Global Business Environment: Analysis of Challenges Faced by SASOL and Impact of Ethical and Sustainable Internationalisation on Business Functions

This report analyses the impact of globalisation on corporate governance, leadership, structure and decision making in a business firm. It evaluates the challenges faced by SASOL in the global business environment and the impact of ethical and sustainable internationalisation on business functions. The report also discusses various ways in which decision making works in a business firm and the routes to internationalisation adopted by business firms.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
P1 Analysis of cost, market, environment and competition which drives international
commerce and trade....................................................................................................................3
TASK 2............................................................................................................................................3
P2 Explanation of the complexity of challenges faced by SASOL when operating in global
business environment..................................................................................................................3
TASK 3............................................................................................................................................3
P3 Evaluation of influence of globalisation on corporate governance, leadership, structure and
business functions.......................................................................................................................3
P4 Evaluation of effect on business functions caused by ethical and sustainable
internationalisation......................................................................................................................7
TASK 4............................................................................................................................................8
P5 Evaluation of several ways in which decision making works in a business firm..................8
P6 Identification and articulation of several routes to internationalisation which are adopted
by business firms along with description of barriers................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Global business environment consists of various factors which impact on smooth
functioning of a company. In addition to this it also influences various organizational factors of
the company also directs the internationalization strategy of the firm. Business firms in the
current age focus on developing a strong global presence to attain international industry
leadership and maximisation of profitability. SASOL is the business firms selected for this
report. SASOL is a South African chemical manufacturing which is present in 30 countries all
over the globe. The effects of internationalization on corporate governance, workplace culture,
business structure and functions is evaluated in this report. Impact of ethical and sustainable
internationalisation on business functions is evaluated in this report. Evaluation of various ways
in which decision making works in a global context along with identification of routes to
internationalization of a business firms is presented in an articulate manner.
MAIN BODY
TASK 1
P1 Analysis of cost, market, environment and competition which drives international commerce
and trade
Covered in PPT
TASK 2
P2 Explanation of the complexity of challenges faced by SASOL when operating in global
business environment
Covered in PPT
TASK 3
P3 Evaluation of influence of globalisation on corporate governance, leadership, structure and
business functions
The international market affects organisational structure and the flow of information in a
company (Adewumi, 2021). The explanation of the impact of global market on the
organizational structure of SASOL, the McKinsey's 7S model is applied below:
McKinsey 7S model of organisational structure

 Strategy: The strategy of the company to gain competitive advantage in their industry and
gain success over their industry rivals is part of this element of the model. The business
strategy at SASOL is constructed on the basis of various global, local and national market
in order to attain international as well as domestic success.
 Structure; The organizational structure adopted by the company is included in this part of
the McKinesy 7S model (Akpan Udoh and Adebisi, 2020). The group structure of
SASOL is divided into two upstream business units, three regional operating hubs and
four consumer facing strategic business units. This depicts the influence of global market
on the structure of the company as the firm has constructed an organizational structure on
the basis of global market regions in order to facilitate smooth functioning of
international operations across markets.
 System: The daily activities and procedures completed by staff for completing business
objectives of the company are present under this category of the model (Bhattacharyya,
2020)(Buckley, Enderwick and Cross, 2018). Employees at SASOL have to conduct the
activity of coordinating and communicating with international teams in order to ensure
attainment of organizational objectives of the company.
 Shared Values: This element of the model involves the beliefs and core values of the
company which are a part of the organizational culture of the firm. The core values of
SASOL include complying with applicable legal requirements and prioritizing
environmental protection. The influence of global market can be seen in this aspect of the
McKinsey 7S model. This is because the company has to follow international trade and
comply with the objectives of World trade organisation which include sustainable
development which s part of the core values of the company and showcase the impact of
global market.
 Style: The leadership style adopted by the company is apart of this element of the firm. In
case of SASOL, the company focuses on building high performing and innovative
workforce to ensure increase in resilience of the company. The transformational
leadership style of the firm is a result of global market and international ambitions of the
company This is because transformational leadership style creates a workforce which
ensures continuous growth of the company to become a leader on a global scale.

