Global Businesses Environment Assignment : SASOL Ltd

GLOBAL BUSINESSS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Define key factors of market, cost, environment and competition which derives global
trade and commerce....................................................................................................................1
TASK 2............................................................................................................................................3
P2 Complexity of strategic challenges that faced by a company while operating globally .......3
TASK 3............................................................................................................................................4
P3 Evaluation of globalisation in organisational leadership, governance, structure, leadership,
function and culture.....................................................................................................................4
P4 Influences of sustainable and ethical globalisation on functions of a company ...................6
TASK 4 ...........................................................................................................................................7
P5 Different ways decision-making can work efficiently in global context...............................7
P6 Determine different routes to internationalise a business involving key barriers..................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Global business environment is referred to the trade of technology, goods, services,
knowledge or capital across domestic borders in global context. It include transactions and
resource sharing beyond the borders so that domestic organisations can improvise their
performance and satisfy customers base in a more appropriate manner (Alkhafaji and Nelson,
2013). This assignment is written in context with SASOL Limited which is Africa based fast
growing chemical and energy organisation, headquartered in South Africa. This report will cover
about key factors of environment like market, cost, competition which derives global trade.
Beside this, complexity of strategic challenges while operating globally are mentioned. Influence
of globalisation in leadership, governance, function, culture and structure is discussed. Influences
associated with sustainable and ethical globalisation on functions of an organisation are
discussed briefly. Beside this, different ways by which decision making can effectively impact
and different route to internationalise business are discussed involving key barriers.
TASK 1
P1 Define key factors of market, cost, environment and competition which derives global trade
and commerce
SASOL limited is a fast emerging South Africa based chemical and energy company.
Company is performing well in domestic regions and successfully expanded to Canada, Gabon,
Mozambique and Australia. Company is planning to further expand in other regions soon. This
assignment will include barriers that are faced by a global business due to globalisation while
entering a new marketplace. Globalisation is defined as the procedure of interaction and
integration among companies, government and individuals in global manner. As a multifaceted
and complicated aspect, globalisation is treated as a capitalist expansion which integrates
regional and national economy of a nation into unregulated and globalised market economy
(Bititci, Cocca and Ates, 2016). Some benefits of globalisation are mentioned below:
 Globalisation results in free trade which is a good way for nation to exchange their
resources, manpower and other products. Due to this, domestic manufactures will have
access to bigger export markets.
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 It benefits in enhanced economies of scale as goods or services of a company can be
produced in any part of globe. Due to this, prices of goods will be low and sales of
company will be high.
Drivers of globalisation
There are various drivers which are related with globalisation. With the help of these
drivers, an organisation can acknowledge the global business atmosphere and related concepts in
a precise manner. Main drivers associated with globalisation are market, cost, government and
competition. In context with SASOL limited which is planning to expand in further countries,
these drivers will posses high influence on their business operations. These drivers are mentioned
below:
 Cost: It is considered as one of the important driver associated with globalisation. Cost of
production, distribution and other costs are varies from nation to nation. This is because
the costs associated with labour, capital and land are different. Operating in region where
these costs are less will be beneficial for SASOL limited as it will results in more
revenues and profits after sales. For example, if SASOL limited wishes to expand its
business operations in UK, pay scale of labour will be high in comparison with labours
available in Asian region, due to this, revenues of company will reduced. But workers in
UK are more capable and skilled due to which overall productivity of company will
enhance (Coltman and et. al., 2015).
 Market: This driver of globalisation includes areas like transferable marketing,
acknowledging the basic needs of targeted consumers, offering standardized products at
international level etc. one essential aspect of globalisation is to fulfil the needs of global
customers in a proper manner. In this respect, manager in SASOL limited is required to
acknowledge the needs and requirements of customers of a particular region in a proper
way. This will allow them to offer and advertise those products via different marketing
channels due to which company can earn desired revenues and profits.
 Competition: Each sector whether it is dealing in retail or manufacturing faces wide
competition. It is faced by those organisations which deals in same industry or sector. It
is another driver of globalisation as SASOL limited is required to identify their potential
competitors before expanding in a new region. It will benefits them in deciding if it is
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profitable to operate in a region or not. Business expansion in areas where competition
will be low benefits the concerned company in attaining high revenues and profits.
 Environment: It is concerned with the rules, policies and regulations that are formulated
by government of a country to limit trade and business of foreign organisations. In order
to earn high revenues and profits, SASOL limited in needed to identify the rules and
procedures to operate in a nation before globalising there. If business environment will be
supportive, it will results in earning of high revenue. In case environment of region is not
supportive, it can results in business failure (Dubihlela and Sandada, 2014).
