Factors Driving Global Commerce and Trade

This document discusses the key factors that drive global commerce and trade, including cost, market, environment, and competition. It also explores the complexity of strategic challenges faced by organizations in a global environment, supported by specific examples. The influences of globalization on organizational governance, leadership, structure, culture, and functions are evaluated. Additionally, the influence of ethical and sustainable globalization on organizational functions is examined. Different ways of decision making that help in working effectively in globalization are also discussed.

INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................4
P1 Analyse key factors of cost, market, environment and competition that drive global
commerce and trade.....................................................................................................................4
Covered in PPT............................................................................................................................4
P2 Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples...................................................................4
Covered in PPT............................................................................................................................4
PART 2............................................................................................................................................4
P3 Evaluate the influences of globalization on organizational governance and leadership,
structure, culture and functions....................................................................................................4
P4 Evaluation of influence of ethical and sustainable globalization on organizational functions-
......................................................................................................................................................5
P5 Different ways of decision making that helps in working effectively in globalization........11
P6 Determination of various routes to internationalization organization may adopt................11
Conclusion.....................................................................................................................................14
References-....................................................................................................................................15

INTRODUCTION
Global business environment are described as an environment that exists in different self-
overseeing nations with components endogenous to home climate of an association alongside
impacting cycle of dynamic on usage of assets and capacities. In basic terms, global business
environment alluded as an over overall climate where an association work their activities. This
idea developmentally incorporates wide scope of components that are, innovation, culture,
governmental issues, geographic area and financial status. There are various sorts of components
that impact associations to globalize their tasks in worldwide market, a portion of that variables
incorporate, benefit creating open doors, worldwide development, business development, global
standing and that's just the beginning. Present report has been led on, SASOL Limited participate
in the area of fast-growing energy alongside chemical company. This company is operating its
business services in South Africa. Organization is looking advances to extend their business
activities into different nations. In this report, conversations has been made on, significant key
factors that drive globalization alongside issues that happens while directed business on
worldwide commercial center. Furthermore with this, report incorporate, various kinds of
components that leads towards affecting activities of an organization along mind interaction of
dynamic.
PART 1
P1 Analyse key factors of cost, market, environment and competition that drive global commerce
and trade
Covered in PPT
P2 Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples
Covered in PPT
PART 2
P3 Evaluate the influences of globalization on organizational governance and leadership,
structure, culture and functions

Globalization is increasing day by day. It affects organizational governance, leadership,
structure, culture and functions. Globalization affects organizational governance through peace
and stability or directly. Change in economy, business, life and community directly affects the
organizational governance. If international corporation is not effective then it leads to effect the
global governance. Globalization affects the organizational governance in various ways.
Globalization affects the culture of various places. In this, cultural values of different countries
are exchanged. Characteristics of cultural globalization are convergence of business and
customer culture between different countries all around the world. It also helps in growth of
international communication. It is also said that exchanging culture values is positive influence
of globalization.
Through market and customer base globalization affects the management and leadership of the
organization. Leadership in the market totally depends upon the customer base and it also helps
in maintaining market position. With the help of customer base company is able to know its
position in the market. Global leadership is important for company in order to increase it
profitability as well as it also helps in recognition of brand or company.
Organizational structure is very important for all types of businesses in globalization. Specially it
is important for such companies which are having its business in other countries such as
multinational corporations. Globalization put impact in the organizational structure such as
change in communication. Communication plays and effective role in the organization. If there
in no proper communication among employees and management then it leads to conflict.
Globalization leads to increase the competition among employees and competition among
businesses is related to product and service they are offering. Company can increase its market
share by offering cheap products in the market. It helps company in positive way but company
needs to maintain its profitability.
P4 Evaluation of influence of ethical and sustainable globalization on organizational
functions-
McKinsey 7S model-