 Staff: The capabilities of the general workforce of the company is the centre of discussion
in the staff element of the model. SASOL focuses on global talent development and
increasing diversity in their company at domestic and international markets. The global
market factors are at play in this case because in order to gain international success,
presence of talented and diverse workforce is required. The initiatives of SASOL in
increasing diversity and building a global talent pipeline are a result of increasing
demand of cultural diversity in global markets.
 Skills: This part of the model includes the skills an competencies of organizational
employees. SASOL is focusing on building digital skills of their workforce in light of
important role of digital technology in helping the firm gain international success. The
global market factor of increasing usage of digital; technology is present in this element
as the company is building digital competencies of employees.
Governance in multinational organization: Corporate governance in case of a multinational
organization includes usage of mechanisms such as controlled ownership, board composition,
market discipline, board chairmanship, board size, management remuneration, interlocking
directorates and managerial promotions which are part of the domestic framework of the
company (Carracedo, Puertas and Marti, 2021) In context of SASOL, the board of directors of
the company provides approval to business strategy and has direct control over the business
operations of the firm.
Leadership in multinational organizations: The transformational leadership style of SASOL
helps the firm develop global workforce which focuses on continuous progress of the company
and ensures quick recovery of the company from drastic market changes through innovation and
resilience.
Hofstede's cultural dimensions
SASOL is present in UK as well as domestic market of the company South Africa.
Culture of UK and South Africa differs which influences daily operations and workplace culture
of the company in these two regions. This s explained below with the help of Hofstede's cultural
dimensions:
Power distance index: The tolerance towards unequal power distribution is evaluated in
this cultural dimension. The moderate score of South Africa depicts the acceptance of
hierarchical organizational culture. On the other hand in UK has low score which showcases that

workplace in UK focus on minimising power inequalities through egalitarian organizational
structures. SASOL has to maintain different organizational structures in UK and South Africa.
Individualism: The level of interdependence between members of the society is measured with
the help of this cultural dimension. Individualism is accepted in both South Africa and UK which
states that individuals are primarily focused on the well being of their close family and
themselves. SASOL has to ensure merit based recruitment and promotions in UK and south
Africa in order to align with the individualistic nature of the regions.
Masculinity: The motivation behind action of people in the society is the centre of
discussion of this cultural dimension (Davis, 2020). The motivation towards attaining perfection
depicts masculine characteristic while the motivation towards liking daily activities depicts
feminine characteristics. Both UK and South Africa are masculine societies which means that the
workplace culture is highly success focused and goal oriented. SASOL invests in employee
development and professional progression policies to ensure gal oriented workplace culture.
Uncertainty Avoidance: The extent to which individuals in a society accept the
ambiguous nature of the future or have crated belief systems to avoid the uncertain nature of the
future is the focus of this cultural dimension (Dhiman, 2018). UK and South Africa have low
score on the uncertainty avoidance levels. This depicts that both the countries are comfortable
with the uncertain nature of the future and regulations are not strictly imposed in business
settings. In addition to this business plans are changed with the arrival of new information.
SASOL has to ensure that the organizational culture is in alignment with this cultural aspect of
UK and South African culture by ensuring relaxed implementation of rules and enabling
employees to make on the spot decisions.
Long term orientation: The ways in which society maintains connection with history and
past is part of this cultural dimension of the company. Normative societies show adoption of
traditional activities and common history while pragmatic societies have accepted adoption of
modern education in order to be prepared for the future. South African culture is pragmatic while
UK culture has intermediate score with some levels of both pragmatic as well as normative
approach to common history. In South Africa SASOL ensures preservation of cultural traditions
of different communities by increasing diversity. On the other hand in case of UK the company
has to ensure presence of British culture as well as modern corporate concepts such as diversity
in order to ensure smooth functioning of the company.