TASK 2
P2 Complexity of strategic challenges that faced by a company while operating globally
Strategic challenge is referred to the pressure which exerts a strong and decisive impact
on the future success of a business firm. These challenges are externally driven but can impact
internal working of a firm in a deeply manner. External strategic challenges are concerned with
customers and their market needs whereas internal strategic challenges are related to capabilities
of an organisation, human resources etc. There are some strategic challenges which can be faced
by SASOL limited while operating in global context. These challenges are stated beneath:
 Understanding other culture and language: With the help of internet and digital
media, it is easier for businesses to increase their presence in a region or country but this
doesn't mean an organisation is prepared to deal with consumers from different languages
and culture. For example, SASOL limited company is based in South Africa and wants of
operate in region like Middle East of USA, due to difference in language and culture it
will be difficult for company to operate with the tactics they were using to deal with
African customers (Elbanna, Andrews and Pollanen, 2016). This can bring a big
challenge for company in globalising their business. Due to this, company can face loss
of revenues or business failure as they were not be able to identify and cater the
expectations of customers in a proper manner.
 Legal landscape: This is another strategic challenge which can hinders the appropriate
expansion of a country in another region or market. When an organisation crosses a
border, they are subjected towards various laws, taxes, regulations and trade tariffs
concerned with different nations. For example, legal laws in US will be different from
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legal norms in South Africa or Mozambique. Due to which even if company is
successfully operating in Mozambique, they will face difficulty in dealing with legal
norms in US. This challenge can hinder the growth of SASOL limited in new countries
and regions. In this respect, it is vital for the manager in SASOL limited to understand the
legal framework of a nation in a proper manner before operating their so that all legal
compliances can be fulfilled in a desired manner.
 Environmental conservation: As environment is degrading day by day, most of the
nations are highly interested in preserving their environment. Due to this, they have
formulated some laws and regulations for domestic and foreign companies which are
operating in that particular country. As SASOL limited in a company dealing in
chemicals and energy, activities of company can highly impact atmosphere and ecology.
This is a big strategic challenge for company as they have to follow strict rules in order to
operate in a region. For example, manager in SASOL limited is needed to plan and open
up their warehouses and factories in those areas which can least prone to environmental
degradation and pollution otherwise, company may have to stop their business operations
and this will bring huge loss of revenues and profits to the firm (Kirchoff, Tate and
Mollenkopf, 2016).
Strategic challenges of globalisation
There are different types of challenges that can be faced by an organisation while expanding
their business at global scale. Some of the certain challenges are defined below:
International trade laws
There are simultaneous increase in demand of law enforcement agencies in order to halt
business as well as financial related crimes for example, tax fraud, computer crime, money
laundering and more. All these factors somehow create challenges for business organisation in
their smooth business flow process and further affect their profitability.
International economic factors
Business organisation faces challenges related to international economic factors such as
currency exchange rates, government restrictions through quotas of export and import, subsidies
and national income. All these factors are required to be undertaken by organisation as to play in
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global market. It further increase more scrutinising of activities and further that waste
unnecessary time and reduce overall rate of profitability.
TASK 3
P3 Evaluation of globalisation in organisational leadership, governance, structure, leadership,
function and culture
To acknowledge the influence of globalisation on governance and structure of an
organisation, McKinsey's 7S model is mentioned below:
McKinsey's 7S model
This model constitutes of seven factors which are divided into hard and soft elements.
With the help of these elements, performance of an organisation can be improved desirably.
Elements of this model will helps in defining the governance and structure of SASOL limited in
a proper manner. These elements are mentioned below:
 Strategy: It is defined as a plan which is formulated by a company to get competitive
advantage over rivals in a marketplace. In context with SASOL limited, it is not
beneficial for an organisation to adopt long term strategy if it doesn't fits with other
elements. This means that manager of company is required to adopt those strategies
which fits other aspects and elements in a proper manner.
 Structure: It defines the manner in which business units and divisions are organised so
that organisational work can be proceed in a proper manner. In context with SASOL
limited, structure can be stated as the organisational chart of company.
 System: It is related with the processes of a SASOL limited which specifies basic
activities of company. It defines the ways to operate business in a profitable manner.
 Shared values: These are standards and norms which will guides the actions of SASOL
limited and employee behaviour in a proper manner (Noble and Nwanekezie, 2017).
 Style: It is referred to the manner in which organisations such as SASOL limited are
managed by top level managers. It represents the management style of leader of an
organisation.
