Global Business Environment: Key Factors, Challenges, and Strategies for SASOL

This report analyzes the key factors of cost, market, environment, and competition that drive global commerce and trade for SASOL. It also evaluates the challenges faced by organizations when operating in a global environment and the impact of globalization on governance, leadership, structure, culture, and functions. The report further discusses the influences of ethical and sustainable globalisation on organisational functions and strategies for risk and diversification. The subject is Global Business Environment and the course code is Unit 18. The report is relevant for students pursuing business management courses in any college or university.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
P1 Analyse key factors of cost, market, environment and competition that drive global
commerce and trade....................................................................................................................1
M1 Critically analyse the impact that key factors have upon the global business environment
in terms of opportunities and challenges.....................................................................................2
P2 Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples..................................................................3
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions...................................................................................................4
M3 Critically evaluate influences of globalisation in application to appropriate theories and
models relating to organisational structure and culture..............................................................6
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions.
.....................................................................................................................................................6
M4 Critically evaluate the key barriers in doing business internationally and make
recommendations on how they can be overcome.......................................................................7
P5 Evaluate the different ways decision making can work effectively in a global context........8
P6 Determine and articulate the various routes to internationalisation an organisation may
adopt, including key barriers.......................................................................................................9
CONCLUSION.........................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
The term globalization has wider presence than it is used in context of any business. Therefore
globalization means the integration of world economies along with their culture, technologies,
goods and services. The major factors that can be seen in context to enhances transportation
services are steam locomotive, steamship, jet engine and container ships. Globalisation can be
economic, cultural and political as well. Thus this term can be deeply understood by involving
the most globalised company of South Africa,SASOL, which is an integrated chemical and
energy based company formed in 1950. SASOL is engaged in development and
commercialization of technologies, including synthetic fuel technologies and produces different
liquid fuels, chemicals and electricity (Bag and Pretorius, 2020). The report will be prepared by
identifying the key factors of cost, market, environment and competition that derives the global
trade and commerce. The report will also cover the issues that are faced by organisation when
operating in global environment and along with this the impact of globalisation on governance
and leadership structure. Also detailing about the ways in which effective decisions can me bade
in the global market of SASOL. At the end also the report will covers the routes to
internationalisation.
MAIN BODY
P1 Analyse key factors of cost, market, environment and competition that drive global
commerce and trade.
In context to SASOL, there are crucial factors that drives the business of company in the
global market. Each factor affects the company in trading internationally. It may expose
organisation to face difficulty in conducting the operations in other country or it may also happen
that opens the door of success for the SASOL.
 Cost
It is the amount of money that any company pay off in order to produce the goods and services.
The meaning vary from the seller and buyer point of view. In order to provide the drastic impact
in marketplace, SASOL believes that performing activities in one market will not be sufficient to
offer economies on big scale. It needs to maximize investment by investing in countries other
than the home country(Bougie and Sekaran, 2019). The another goal of SASOL is to get the
most linear investment cost. In pursuance of this company adopted cost leadership strategy. With
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this company can offer product and service in international market at nearly similar prices opted
by the competitors but a lower price. This will also spread the benefit of promotion and
advertising of company to make customer aware of their products and they ensure that wherever
people demand their product it is available for them
 Market
It has been observed in the enhanced economy, that consumers are aware and have knowledge
about the ongoing trend and lifestyle and their use. Because of this marketers of SASOL are able
to get ready buyers in countries that pursue good purchasing power and countries with well
developed infrastructure(Centobelli, Cerchione and Ertz, 2020). Which market to enter is a wise
decision to make for SASOL with respect to picking up of right regions that have export offices
and also have similar demographic and behavioural traits.
 Environment
In order to have regular and constant demand for its products, SASOL has widely spread the
advantages of globalization and also took measures to enhance the wealth and mobility of
consumers. In order to expand its operations and create a wider base, company has bind itself
with the levels of economic development and SASOL also took advantage of newly emerged
markets in the form of making its communication more enhanced. In order to serve in global
markets SASOL handles the manufacture base not build complete plant.
 Competition
In order to remain ahead in the competition, global rivals use a strengthen marketing strategy in
order to sustain advantages that if reduced from the mentioned level could make it susceptible.
SASOL which is a leading company drives its globalization process in the international market
by creating global markets through introducing, upgrading and distributing new products earlier
than the rival companies(Gray and Purdy, 2018).
M1 Critically analyse the impact that key factors have upon the global business
environment in terms of opportunities and challenges.