Indulgence: This is the last cultural dimension in which the level to which individuals
assert control over their impulses and desires is identified (Gao, 2018). Indulge is accepted in
both South Africa ns UK which means that business firms have to ensure optimistic
organizational culture and provide embayment opportunities to employees. SASOL ensures that
employees are able to enjoy their workplace through employee benefits such as free lunch,
employee assistance programme and Gym membership.
P4 Evaluation of effect on business functions caused by ethical and sustainable
internationalisation
Ethical globalization refers to responsible global progress and international trade of a
company which has positive impact on the society and environment (Gromoff, Bilinkis and
Kazantsev, 2017). Ethical globalization involves ensuring that unfair trading practices such as
hoarding and dumping are not followed. In addition to this elimination of unethical activities
from the supply chain such as sexual harassment and child labour is eliminated from the supply
chain. Sustainable globalization focuses on recognizing value of natural resources and
demonstrating respect for ecosystems and supporting development of local communities.
SASOL has taken various steps to ensure sustainable and ethical globalization which includes
actions such as Slavery and Human trafficking statement to abolish the presence of modern
slavery from the supply chain. In addition to this, actions to increase sustainability are also taken
by the company to ensure sustainable development of the firm. There are various advantages and
disadvantages to sustainable and ethical globalisation which are provided below:
Advantages
 Sustainable globalization can help business firms spread the positive impact of
sustainable technologies from developed to developing countries (Iyigun, 2018). SASOL
is present is Gabon and Nigeria which are not as developed nations as South Africa.
Sustainable development can help the company increase the usage of sustainable
practices and technologies in such regions and positively impact on global environment.
 Ethical globalization ensures ethical development and maintenance of business
relationships with other countries so that the transfer of knowledge and human resources
enables growth of the company (Kafetzopoulos, Psomas and Skalkos, 2019). Ethical
globalization enables business firms to develop decision making process which is both

culturally sensitive and flexible within the core values of the company. SASOL has taken
various steps to promote diversity and inclusion on an international scales.
Disadvantages
 The primary disadvantages of adopting sustainable globalization is the negative impact of
sustainable globalization on profitability of the company. Sustainable globalization
requires high amount of investment on reducing energy consumption and using green
alternatives for various business process which harm the environment. Utilizing
environment friendly raw material and business processes increases overall costs of the
company, which reduces profitability and stops the company from attaining market
leadership quickly (Khalid and Seuring, 2019).
 The main disadvantage of ethical globalization includes ensuring that business firms have
to trace their supply chain in order to ensure that suppliers and logistics partners are
conducting activities in an ethical manner. This is a difficult task which is also not cost
effective. This leads to business firms using high amount of human and financial capital
on monitoring suppliers and logistics partners which is a disadvantage of ethical
globalization.
TASK 4
P5 Evaluation of several ways in which decision making works in a business firm
Organizational decision making: Business decision making is defined as the process of
identification of decision, collecting data and evaluating other options to make the most informed
decision for the business firms. The process of selecting course of action from alternatives on the
basis of certain criteria is defined as decision making (Kopnina and Blewitt, 2018).
Importance of decision making: Decision making is important in business firms because it plays
a vital role in the planning process of thee company. The planning process of business firms
requires various decisions on the resources needed by the company, future direction of the
company, tasks implemented for the completion of the plan and division of tasks among
employees. Decision making is significant in SASOL as it requires to determine the plans for
international operations of the company.
Organizational strategy: Business strategy is defined as the course of action or series
of decisions which assist entrepreneurs in attaining business objectives of the company. Business

