Evaluation of the influence of globalisation on organisational governance and structure

This article discusses the impact of globalisation on organisational governance, leadership, structure, and culture. It evaluates the McKinsey's model of 7s in relevance with SASOL and how it helps in maintaining an effective structure and governance. It also highlights the challenges and opportunities faced by SASOL due to globalisation.

Global Business
Environment

Contents
Contents...........................................................................................................................................2
PART 2............................................................................................................................................3
TASK 3............................................................................................................................................3
P3: Evaluation of the influence of globalisation on organisational governance and
leadership, structure, culture and functions...........................................................................3
P4: Evaluation of the influences of ethical and sustainable globalisation on organisation
functions......................................................................................................................................7
M3: Critical evaluation of the influence of globalisation in relation to organisational culture
and structure.................................................................................................................................7
TASK 4............................................................................................................................................8
P5: Evaluation of decision-making ways that can work in an effective manner in global
context..........................................................................................................................................8
P6: Determination and articulation of various routes to internationalisation for organisations
with their key barriers..................................................................................................................9
M4: Critical evaluation of key barriers in doing business internationally and recommendations
for overcoming them..................................................................................................................10
D2: Critique strategies that an organisation can adopt while performing globalised activities
and justified recommendations on adapting organisational structure and decision-making
process.......................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFRENCES.................................................................................................................................11

INTRODUCTION
Globalisation is a broader concept which can be described as increased integration of world
economies through movement of products, services and capital across the border. For better
understanding of globalised business practices, SASOL company is taken into consideration.
SASOL Ltd. Is a chemical and energy company based in South Africa. In other words, it can be
defined as movement of human capital and technological advancements through international
borders. Main purpose of globalisation is to develop world economy through integrating varied
forces together. Company was established in 1950 and has its headquarters in Sandton, South
Africa. This project highlights various key factors which drive globalisation as business
objective of company is to expand their activities on an international basis. This project also
depicts determination of strategic complexities which are associated to organisation while
operating a global environment.
PART 1
Notes:
Explanation of the concept of globalisation
Most of the people and companies are moving from their host country to global world and other
countries to explore themselves . Globalisation of business refers to the change and expand in a

business operation, functions and management. From a company operate their business activities
within one country to operates these activities in multiple countries.
Notes:
Cost: It refers to the cost of production, product, marketing, distribution, human resource
management in a company. The SASOL want to expand their business globally which leads to
increase their these cost also. Before expanding their business managers and accountant of
company must evaluate their cost and expenses of exploring their business in different countries.
The opportunity for global expansion, effective sourcing or manage cost and experience impacts
differentials in costs among regions as well as technology advantages drives the economics of
the company.
Market : It refers to the market condition, trends and customers trends, culture, values, demand,
needs, taste and preferences of customers in that country. In the context of SASOL, the manager
must be identified customer taste and preferences evolve, including the level to which consumer
needs meet around the globe, numbers of customers are available for their product, global
transmission of distribution evolve, online marketing platforms and main countries in which
most innovation and creation take place for the growth of the company.

Environment: It refers to the trade policies, social culture, environment climate, technology
standards and common product of particular country. In the context of SASOL, the mangers
must do research and identification about the government polices, tax regulation related to the
trade. Climate condition of that country which are suitable for their company or not , common
market product of that country. Along with that, they must analysis about the standard of
technology and level of innovation related to their product in different countries.
Competition:It refers to the current market competition related to their product, level of
competition in market, competitors strategies and many more. In the context of SASOL the
managers need to investigate about the strategies of competing company, also the level in which
competitors from multiple countries come in the fray. As well as how they globalise their
corporate capabilities and strategies and create interdependence among global markets to survive
and lead in international market.
Notes:
Key factors of PESTLE analysis in relevance to SASOL Limited are discussed below:
Political factors- These essentially comprises of administrative system, tax policies and fiscal
policies for foreign business policies of a nation. In UK, political landscape is stable and
government supports foreign direct investment form different countries. In relevance to SASOL,