In the world where nothing is constant, SASOL has uplifted its long term strategy in order to be
reactive towards the global trend in order to maintain its existence. With the changing world,
customer requirements also change and complexities with respect to environment is also
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increasing. By implementing digital solution and enhancing the way to operate, company is able
to remain competitive and meet demands of stakeholders.
P2 Explain the complexity of strategic challenges faced by organisations when operating in
a global environment supported by specific examples.
The global environment in which SASOL is operating its activities is very difficult to predict
due to the existence of barriers to trade in most effective and efficient way(Hilman, Ali and
Gorondutse, 2019). As the competition and market have become global, thus it gave rise to a
system that involves complexities and making of strategic decision more difficult due to rapid
changes and unpredictability of environment in which SASOL is operating. The challenges
faced can be discussed by the use of PESTLE analysis Political Complexity- this is the complexity associated with the neglecting of political
factors in operating in global external environment. SASOL in order to meet its long
term goals, faces political hindrances amidst them. As political uncertainty continue to
exist, it is difficult for the company to identify the upcoming political trends like rates of
taxes and change in rules and regulations to operate effectively. This has made the
strategic planning of SASOL more complex and due to this decision making also get
affected. As future trends with respect to foreign trade regulations cannot b predicted, it is
a biggest challenge for the SASOL. Economic Complexity- this include elements of economic factors like growth,
unemployment, inflation, interest and exchange rates. The complexity associated with
these factors is the prediction of economic trend. Inability of SASOL to forecast the
economy regarding determinants like whether the change in interest rate will be
beneficial or not, inflation will be favourable or harmful, this is termed as the
complexities which will affect the employment and trade policy. Since SASOL is
continue to expand its operations globally, any negative fluctuation can affect the
financial performance of company. Social and cultural Complexity- this complexity took birth from the change in lifestyle
or changing trends, beliefs, consumer preferences and most importantly knowledge of
corporate social responsibility(Holsti, 2019). The African countries have started being
impacted by the western cultural values and beliefs because of fast spread of information
by the use of social media in context to SASOL. This complexes the acceptance of
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products of SASOL to its customer as the product is not marketed as expected by the
company. Technological Complexity- the rate at which technology changes is different. This
therefore creates a mess between rate of change and influence on operations of SASOL.
Analysing competitor has become more complex over time due to continuous evolvement
of technology(Ji and Wang, 2021). Environmental Complexity- In order to conduct business smoothly, SASOL is into the
in-depth analysis of physical environment and general environment. In case people
discover that operations performed by SASOL is harmful for the environment or is a
threat to, may adversely affect the activities. Operating globally requires applying the
international laws relating to environment carefully and appropriately otherwise the non
consideration can create complexity in running a business. Legal Complexity- this complexity arises due to violation international laws and
regulations that must be applied by SASOL while operating globally. Adhering to
complex laws of global market is not an easy task to perform thus it involves some
complex procedures to. This complexity expose the SASOL reputation negatively and
affect the strategic plan and decision making.
M2 Evaluate strategic challenges in context of risk and diversification strategies and the
supply chain flow.
While operating in global market, it is difficult to assess the risk associated with it. Challenges
associated with risk can be the mismeasurement of risk, inability to assess the risk already known
and also the communication of risk to the top level management. In which market to diversify it
operations is the biggest challenge faced by SASOL. The point that is to be marked at top is
inputs flow from original supplier through process of production to the final user is complex.
Therefore global supply chain contains some complexity is it includes people with different
behaviour and background that is difficult to manage(Kumar and Bhatia, 2021).
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions.
For the purpose of identifying the impact of globalization on organisational governance and
leadership, structure, culture and functions, SASOL make use of McKinsey 7s model as-
 Strategy- this is the plan of any business in order to maintain competitive advantage
over its competitors. Therefore it is required from the SASOL to maintain a balance
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between core competencies and short run cost savings. Customer of organisation expects
that their money should be valued. In respect of gaining a wider market share by
competing in prices, SASOL is required to neglect cost cutting that results in production
of inferior products ad less attractive service delivery(Lai, Sun and Ren, 2018).
 Structure- This reflects the format of company that is how the departments of
organisation is divided and person responsible for same. As SASOL is operating
globally, in one of the recent case their put up a question on the current structure and
supply chain management of company. In order to solve this, it require a focus on
diversifying the suppliers geographically so that issues may not arise with respect to
climate and geopolitical.
 System-This is associated with the activities that are performed by the employees of
company in order to complete the assigned task. In order to face this challenge SASOL
is required to improve its internal processes ad also enhance its customer relationship
management and also company is required to put in place a system of Work from home
in order to avoid the complexity of retaining a customer for a longer period of time and
also improve and maintain and interact with the employees regularly.
