Globalization and Driving Factors: A Critical Evaluation

This report discusses the concept of globalization and its driving factors, with a focus on the impact on the business environment. It also explores the application of Hofstede's Dimensions of culture in evaluating the globalization impact on a global company. Recommendations on overcoming strategic challenges and the use of McKinsey's 7S Model are also provided. The ethical and sustainable factors that organizations need to consider in a global market are discussed, along with the use of Hofstede's Dimensions of culture to evaluate the influences of globalization on international organizations.

HNBS 318 Global Business
Environment

INTRODUCTION
GBE is defined as surroundings in different nations with the exogenous factors to home
environment of company. The businesses are impacted through global environment that
uncontrollable international and local interactions which impact an organisation operates
(Adekola and Sergi, 2016). Present report is supported on SASOL Limited and this is fast
growing energy and the chemical based organization. In this report going to discuss about the
globalization and driving factors which effect on the business environment. There will be
discussion about application of the Hofstede’s Dimensions of culture for showing critical
judgment of globalization impact on global company.
PART 1
Concept of globalization
Globalization refers to enhancing interdependence and integration of world economies. It
is move about expansion of the social and economic ties among countries by spread of the
corporate institutions that can lead to shrinking of world in economic context. In this,
organizations can gain the competitive benefit on many fronts by globalization. They can
minimize cost through manufacturing abroad. The globalization permits business of specialize in
manufacturing the services and products where they can gain competitive benefits.
Driving factors of globalization
Under this, there are different factors which responsible for carrying globalization
operations which make process more effective for long period of time. Different globalization
factors mention below:
Economic factor- It consists data regarding market as well as economy if
underdeveloped country is not having growth. In context to this, globalization is helpful in
enhancing growth of an organization through using advanced technology, transportation facilities
and many others. It will help in reduce the labor cost.
Technological factors: It is one of the crucial driver of globalization as it help in
exchanging the technology to one nation to the another one with the aim of improving the
relation. With the help of this, two countries can easily share data and necessary information
towards the future activities (Aithal, 2017). In context of business organization, this type of
driver help company in building their positive and competitive brand image at market place.
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PEST/LE analysis of the macro environment in which the international (global) company
Every business organization wants to expand their business activities at global level with
the aim of attaining success. In this company is responsible for analyzing macro environment of
international level so that they can improve their performance and at the same time also handle
entire changes exist in macro business environment (Amankwah-Amoah, 2016). For analyzing
the same, SASOL Limited conduct PESTLE analysis through which firm can easily expand their
business activities. All these components of PESTLE analysis will be understood by following
description:
 Political: It s crucial for company to evaluate the factor before expanding their
operational. Mainly, SASOL Limited operate their business in various countries as
political nature or countries are directly affect their activities. If all nations are politically
stable then company face less risk in context of changing in government policies towards
the oil and gas trade. This can be improve its productivity level at market place.
 Economic: It is related to the inflation rates, unemployment, norms of specified countries
which directly influence company performance. SASOL Limited focus on those
customers who has high purchasing power that may increase their profitability level and
at the same time also forecasting the overall growth of company sat international market.
 Social: This type of factor put huge impact on the working culture of company because it
includes customers taste, preferences, their attitudes, market demand and many more. All
these are play a crucial role in developing growth of company. Thus, it is important for
SASOL Limited to effectively understand the customers taste and demand before
providing them products. This will improve the chances of enhancing overall profitability
level.
 Technologies: This factor of macro environment directly affect the entire working system
and process of company. Now a days, every business organization implement
advancement of technology within their operations with the aim of improving their
competitive performance (Cumming and Zahra, 2016). Thus, it become important for
SASOL Limited to use new technologies so that they can offer best quality products as
per consumers demand and at the same time also attain high competitive advantage at
market place.
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Complexity of strategic challenges of globalization faced by organizations and evaluate
Globalization is refers to the external environment which includes various challenges and
issues that negatively impact on the organizational abilities and performance as well. It also
affect on company growth and its profitability because change in policies of government and
inflation rate may create issues in attaining competitive growth (Doh, McGuire and Ozaki,
2015). Along with this, it is also consider fluctuations in inflation rate, government policies,
currency exchange rate and many more. All these may reduce the efficiency level and also put
adverse affect on the company image as well. In this regards, there are some major strategic
challenges of globalization faced by SASOL Limited are as follows:
 Cost related change: At the time of running commercial activities at global level, finance
is one of the important factor that help company in managing their goodwill at market. In
this regards, SASOL Limited face issue related inefficient fund to move their activities in
another countries. This is the reason that manager of company is responsible for making
strategic plan that consist proper management of available fund (Hamilton and Webster,
2018). By this company easily operate globally and attain growth as well.
