Global Business Environment and Sasol: An Evaluation of Structure, Culture, and Governance Applying McKinsey's 7S Model

This report evaluates the impact of global market on Sasol's structure, function and culture, and how the organisation has adapted to operating in a global market. It applies McKinsey's 7S model to evaluate the structure, culture, and governance of Sasol. The report also discusses the ethical and sustainable factors that the organisation has to consider in a global market.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Part 1................................................................................................................................................1
Covered in PPT.......................................................................................................................1
Part 2..............................................................................................................................................10
An explanation of structure, culture and governance within an organization such as SASOL
applying McKinsey’s 7S model to the organization............................................................10
McKinsey’s 7S model..........................................................................................................10
An evaluation of how the above has been influenced by global operations and how the
organisation has adapted to operating in a global market....................................................12
Hofstede’s Culture Dimensions............................................................................................12
An evaluation of ethical and sustainable factors that the organisation has to consider in a
global market........................................................................................................................13
Critical evaluation of strategic decision making in relation to risk and diversification in a
global context.......................................................................................................................14
Evaluation of different strategic global expansion routes....................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Global business environment defines the nature of international trade business which is
evolving in a significant way which helps in shaping the nature in changing global commerce.
Global business means selling goods and services in different countries across the globe for
gaining more reach and growth (Abu Bakar, Ahmad and Ahmad, 2019). International business
gives more scope for expanding business in new markets which helps in gaining competitive
advantage in different countries. Sasol is an international chemical and integrated energy
company, which is headquartered in Sandton, South Africa. The report outlines about different
key factors that directs globalisation in Sasol company and explains about strategic problems
related with operating globally. The report also discussed about the impact of global market on
company structure, function and culture, and defines the effect of globalisation on company
strategy and decision making.
MAIN BODY
Part 1
Covered in PPT
Notes:
International business Sasol is an international chemical and integrated energy company, which
1

is headquartered in Sandton, South Africa. The report outlines about different key factors that
directs globalisation in Sasol company and explains about strategic problems related with
operating globally. The report also discussed about the impact of global market on company
structure, function and culture, and defines the effect of globalisation on company strategy and
decision making.
ness gives more scope for expanding business in new markets which helps in gaining
competitive advantage in different countries (Abu Bakar, Ahmad and Ahmad, 2019).
Notes:
Globalisation is explained as a theory of comparative advantage which defines that countries that
are expert in producing a specific product are at a benefit of exporting products to countries
which are less efficient in producing (Aghaei, 2019).
2

Notes:
Technology advancement – It is one of the most important factor which drives globalisation
and helps in growing in different sectors of economies across the world. New technology and
better communication system helps Sasol limited in exchanging goods and services, ideas,
resources easily irrespective of any geographical location.
Notes:
 High competition – Organizations try hard to achieve competitive advantage in the
market for achieving success and growth of the company. Increased competition in the
3

domestic market forces company to operate globally. Sasol faces competition from
several companies and focus on selling good quality products for customers to expand
market share in different countries.
 Economies of scale – Due to rise in competition, companies try to reduce the cost so that
they achieve economies of scale in the market. Sasol limited focus on producing similar
product in large market to reduce costs and for sustaining in the competitive market. The
company needs to invest large amount of money for promoting products globally.
Notes:
This helps buyers and sellers of the company to make transactions at any part and any time of the
world which reduces communication barriers between people (Betti and Sarens,
2020).Technology is transferred easily to developing countries where need of high tech
production is needed to combine with low wages. Digital technology enables people to connect
anywhere through social media which is used by almost half of the population all over the world.
Many companies are moving towards digitalization as people are more facilitated with the
changing technology and which also reduces the cost of operations. Digital economy brings
several changes like connecting with good producers through online modes, education, health
services and entertainment which is delivered online. New technologies such as artificial
intelligence, 3D printing 5G and cloud computing brings the economy into the 'Fourth Industrial
Revolution' and next move of globalisation
4

Notes:
This will allow them to accomplish their tasks more easily and effectively. Programming
techniques, internet sites, as well as software could enable organization divisions raise its
functions toward the new stage. As a response, adopting use of digital technology has now
become vital for firms seeking a global edge over its competitors. It moreover helps them
promote innovative thoughts to the individual functional units.
Notes:
Factors are explained below:
5

