of global teams, currency exchanges and inflation rates. These sometimes make it
challenging for businesses to perform their activities smoothly in an effective manner.

P2 Assess the strategic difficulties faced by businesses globally.
The strategic challenges faced by SASOL when performing its operations in the global
environment includes: International Recruitment: The most common challenge faced by the organisations
when performing globally lies in the recruitment process which involves recruiting
individuals internationally. This poses problems to the HR teams of having to interview
unknown persons belonging to different employment cultures and work ethics. This leads
to difficulty in performing process of recruitment suitably as differences with respect to
different factors lead to an inefficient recruitment that may not be beneficial for business
in long run (Faghih and Zali, 2018). Global expansion difficulties: For organisations which aim upon functioning their
operations at a global level and observe the benefits of globalization, setting up a
manageable existence overseas is challenging. Setting up a whole new enterprise
overseas would require a heavy capital investment from the business organisations. Also
the companies need to be aware of all the different global and legal systems that are
present in the countries so that any financial or legal consequences could be avoided. Complexity of Global Supply Chain: The flow of all the inputs involved in
manufacturing from their primary suppliers through several processes to the end
customer is very intricate and complex. The reason being that the participants concerned
in global supply chains are hard to manage, coordinate and control. This poses global
supply chains as a strategic complexity due to the constraints on the business managers
while making strategic and effective plans and decisions.
 Economic complexity: It is very difficult to anticipate the changes and trends in the
economic factors of an organisation in the global scenario. As global economic
environment pertains to high level of uncertainness which makes it difficult for
businesses to take solid decisions relating to their productions and financial health
(Ramakrishnan and Arokiasamy, 2019). This depicts that economic issues are also among
the strategic complexities which are faced by organisations in international business.
M2 Determine the challenges regarding the risks and expansion strategies and supply chain flow.
The supply chain risks involve interruptions in the product flow whether the raw
materials or parts of final products within the supply chain. The organisations should work upon

understanding the type of risks present and also evaluating the degree of risk involved in each
case so that the treatment of these risks could be performed efficiently. Risks along with
diversifications are factors which involve primary strategies accepted by management of an
organisation for the purpose of managing the business activities as well as overall performance
of the concern.
D1 Assess the global business environment relating to the opportunities and challenges handled
by a business.
The opportunities and challenges faced in global business environment influence the
operations of an organisation hugely. The external opportunities available to organisations
globally includes better international growth potential which assists the businesses to expand
their operations and profits earned exponentially (Massihi, Abdolvand and Rajaee Harandi,
2021). The challenges in the market affecting the organisations include exploding data and
monitoring performances. As the employee involvement and engagement in the global scenario
is huge it becomes difficult for businesses to keep a track of the performances of all the
individuals also the data involved in a global business scenario is massive leading to difficulties
in the processing of that data.
CONCLUSION
From the above report, it can be concluded that a business moving in international market
has a good scope of expansion. SASOL is one such organisation which is present in global
market it producing chemical and energy organization. The challenges faced in global market
can be dealt with proper analysis and studies. this helps the organisation in increasing
productivity and efficiency.

PART 2
P3 Measure the effects of globalisation on organisational governance and leadership structure,
culture and functions.
Globalisation plays a huge role in influencing the organisational governance, leadership,
structure, culture and functions. There occurs a number of various opportunities available to
companies when planning to expand their businesses on a global level (Andresen and Bergdolt,
2021). The management at SASOL aims to utilise the McKinsey 7S model to have a positive
influence on the company's leadership, structures, functions in this era of globalisation. The
seven constituents of McKinsey's 7S model are given below in context to SASOL: Strategy: This explains the organisations planning and program for the purpose of
constructing and keeping a competitive benefit over the competition of the organisation.
In context to SASOL, the organisation and its management adopts various competitive
and cost effective pricing strategies that assists them in maintaining upon their product
quality along with attracting more and more customers on a global level. Structure: This explains how the organisation is formed and organized. It defines the
reporting structure in the organisation, the composition of the teams in the company.
SASOL utilises their organisational structure in a form where the responsibilities and
duties of the employees are divided in such a manner which supports them to function
effectively and as per the necessities of the global countries. Systems: The daily activities, duties and procedures that the employee staff of the
organisation utilises to get their work done at the workplace (Fatoki, 2020) . SASOL
formulates upon the plans and strategies in an effective manner targeting upon the
expansion and development of the organisation in the global markets which will also
assist in increasing the company revenues. Shared values: This defines the core values that are shared by all the individuals in the
organisation along with the work ethics that are followed by them. With respect to
SASOL, the management of the organization gives strong emphasis on the behaviour and
working pattern of its employees while also providing healthy motivation to get
profitable outcomes.

