Global Business Environment - SASOL Ltd

Global Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Project 1...........................................................................................................................................1
1. Introduction to the concept of globalisation.......................................................................1
2. Driving factors of globalisation..........................................................................................1
3. Significant impact of digital technology upon globalization.............................................2
4. PEST/LE analysis of the organization................................................................................2
5. Challenges of globalisation and the strategic challenges...................................................3
6. Recommendations on how to overcome these challenges.................................................3
Project 2...........................................................................................................................................3
1.An explanation of the structure, culture and governance of the organization by Applying4
McKinsey’s 7S model............................................................................................................4
2. Applying Hofstede's Dimensions of Culture to demonstrate how the organization has been
influenced...............................................................................................................................5
3. Evaluation of ethical and sustainable factors.....................................................................6
4. Factors have affected decision making in a global context................................................7
5. Strategic expansion routes the organization took and analyze both advantages and
disadvantages..........................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment refers to the combination of internal as well as external factor
which affects operational activities of the organisation. Global business environment is
considered as the place where two or more business organisation works together for mutual
profit by exchanging goods and services with each other. Present assignment is based on SASOL
limited, this company offers product related to energy and chemical. This report describes about
Key factors that impacts over globalisation and other strategic complexities which affects
operational activities of organisation at global level. It further explains about how operational
activity of global market affects structure and culture of company. At last, it elaborates regarding
influence of globalisation on decision-making process of organisation.
Project 1
1. Introduction to the concept of globalisation.
The interconnection of people,company,government and countries regarding to
economical, social, technological, cultural and political factors around the world is the basis of
globalization. This process helps in massive increase in trade and the technological exchange.
The positive affects of globalization are higher in developing and developed countries as
education technology and investment standard can be raised through this process. It also helps in
gaining the economic boost to the different countries. There are also some negative impacts of
globalization as the richest countries gets most of the profit like differentiation of tax policy in
different countries.
2. Driving factors of globalisation.
There are certain factors which are responsible for carring out the operation of
globalisation,which makes this process effective for the longer run and these factors are:
The factors that drives the globalization are the economical factor which includes the data
about market and economy of the business if the underdeveloped country not having the proper
growth in the economy, then globalization helps is boosting a growth of company by taking
benefit of technology, resources and transportation facilities etc. The developing country can get
be of lower labour cost etc.
While the technological factors helps in exchanging the technology of one country to the
another one, in the form of machinery, advanced equipment etc. The interaction between two
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country can also be increased by exchanging the data and information for the future research
projects. Through the technological factors the speed and the efficient of work can also become
effective and it also helps in
3. Significant impact of digital technology upon globalization
The technology which uses digital resources like internet to process the data so that it could
converted into information and analysed and communicate through others with the digital
medium is considered as digital technology it has made its huge impact on the
globalization as well as the SASOL both. By the help of digital technology company is
able to promote its business at the far places.Reach of a customer is also increase by the
help of digital medium as internet could be accessed at the desirable location and order and
payment of material can also be done through by a single click .Overall handling of higher
number of consumer is also being increased as this technology provide real time database
detection which helps in limiting the chances of fraud in online payment also so by having
digital technology the purchase and selling of product of SASOL has been done in an
effective and profitable manner.
4. PEST/LE analysis of the organization
SASOL Limited is expanding its business at international level. For this, its manager
have conducted PESTLE analysis. Pestle analysis is considered as the strategic tool which helps
in evaluating macro environment of organization. All major components of macro environment
are described as below:
Political: SASOL Limited is dealing with oil and gas in many countries. It can be said
that if the company trade with those countries who are politically stable then it will minimize the
risk of changes in governmental policies regarding oil and gas trade. It also includes wages
legislation, taxation, product labeling etc.
Economic: Economic factors in macro environment includes inflation rate, interest rate,
unemployment and competency's norms. All these elements affect the competitive advantage of
organizations. In this regard, managers of SASOL, take use factor's like spending power of
customers, growth rate of Oil & Gas industries etc. for forecasting its growth trajectory.
Social: It impacts on working culture of an organization. In this regard, attitude of
customers and social beliefs play a major role in understanding the demand of marketplace.
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Therefore, it is necessary for managers of SASOL to design its business strategy as per societal
laws and demographics.
Technological: It is considered as main factor which disrupts the whole working process
of industries. Due to advancement of technology, it becomes essential for companies to replace
old techniques with new one. This would help in winning high competitive advantage by
fulfilling the demand of customers on time.