Political – Political factors plays an important role in determining the effect of different factors
on long term profitability of a company in certain market or country. Sasol limited operates its
functions in several countries with political instability which reduce the growth opportunities for
the company. The company needs to carefully analyse and study the recent trends of government
in order to keep updates of each and every aspect of change in policy. The other political factors
that affects the company is taxation policy as well as tariff and non-tariff barriers of the country.
Economic – There are several economic factors that affect growth of the company such as
inflation rate, tax rate, cost of living and wage rates. Sasol limited chooses countries which have
strong financial markets for earning more growth rate and achieving success and helps in gaining
competitive advantage. Any rise in the rate of inflation will affect the revenue of company
negatively which reduces the spending power of the customer and affects the demand of goods
and services. The company also consider employment rate of the country as it also affects the
spending power of the consumer.
Social – Social factors include population growth, lifestyle, health and safety, cultural norms and
age distribution. Sasol limited analyses the consumption and spending patterns of the customer
for introduction of new products and services in the market. The company needs to focus on
improving its business management activities while entering into a particular market with low or
high power distance. The culture of the company is also different this will also need to be
understand by the company while making decision in order to enter in another country.
Technological - Rapid change in technology in international market effects the operations of the
company for adopting to the new changes for sustaining in the competitive market. Adopting
social media practices will help the company in improving its performance and develop online
brand channels for better reach to the customers (Al-Abrrow, Ali and Alnoor, 2019). By
focusing on new technological advancements like 5G which provides high speed and experience
to the customers for increasing market share and customer loyalty. The company can also use
virtual reality and augmented reality service in order to offer innovative service in another
country.
Legal - Any change in the policies and regulation of the government will affect the business
performance of the company. Providing secure and safe working environment to employees will
help in improving the stability and performance of Sasol limited. The company needs to study
about data protection laws which helps in safeguarding data and information of customers to
reduce fraudulent marketing practices. By complying these laws makes easier for the company in
order to enter in another country in better manner.
Environmental – Environmental factors affect the company surroundings such as weather
conditions, climate change, pollution and temperature. Investing in renewable technology will
help Sasol limited in assuring long term sustainability which also increase satisfaction of
stakeholders and grow customer base. Changes in weather conditions will increase the operations
cost which increase the prices of the product in the market, so company needs to stimulate the to
develop flexible value chain. The company also use sustainable material for making their
products in order to maintain sustainability of the country.
6

Notes:
In case of SASOL Ltd, the key driving factors of globalization are described below:
Containerisation- Costs which involve in ocean shipping is cutting down which makes
company in order to export and import goods and service country to country to gain more profit.
This will also help SASOL Ltd to sell their offerings in another country in better manner.
Technological change- As the technologies are developing rapidly which helps in decreasing the
cost of transmitting as well as communicating information. This will also make easier for the
people to have information about other country product and service which leads globalization in
all over the world.
7

Notes:
High Tariffs and Export fees – Different countries have their own tax regime on which
companies need to pay taxes according to rules and regulations. Globalisation is making high
fees and tariffs for exports and import of goods and services which increases the operations cost
of Sasol company which hinders the growth and sale of products and services in international
market.
Confusing localised systems – Companies faces confusion while setting up business in
international because of different legal laws in different countries (Biloslavo, Bagnoli and Edgar,
2018). This challenge creates problem while expanding business in any country as it leads to
severe legal and financial issues. So the company needs to be aware of new legal system in
which the company operates its functions.
International recruiting- The other strategic challenge faced by the company due to globalization
is international recruitment as the company need to more employees to perform their different
function while expanding their business in another country. Due to different time zones, cultural
differences and language barriers many problem faced by the company in order to recruit
talented employees in the organization.
8

9

Notes:
Abu Bakar, A.R., Ahmad, S.Z. and Ahmad, N., 2019. SME social media use: A study of
predictive factors in the United Arab Emirates. Global Business and Organizational Excellence,
38(5). pp.53-68.
Aghaei, I., 2019. Discovering Institutional Dynamics of Entrepreneurial Business Environment
Development Evidence from MENA’s Oil-Richest Countries.
Al-Abrrow, H., Ali, J. and Alnoor, A., 2019. Multilevel influence of routine redesigning,
legitimacy and functional affordance on sustainability accounting: Mediating role of
organizational sense-making. Global Business Review. p.0972150919869726.
Bergquist, A.K., 2019. Renewing business history in the era of the Anthropocene. Business
History Review, 93(1). pp.3-24.
Betti, N. and Sarens, G., 2020. Understanding the internal audit function in a digitalised business
environment. Journal of Accounting & Organizational Change.
Biloslavo, R., Bagnoli, C. and Edgar, D., 2018. An eco-critical perspective on business models:
The value triangle as an approach to closing the sustainability gap. Journal of Cleaner
Production, 174. pp.746-762.
Part 2
An explanation of structure, culture and governance within an organization such as SASOL
applying McKinsey’s 7S model to the organization.
McKinsey’s 7S model
McKinsey's model consists of 7 factors that help companies in identifying areas where
they need to work to create an efficient workforce for better productivity and growth. For
10

