Drivers and challenges for globalization in Global Business Environment

This report analyzes the key factors of cost, market, environment, and competition that drive global commerce and trade. It also explains the complexity of strategic challenges faced by organizations when operating in a global environment, supported by specific examples. The report focuses on Sasol Limited, an integrated energy & chemical company based in Sandton, South Africa. It covers PESTLE analysis, international business driving forces, and the impact of digital technology upon business. The report also discusses the influence of leadership, governments, culture & functions, ethical and sustainable globalization, and different modes of entry for organizations starting their business operations on an international level.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
TASK 1...................................................................................................................................1
P1 Analyse Key Factors of cost, market, environment and competition that drive global
commerce and trade......................................................................................................1
TASK 2...................................................................................................................................4
P2 Explain the complexity of strategic challenges faced by organisations when operating in
a global environment supported by specific examples.................................................4
CONCLUSION................................................................................................................................5
References:.......................................................................................................................................7

INTRODUCTION
Globalisation refers to the procedure of increasing the business operations in international
market with the expectation of creating interrelationship with all the business activities. In
general terms it can be said that globalisation work as the key development in the process of
production of goods and services at global level. Expansion of business organisation in
international market result in the growth of global, technology, information, trade, culture,
economy and many more. Sasol Limited is an integrated energy & chemical company, these is
based in Sandton, South Africa. The company is formed in 1950s. The company is operating
their business in oil and gas chemical company. This report is divided in two parts in which first
part covers the PESTLE analysis along with the international business driving forces, strategic
challenges & impact of digital technology upon business (Ado, A. and Wanjiru, R., 2018).
Whereas second part of this report deal with the influence of leadership governments culture &
functions along with the combination of ethical and sustainable globalisation on Deliveroo,
application of McKinsey and Handy;s model of culture along with the description of different
modes of entry which an organisation can adopt while starting their business operations on
international level.
PART 1
TASK 1
P1 Analyse Key Factors of cost, market, environment and competition that drive global
commerce and trade.
Concept of globalisation
Globalisation is the concept that describe the growing interdependence of the world's
cultures, economies and populations by cross-border trade in the products and services, flow of
investment, people, information and the technology. It is the trade which focuses on term more
narrowly to refer to international trad & there are some of the investment flows. In the ancient
times, individual have sought distant place in order to settle, product and exchange goods
enabled by improvements in its technology and the transportation. Global business environment
is defined as the environment is various sovereign countries and certain factors to home
environment of the business, basically influence the decision-making on the resources and the
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capabilities. The business environment is being categorised into two parts which includes
internal factors and external factors and all these factors have the power to influence the overall
functionality of the business environment. There are factors which influence the operations of
the business such as political, economical, legal, social factors. It is the aspects which bind the
countries, people in an interdependent global economy. The company is operating their business
in oil and gas chemical company.
Pestle analysis
Pestle analysis refer to the identification of macro environmental factors such as political,
economical, social, technological, legal and environmental factors. It helps organisation to take
decisions properly. Every organisation use this tool to identify the risk factors which affect the
operations of organisation. Few of these factors are controllable to some extent. SASOL also use
this tool to identify the external factors which may affect them and take necessary steps to alter
them. PESTLE analysis of SASOL can be discussed as:
 Political factors: All the government policies which affect the organisation refers to
political factors. Tax policies, foreign trade policies, environmental laws and political
instability and stability are some the political factors which affect operations. In case of
SASOL political stability plays important role because gas and oil sector add major part
of revenue in economy. SASOL is located in South Africa where political stability can
be seen which is positive factor for business. Tax policies and trade policies of Africa
also allows SASOL to expand their business internationally by controlling unfavourable
costs.
 Economic factors: There are many macro factors like saving rate, interest rate, inflation
rate and foreign exchange rate refers to economic factors. These factors play important
role because purchasing power depends on the employment rate of the country. It has
direct relation with demand and supply, which is influenced by purchasing power of
customers. Economic factors of South Africa are unfavourable for businesses which is
negative point for SASOL . During covid-19 its economy affected badly because South
Africa already struggling with its exchange rates.
 Social factors: These factor states the impact of social environment of country. Beliefs
and attitudes of people determine their society. Social factors include income
distribution, growth rate, lifestyle, health measures, age distribution and cultural
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barriers. South Africa's demography have a positive impact on SASOL because their
education rate is increasing which is great for them. People have started to gain
knowledge about the oil and gas business and become an asset for the industry. Youth of
South Africa are willing to contribute their efforts to maximize their profits.