strategy of the company provides an outline of the future directions and decisions of the firm to
attain organisational objectives (Lewis and et. al., 2017).
Importance of business strategy: Business strategy is importance for business firms as it creates
a vision and direction for the company. Employees of the company understand the future plans
and their role in contributing to success of these plans with the help of the business strategy of
the company. In addition to this common goal for the workforce is created with the help of the
business strategy. SASOL needs to develop an effective business strategy in order to gain
success in various business endeavours.
Principles of leadership change
Leadership change must be human centric: Employees drive change and it is
important for executives at business firms to support change in order to gain effective results
from change in leadership. SASOL needs to ensure that leadership change is centred around
employees.
Digitization: Effective implementation of leadership change can be attained with digital
technology (Loon, Otaye‐Ebede and Stewart, 2020). SASOL needs to adopt digital technology
and build global digital infrastructure to ensure increased communication and effective
implementation of change.
Lead from top: This includes support from stakeholders, presence of change leaders
with clear vision of the future and change champions who lead teams and departments. SASOL
needs to ensure presence of these elements in order to ensure effective leadership change.
Support from bottom: Supporting employees through communication, participation and
feedback is essential leadership change to ensure low employee resistance. SASOL needs to
build communication channels through which employees can interact with supervisors and
leaders to decrease employee resistance to change.
Continuous improvement: SASOL needs to ensure continuous improvement in order to
ensure that change leadership provides effective results for a long time period.
Internationalization: Internationalization is the practice of designing products, services and
internal operations to facilitate expansion into international markets. SASOL has gained strong
global presence with the help of internationalization (Makri, Papadas and Schlegelmilch, 2019).

P6 Identification and articulation of several routes to internationalisation which are adopted by
business firms along with description of barriers
International expansion strategies
Franchising: Business firms which are termed as franchisors allow individuals or groups in
other countries to utilize their product, service and intellectual property by implementation of the
business model of the company in exchange of initial fee and royalties from thee franchisee of
the company (Mezghani and Aloulou, 2019). SASOL can utilize this strategy by opening
franchisees of chemical manufacturing plants in regions rich in petrochemical resources. The risk
associated with this strategy is low as the cost of setting up the business is incurred by the
franchisee owner.
Direct Export: The direct sale of a product from exporter to importer in other country is called
direct exporting and it enables the firm to sell their products to consumers in various countries.
SASOL can utilize this strategy by introducing direct export to countries with high demand of
petrochemical products. This is high risk strategy as the exporter has to take the responsibility of
managing the sales process, logistics of shipment, foreign distribution, and for collecting
payment.
Strategic Alliance: The usage of this strategy includes two independent business firms
conducting a mutually advantageous project by pooling their resources and knowledge
(Niemimaa and et. al., 2019). SASOL can form a strategic alliance with international chemical
manufacturers to enter a foreign region. This is low risk strategy as knowledge and resources of
two business firms are involved in attaining success.
Acquisition: Business firms can expand internationally by acquiring shares of a successful
foreign company to gain control of the organization which is called acquisition. SASOL can
acquire shares of business firms in foreign regions as a way to diversify their products portfolio.
This strategy is low risk as it involves gaining control of successful company or a business firm
with high growth potential.
Barriers to international trade and their impact on decision making and strategy
Natural barriers: These obstacles in international commerce and trade include physical
and cultural barriers. Distance and climate are the main natural barriers as they affect
transportation and operational costs of the company (Nisula and Pekkola, 2018). In addition to
this language is another natural barrier which affects negotiation an communication at the

company. Decision making is conducted in the basis of natural barriers and business strategy of
the firm is constructed on the basis of favourability of natural barriers.
Tariff barriers: These kinds of barriers include the taxation imposed by governments.
Decision making at business firms is conducted on the basis of taxation of governments as it
increases costs and business strategies are formulated to ensure low impact of taxation (Oumlil
and Balloun, 2017).