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 Staff: It is related to the type and number of employees which are working in a company
along with the manner through which they are hired, motivated, rewarded and trained.
 Skills: These are the abilities, competencies and capabilities which are incorporated by
the workforce of a company so that objectives and targets can be attained in expected
manner. Appreciable skills of employees will benefits SASOL limited in gaining high
revenues and sales against rivals.
Impact of globalisation on organisational structure, leadership, function and governance
Organisational governance: In case of SASOL limited, company has clear and transparent
rules and procedures due to which employees are well familiar about policies of company. Due
to this, employees are capable to deliver their best performance and organisational work is
accomplished in strategically advantageous manner. Beside this, company perform social
corporate responsibilities as their main function so that along with earning profits, company can
fulfil its duties as a part of society. Company follows hierarchical organisational structure in
which positions and power are allotted to people as per their hierarchy and lower departments are
accountable to upper departments for their work. Organisation uses democratic leadership style
in which opinions of employees are considered before taking decisions. Due to this, company
takes right and strategically advantageous decisions (Owolabi and Makinde, 2012).
Hofstede's cultural dimension: This framework is used for cross-cultural communication and
incudes various kinds of dimensions which can impact the culture of SASOL limited in a
considerable manner. In context with company, this framework is mentioned below:
 Power distance: It is defined as the willingness of individuals living or working in a
region to accept power and status difference among members. If SASOL limited have
high power index, this means power is distributed unevenly and employees are not given
much preference.
 Uncertainty avoidance: It is defined as the lack of tolerance for partiality or ambiguity
and requirement of formal policies and rules. In case of SASOL limited, if company will
be impartial, appropriate working culture can be maintained within company (Caiazza,
Shimizu and Yoshikawa, 2017).
 Individualism vs collectivism: This element of cultural dimension states that in some
workplace, employees treat themselves as individuals and perform business activities
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according to their personal interest whereas in some places, employees work collectively
so that organisational goal can be achieved properly.
In case of SASOL limited, culture of company is very comfortable and friendly in which
employees are given preference as per their work not on partiality basis. Also employees work in
a collective manner due to which projects of company accomplished in a timely and proper
manner.
P4 Influences of sustainable and ethical globalisation on functions of a company
Ethical globalization is defined as the procedure of transforming, manufacturing and
delivering service or product in an ethical manner. In this regard, SASOL limited is required to
formulate corporate governance by giving consideration to global needs. In case of sustainable
globalization, it states that an organisation must develop sustainability in its business operations
before entering new market so that high returns can be gained (Cheng, Green and Ko, 2014).
Impact of ethical and sustainable globalization on company's function are mentioned below:
 Human resource: As employees are considered as main asset of firm therefore, it is vital
for SASOL limited to recruit new talent and formulate new HR plans and policies so that
objectives and goals of company can be achieved efficiently. New policies must take
place in global ethical manner which will be hard for employees to adopt and this will
reduced their working productivity which will impact sustainability in negative manner.
In this respect, company is required to give extra benefits, rewards to employees to
motive them.
 Marketing: This is another function in which adoption of new practices will help the
marketers in SASOL limited in acknowledging the requirements of its energy and
chemical products in marketplace. Development of effective marketing strategies will
impacts the customers due to which sales of company will be increased in a considerable
manner. But introducing market strategies in ethical manner can be complex as company
will be required to change its processes and systems which will require large sum of
money.
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TASK 4
P5 Different ways decision-making can work efficiently in global context
To expand business in new market, it is vital for an organisation to deal with every factor
which can influence business in a negative manner. In this procedure, leaders and managers of
organisation plays a vital role in formulating timely decisions in accordance with the demands of
customers in global context. Before taking any vital decisions, it is important for manager in
SASOL limited to reduce chances of resistivity. In this context, manager of company must
provide required training to employees and the leader must motivate employees so that they can
perform well in complex situations and objectives of company can be attained in timely manner.
Different ways of decision making
 Visionary: In this way, the manager of SASOL limited will formulate a clear vision to
take decision and inform the workers about the manner to implement changes according
to the decisions. This will helps the members of SASOL limited in acknowledging what
firm will attain after expanding their business in new market.
 Guardian: This way of taking decision will helps in choosing healthy alternatives by
giving consideration to fact based information. In context with collected information, a
plan is formulated to globalise business in advantageous manner (Kasemsap, 2018).
 Motivator: In this way of decision-making, manager of a firm convinces employees and
other associated people of organisation about the requirements of change. In accordance
with that changes takes place within an organisation.