managers should overlook political environment of country in which it wants to expand their
business. Political factors can be a challenge for SASOL as these fluctuates very often.
Economic factors- These factors encompasses rising GDP, inflation rates and unemployment
practices of a nation. Due to global lockdown and corona pandemic, whole world is trying to
come up from the verge of recession. This practice has slow down the movement of currency as
well as products. This also lowers purchasing power of people. This factor has curb the
globalisation practices for some time. These factors needs to be well taken care of by managers
of SASOL while planning to expand business in different country. It also poses as a challenge
for SASOL.
Social factors- These factors comprises of lifestyle, perceptions, tastes of population of a nation.
These factors are largely dynamic in nature as new varied companies provides a large variety of
goods or services. It takes a less than a minute for influencing customers to switch the brand if
they find that more effective. It is desirable for managers of SASOL to perform accurate reliable
market research and be aware about dynamic market trends. It is also a challenge for SASOL to
comply with dynamic market trends.
Technological factors- These factors depicts the illustrated role of new advancement in
technology either digital or machineries. Varied countries support organisation that came from
foreign direct investment as this aids them in bringing new technologies to their country.
Managers of SASOL should analyse impact of digital media and newer technologies in
differential markets in order to expand their business. These factors can emerged as an
opportunity for SASOL as these can help them to modify their processes.
Legal factors- These factors comprises of rules and regulations framed by government which are
to complied while performing business activities. Managers of SASOL follows all the rules
related to health, safety and employment. This can poses as an opportunity for SASOL as it can
helps them in expanding their business further.
Environmental factors- These encompasses of varied forces related to norms prescribed by
government in relation to pollution and industry wastes. Managers of SASOL works on
improvised plants which helps in lowering the chemical and other waste materials. It can poses
as an opportunity for SASOL as it aids them to present their positive image in front of public.

Notes:
Accepting and facing these issues in an effective manner assists establishments in gaining
sustainable competitive advantage. Various challenges that occurred due to process of
globalisation in accordance with SASOL are discussed below:
Increased competition- Globalisation increases competition for domestic markets as well as for
establishments who are planning to enter into new markets. This competition can be in form of
product, technology, target market and production capabilities.
Incurring tariffs and export fees- Globalisation process can increase incurring tariffs and more
tariffs which managers of SASOL has to take care while planning to enter in new country.
Payroll and compliance challenge- This issue is related to human resource and legal
department. It is challenge for managers of SASOL to maintain payroll of their human resources
in other countries. It is also needful to take care of legal complexities of varied countries in order
to avoid any expensive litigation.
Immigration challenges- Various countries are strict about their immigration laws related to
people coming for employment practices from different countries. As these can poses as a
challenge for SASOL as it can lead to lack of human resources at production process of
establishment.

Difficulties of global expansion- It is not easy for organisations to expand their business on a
global level. SASOL needs lot of capital and awareness about legal system of different countries.
This can create varied difficulties in expanding their businesses on a global level.
Notes:
Evaluation of the significant impact of digital technology upon globalisation
Technological advancements assists organisation in lowering down their cost of transportation
and production over the globe which further helps in facilitating the ways for bringing raw
materials and other inputs to production unit. Digital technology has cut down the long networks
of people that helps them to connect to each other. It helps businesses to communicate with their
suppliers or retailers from different countries for purchasing unique products of that specific
country. It also helps people in purchasing goods from a variety of choices from online websites.
Digital technology has helped in enhancing connectivity among people which is a necessary
component for expanding business operations in international markets.

Notes:
This can be done through performing extensive research about latest market trends, dynamic
consumer behaviour, political and legal landscape of nations where it want to diversify its
operations. Managers of SASOL have to lower risk of globalisation by diversifying its operation
and bringing innovative practices. They can use mitigation strategy in overcoming their issues
and challenges. These diversification helps organisation in engaging new customer base towards
their products which in turn helps them to generate more revenues and gaining sustainable
competitive advantage in an international market.

Notes:
Opportunities that SASOL faces due to globalisation
Constant modifications in technological advancements either virtually or machineries based.
This aids managers of SASOL in adopting new technologies which further helps in gaining
competitive advantage in mew markets.
Managers of SASOL have made compliance with all the environmental laws and use those
machineries which help them in lowering pollution level of industry wastes. This poses as an
opportunity for establishment as it helps in maintaining goodwill and positive image among
public.
SASOL complies with all the healthy and safety laws in order to keep their employees safe and
provides them secure working environment. This helps them to retain their employees and
increase organisational productivity.
Challenges faced by managers of SASOL
Political landscape of different countries poses as a challenge for SASOL as these needs to be
stable instead of dynamic. These can hamper their plans and can compels many new regulations
to their business.
Economic factors of unemployment and lowering purchasing power of people due to global
lockdown creates challenge for managers of SASOL in expanding their business.