understanding the culture, structure and governance of Sasol limited in international markets
they used McKinsey's model which is explained below:
Hard elements
 Strategy – For achieving competitive advantage in global market it is important for Sasol
limited to understand the strategies and methods related to globalisation so that
employees and stakeholders have full knowledge about the concept which helps in
gaining company's objective (Chang and Huang, 2022).
 Structure – The structure of Sasol limited is simple and flat where employees and
managers delegate authorities and responsibilities in a coordinated manner which helps in
motivating employees to work effectively and efficiently. The company must focus on
delegating responsibilities in a proper manner to avoid any discrepancy between
managers and employees.
 System – Sasol limited follows simple procedures and protocols that help employees in
completing their projects. The workflow in the company is smooth as everyone is aware
of the work they have to perform to gain success and proper plans are made to define the
working culture and job structure (Chukhray and Mrykhina, 2018).
Soft elements
 Style – Sasol limited follows transformation and personal leadership style to influence
the management change in expanding company in international markets. This style of
leadership helps the manager of the company in directing responsibilities to employees in
a deliberate manner and also motivates employees for high performance and by
promoting product innovation to build a resilient company.
 Staff – The working staff of Sasol company is highly qualified and talented. The
company has divided members in each department according to the knowledge and skill
they have which helps in improved performance. They provide proper training and
rewards to the employees to enhance skills and knowledge for increasing profitability.
 Shared values – Sasol limited shares common goals and objectives in the company and
also shares proper values and ethics to guide the employee behaviour. They share
motivation so that every employee gets full consideration in the company for better work
prospects and to sustain in the global market (Clayton and Clopton, 2019).
 Skills – The employees of Sasol limited company is capable enough to drive business
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growth in the international market by having skilled knowledge and talent. They have
unique set of skills in the production and manufacturing department that holds value in
gaining success which helps in achieving competitive advantage.
An evaluation of how the above has been influenced by global operations and how the
organisation has adapted to operating in a global market.
It is critically evaluated from the McKinsey's model related with culture, time and
governance in Sasol limited that culture plays an important role in determining the internal
environment and organizational structure of the company because it is necessary to understand
the working style and culture of different countries. This helps company recruiting people from
diversified countries for increased productivity and improved performance which also complies
different values and beliefs of customers. Hence, it is recommended that for setting up business
in different country, it is necessary for Sasol limited to study the culture, market needs and legal
system for smooth functioning of business operations.
Hofstede’s Culture Dimensions
Hofstede's dimensions theory of culture is defined as a framework which is used by
companies to understand different cultures across countries and to recognize methods for
operating business in different cultures. The culture dimension theory in context of Sasol limited
is explained below:
 Power distance index – This method helps in measuring the performance of members in
a group or society evaluate the hierarchy of authority and power. In Sasol limited the
power is distributed equally among different members of company and hierarchy of
responsibility is delegated by the senior boss (Drábek and Stroková, 2019).
 Individualism vs Collectivism – In organizational culture Individualism is referred to
employees that thinks more about themselves and their interest to develop in the
company whereas Collectivism is defined as a culture where employees work in a team
with a motive to achieve organization success and support each other. In Sasol limited,
the company follows individualism culture in which employees performance in evaluated
in individual basis and are less coordinated.
 Masculinity vs Femininity – Masculinity is defined as a organizational culture where
gender distinction prevails and is dominated by male employees which focus on
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achieving success (Umadia Sr and Kasztelnik, 2020). Whereas Femininity is defined as a
culture which focus on quality life, modesty and supports female working. In Sasol
limited, the company possess masculinity culture where employees are motivated to work
in a highly competitive market and are driven by male employees.
 Uncertainty avoidance – Uncertainty avoidance index in organizational culture defines
the value of anxiety in employees of the company. Higher uncertainty means people have
more fear and are less innovative whereas low uncertainty means people are risk taking
and innovative in work. In Sasol limited, the company has low uncertainty and are open
to new innovative ideas for products and services which helps in achieving success in
global market.
 Long term orientation vs Short term orientation – Long term orientation method in
organization culture that supports factors which helps in gaining long term success in
market whereas short term orientation refers to the culture that focus on achieving short
term success by traditional methods. In Sasol limited, the company follows short term
orientation which helps in identifying the risk of external factors and achieve competitive
advantage.
 Indulgence vs Restraint – Indulgence in organisation culture is referred as the employee
directed culture in which the company focus on providing satisfaction to their employees
whereas Restraint is defined as culture where strict rules are followed for better work
orientation (Gamidullaeva, 2019). In Sasol limited the company follows Indulgence
culture which provide benefits to employees like flexible work timings and remote
working to improve productivity and growth.
An evaluation of ethical and sustainable factors that the organisation has to consider in a global
market
To expand business in international markets for long term growth the company considers
various ethical and sustainable factors in order to achieve success. There are several ethical and
sustainable factors such as outsourcing, workplace diversity, working conditions, customer
satisfaction and knowledge sharing which enables company in sustaining in the competitive
market. Sasol company has to take care of these factors which helps in gaining more market
share and customer base for increasing brand loyalty (Thanetsunthorn and Wuthisatian, 2019). It
is important for company to understand the culture of different countries for achieving
13