 Shared values- This segment describes the ethical values that is to implement while
operating in the global business environment. In order to solve the challenge of
Transparency, investors from worldwide of SASOL are putting lot of efforts with
respect to environmental, societal and government issues by introducing the concept of
Triple Bottom line in its financial reporting.
 Skills- this depicts the skills of employees of organisation that is depicted at the time of
performance of activities. SASOL get affected with this element in a serious way as it is
operating globally an involve employees from around the world, this means measuring
individual skill the challenge so in order to avoid this complexity, SASOL has
implemented the training and development program(Luthra and Mangla, 2018).
 Style-this depicts the style of leadership adopted by the leaders of company. For SASOL
to lead an employee working in different location is different in each prospect. In order
to solve this complexity SASOL has adopted the use of more collaborative and inclusive
form of leadership.
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 Staff- this segment comprise of employees working in the organisation. Due to
diversified operations of SASOL it is difficult to bring the employees on one ground and
interact. For this complexity, company is using the method of Recruitment and on
boarding. Hence this will also make transparency in culture(Maamari and Saheb, 2018).
M3 Critically evaluate influences of globalisation in application to appropriate theories and
models relating to organisational structure and culture.
Applying different theories and principles to identify the impact on structure and culture of
organisation, is the matter of fact. By applying McKinsey’s model, it is easy for the SASOL to
measure the influence of governance and structure on its operating globally. There involved lot
of complexities while performing activities in the international market as each and every aspects
contains pros and cons that is need to be considered for the smooth operations.
P4 Evaluate the influences of ethical and sustainable globalisation on organisational
functions.
In order to run the business successfully, SASOL is required to consider two important concerns
that are Ethics and Sustainability. This is also required to be maintained by the company while
operating globally through the use of different organisation functions. Globalisation impacts on
the way in which people live so it is required for the SASOL to take care that changes must go in
a sustainable direction.
 Production function- With respect to this function, it has strong position among other
and is a ever going process. This function has a high dependence on the marketing
function as it is related to the sales. Ethical behaviour is to be maintained by SASOL
while producing the products in global market as it is to be done in appropriate way like
no use of defective material and use of appropriate methods that are not illegal(Strange,
and Humphrey, 2019). The product produced should be sustainable to the global
environment
 Purchasing- this is associated with the obtaining of goods for the purpose of usage of
organisation. In order to maintain the ethics while considering the source of raw material,
it can done with not selecting lower quality goods and also no manipulation with the
prices(Tanhueco-Nepomuceno, 2019).
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 Human and Resources- this department has faced the complexities from globalisation.
As SASOL is operating in other countries as well that give rise to cultural differences
that exploit the benefit of globalisation to some extent like the commitment issues among
the employees, the management is biased with respect of hiring and promoting the
workers. By implementing the ethics in globalization it provides benefit of neglecting the
discrimination and also the child labour issues.
 Finance department- this is the foundation on which the business operations depends.
Therefore the ethics and sustainable globalization with respect to SASOL has a serious
impact on the company's finance department. In pursuance of this company is required to
implement ethical practices that are to be followed the investors as well and also do fair
trading that no scope for unfair trade practices, this will create a strong and potential
image of the company.
 Sales and marketing- As the number of customers of company also includes the
customer from other market apart from the home country. This means that needs and
want vary. SASOL faces ethical issues that arose from the marketing policies and also its
way of treating its customers. Hence company requires a good marketing team that can
make customer use premium products of company and avoid marketing of spoiled and
dangerous products. This team also requires to make sure that details provided behind the
product is sustainable that is not outdated and at the time of labelling ethical methods are
used.
M4 Critically evaluate the key barriers in doing business internationally and make
recommendations on how they can be overcome.
In doing business globally, there associated lot of benefits along with some obstacles in
maintaining them(Tasleem, Khan and Nisar, 2019). Hindrances like communication gap, cultural
differences, distinct legal formalities. In order to conduct trade in other foreign markets, SASOL
needs to be familiar with the existing laws and also if importing certain products it has to pay
additional taxes and duties. In order to remove communication gap, SASOL needs to rely on the
translators. The impact of culture can be widely seen on group rather than individual.
P5 Evaluate the different ways decision making can work effectively in a global context.