Dynamic social needs of people at different places can be a challenge for SASOL. This can
deteriorate their image in new marketplace.
Notes:
These needs to be catered by organisation in order to gain sustainable competitive advantage in
newer markets. Global environmental factors with their opportunities and challenges are needed
to be assessed by organisations in order to expand business activities on a global basis.

PART 2
Evaluation of the influence of globalisation on organisational governance and leadership,
structure, culture and functions
Introduction and Purpose
Organisational structure is described as a technique which helps organisations in
allocating desired tasks to different teams or groups in order to enhance their co-ordination and
supervision in accomplishing predetermined objectives (Bhagra. and Sharma, 2018). It is very
important for the management of the company to adopt an effective organisational structure
because the productivity of the company is totally depend on this. Organisational governance is
considered as a holistic set of different processes, rules and practices which helps in ensuring
reliable decision-making processes. Organisational culture is described as beliefs, norms and
values that employees held in their high esteem that governs their behaviour in establishment.
These needs to be considered by organisation in creating a flexible working environment.
Explanation of organisational governance and structure through using McKinsey's model of 7s in
relevance with SASOL are discussed below:

McKinsey's model is a framework which uses certain elements that aids organisation in
maintaining their effective structure and governance which helps them in raising performance
level of employees (Cherunilam, 2020) (Dede, 2019).
Hard elements are those which are simple to easy to identify and organisational
management can manipulate them on a direct basis. Strategy- this element refer to the plan which are developed by the organisation in order
to achieve all the set goals of the company. If an effective strategy is developed by the
firm then they can achieve a successful position in the market and also able to enjoy the
competitive advantage over their rivals. Managers of SASOL have applied varied types
of strategies for differential operations such as pricing, marketing etc. These needs to be
effective and framed through hierarchal level which assists organisation in gaining
competitive edge (D'yakonova, Nikitina, and Gurvits, 2018). Structure- this factor of the model represents the way in which the different areas of the
business are divide and includes the information of who is accountable to whom. In
simple words the structure is basically the organisational chart of the organisation. This
element of the model is being considered as the most viable factor because this is easy to
change. This force should be defined accurately in an organisational context as it helps
managers of SASOL in allocating and diversifying tasks to team members in an effective
manner. System- system are basically the processes of the organisation which help them in
performing the daily activities and also revel that how the decision are made. This is
being considered as that area of firm which determine that how the business is done. It is
considered as a routine procedures that are undertaken by employees or workers in
performing a desired job. Managers of SASOL provide accurate instructions to their
employees in order to increase their performance.
Soft elements are those which are less tangible and influenced by company's culture
instead of management. These are: Skills- these are basically the skills and abilities which are posses by the employees of
the company. These are termed as unique or special capabilities of employees that assists
them in attaining organisational proficiency. During the change in the organisation a
question often arises that what skills are needed in order to reinforce the company

strategy. Managers of SASOL works very hard to make their employees competent in
order to meet their pre-determined requirements. Staff- this element is totally related to the number of staff members of the company.
Along with this, the need of the employees and how they will be recruited, trained,
motivated and rewarded comprises in this. This aspect talks about hired employees or
workers at SASOL which try to perform well for organisational as well as individual's
interests. Style- this element represents the way in which the top level managers manage the
company. This also includes that how they interact with each other, what actions do they
take and their symbolic value. In simple term this is the management style which are
adopt by the leaders of the company. This element talks about the selection of approach
of leadership that is undertaken by leaders or managers of SASOL limited. This helped to
inspire employees for increasing their productivity levels. Shared values- this is being considered as the most important or the core of this model.
This comprises of all the rules and regulation or the norms which not only guide the
behaviour of the employees but also guide the company action. Shared values are
considered as the foundation of each firm. These values can be described as ethical or
sustainability practices that an organisation applied in its workings. Managers of SASOL
have adopted effective sustainable and environmental-friendly practices in order to
maintain their goodwill in new international markets.
Applying Hofstede’s Dimensions of Culture to demonstrate how the organisation culture has
been influenced.
Hofstede's culture dimensions model define the connection between society, culture and
individuals. It includes national and international factors which influence the culture of an
organisation as well as indirectly impact the behaviour and action of employees in the business
organisation (Farhoomand and Et. Al., 2021). In the context of SASOL, by using this model the
managers can influence the environment as well as behaviour of employees in their organisation
to increase their performance and productivity for the growth of company. It includes five
aspects which influence the organisation culture of SASOL that are define below: Power distance-This factors defines the extent to that the least powerful employees in
organisation expect that the authority is delegated unequally. In this aspect, power and