competitive advantage in the global market. Collaboration helps in increasing knowledge sharing
among the team members for better coordination and team work. Sustainable factors helps Sasol
limited in proper utilization of resources and in mitigating risks in the company for increasing
profitability and growth. To gain success in global market it is important for Sasol limited to
consider ethical practices which helps in protecting the interest of employees and sustainability
to achieve customer satisfaction.
Critical evaluation of strategic decision making in relation to risk and diversification in a global
context.
Organizations faces many difficulties and threats in their strategic decision making while
expanding business in international market. These problems occur because of uncertainty and
turbulence in the changing dynamic environment at the of globalization. In order to cope up the
complexities in the global market it is important for Sasol limited to adopt strategic decision
making which helps in reducing risks. Different ways of strategic decision making that helps in
effective working in global market is explained below:
 Mitigating risk – While taking decision related to globalisation like which market to
target, how to study the market and how to tap into new markets helps in taking risk
decisions to meet the needs of uncertain situations in future. Thus, Sasol limited
considers risk management principles while decision making to reduce the risk of
uncertainty and to work efficiently and effectively with the international market strategies
(Hacioglu, 2019).
 Leadership – Globalisation helps in brining diversified culture in organisation and also
brings larger approach to information that drives manager to apply appropriate style of
leadership. Sasol limited chooses transformational and participated style which enable
managers to earn employee loyalty by their transparent decision making that helps in
improving performance of employees in the competitive international market.
 Demand of internal diversification – With growing risks of competition and decision
making through globalisation is forcing companies to expand and diversify operations of
business in global market to increase market share and growth. Global diversification
decision is effective for Sasol limited to grow their business functions in foreign market
which helps in achieving sustainable competitive advantage (Letnar Cernic, 2018).
14

Evaluation of different strategic global expansion routes
Internationalisation is the global activity in which organisation trade or operate in other
countries apart from the native country. In simple terms it is process of importing and exporting
of goods and services across the national borders. In order to enter the international market there
are several strategic global expansion routes for the organisations and all have adequate strategic
plan for the rapid expansion into the global market. The different modes of entry into the
international market are discussed below:
Franchising: This is the most common market entry route for the organisation in which a
already established business provide their legal and ethical selling rights of their products and
service into the franchisee market to the other individual. This is very advantageous for the
company as through this firms can directly enter into new market with a great brand recognition.
This route of global expansion is highly profitable (Morrish and Earl, 2020).
Key Barriers:
 In this market entry mode there is need of sound intellectual property rights and high
legal considerations and documentation.
 The franchisee has low power and influence on the strategic decision making of the
company.
Piggy Backing: this mode of global expansion into the new international market is good in
potential as in this two non competitive firms voluntarily join each other into partnership to cross
sell each others products and services in order to gain high customer base. The aim of this mode
of entry is to exploit the economies of scale which is good for both business and also help in
enhancing the presence of both firms in the foreign market.
Key Barriers:
 As per this mode of entry it is hard to trust intention of other company in order to handle
the promotional activities in other ones hand especially at the time where the origin of
the country is new and different.
 In the long run the sole proprietor of the organisation tends to loose the control from the
designing and development of the product.
Joint Venture: this is another entry mode into the international market where two different firm
from different countries come through into an alliance through a contract to work together as one
team, or firm. The benefit of such mode of entry into the international market is that it is low cost
15