An effective decision making can be very useful for every business organisation. It is the
work of manager to make effective decisions in order to achieve the organisational objectives
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and acquire growth and success (Zhao and Zhou, 2021). A proper and effective decision making
helps an organisation to reduce their risk and increase the overall productivity of an organisation
which helps an organisation to achieve a great share at the market place. Globalisation have
paved the ways for many business as it allows many business to enter different nations all around
the world. But it it is significant to apply adequate knowledge and skills in decision making in
order to fulfil the requirements. There are various techniques and tools which can be used by
managers to solve their problems and to make different decisions in an organisation. In context
to SASOL, it is important to have a adequate knowledge of different market conditions and
conditions in order to make decisions which helps the company to grow its market internally in
the global market as well. Identify the Problems to make Decisions: It is the very first step for an company to make
decisions. It is significant to identify the problems that are going to be faced by the
organisation due to global competition and threats. An evaluation of the problems helps
the organisation to be clear about the issue that the leaders need to take in consideration.
It enable the manager to solve the problems effectively and efficiently without having
any issue decision making. Collect and Gather the relevant Information: To solve the problems adequately it is
important for decision to have relevant information relating to the issue or problems. It
will help the managers to adequately analyse the issue and helps to resolve it properly.
Hence ,it is very important for any organisation to analyse all the external and internal
factors in order to be effective in its operations as it clarifies all the issue that may
influence the functioning and operations of the organisation(Tuffour, Amoako and
Amartey, 2020). Identify the best alternatives : The next step in the decision making is to evaluate the
best out of the various alternatives that are available for an organisation. Evaluating the
best alternatives involves the looking at the advantages and disadvantages the decision
carries with it to impact the functioning of an organisation which helps them to
incorporate the best decision that can prosper the company growth and success. It is a
significant decision of the manager to find the best alternatives which can help an
organisation to achieve competitive advantage.
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 Actions Required : The next step involve in decision making is to take different actions
to regulate those changes in the organisation. As it will help the company to enhance its
performance by incorporating the those decisions (Al-Shammari and Masri, 2020). The
corrective measures in the operations and functions through decision making can help an
organisation to achieve their targets within the specified period of time and with
efficiency and effectively.
 Appraisal the decision and consequences: This is the most crucial and important
decision as it involves the result that are being measured by the organisation by
implementing those changes with the organisation. Whether the decisions that are being
taken and made made a influence in the functioning and help the organisation to achieve
success and development in the global market or not. If the decisions does not lead
positive results then make the corrective measures to regulate the functioning.
P6 Determine and articulate the various routes to internationalisation an organisation may
adopt, including key barriers.
In order to enter the new market, The organisation SASOL have to initiate its efforts by
contributing and satisfying the needs and preferences of the local markets which makes it easy
for the organisation to make a route in international markets. As it is difficult for the organisation
to enter the global markets without the help of local markets as there are different policies and
regulations of different nations which need to be undertaken to achieve those targets. To analyse
the best route for SASOL, in order to expand their market there are various factors that need to
be considered which are as follows- Select Export system: SASOL company can use export process to expand its market and
have a global reionisation in the marketplace by making their product and services
available in different nations. These strategy can help an organisation to expand its
markets and operations. Foreign direct investment: Another strategy that can be used by the company SASOL, is
to make partnerships with the different company that operates its markets in internal
markets which helps the organisation to have ease to have a reach in the global market
and to expand (Cortés-Pérez, Escobar-Sierra and Galindo-Monsalve, 2020). Licensing strategy: This strategy focuses on engagement of two or more firms together
as there are lot or huge investment required in order to acquire license. But the company
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can face an issue that foreign company cannot collaborate with their parent ones in order
to get the licensing strategy in practice. Build joint venture with the company: Joint venture means when two or more companies
come and join together for achievement of a common objectives . This will help SASOL
to expand its markets internally and have a global reach in the marketplace. Language barrier: It is an significant barrier for any organisation that needs to expand its
markets and operations internationally but to acquire the global market it is important to
have a good command over the language by engaging and employing language
translators and more which helps the company to achieve success and growth.
 Managing the global terms: To expand the market SASOL, the company needs to
regulate with all the rules and regulations in order to have proper functioning and
operations.
CONCLUSION
The report prepared above is with respect to glocalisation which is more bigger term then its
utilization. The report has covered the influence of factors like cost, market and competition and
also the way it expose to certain challenges and opens the door of opportunities. The report has
also provided the complexities involved in operating globally and also the influence of global
market on the leadership, culture and structure of organisation and its link to the functions of
organisation. Therefore the report also covered the ways of making effective decision in the
global market. At last it also covered the obstacles that came in the way to operate effectively in
the global market.
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