inequality is detached from the members of lower level. In higher level, it indicate that
the hierarchies are distributed properly and they accepted without any doubt. In the
context of SASOL, workers or employees who works on lower level feels that they have
less powers compare to other employees who work on higher level. Collectivism vs. Individualism- This dimension defines that the united people are
coordinated into groups. Individualism in a society give more attention on the individual
and nuclear family. On the other hand collectivism in a society involves joint families
and big group. In the context of SASOL, when employees works individually they work
for themselves whereas when employees works in a team they built trust or team spirit
among themselves as well as help and support each other to achieve their group or
organisational goal with efficiency. Uncertainty Avoidance- This dimensions defines, how people tolerate ambiguity and
uncertainty. This shows how employees in an organisation deal with unexpected situation
and unknown problems (Hamilton and Webster, 2018). In the context of SASOL, high
uncertainty avoidance in employees shows low tolerance level for ambiguity, uncertainty
and risk taking and all these situation is minimised by strict environment and rules. On
the other hand when the employees are flexible and ready to deal with these situation and
accept the changes organisation follow liberal rules and regulation. Femininity vs. Masculinity- This dimension define the thinking and preferences of
society towards gender equality, behaviour and rights. In the context of SASOL,
masculinity means assertive environment, well-defined gender role and focused on profit
generation and material achievement. On the other hand, femininity in SASOL means
modest environment, changeable gender roles and give importance on the quality of life
of employees. Long Term Orientation- This dimension defines, the short term and long term goals of
the company which show the life of operations in company. In the context of SASOL, it
defines the purpose or time of their operation such as short term success it includes
strategies for achieving current goals and long term success it includes strategies for
achieving future goals.
 Restraint vs. Indulgence- This dimension define, the influence of society to control the
desires and impulses of company. In the context of SASOL, indulgences means that they

operate their business in society where no social norms and society control. Whereas,
restraint means that the people in society make various social norms to regulate operation
of business.
Evaluation of the influences of ethical and sustainable globalisation on organisation functions
Practising of globalisation process in a sustainable and ethical manner is significant for
organisations to run their functions smoothly. Influence of ethical and sustainable globalisation
practices on the functions of SASOL are as under: Human resource function- Human resource department of establishments are facing
with varied challenges in managing workforce on a global level (Kasemsap, 2018).
Mangers of SASOL are facing complexities due to cultural differences as these can
hamper teamwork and group tasks. They are facing issues in promoting, compensating
and recruiting employees. Finance function- This department is considered as vital part of organisation in
performing business activities. It is significant for managers of SASOL to follow ethical
practices in financing business operations on a global level. It should be check by
managers that all the financial reports are presented in a reliable manner on a worldwide
basis through their official sites. Sales and marketing department- Marketing team of organisation are needed to frame
their strategies in a way to avoid any sort of ethical issue. In order to expand business on
international markets, managers of SASOL need to frame and execute sustainable and
ethical practices of marketing. They ought to be ensure that they provide products which
are free from any hazardous things.
 Production function- This function is related to obligations of company to produce
products which do not provide any harm to consumers in order to perform globalisation
practices in an ethical manner. Managers of SASOL performs tier business activities by
keeping sustainable and environmental practices in mind.
Critical evaluation of the influence of globalisation in relation to organisational culture and
structure
It has been critically evaluated that globalisation as its influence on organisational structure and
culture at SASOL. This has been assessed through McKinsey model and Hofstede’s dimension
of culture framework for understanding of organisational structure as well as culture at SASOL.