 Style: The leadership style which prevails and is adopted in the business. SASOL follows
the pattern of democratic leadership which supports an equal and active participation of
all the employees in the working and even the business decision making process. This
helps to engage all the individuals who are present in the organisation and generate
favourable relationships. Staff: The employees and the individuals working in the organisation along with their
strengths and capabilities. SASOL has employed skilled and accomplished individuals
who assist the organisation in achieving all its business targets with better efficiency and
fruitfulness. Skills: This explains the actual skills and competencies of the individuals employed in the
business organisation. SASOL has established itself as an effective organisation where
the skills and competencies of individuals gets developed in an effective manner and
develop communication skills, decision-making skills, leadership skills, problem-solving
skills, collaboration skills and time management skills which helps them achieve targets
in the best way possible.
Application of Hofstede model of culture-
The Hofstede model of culture constitutes six dimensions. The cultural dimensions
display the autonomous preferences of states of affairs over one another which differentiates the
countries and not individuals) with each other (McWilliam and et.al., 2020). When an
organisation is exposed to a global business level, there are many factors which influence the
buying decision of consumer. By utilising the Hofstede model of culture, the effect of different
factors can be apprehended as follows: Power Distance: This culture advances strong and solid hierarchies with the influential
and powerful leaders where the power is apportioned in an unequal manner. In SASOL,
the decision making process is governed by the senior level managers of the organisation
which doesn't constitutes of any involvement of suggestions or opinions from the other
employees. Individualism and Collectivism: It defines the loosely formed social framework where
the individuals look after only themselves and their families. Collectivism describes a
strongly formed organisation where the individuals even take care of their relatives along
with their families.

 Masculinity and trade role: This dimension corresponds to the preference given in the
world to heroism, achievement and material success. The market sometimes supports the
masculinity structure and hence supports a particular variety of products only (Nikitina
and Lapiņa, 2019) . Tolerance and ambiguity: In this society, tolerance and ambiguity acts as the primary
components that require consideration when an organisation determines the various
cultural forms on the basis of which they perform their business and promotional
activities. Long-term orientation: The societies with long term orientation prefer to keep focus on
the future and achieving long term goals neglecting the short term success in the process.
 Indulgence and quick gratification: It has been observed that high levels of indulgence
show that a society permit comparatively free gratification, and increased levels of joy in
life.
P4 Assess the impact of ethical and sustainable globalisation on business functions.
In globalisation, ethical factors refer to the principal, values and beliefs that assist
individuals and organisations to specify what is right and what is termed to be wrong. In the
global scenario, it involves providing respect towards the employees, between the co-workers,
providing honest communications along with constructive feedbacks and trust among individuals
working in the organisation (Hung and et.al., 2021). The only consequence that comes with free
trade and globalisation lies in the problem of inequality. This is solved with the objective of
performing the business in an ethical manner which involves providing higher amount of
inventions, better education and redistribute the wealth in the economies.
Sustainability refers to the policies, initiatives and actions which aim at protection of a
specific resource. The four pillars of sustainability in the global environment involves human,
social, economic and environmental. These pillars work together to form the concept of
sustainable growth and development in the global environment. It facilitates the strength to stand
along with the competitors with a sustainable growth mind-set. SASOL has formed upon
respective ethical and sustainable factors which assist the organisation in global business
developments. These includes the company human resources, economies of scale and even
advertising he products of the company with efficient marketing systems involving nominal
wastages. The sustainability can be achieved by providing products which satisfy the needs and

requirements of the customer base in this dynamic business environment. With high knowledge
and proficient workers giving their contribution in company's marketing schemes and
conceptions, the customer base of SASOL could be improved on a high scale.
M3 Evaluate the impact of globalisation with respective theories and models regarding
organisational structure and culture.
Globalization impacts the organisational structure and the culture which prevails in a
huge manner (Djelic and Quack, 2018). As at a global level factors such as organizational
planning, leadership and even the structure of business changes along with globalisation. The
theories influence the concept of globalisation by assisting to provide a framework with which
the businesses can work in the global scenario.
P5 Explain the diverse ways decision making can work effectively globally.
For expanding the businesses at a global level, there are various primary as well as
competitive requirements that the business needs to decide about, before heading to declare itself
a global business. These include facilities of transportation, uses of advanced technologies and
management of an effective communication in the business at a global level. In SASOL, for
working at the world wide level in an effective manner, the organisation need to make efficient
as well as productive decisions on the basis of cultural aspects, time zones considering various
convention and policies as well as standards of an overseas market. With respect to SASOL, the
organisation can follow two types of decision making for working effectively, mainly based
upon the type of condition in which decisions are required to be made. Proactive decision-making: It is related with the prediction of the various events that can
have an effect on the business and on the basis of these information a proactive and
rational conclusion is made. It has a strategic approach attached to it (Venkatesh, Mathew
and Singhal, 2019).
 Reactive decision-making: it is based upon making fast and immediate decisions
depending upon the problems which have taken place in the business. Since this is
primarily dependent upon the problem, these are generally made in pressure situations.
Hence it can be said that an active organisation is more on the front of making proactive
decisions by taking self-initiatives in the global market rather than just reacting in the
problematic situations by making reactive decisions.