Every organization has their own goals and goals can be different. Governance,
leadership, structure, culture and functions of the organization also varies with the change in
goals of company. In order to evaluate the globalization these concepts needed to be cleared.
Every organization has their own structure. Organizational structure is very important for
company in order to determine the line authorities, communications and allocation of rights and
duties. Culture of organization is defined as set of beliefs, values and assumptions which are
shred by the employees of the organization. Governance of organization is described as set of
processes, Policies, laws which helps in controlling the organization. Organizational functions
should be proper. If all the functions of the company works in the right manner then it leads to
growth of the organization. It is very important for company to maintain governance, leadership,
structure, culture and functions.
As it is already discussed that SASOL limited is very high growth organization in south
Africa. Company is inclined towards globalization and it is planning to make plans in order to
participate in global trading and commercialization. Global trading will help company to grow in
an efficient manner. It is important to evaluate the influence of globalization on company.
MCkinskey 7S model is evaluated for the globalization. This model includes-
 Shared values
 Strategy
 Skills
 staff
 Style
 System
 Structure
Strategy – Company uses cost leadership strategy. It is evaluated from its marketing
communication message. Company sustains the strategy because of exploitation of economies of
scale. Company is exercising the bargaining power in order to deal with suppliers for securing
the low purchase cost. Recently company is facing challenges such as payment of suppliers and
decline of sales. Company’s strategy to deal with theses issues includes reduction of capital
expenditure, changing the pension scheme and review of property portfolio.

Structure – Company’s structure is hierarchical and has many levels of management form sales
of chemical to CEO. CEO of company is trying to simplifying the organizational structure. If
structure is simplified then it helps company to get the proper flow of information. Company has
10 boards of directors and executive committee has11 members.
System- As Company has to produce chemical and energy on daily basis. It requires wide range
of operations. Company can use simplify the system in order to get the proper operations within
the organization. Company is changing its performance evaluation system in order to measure
the performance of employees and department. It is very important to measure the performance.
If performance is not good then company can measure it and enhance it. Enhancement of
performance is important in order to grow in the market.
Company has different systems which includes-
 Human resource management
 Finance
 Marketing
 Operations
 Sales
 Supply chain management
 Customer relationship management
Shared values- Creative and supportive organizational structure can be made with the help of the
core values at organization. It helps organization to perform better and also helps in motivating
the motivation and organizational commitments. Company has various core values which are as
follows-
 Creativity
 Honesty
 Transparency
 Accountability
 Trust
 Quality
 Heritage

Company is also trying to conduct its operations with highly ethical and moral standards. Which
helps company in defining the benchmarked against international criteria.
Culture- Company believes in diversity. Company also inclined at international presence for that
company needs to supply different product at different countries. Company can change its
policies and more focus on diversification so it helps in globalization. Company should be
motivated towards the innovation in order to earn profit through globalization as innovation
plays major role in globalization. Company also has supportive leadership which helps in
employee motivation and job satisfaction. It is very important for functionality of organization.
Employees need to be motivated for proper functioning.
Style- There are different management styles. Company uses participative leadership style.
Company is trying to engage itself to keeps its employees motivated in decision making.
Participative style means every employee can share vision and ideas. It helps in regular
interaction with employees. Thus, efficient management style is important for company.
Staff- Company has large number of employees which are sufficient for its global operations.
There is internal and external hiring within the organization. It depends upon the urgency and
requirements of skills. It is observed that company hire people as per the requirements of skills.
In house training is given to the employees. In the company job roles and positions are designed
in such a way to achieve the goals, and skills of employees are important for the company for
growth purpose. As company has large number of employees then synchronization among
employees is necessary in order to meet the organizational goals.
Multinational corporation governance and leadership in international context-
Corporate governance is defined as rules and regulations created by company in order to
maintain its operations in international market. These rules and regulations are directly
controlled by company. It helps in identification of power and accountability and decision
making power. There are four P’s of corporate governance it includes people, process,
performance and purpose. There are six pillars of the corporate governance. It involves rules of
law, Moral integrity, transparency, Participation, effectiveness and responsibility. Globalization
affects the MNC governance in several ways. Hence, it is said that globalization impacts the
corporate governance. It also affects the leadership in different markets. Leadership of company