It has been analysed that SASOL has well-established hierarchal channels, skilled staff, excellent
leadership approach etc. Organisation culture of SASOL is flexible for employees as they can
change themselves in case of any ambiguity. Managers motivates their employees into attaining
long term success and flexible to adapt any changes. Employees are provided with restraint
environment where they can achieve their individual interests (Kasemsap, 2018).
Evaluation of decision-making ways that can work in an effective manner in global
context
In order to be successful while adopting globalisation practices, organisations are tend to
think critically as expanding necessarily means to deal with other languages, cultural norms and
regional nuances. Effective decision-making strategies are needful to operate in a global
environment. It is significant for managers of SASOL to evaluate political landscape, economic
policies and legislative laws in order to enter into international markets. Decision-making
approach used by managers of SASOL are as follows: Proactive decision-making- It is a type of strategy where decisions are taken before an
incident happen or about to happen. This exercise needs excellent critical thinking in
order to be outlook all the probable scenarios as well as their solutions. This approach
assists managers of SASOL in making first mover advantage which is a necessary
component to get success in global context. Through this, they can evaluate the degree of
risk before happening of an event which helps them to diversify their operations.
 Reactive decision-making- It is considered with making quick and immediate decisions
whenever a situation arises. This strategy can lend business operations into danger as
managers have not foresighted or imagined the unexpected challenge or issue. This helps
managers of SASOL in taking decisions faster but can hamper their image on global
level. It is needful for managers of SASOL to anticipate the upcoming opportunities as
well as challenge in order to make decision-making process effective.
From the above discussion it has been evaluated that pro active decision-making strategy
assist the management of the SASOL company not only in diversifying their span of control but
also in expanding their business operations globally. With the help of this strategy company's
are able to enjoy the competitive advantage over their rivals and also help in increasing their
global market share. If sound as well as effective business decision is taken by the company at
the global level the management of the SASOL mitigate the effect of different external as well as

internal factors on the various functions of the company. These factors are those which hinder
the smooth running of company and its profitability
Determination and articulation of various routes to internationalisation for organisations with
their key barriers
It is vital task for organisations to analyse varied routes of entering into international
market as these can assists them in accomplishing their long term business plans. Various routes
provided to managers of SASOL are discussed below: Franchising- Under this route, organisations deal with other companies to expand their
business by using their brand name. This route can be considered by managers of SASOL
as this helps them to expand their business in international markets and provide them
ample time to manage their other operations. Key barrier of this issue is that it is an
expensive exercise and limits the organisations who have inadequate capital. It can be
difficult for franchisee to imitate business model of SASOL can be another barrier to this
practice (Nikitina and Lapiņa, 2019). Joint venture- It can be described as a business entity where two or more arties having
common interests come together and shared risks, profits, losses and responsibilities in
determined proportion. Managers of SASOL can enter into joint ventures as it provides
new and advanced technological ventures that further helps in modifying tier products
into new markets. Key barrier in adopting this route is lack of communication and
different opinions can hamper business operations.
 Licensing- Under this route, a contract is made between two or more organisations,
where one allows another to produce their products on the basis of some specified
conditions in exchange for a certain fees. Managers of SASOL can adopt this route for
expanding their business as it offers low capital investment and infrastructure facilities.
Key barrier of this route is that it can be expensive in terms of providing infrastructure
and technical assistance to licensee.
Critical evaluation of key barriers in doing business internationally and recommendations for
overcoming them
It has been critically evaluated that there are various barriers that impacts organisations in
expanding their business internationally (Rialp-Criado and Komochkova, 2017). These barriers

can be social, cultural and need of extensive capital. In order to overcome from these challenges,
it is desirable for managers of SASCO to evaluate latest market trends and dynamic consumer
demands. It is advised to managers of SASCO to evaluate political and cultural landscape of
country in which it want to expand their business.
Critique strategies that an organisation can adopt while performing globalised activities and
justified recommendations on adapting organisational structure and decision-making process
Strategies that an organisation can adopt while performing globalised activities is to
evaluate international environmental factors as well as perform extensive market research in
order to examine numerous needs of consumers on a global level (Silvius, 2018). Managers of
SASOL can provide effective training and development sessions to their employees in order to
make them flexible and adaptive to changes.
It has been recommended to managers of SASOL that they should adopt centralised
hierarchal channels in order to make decision-making process effective. They should adopt
proactive decision-making approach in order to take timely actions for expanding their
operations in international market. It is advisable to strategists of SASOL to make modifications
in their business operations as per different countries, consumers and market trends.
CONCLUSION
From the above presented report, it has been concluded that globalisation impacts
organisation structure, functions, culture, governance and leadership in an adverse manner.
Organisational culture is described as values, perceptions, norms that affects employee’s
behaviour while performing their jobs. Hofstede’s dimension of culture model is used by
organisation in order to bifurcate cultural practices on the basis of different aspects such as
indulgence, uncertainty, power distance and many more. Proactive decision-making strategy is
used by organisations to take first mover advantage which in turn helps them in gaining
competitive advantage in market.

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