P6 Ascertain diverse routes to internationalization along with obstacle concerned.
Internationalization refers to designing a product in a way that the consumption of that
product can be given across multiple countries. This process is utilised by various organisations
who plan upon expanding their reach on a global level surpassing their domestic markets while
understanding the tastes and preferences of customers from different geographical areas.
The various barriers to internationalisation are as follows:
1. Financial barriers: The primary financial barrier faced by companies is the problem of
arranging, allocating and investing the funds needed for taking a business organisation
globally. SASOL should work upon strengthening its financial availability of funds in
order to avoid the problem of financial incompetence which may to failure in the entry of
business in the global environment (Nantembelele and Gopal, 2018).
2. Managerial barriers: For the purpose of operating a business in the global markets,
there needs to be an effective and well experienced management system needed for
efficiently managing the organisation. Along with this the management of the physical
and the human resources which are available with the organisations is necessary which
otherwise may prove to be a barrier affecting the entry and performances of an
organization globally. SASOL should hence work upon an effective management of the
all the various resources present with them so that it can enter the markets easily.
3. Cultural Barriers: The cultural barriers may also affect the entry as well as the
positioning of an organisation in the global business environment. There are various
countries which hold their cultural values very strongly and hence if the business plans
upon expanding in such countries it needs to effectively work upon forming country
related policies and entry programmes. SASOL should make due analysis of the
respective cultural necessities and plan upon their products and services in the same
manner to avoid any deviations in the expected results.
4. Technological barriers: The technological advancements taking place continuously
make the environment very competitive for business organisations. Hence the
organisations should effectively work upon developing their processes with the similar
speed so that it doesn't comes out to be a barrier. SASOL should hence make essential
changes and effective developments in their technological area so that the business
doesn't faces any such barrier while ranging their operations globally.

There are variety of internationalisation routes. These indicate the localized marketplaces
that the businesses are entering along with the skills, resources and risk that they are ready to
deal: Licensing: This refers to the process of occupying the license from a respective company
or a brand in the form of acquiring the desired permission to produce and sell their
respective products in the market. It involves payment of royalty charges to the actual
owner of the brand for the received benefits of selling their products. It creates s newer
opportunities for companies to expand their operations in global market without much of
a capital investment (Thanetsunthorn and Wuthisatian, 2019).
 Joint venture: It is a form of written agreement that involves combining the business
ideas of two different organisations who plan to work together with the aim of business
expansion. It forms an individual brand from the combination of the two different
companies and their respective resources. This helps in providing the two different
companies with each of their necessary requirements and hence flourish in the market
without much of capital investments. Hence SASOL should aim upon joining their
business with an international brand which will assist the company in accelerating its
level of sales in the global markets and run the business effectively.
M4 Criticise the primary barriers for performing business internationally and provide solutions
for overcoming them.
The key barriers that the businesses face when performing globally and the ways in which they
can overcome those barriers are: International Recruitment: Recruitment done on international level requires to secure
success in the hiring task, HR teams must take into account the challenges such as time
zones, cultural differences and even obstacle in language to discover a good fit for
SASOL. Global expansion difficulties: For overcoming the difficulties due to global expansion
SASOL should take the necessary steps to be aware of all the essential labour laws
changes and the legal modifications which keep occurring to reduce the level of
difficulties in the expansion.
 Complexity of Global Supply Chain: For dealing with this barrier SASOL should
develop upon a flexible workforce that can assist in easing out the intricacy in the

organisation while managing the supply chain. It should also build upon supplier
customer relationship along with developing an effective access to leadership so that the
difficulties occurring in supply chain could be managed thoroughly .
D2 Give the strategies that could be used by businesses on a global level regarding
organisational structure and decision-making processes.
When operating in a global environment, the decision making should be primarily based
upon setting up planned path aiming towards business goals and implement specified steps for
realising them (Jehanzeb and Mohanty, 2018). Along with this the structure of organisation
evaluates the ways in which the business organisation will illustrate its business units and the
process in which the businesses necessities will be met.
CONCLUSION
From the examination done above, it can be said that there are variety of ways by which
an organisation can involve in international trade. The decision of moving in international market
is influenced by various factors. Better technology, recognition and productivity is good reason
to take the business on international level. There is various factor that effect the business
decision outside the country in which culture plays a vital role.

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