is impacted by globalization and with the help of customer base in the country it is measured that
which company has leadership in the market. Globalization leads to increase the competition and
it affects the leadership of the company in the market. Company can create leadership in the
different country by using techniques such as offering low cost products, making brand name
and marketing and promotion of the product and service in proper way. Hence, it is said that
company’s governance and leadership is affected by the globalization.
Hofstede’s dimension influence upon the organization-
This theory is developed by the Geert Hofstede. With the help of this framework cultural
values and beliefs of different countries can be understood. It is easy to discriminate between the
different nation culture, dimension of culture and its impact on business. According to Hofstede
there are six categories by which culture is defined-
Power distance index- In this dimension inequality and power is tolerated. According to the
viewpoint of followers inequality and power are viewed. As company deals in different countries
so it is important to that is dealing with country with high power index or low power index. High
power index is indicator of culture which has inequity, encourages bureaucracy and high respect
rand and authority. On the other hand low power index is an indicator of the culture which
encourages organizational structure.
Individualism vs. collectivism- Individualism means focusing on achieving the personal goals on
the other hand collectivism means meeting the objectives as a group. Individualism is defined as
“I” and collectivism as “WE”.
Uncertainty avoidance index- In this dimension it is understood that how company should deals
with unexpected situations and events. If uncertainty index is high then it is considered that
coutry is having ambiguity and risk taking. With the help of strict rules and regulations it can be
avoided. In contrary, if country is facing low uncertainty index it means it is good idea to invest
in those countries.
Masculinity vs. Femininity-
It plays important role in knowing the culture of the company. It is important to know that
country is more interested into masculinity or femininity.

Long term and short term orientation-
Focus of long term orientation is on delaying short term success in order to achieve long term
goals. It emphasizes on persistence, perseverance and long term growth. On the other hand short
term orientation is totally focused on short term success. It emphasizes on short term growth.
Indulgence vs restraint-
Indulgence means focus and enjoying life and having fun and restraint means society is focused
on rules and regulation.
While considering this load of variables inside Hofstede's social measurements SASOL
can adequately ready to direct their activities. This will in other hand will help organization to
build their work effectiveness while guaranteeing high development rate efficiency and benefit.
Likewise with this, it further Aid Company to acquire upper hands while guaranteeing high
financial development.
Ethical and sustainable globalization-
It has direct impact on financial functions of the organization. Due to marketing policies
many ethical issues are faced in sales and marketing of the product. It is very important for sales
person and marketing manager to talk in polite way as it puts great impact on the customer. Good
ethical practice is required for the company if it wants to sustain in the market for long term.
According to good ethics taxes should be paid on time in the investing country so that company
can sustain there for long time. SASOL limited is chemical company and it is great example of
this. In order to avoid the ethical implications company needs to work in the harmony. Ethical
implications arise due to change in technology or newly introduced product which gives
competition to the company. Human resource department also witnessed several complications.
Because there are different in culture and language. It may create the commitment issues. Ethics
of HRM includes the importance of avoiding discrimination and child labor. Hence it is said that
company needs to maintain its ethics in order to sustain in the market for long term.
P5 Different ways of decision making that helps in working effectively in globalization
There are many ways by company can work effectively and give competition to the
competitors. As globalization is increasing very rapidly. Company can take decisions after