 Technological factors: This include automation, innovation, research and development
which affect the operations of the organisation. These factors helps organisation in
decision making, whether to make changes in operations or not. Technological factors of
South Africa is favourable for businesses because its infrastructure is becoming strong
over the years. SASOL enjoys benefits of technological up gradations like internet
penetration, investment in research & development and social media support.
 Legal factors: It is important for company to know what is legally right or what is
wrong. These are the laws which are specific about the legal policies. Factors like
customer protection laws, health and safety laws, copyright and patent laws,
discrimination law, etc. are some of the legal factors from which organisations need to
be aware. SASOL make sure to follow all these rules and regulation and formulate their
internal policies according to these factors.
 Environmental factors: This includes factors like climate change and weather
conditions which may affect the availability of raw material. Organisations should take
necessary measure which are favourable for environment like they should keep track on
their waste management which lowers the pollution level in environment. SASOL
always contribute their efforts to make environment green and clean with the help of
recycling process. They have designed the policies for disposing their waste in nature
friendly manner.
An analysis of key driving factors of globalisation
This also develop the competitive edges through globalisation and developing countries
also helps to be the most cost-effective by which they can attract jobs. They can reduce operating
costs by producing abroad, buy raw material in cheaper rates due to the reduction of the tariffs
and grab the million of new customers. In context to Sasol limited, they are operating their
business at global level and the manager of the company is connect through the video-conference
in order to analyse the challenges and the expand their business. Globalised has increases the
production of products and services across the world. In modern era, the globalisation now
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experiencing 'internet economics', due to the betterment in the digital technology. There are
various factors which are facilitating the company in order to operate their business across the
international borders. Business environment is the major factors which involves the key driving
forces that are having the major impact in the overall profitability of the company. In context to
Sasol Ltd., There are various factors which is facilitating the business in order to globalise their
business are explained as follows:
 Financial Liberalisation: The main aim of the business is to benefits from the
minimum lower unit labour costs and also favourable production aspects which is also
encouraged countries in order to adjust the proper tax systems in order to attract the
FDI(Foreign direct investment). There are various countries that are becoming engaged
n tax competitiveness among each other in order to lucrative foreign funds. This also
helps the Sasol Ltd. In expanding their to the international boundaries with taxation and
tariff in the export and imports of their oil and gas in the large market.
 Intense Competition: there are numerous companies which are operating their business
in large market. When an organisation is operating their business in the international
market then they leads to understand the trends, buying behaviour of the individual
living in South Africa. In context to Sasol Ltd., They are operating their business in
different parts of world and so that they can meet the huge competition in the large
market. This helps them to export their products and services in the large market. Cultural exchange: it is the biggest drivers of globalisation as the people travel from
one country to another and share their cultural beliefs and practices. When the company
is offering their products and services in the other nation then they share their own
country's culture. Thus, when any of the company is exporting their services this helps
in establishing the better consideration in the market and they can rightly understand the
beliefs, their choices in order serve them better. In context to Sasol Ltd., these cultural
exchange across the globe helps them to have better accessibility to the business and
they can sustain in the market for long period of time. Cost: It is defined as the sum total of expenses which caries from country to country for
the purpose of gaining higher benefits at international level (Zhou, C., 2018). While
working on the global level, cost provide several of opportunities along with the
development of business organisation. If an organisation enjoy cost advantage, it result
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in the earning of higher profits on huge level. In order to decrease the costing of
organisation, the management is required hire skilled managers and leaders so that they
can focus on the successfully completing the business operations. Sasol Ltd can take the
cost advantage by reducing the costing of organisation. They can do shipping in bulk
which result in less costing of delivery agents. Market: This key factor provide lead to the domestic market which also offer many
opportunities to the business organisation which is necessary for management while
doing expansion of business in the global market. The Sasol Ltd company can
accomplish higher market share which result in long term sustainability in market (van
Tulder, Verbeke. and Piscitello 2018). It is necessary for the managers of Sasol Ltd to
analyse and identify the needs and requirements of of customers so that the organisation
can provide services as per the market requirements. This action help the organisation in
earning higher profits in international market. Competition: It has been found that several of organisations are available in the
international market which are offering the same products and services. Due to
internationalisation, it has been found that the competition in global market is increase.
