Global Business Environment - Sasol Assignment Solved

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Globalisation...............................................................................................................................3
Driving factors of globalisation..................................................................................................4
Significant impact of digital technology upon globalization......................................................4
PESTLE analysis of an organisational context...........................................................................5
Challenges of globalisation and the strategic challenges for an organisation.............................6
Recommendations.......................................................................................................................6
PART 2............................................................................................................................................7
Explanation of culture, structure and governance by using McKinsey's 7S model....................7
Apply Hofstede's dimensions of culture to determine that how organisation has been affected 8
Evaluation of ethical and sustainable factors about organization within the global market.......8
Factors that affect decision making.............................................................................................9
Strategic expansion routes as well as advantages and disadvantages within the organisation. 10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Organisation usually experience unpredictable change or challenge while coping up with
various external factors like political or economical change which is the part of Global business
environment. So to sustain in global market firm set the strategies, make optimum utilisation of
resources and remain flexible to accept as well as adopt the changes (Amran, Lee and Devi,
2014). Thus, engagement of an organisation with the global business environment significantly
help the business to gain long term advantage. For the better understanding of report SASOL
Limited company has been selected which is energy and chemical company. Although the
company operates in South Africa but has expanded its business globally including countries like
Canada, Australia, Mozambique and so on. This report cover certain topics like essential factors
that drive to globalisation. Determine the complexities which are associated while operating
business in global environment. Evaluate the structure, culture and function of an organisation
while operating the business in global environment. Further, define the decision making and
globalisation strategy that influences the organisation are covered in this report.
TASK 1
Globalisation
Globalisation refer to the process by which the countries interconnect with each other for
culture as well as trade exchange. It has massively enhanced the interdependency among the
national and international country for the production of goods and services. Most of the
multinational company conduct cross border exchange where they significantly exchange the
goods, technology, information as well as investment for the mass production. In relation to
SASOL company which deals in energy and chemical products has not limited its products like
natural gases, crude oil and so on within in national boundaries that is South Africa. It has
perhaps extended the business to various countries in order to generate more revenue with the
help of diversification and strong distribution channel. Earlier due to closed economy companies
used to find immense difficult and constraint to reach out to the potential customer (Beqiri,
2014). Further, with passage of time globalisation has promoted the company to analyse external
factor and expand the business by maintaining the global image.

Driving factors of globalisation
There are certain emerging factors that has play significant role to contribute for the
existence of globalisation for the smooth functioning of business. These factors are determined
below:
Constant change in technology: Due to the advancement of technology and adequate
flow of communication has rapidly enhanced the technology for the development of overall
economy (Bititci, Cocca and Ates, 2016). Globalisation has lead to a technology web that has
enabled the business to trade successfully by removing the trade barrier. In relation to SASOL
company analysed the changing preference and increase demand of energy and chemical
product. This lead to the generation of innovation and easy expansion of company in order to
gain the long term sustainable development by overpowering their competitors.
Containerisation: As most of the multinational company likes to takes the advantage of
their economies of scale in order to expand their business on other geographical region. Thus, for
the convenience of company the prices of ocean shipping has lowered down due to bulk shipping
and increase opportunity because of globalisation. Hence, this is a beneficial situation for
SASOL limited to trade effectively and at desirable prices.
Significant impact of digital technology upon globalization
Digitalisation has facilitate the globalisation as it assist the company to engage traffic and
invite the customer from various sources like social media, website, SEO and so on. It has lead to
the generation of innovation which has enhanced the connectively among the country by virtual
media. Herein, SASOL company can make the use of digital media to communicate about their
product line that leads to the value addition. This help the customer to easily access the product
and gain all the relevant information which is posted by company. Along with that they can
contact the company to resolve their queries (Coltman and et. al., 2015). Moreover, respective
company can use social media and affiliated marketing tool to make customised advertisements
and attract the customer by generating the brand awareness. Such technology makes the use of
google analytical tool which basically helps the company to get the ultimate result at real time
and change the strategy accordingly with the purpose to gain better result. Furthermore, digital
media is a cost effective method which has even benefited to the small or media company to
build their virtual existing. and carry on the business by touching to the international borders.