5. Challenges of globalisation and the strategic challenges
External environment of business has created a large impact on abilities of organizations
including by which they can enhance their growth and profitability. It includes fluctuations in
currency exchange rate, employment legislations, governmental laws etc. Therefore, some major
strategic challenges in front of SASOL are:
Slow GDP rate: This factor creates various uncertainties such as less economical growth
which directly impact on productivity and profitability of business. Therefore, SASOL Limited
also faces issues in terms of risks and geographical change.
Cost: Finance is the most essential factor in a company which helps in conducting entire
activities in proper manner. In this regard, the most crucial challenge in front of SASOL
corporation is to introduce adequate amount of finance. To move business at global level, it is
necessary for its managers to plan strategies to optimize available funds in adequate manner.
6. Recommendations on how to overcome these challenges.
In order to overcome from strategic challenges, it is recommended to managers of
SASOL, to make effective managerial decisions related to modification. They must carry out
research to ensure that whether changes in organizational structure and implementation of digital
technologies is beneficial for improving performance of business. In addition to this, present
company also requires to make investment for welfare of societies. It will help in enhancing
business image in societies as well.
Project 2
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1.An explanation of the structure, culture and governance of the organization by Applying
McKinsey’s 7S model
SASOL Limited is expanding its business over global level. Through the whole process
of globalization the company is required to update their current organizational structure, culture
and governance in order to become successful in future (Alqahtani and Saba, 2013). For this, top
management of company is adopting various element of McKinsey 7s model. This model mainly
reflects inter-dependency of Hard and Soft element and these elements are described as below:
Hard:
 Strategy(Governance): The company mainly opts strategy which helps them to deal
with different situation during expansions. It can be said that management team of
SASOL Limited should formulate most effective rules and legislation which are required
for dealing with companies.
 Structure: SASOL Limited is using functional organizational structure as in this
employees of company are grouped according to its their skills and area of specification.
Management of SASOL Limited should follow the same structure as it is successful for
expansion.
 System: System is considered as the pattern in which organizations performs their
business activities. SASOL Limited is expanding its business at global level, it will
directly influence the system of the company. Hence, it is better for organization to
update its system according to requirement of operating company.
Soft:
 Shared values: SASOL Limited is mainly giving preference to its values which believes
in performing all activities within their ethics (Zhang, A. and Huang, G. Q., 2012). It can
be said there will be negligible of influence of globalization on ethics of company.
 Skills: It will be important for SASOL limited to hire highly skilled employees for
maintaining business performance during globalization.
 Staff: Influence of Globalization will increase requirement of more employees in order to
operate business transaction.
 Style: As a influence of Globalization, SASOL limited will be going to opt democratic
leadership style for building positive relationship with employees.
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2. Applying Hofstede's Dimensions of Culture to demonstrate how the organization has been
influenced
The role of culture, structure and governance has played an important in the operation of
the companies in the global market. It influences the work accountability and functioning at the
domestic as well as global level. In context with Sasol Limited, it is important for the company
to maintain and establish their company's structure and culture in order to increase productivity
and efficiency at the global level (Black, Morrison and Gregersen, 2013). This can be best
explain and solve with the help of six dimensions of Hofstede's theory of culture which
explained as further:
Power distance index - In regards with Sasol Limited, company is using power distance
index in order to judge any kind of inequality going in an organisation. This is implemented to
avoid use of complex hierarchy of company structure.
Individualism versus collectivism - In context with Sasol Limited, company is following
collectivism in an organisation to make management and structure of the company most effective
and relevant for adopting the culture and governance in an organisation.
Masculinity versus femininity - Sasol Limited prefers femininity in place of masculinity
to create good and effective relationship with supervisor and senior (Ferraro and Briody, 2013).
It eliminates the gap between relationship of men and women in order to reduce any kind of
biasses and unfair.
Uncertainty avoidance index - It shows how people are well cops with an anxiety. Sasol
Limited can use this index technique in order to acknowledge any kind of anxiety and
misunderstanding within an organisation and increase their morale to enhance global expansion
of the company.
Pragmatic versus normative - Sasol Limited uses normative approach in which
emphasis is used to give on values and rights and strong conviction of an employee. People
generally focuses on WHY instead of WHAT is happening. It will enhance other to grow
accordingly in the global market.