Competition in the international market influence the business organisation to perform
their operations there. Sasol Ltd is also working in global market which state that they
are also facing higher competition.
 Environment: This key driving factor help the organisation in identifying the
environmental forces in which an organisation is performing their business operations. It
include several factors of business environment such as political, economic, social,
technological etc. in the context of Sasol Ltd, the organisation is required to to pay
attention on business environment so that they can make and develop effective strategies
which implies long term sustainability in global competitive market along with an
effective maintenance of leads in such dynamic environment. Development of effective
strategies at work place help the Sasol Ltd in earning higher profit.
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TASK 2
P2 Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples.
The idea of globalisation is related to the the performance of business operations with
higher effectiveness and efficiency by developing the effective strategies. These strategies help
the business organisation in performing the tasks in an effective and efficient manner along with
improving productivity and profitability of organisation. Internationalisation is defined as a
platform where several of organisation from different countries perform business operations
affiliated to the trading. It has been found that there are many complexities are available in the
market which are faced by the companies while performing business operations. Below
mentioned are the some challenges and complexities which are available in the international
market for Sasol Ltd: Loss of cultural identity: The business organisation have to work with the people of
several cultures because of presence of different cultures in the global market. It is
consider as the important issue for the organisation. Sasol Ltd have to pay attention on
the culture as well while performing business operations in several countries.
Understanding and adapting the several of cultures of different countries is really a
difficult task for the organisation (Song, S. and Lee, S., 2020). By understanding the
culture, the organisations have to develop their working strategies in such a way so that
they can maximize their productivity and profitability. In order to successfully running
and effectively functioning, the business organisation is required to do necessary
modifications in the products and services and make them as per the preferences of the
customers.
 Entry Fees: The international organisations have to pay several fees in relation to doing
export. Along with this, while doing expansion of business organisation in another
country, the management have to pay the specified and decided fees of the source of
expansion, which they are adopting. In the context of Sasol Ltd, it is necessary for the
management to pay the export fees while doing collaboration with several local and
international businesses. Earning higher profit is the main objective of expansion of Sasol
Ltd in several countries. The government of any particular country can also charge some
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fees before allowing the Sasol Ltd to start business operations in the specific country. It
directly effect the profit margins of organisations negatively as it result in increase in the
operating cost of organisation.
CONCLUSION
From the above discusses report it can be concluded that a firm highly pays its focus
upon the business enhancement through different organizational culture, governance as well as
leadership. This helps companies in successful achievement of business objectives as well as
competitive advantage at global level. The report further acknowledges various terms that assists
company in taking effective business decision by considering factors at global level. This
provides helps in accumulating knowledge related to the application of model in order to
understanding governance, structure & culture that is present within the organization due to
which a company is able to maintain efficiency and effectiveness while taking global business
decisions. Further the above mentioned report also provides a detailed analysis of sustainability
as well as ethics that is needed to be present at global level operations. There are different modes
through which a company can enter into global market such as licensing, exporting and many
others. Selection of best route is highly essential for business as this can effect the global
presence & the company's sustainability in such market.
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References:
Books and Journals
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creation and institutional perspectives. Critical perspectives on international business.
Ahmed, F. and Alam, M.A., 2021. Business Environment: Indian and Global Perspective. PHI
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Akhtar, M. and Sushil, S., 2018. Strategic performance management system in uncertain
business environment: An empirical study of the Indian oil industry. Business Process
Management Journal.
Bhagra, A. and Sharma, D.K., 2018. Changing paradigm of employability skills in the global
business world: A review. IUP Journal of Soft Skills, 12(2), pp.7-24.
Boddewyn, J.J. and Peng, M.W., 2021. Reciprocity and informal institutions in international
market entry. Journal of World Business, 56(1), p.101145.
Buckley, P.J., Enderwick, P. and Cross, A.R. eds., 2018. International business. Oxford
University Press.
Chi and et. al., 2019. Real options theory in international business. Journal of International
Business Studies, 50(4), pp.525-553.
Dabić and et. al., 2021. Knowledge Sharing and its Management in an International Work
Environment: Drivers, Challenges, and Consequences. Journal of Global Mobility.
Ferraro, G.P. and Briody, E.K., 2017. The cultural dimension of global business. Routledge.
Hickmann, T., 2017. Voluntary global business initiatives and the international climate
negotiations: A case study of the Greenhouse Gas Protocol. Journal of Cleaner
Production, 169, pp.94-104.
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