Hence, digitalisation has made immense contribution in globalisation as it does not require the
company to make huge investment in brick and mortar outlet.
PESTLE analysis of an organisational context
PESTLE analysis: It refer to the external factors which needs to de considered or
analysed by the company to expand the business effectively. These factor help the company to
make vital decision as it directly affect the performance of company.
Political factor: Political factor include factors like trade regulation, tax policy product
labelling and other requirement for energy and chemical company which needs to be taken care
by company. As SASOL company has exposed itself to various political condition which make it
necessary for the company to examine various rules and guideline imposed by the local authority
of various region and deal accordingly for the better functioning of business.
Economical factor: SASOL company consider the economic factors like foreign
exchange, inflation rate, interest rate and various economic cycle which is determine by the
company to make decision in relation to demand and investment. This help selected company by
formulating the effective strategy and make significant decision as per the different economic
cycle by changing the prices of product. Thus, it is used to form interrelation among various
countries (Elbanna, Andrews and Pollanen, 2016).
Social factor: It include culture, population growth, attitude and preference which
different from one region to another as t. As SASOL company is a multinational company so it
needs to be familiar with the lifestyle and liking of local residence to gain their trust. It is crucial
for company to distribute quality material which are adulteration free like, SASOL company can
eliminate the use of oil sands or cheap fuels because this may lead to the negative impact on the
existence of company.
Technology factor: Technology or the innovation is used by the company to strengthen
their distribution channel and come up with new ways to solve the problem of ultimate customer.
Although SASOL company remain keen to update their existing technology and adopt latest
ones as per the changing preferences or at the time of obsolete of existing one. For instance,
respective company can use automatic technique and use innovation for quick recovery of oil.
This help the company to gain edge over rivalries.
Environmental factor: Changing climatic condition or weather pattern directly affect the
functioning of industry. As SASOL business operate in external environment where they depend

upon the environment to extract the natural resources like fuel. So respective industry needs to
remain careful because they cannot negatively affect the environment otherwise this can hamper
the image of company. Thus, respective company makes the optimum utilisation of the available
resources by reducing the wastage and emission of beneficial gas like carbon-di-oxide.
Legal factor: Legal factor includes the law or legal implication made by the government
for the welfare of society and internal stakeholder that need to be rendered by the company
(Daley, 2012). In relation to SASOL limited needs to anticipate the market and the changing
price of fuel so that they can make the strategy accordingly. Moreover, there are certain laws
such as gender discrimination, minimum wages rate which needs to be abide by the company to
enhance productivity.
Challenges of globalisation and the strategic challenges for an organisation
Globalisation has provide huge benefit to the company in terms of advance technology,
and promote connectivity in terms of easy flow of communication. On contrary, there are certain
challenges of faced by globalisation which is stated below:
Biasness among labour of different region: Globalisation has benefited the company in
terms of mobility like they generally conduct the operation in an emerging economy where the
cost of labour is relatively low. This lower down the operation cost of cost. On contrary, the
worker is underpaid in comparison to another skilled worker which exploit their interest.
Threat for small medium enterprise: As due to globalisation most of the organisation
has expanded their size and reach due to which small or medium enterprises faced difficulty to
cope up with competition. Hence, because of it their ultimate objective is to sustain rather then
expansion (Gakure, 2014).
Recommendations
SASOL company should formulate the effective strategy after analysing the internal as
well as external factor based on which they must formulate the effective decision. It is crucial to
provide training and development session to the employees which makes them competitive to
deal with the changes and come up with innovative idea. Moreover, respective company should
uses globalisation as well as digital technology that can enhance the interconnectivity of firm
within national and international boundaries.

PART 2
Explanation of culture, structure and governance by using McKinsey's 7S model
The culture, organization structure as well as internal governance keeps on changing as
per the impact of globalization due to which even SASOL company exploit the opportunity to
expand its operations in various countries. The company can adopt McKinsey's model which
consist of hard and soft elements that help to carter the upcoming demand of customer. Elements
of the model is stated below:
Hard elements:
Strategy: The strategy needs to be implicated in such a manner it helps SASOL company
to adopt the changes and sustain in competitive pressure without affecting the internal operations
of business and fulfilling global requirement.
Structure: SASOL has followed functional structure where task is allotted on the basis
of specialization which is directed by the functional head (Jain and et.al., 2015). This structure
helps the company analyze the external market as well as competitive move and expand its
reach for various products like electronic material, synthetic resin, fertilizer and so on to various
international places.
Systems: System is the procedure or pattern by which respective organizational perform
its activities and upgrade its performance by adopting new system and replacing old ones. It
basically include selection system and team development process to improve the production or
quality of company's product.
Soft elements:
Shared values: SASOL limited makes effort to maintain the healthy environment of an
organization where people share interpersonal relationship to gain the long term profitability by
enhancing efficiency that can meet the internal requirement.
Skills: Skill refer to the capability of workforce to perform the task. SASOL company
conduction session which are related to training and development of an employee to enhance
their capability. This helps in effective resource utilized of resources to cater international
demand of customers (Okeke, Onuorah and Jakpa, 2016).
Style: To deal within global market SASOL Limited can adopt democratic leadership
style. This gives authority to internal member to be the part of decision making which help in
creative decision making.