Indulgence versus restraint - In context with Sasol Limited, high indulgence persists
optimistic character of an employee and provides freedom of speech to everyone to enhance their
communication skills (Cavusgil and et. al., 2014). This approach is focus on personal happiness
of an employee to work in the global market.
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3. Evaluation of ethical and sustainable factors
Ethics refers to the behavioural practices of an individual for carrying out operations. Ethics can
also be used with reference to business organisations in the sense that every business entity is
required to conducts its operations in ethical manner. The aim of this is to ensure that
organisations do not engage in malpractices or those procedures that are harmful for society or
environment (Solomon and et. al., 2014). Sustainability refers to the process of making use of
those techniques and processes that do not harm environment or community in which entity
carries out its operations. Some of the ethical and sustainable factors considered by SASOL
Limited to successfully expand its business in overseas markets are:-
 Corporate Social Responsibility (CSR): This is an initiative taken by organisations in
order to ensure that the entity contributes significantly towards environment and society.
The management of SASOL Limited have adopted many CSR initiatives like with an aim
to achieve its short term goal of expansion across the globe:-
1. Providing education with focus upon improved school-based education in science,
technology and literacy, facilitating higher education and developing potential and
skilled work skills.
2. Providing employment opportunities to individuals, particularly the unskilled or
marginalised groups such as youth and women (Voegtlin, Patzer and Scherer, 2012).
3. Focussing upon health and welfare issues and determining social challenges like
Aids, tuberculosis and malaria.
4. Development of art, culture and sports with a view to enhance local talent.
 Compliance with laws and regulations: A company is required to follow certain
rules and guidelines in compliance with law. SASOL Limited considers the
importance of operations of an entity in compliance with statutory laws. Thus it
operates in a manner which is in compliance with laws of employment, health and
safety, trade barriers and other legal laws. The company recognises the need of
compliance with statute so as to formulate easy expansion of its operations across
various international markets.
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4. Factors have affected decision making in a global context
Factors have affected decision making in a global context. There are various factors
which are affecting decision making process of organisation at global level (Kasemsap, 2014).
There is a huge requirement that SASOL should highly focus on the social responsibility,
cultural values and the
plans and policies which are followed by the public at the global scale. If SASOL have taken
decision in order to expand their business operations in United Kingdom where the citizens are
mainly focused on their roles and responsibilities related with their life events The firms have
developed plans and strategies in order to achieve targeted customers in South Africa but there
had to be changes implemented in the strategies so that firms can retain loyal customers who will
enhance their overall sales and profitability ratios.
On the other side the society which is existing in United Kingdom is different from
African nations so there can be possibilities that changes have to be made in the activities which
are linked with corporate Social Responsibility. There are effective changes implemented in the
decision making process which are connected with CSR activities which may result in SASOL
Limited so they can easily perform all their business operations at global level with full
efficiency and effectiveness (Laudon and Laudon, 2015).
5. Strategic expansion routes the organization took and analyze both advantages and
disadvantages
To formulate the successful expansion of business and its operations across international borders,
a numbers of business strategies are available. In SASOL Limited, the top management used 2
major policies: Growth through acquisition of another existing business and joining industry
cooperatives to achieve savings in some common areas of operations like advertising and
marketing. While these expansion strategies have largely helped the company in facilitating
expansion of its operations across some countries of the world, it also had some adverse effects.
Expansion of a company doesn't just refer to dealing with same problems on a larger scale but it
also means gaining insight into, adjusting to and managing a whole new set of obstacles in a new
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business environment (Lee, Olson and Trimi, 2012). It is a challenge for the company to
establish and update working system so as to track inventory management, monitor cash flow,
assessing the delivery system. Also, management of finance, tracking the development of human
resources as per expansion of business operations need to be considered by the managers of
SASOL Limited. Also expansion of business requires hiring of new skilled individuals which is
yet another constraint for the company.
CONCLUSION
From the above mentioned report, it has been concluded that business environment is mainly
consist of internal and external factors of an organisation. It can be said that digital technology is
considered as the driving factors of globalisation which helps in converting whole business into a
success. It has been found that cost is biggest challenge which interrupts growth of organisation
at global level. With the help of PEST analysis, organisation can analyse external factors of the
business which impact on the future growth of the company. There are numerous of factors
which impacts over decision making process of the organisation at global level.
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REFERENCES
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new approach to leadership and its multi-level outcomes. Journal of Business Ethics.
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