entry mode and has less risk of failure of debt (Shchetinin and Lapshin, 2022).
Key Barriers:
 The key barrier in this mode of entry is that in this two firms are integrated together but
have different organisational culture to follow which makes the negotiation process
difficult.
 In this there is the conflict of interest due to the unclear understanding of the
organisational objectives of both the company.
CONCLUSION
It is concluded from the following report that globalisation plays an important role in the
economy which helps company in expanding business across different countries for increasing
company growth and profitability. For reducing the risk of external factors and for sustaining in
international markets the company adopted pestle analysis for better performance and
knowledge. The report also evaluates different key factors of globalisation that helps in
increasing market share and profitability. The report evaluates defined challenges that help
company in reducing risk and in understanding market culture of different countries. The
company adopted McKinsey's and Hofstede’s culture model which helps in achieving
competitive advantage and also defines strategic decision making factors that help the company
in reducing risk and competition while expanding business in global market.
16

REFERENCES
Books and Journals
Abu Bakar, A.R., Ahmad, S.Z. and Ahmad, N., 2019. SME social media use: A study of
predictive factors in the United Arab Emirates. Global Business and Organizational
Excellence, 38(5). pp.53-68.
Aghaei, I., 2019. Discovering Institutional Dynamics of Entrepreneurial Business Environment
Development Evidence from MENA’s Oil-Richest Countries.
Al-Abrrow, H., Ali, J. and Alnoor, A., 2019. Multilevel influence of routine redesigning,
legitimacy and functional affordance on sustainability accounting: Mediating role of
organizational sense-making. Global Business Review. p.0972150919869726.
Bergquist, A.K., 2019. Renewing business history in the era of the Anthropocene. Business
History Review, 93(1). pp.3-24.
Betti, N. and Sarens, G., 2020. Understanding the internal audit function in a digitalised business
environment. Journal of Accounting & Organizational Change.
Biloslavo, R., Bagnoli, C. and Edgar, D., 2018. An eco-critical perspective on business models:
The value triangle as an approach to closing the sustainability gap. Journal of Cleaner
Production, 174. pp.746-762.
Chang, C.W. and Huang, H.C., 2022. How global mindset drives innovation and exporting
performance: the roles of relational and bricolage capabilities. Journal of Business &
Industrial Marketing.
Chukhray, N.I. and Mrykhina, O.B., 2018. Theoretical and methodological basis for technology
transfer from universities to the business environment. Problems and Perspectives in
Management, 16(1). p.399.
Clayton, P.R. and Clopton, J., 2019. Business curriculum redesign: Integrating data
analytics. Journal of Education for Business, 94(1). pp.57-63.
Drábek, J. and Stroková, Z., 2019, May. The Present State of the Business Environment in the
Slovak Regions. In Economics, Management and Technology in Enterprises 2019 (EMT
2019) (pp. 188-191). Atlantis Press.
Gamidullaeva, L.A., 2019. Inter-organisational network structures and knowledge diffusion
through innovation intermediaries. Global Business and Economics Review, 21(6).
pp.756-776.
17

Hacioglu, U. ed., 2019. Handbook of research on strategic fit and design in business ecosystems.
IGI Global.
Letnar Cernic, J., 2018. Moving Towards Protecting Human Rights in Global Business Supply
Chains. Boston University international law journal, 35(2). pp.101-116.
Morrish, S.C. and Earl, A., 2020. Networks, institutional environment and firm
internationalization. Journal of Business & Industrial Marketing.
Shchetinin, I. and Lapshin, S., 2022. Exploration and Exploitation of Nascent Local Business
Opportunities during the Global Disruption: Strategic Actions of Subsidiaries of Large
Multinational IT Corporations in Russia in the period of the COVID-19
Pandemic. JEEMS, p.107.
Thanetsunthorn, N. and Wuthisatian, R., 2019. Understanding trust across cultures: an empirical
investigation. Review of International Business and Strategy.
Umadia Sr, K. and Kasztelnik, K., 2020. The financial innovative business strategies of small to
medium scale enterprises in developing country and influence for the global economy
performance.
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