P6 Determine different routes to internationalise a business involving key barriers
There are many barriers which can be faced by company while internationalising their
business. In context with SASOL limited, these barriers are mentioned below:
 Financial barrier: It is the major barrier faced by a company while globalising. Due to
lack of funds and finances, it will not be possible for SASOL limited to perform their
business activities.
 Lack of skilled workforce: It is another barrier which can be faced by SASOL limited
while expanding their business in new country. Without skilled employees, company will
not be able to perform its activities and operations in an efficient manner.
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 Market based barriers: This barrier can take place when a company hive inappropriate
information and knowledge about the foreign land where they are planning to expand.
Due to this barrier, satisfying customers will be difficult which will impacts the revenues
and profits of company in a negative manner.
To deal with these barriers properly, company is required to choose best routes to
internationalise their business. In this context, some routes which can be adopted by SASOL
limited to expand business are mentioned below:
 Exporting: It is the procedure of selling services or goods produced in one nation to
another nation. It can either be direct or indirect. In direct exporting, SASOL limited will
have control over its products in foreign land but this will not be the case for indirect
exporting (Lewis and et. al., 2017).
 Joint venture: In this strategy, SASOL limited can join hands and share ownership with
another organisation. This method is used when two or more organisations want to attain
common objectives like technology sharing, joint product development etc.
 Outsourcing: This is a cost effective strategy where portions of work are transferred to
suppliers on contract basis. It will benefits SASOL limited in reduced costs and risk
sharing.
Expansion routes
Franchising: It is considered as a form of business within which a business owner
engages in distribution trough other affiliated dealers. In simple terms in franchising allow one
party to grand another involved party the right to take use of their trade-name or trademark and
certain form of business system.
Advantage: By undertaking franchising business owner can measure more stipulated growth and
further increase profitability along with improved valuations.
Disadvantage: In this there may be difficulties in hiring best staff that may affect business
performance.
Licensing: Licensing agreement allow licensee a right to take use of products and
services which is already owns by licensor
Advantage: With the help of this risk can be deliberately reduced. In addition with this, with the
help of this method business can have quick and easy access to foreign market.
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Disadvantage: Business owner may face difficulties to find right licensee. In addition with this
it create dependency upon licensor and further add competition in marketplace.
SASOL is intent to take advantage of Licensing form of business expansion. As it will allow
them to create an opportunity for passive income while creating new business opportunities and
further reduces risk for both involves parties.
CONCLUSION
From above mentioned report, it has been concluded that there are different driver which
impact globalisation and businesses which wants to globalise in a considerable manner. Due to
globalising business, there are different strategic challenges and complexities which are faced by
company. These challenges can hinder the growth of company. Beside this, globalisation
influence the culture, structure, function and leadership of organisation to a great extent. There
are different kind of decisions which impact a company and its working considerably. There are
different ways like licensing, franchise etc. to internationalise business.
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REFERENCES
Books and Journals
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control in a dynamic environment. Routledge.
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Coltman, T. and et. al., 2015. Strategic IT alignment: twenty-five years on.
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enterprises’(SMEs) performance: The role of employee participation, implementation
incentives and evaluation and control. Journal of Economics. 5(1). pp.45-55
Elbanna, S., Andrews, R. and Pollanen, R., 2016. Strategic planning and implementation success
in public service organizations: Evidence from Canada. Public Management Review.
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orientations on green supply chain management and firm performance. International
Journal of Physical Distribution & Logistics Management. 46(3). pp.269-292.
Noble, B. and Nwanekezie, K., 2017. Conceptualizing strategic environmental assessment:
Principles, approaches and research directions. Environmental Impact Assessment
Review. 62. pp.165-173.Sciences, 11.
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performance in university education: A study of Babcock University. Kuwait Chapter of
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Caiazza, R., Shimizu, K. and Yoshikawa, T., 2017. Cross‐border M&A: Challenges and
opportunities in global business environment. Thunderbird International Business
Review. 59(2). pp.147-151.
Cheng, M. M., Green, W. J. and Ko, J. C. W., 2014. The impact of strategic relevance and
assurance of sustainability indicators on investors' decisions. Auditing: A Journal of
Practice & Theory. 34(1). pp.131-162.
Kasemsap, K., 2018. Mastering business process management and business intelligence in global
business. In Global Business Expansion: Concepts, Methodologies, Tools, and
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Lewis, H., and et. al., 2017. Design+ environment: a global guide to designing greener goods.
Routledge.
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