 Legal and regulatory Structure: Each and every countries has their unique laws and
regulation to govern business activities. Thus, it is important for firm to effectively
realize the legal climate of the nation and industry before expanding their business in a
new market. This can effective for company in improving their operating standards and
also make an effective strategic decision towards how to expand globally to ensure about
higher profitability level.
Recommendations on how to overcome these challenges
It is crucial for company to overcome from all the strategic challenges that faced by
business while operating their business at global level. In this regards, SASOL Limited needs to
develop an effective managerial decision that help them in improving entire process and develop
necessary modification (Fabus, 2018). Along with this, company needs to ensure about
organizational structure and also implement advancement of technologies to heighten their
performance level at market. Furthermore, SASOL should manage sufficient fund to operate
their business activities for operating business at global level. Through this company easily
expand their business activities and also develop their competitive brand image. In addition of
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this, business is requires to follow all the set laws and regulations while spread out their
operations at international phase.
PART 2
Structure, culture and governance of the organization by applying McKinsey's 7S Model
Structure, culture and governance is consider as crucial part of business organization as it
help in utilize the entire activities in efficacious or systematic manner. In this regards, SASOL
Limited is famous company that operate their business in new countries for attaining competitive
advantages at market place (Kasemsap, 2015). This will provide huge opportunities to business
to develop their positive and famous image in customers mind. When company going
globalization then they responsible for updating their culture, organizational structure and
governance. By this, firm can improve their overall performance and also sustain in competitive
market for longer duration. For attaining the same, top management of SASOL Limited
implements McKinsey 7s Model with the aim of making entire activities of company more
effective and smooth as well. This type of model is based on two elements such as Hard and soft
as these can be discussed below:
Hard:
 Strategy: It is crucial for company in implementing an effective strategy as it help in
managing all the changes and also make organizational activities in an effective way.
Thus, it is crucial for management of SASOL Limited to formulate best and suitable rules
and regulation that needed by company in dealing all the changes in systematic manner.
 Structure: For accomplishing success at market, it is crucial for firm to follow an
effective structure that help in running business activities in successful manner. Mainly,
SASOL Limited follow functional organizational structure in which all the employees
perform their job activities as per their skills and specified knowledge (Knežević Cvelbar
and et. al., 2016). At the time of expanding their business, SASOL Limited follow the
same organizational structure that support them in successfully expanding activities at
international level.
 System: It is refers to the pattern in which organizational activities can be performed in
well organized manner. In this regards, SASOL Limited expand at globally with the aim
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of attaining competitive success (Lee, 2017). By this, entire system and activities is
directly influenced. Thus, it is important for company to update their existing system so
that they can effectively operate or perform their commercial activities at global level.
Soft:
 Shared values: The main focus of SASOL Limited on its values and ethics in order to
perform their activities in effective way. In this regards, it put minimal impact on
company values and ethics. This may improve the performance level of company.
 Skills: Talented workers are consider as an crucial asset for business to attain success at
global level. In context of SASOL Limited, they also required highly skilled workforce
so they can accomplish their set targets. By this, company can expand their business
successfully.
 Staff: When firm run their operations at global level, company requires more employees
within the operational activities with the aim of expanding their operations international
market in order to attain higher success.
 Style: Globalization directly influence the business activities of SASOL Limited in
which company opt democratic leadership style within their working activities with the
aim of building positive relationship among all the workers. This can be ameliorate the
overall performance of company and its employees as well.
Ethical and sustainable factors that the organization has to consider in a global market.
In business organization, ethics refers to the individual practices in which operations
were carried out. Therefore, company is responsible for conducting operations in ethical way that
support in developing positive and competitive brand image. In this regard, the primary purpose
of business is to ensure that entire activities can be done ethically and does not put harmful
impact on society and environment. This can be effective in enhancing positive and competitive
brand image. In addition of this, sustainability is consider as a process of implementing
techniques that do not harmful for society and environment as will (Levi-Jakšić, Jovanović and
Petković, 2015). It help in making overall performance of company is more competitive and also
ask for number of customers over there. In this regards, there are some ethical and sustainable
factors that help SASOL Limited to spread out their business at international level successfully.