Staff: In context to SASOL Limited that accept the changes and diversify in various
company due to which they require contribution of potential staff. For which HR manager need
to conduct recruitment cycle to hire the efficient aspirant and prepare the team to function at
global level.
Apply Hofstede's dimensions of culture to determine that how organisation has been affected
It refer to the cross culture communication that exist in various international borders and
can affect the functioning of business. Such framework include various points which are
discussed below:
Power distance index: As the power is not distributed uniformly which leads to
inequality. High power distance index leads to limited power among the people to make major
decision (Kasemsap, 2017)). Whereas, low on power index leads to effective relation among
employer and employee. In relation to SASOL company has vertical structure where power
distance is high to make the rapid decision for international requirement.
Individualism versus collectivism: The manager of SASOL company concentrate to
develop the skill of their employees to achieve the standard of an organization for which they
follow collectivism. In leads to better integration and fulfillment of objective.
Uncertain avoidance index: Organization operate in changing environment which
makes it essential for them to anticipate the market and perform accordingly. The SASOL
company predict and set the strategy as per changes.
Masculinity versus femininity: It include the responsibility of various gender on the
basis of task. Herein, SASOL company maintain the balance and empower the role of overall
employee.
Indulgence versus resistant: The manager of respective company promote indulgence
where the manpower is encouraged to showcase their feelings and put their views forward. This
lead to effective communication among various member of an organization.
Evaluation of ethical and sustainable factors about organization within the global market
Ethical globalisation helps the business to integration with various other countries by
preparing the good and perform global operations worldwide. Whereas, sustainable
globalisation refer to the diversification of business by maintaining the interest of various
external factor for long term development. Some of the ethical and sustainable factor that
influences the organisation are described below:

Marketing: Marketing department helps the company to analyse the preferences or
demand of customer and fulfil them effectively. SASOL Limited bring the innovation in their
energy and chemical product and with the help of effective promotion technique diverse product
at global level. Thus, it helps to generate the sales of company ans expand the operations
effectively.
Finance: In include the budget which carries the expenditure firms can incur on various
activities as well as invest which can flourish the business (Lee and Min, 2014). Such function
helps the SASOL company to make the optimum utilisation of resources and carry on monetary
activity effectively for the sustainable growth of business at global level.
Human resource: It include various activity like recruitment, training and development
of an employee which are necessary to achieve the objective of business. It empowers the
employee with the help of performance appraisal technique and motivate them to achieve the
objective of business with the help of reinforcement technique.
Social: Social factors include the attitude, belief as well as cultural acceptance of people.
SASOL company needs to analyze these factors and expand its operation accordingly to meet the
need of global citizen. This is useful for both organization as well as customer as it help to
enhance the living standard and upgrade the lives of various people that helps in long term
sustainable development.
Environmental: Environment is the surrounding where business perform all their
activities associated with energy and chemical substance. SASOL company analyze the changes
and operate in such a manner it safeguard the interest of its employee, society as well as
organization for long term term sustainable development.
Factors that affect decision making
Decision making is a process of selecting the best course of strategy or action to deal with
the adverse situation effectively. It is time taking process but business engage in decision to
overcome the negative circumstances. On contrary, there are certain factors like changing
preferences of customer and competition rate that can affect the decision making process as well
as hamper smooth business functioning (Malikov and et.al, 2015). Herein, SASOL company
have presence in various countries which make it essential for the manager to determine the
external factor such as regulation made by various government for the chemical industry and
make decision accordingly. Further, the manufacturing rate, economic cycle and tax rate differ

from one region to another that affect the decision making. Additionally, business shift to those
area to another with the motive of profit maximization and get the support from local authority as
it minimises the factor that can affect the decision making. Therefore, favourable innovation and
advance technology help the firm to cope up changes and perform effectively.
Strategic expansion routes as well as advantages and disadvantages within the organisation
Expansion means stretching of business services from one geographical area to another
with lead to the growth and development. Therefore, the advantage or disadvantage associated
with strategic expansion route is defined below:
Export: It is a one of the forms of strategic expansion routes that help the firm to gain
huge amount of profitability by enhancing the productivity. In relation to SASOL company
manufacture or extract the products at one place that is the most suitable place from where it can
easily avail the resources and deliver it to various other international boundaries. This assist the
company to formulate effective decision and expand the operations smoothly (Wu and Huarng,
2015).
Advantage
 It boost up the foreign sales and enhances market share due to foreign direct investment. Due to the mass production SASOL can get the advantage of economies of scale.
Disadvantage
 Company may need to incur extra cost due to product modification to meet the need of
foreign country
 Imposition of high tariff is a disadvantage in terms of revenue.
Licensing: Within licensing agreement licensee gets the authority or right over the
product of licensor. Such mutual benefit can helps respective company to diversify operations of
business.
Advantage
 It act an advantage for both parties opportunity to generate passive income and mitigate
risk factor. It lead to easy entry of the firm in foreign market.
Disadvantage
 Internal dispute and clashes among parties can affect the business.
 It is not necessary that the agreement with generate revenue for SASOL company.

CONCLUSION
From the above report it has been determined that globalisation is an opportunity for the
business to launch the new product and extend the reach of existing product in new geographical
market. This help the firm to gain global recognition for which they need to identify the external
factor that include PESTLE analysis for the better performance of business. Moreover,
digitalisation has positively affected the globalisation as it has made the trading more easier and
cost effectively. Furthermore, business can be a part of expansion route which includes export to
gain competitive advantage and operate effectively.

REFERENCES
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Wu, C. W. and Huarng, K. H., 2015. Global entrepreneurship and innovation in management.