CONCLUSION
From the above report it is determined that globalization affects leadership, corporate
governance, organizational structure and culture. The impact of globalization can be seen on
organizational structure of the company by application of Mckinsey’s 7S model. Hofstede’s
cultural dimension help in understanding the impact of globalization on organizational culture as
the difference in national culture of international markets affects the workplace culture of the
company. Ethical and sustainable globalization assists in ensuring that the international
expansion of the company is completed in an ethical manner without causing harm to the
environment. Ethical and sustainable globalization has various advantages and disadvantages
which need to be addresses by the company in order to ensure minimisation of the disadvantages
caused by ethical and sustainable globalization. Decision making is an important part of daily
business activities of a business firms and plays an important role in the process of
internationalization. There are various strategies for international expansion which require
strategic decision making in relation to risk and diversification.

REFERENCES
Books and Journals
Adewumi, S. A., 2021. STUDENTS'ENTREPRENEURIAL MINDSET IN THE ERA OF
GLOBAL HEALTH PANDEMIC: PERSPECTIVE FROM THE UNIVERSITY OF
LAGOS, NIGERIA. Eurasian Journal of Business and Management, 9(1). pp.71-89.
Akpan, I. J., Udoh, E. A. P. and Adebisi, B., 2020. Small business awareness and adoption of
state-of-the-art technologies in emerging and developing markets, and lessons from the
COVID-19 pandemic. Journal of Small Business & Entrepreneurship, pp.1-18.
Bhattacharyya, S. S., 2020. International business strategy: development of an integrated
framework and typology. Review of International Business and Strategy.
Buckley, P. J., Enderwick, P. and Cross, A. R. eds., 2018. International business. Oxford
University Press.
Carracedo, P., Puertas, R. and Marti, L., 2021. Research lines on the impact of the COVID-19
pandemic on business. A text mining analysis. Journal of Business Research, 132.
pp.586-593.
Davis, P. J., 2020. Getting employees involved in strategy planning. Journal of Business
Strategy.
Dhiman, S. ed., 2018. Handbook of engaged sustainability. Springer.
Gao, S. S., 2018. International leasing: strategy and decision. Routledge.
Gromoff, A., Bilinkis, Y. and Kazantsev, N., 2017. Business architecture flexibility as a result of
knowledge-intensive process management. Global Journal of Flexible Systems
Management, 18(1). pp.73-86.
Iyigun, N. O. ed., 2018. Creating business value and competitive advantage with social
entrepreneurship. IGI Global.
Kafetzopoulos, D., Psomas, E. and Skalkos, D., 2019. Innovation dimensions and business
performance under environmental uncertainty. European Journal of Innovation
Management.
Khalid, R. U. and Seuring, S., 2019. Analyzing base-of-the-pyramid research from a
(sustainable) supply chain perspective. Journal of Business Ethics, 155(3). pp.663-686.
Kopnina, H. and Blewitt, J., 2018. Sustainable business: Key issues. Routledge.
Lewis and et. al., 2017. Design+ environment: a global guide to designing greener goods.
Routledge.
Loon, M., Otaye‐Ebede, L. and Stewart, J., 2020. Thriving in the new normal: The HR
microfoundations of capabilities for business model innovation. An integrated literature
review. Journal of Management Studies, 57(3). pp.698-726.
Makri, K., Papadas, K. and Schlegelmilch, B. B., 2019. Global social networking sites and
global identity: A three-country study. Journal of Business Research.
Mezghani, K. and Aloulou, W. eds., 2019. Business Transformations in the Era of
Digitalization. IGI Global.
Niemimaa and et. al., 2019. Business continuity of business models: Evaluating the resilience of
business models for contingencies. International Journal of Information
Management, 49. pp.208-216.
Nisula, K. and Pekkola, S., 2018. How to move away from the silos of business management
education?. Journal of Education for Business, 93(3). pp.97-111.

Oumlil, A. B. and Balloun, J. L., 2017. Cultural variations and ethical business decision making:
a study of individualistic and collective cultures. Journal of Business & Industrial
Marketing.