All these are as follows:
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 Corporate Social Responsibility: It is crucial factor that initiate by company to give
their contribution towards the society welfare and environment security as well. In
regards of SASOL Limited, organization have adopt CSR activities that help them in
improving their competitive image in across the globe (Rowell, 2017). As company
provide huge employment possibility to local people in order to better their living
standard that contribute in developing economic growth. Furthermore, providing
education services is also provide by SASOL in order to reduce poverty rate of economy.
 Compliance with laws and regulations: For maintaining sustainability and ethical, it is
essential for SASOL to follow all the necessary rules and regulation to make their
performance more more competitive. In this regards, company needs to follow all the
compliance with employment laws, health and safety and mare more legal laws. Through
this company can easily done expansion of their operational activities in across the globe.
Hence, effective implementation of these Ethical and sustainable factors company can
expand their commercial activities at global level and at the same time also maintain their
competitive image.
Hofstede’s Dimensions of culture to show a critical evaluation of the influences of globalization
on the international organization.
In business organization, culture, structure and governance play a crucial role as it help
business to grow their operational activities at global industry place. Mainly, it also influence
entire operational and functionally activities. It main contributes in increasing productivity level.
In context of this, SASOL Limited is responsible for maintaining as well as as establishing
proper structure that support in establishing their competitive image. For this company, use
Hofstede's theory of culture that understood by following description: Power distance index: Under this, SASOL Limited use power distance index that help in
reducing the inequality within the company. It increase the possibilities of accomplishing
competitive growth at global market (Salvatore, 2015). Individualism versus collectivism: The main focus of SASOL Limited is to follow
collectivism within the company with the aim of making organizational structure more
effective. This will contributes in improving the chances of attaining success at global
level.
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 Masculinity versus femininity: It is also consider as an important culture in which
company focus in developing as well as creating positive relationship among employees
and employer with the aim of reducing the issues and unfair environment. Uncertainty avoidance index: Under this aspect, SANSOL use index that help in
evaluating the knowledge towards the anxiety and any kind of misunderstanding that
occur at working area and in-front of workers. By this, company may amend their morale
and encouragement towards the company and its activities. BY this firm can operate their
business at global level more successfully (Wood and et. al., 2015). Pragmatic versus normative: In this, company provide strong article of faith to their
workers which on their actual performance. This will directly contributes in improving
their abilities to perform their task effectively.
 Indulgence versus restraint: In SASOL Limited, employees are high self-indulgence
persists optimistic behavior and also get chance to communicate and give speech in-front
of people. As it help in improving their communication skills and make them able to
perform their activities at international level.
Different ways decision-making can work effectively
There are ways ways and cause that directly impact the decision making process of
company at global market. In this regards, SASOL needs to take initiate for development of
society, social responsibility, their plans and cultural values a well. All these are follow or
implement by the company when they operate their business globally. In case business take
decision to expanding in UK then they have to analysis political environment and laws as well.
With the help of this, firm can easily perform their commercial activities successfully.
Furthermore, if company operate their business in another country then they have to
change their policies and strategies with the aim of inviting or retaining large number of loyal
customers. This will contributes in increasing overall sales and profitability level at market and
make their brand image more competitive.
Strategies for internationalization an organization may adopt
When company operate their globally, then they needs to ensure that expansion is
successfully done and business also effective perform at global level. In this regards, number of
business strategies are there through which company amend their performance level. In context
of SASOL Limited, manager of organization use 2 type of effective policies likes they use
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acquisition for attaining growth level and also join industry cooperatives in order to operate at
global level. Mainly, it includes effective advertising and marketing activities through which
firm increase their brand image and awareness in customers in another countries (Uchihira,
Ishimatsu and Inoue, 2016). By using these expansion strategies, firm may improve their
profitability level and also accomplishing their targets as well. In addition of this, expansion of
business is not easy as it create challenges in-front of company in which management established
and at the same time also update their working system so that firm can effectively manage
inventory, cash flow delivery system, operational activities. All these are positively impact on
the overall growth of company at globally. Furthermore, expansion of business is also required
new and skilled workforce, proper finance and so on are important aspects through which firm
can easily increase the chances of attaining competitive advantage at international market.
CONCLUSION
As per above discussed project it can be evaluated that business surroundings is one of
the important aspect that consider both internal and external factors. As it put their impact on
entire activities of company and its operations as well. In context of this, advance technologies
like digital technology is play a crucial role in business organization as it change entire
operational activities by making it more effective and smooth as well. By this, firm can build
positive brand image at global level. Apart from this, cost related aspect is one of the leading
situation that faced by company in spread out their commercial activities at global level. For this
company use PEST analysis in order to effectively analyze the macro environment that directly
help in improve performance of company at market place.
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