analyzing economic conditions, political conditions and cultural dynamics. When company
wants to take decisions then it should consider trade policies of target countries, industrial and
labor practices and importance of NGO. Every country has different economic conditions so
company needs to take decisions accordingly.
When the government of countries change then it leads to change in political policies. Company
should analyze all the rules and regulations before investing in target country. It is also important
to analyze that company is politically stable or not. If country is not political stable and changes
is policies frequently then company needs to take decisions accordingly. Culture influence the
employee participation, work life balance and management practices. It is very important for
company to satisfy his/her employees. It leads to decision making. Management of the company
can take decisions according to productivity of the employees and it also helps in deciding that
employees need training or not. Thus, it is said that there are various ways which helps in
effective working in globalization.
P6 Determination of various routes to internationalization organization may adopt
In the cutting edge and hyper cutthroat period, every single association means to grow its
business tasks at worldwide level to procure expanded benefit and increment clients base.
Nonetheless, when an association extends its activities globally, they need to utilize certain
techniques in order to guarantee that it is done in an effective and proficient way. There are
various techniques with the utilization of which SASOL can undoubtedly grow itself at
worldwide level in a strong way. A portion of the significant courses that can be received by
SASOL to acquire passage into global business sectors are:-
Licensing:
This alludes to a strategy wherein an organization gives its permit to other element
through which that substance conducts activities for the sake of that separate organization. This
can fill in as an ideal system on the off chance that an endeavor plans to work with extension of
its business tasks at worldwide level. Concerning SASOL, this organization can charge them
sovereignty or expense for utilizing the innovation just as brand of the element. Here, essentially
two organizations get enjoyed an agreement, in particular, licensor and Licensee. The previous is
the one that gives permit to other association while the last is the organization who obtains

permit so as to lead business activities. This holds benefits just as disadvantages for SASOL. In
such manner, advantage is that they create utilization of this open door to acquire dynamic pay,
likewise they can undoubtedly complete extension inside another area, accordingly giving
freedoms to both the organizations and reducing the risks. The downside of this technique is that
licensee is completely reliant upon the licensor which prompts increase in rivalry inside market.
Nonetheless, licensee organization needs to cause gigantic costs to profit permit.
Exporting:
This can be alluded to as an interaction wherein an association fares or supplies its items
and administrations in another market. With significance to SASOL, in the event that it receives
this strategy, they will give their items in global business sectors through which they will
actually want to determine various advantages. With this, SASOL will actually want to expand
its deals and its market presence, subsequently acquiring an upper hand. Nonetheless, when this
organization will work with development by utilizing trading, it will enormous rivalry.
Additionally, they may additionally confront issues, for example export legislations of various
countries inferable from which the organization are required to modify its systems and plans as
per them.
Organizational decision making and strategy-
Strategic planning is process with prioritize the goals or objectives in order to achieve the long
term success. There are different kind of strategies that company can use in decision making
which are as follows-
Harness decision making framework-
Decision making framework is very necessary for the company in order to work efficiently. It
gives different route options which provides same destination. High level destination are
provided by the strategic plan. Decision making framework includes brainstorming, alternatives
analysis, ranking and weighting.
Ranking multiple priorities at once- It is very important to prioritize the objectives of the
organizations so that company can grow in an efficient manner. After that quantifying the
decision making is important.

Decision making is important in the organization as it helps in selecting the best course of action.
With the help of decision making successful operations of organizational activities can be done.
Managerial functions includes the planning, organizing, directing and controlling.
Principles of leadership change and process of internationalization-
There are various principles which helps in leadership change and internationalization. Some of
them are as follows-
Lead with the culture- For a leader culture is everything. Culture is very crucial for the change
management. It is very important to address the culture appropriately.
Start at the top- Employee engagement is very important in order to work efficiently. Company
should always use approach of the top down in order to maintain its growth.
Every layer involved- In leadership and Globalization Company should choose participative
style of leadership in order to work effectively. Employees should participate in every discussion
and should give idea and information about relevant work.
Rational and emotional case- If company is entering into new markets then it should then it
should consider rational and emotional case together.
Hence, it is said that principles are very important for company to maintain its growth.
International expansion strategy- There are key factors which must be included in the
international expansion strategy. Company’s international expansion strategy is as follows-
 Selection of the target market
 Analysis of market is very important for company. It involves market size, customer
base, market growth, channel analysis and working medium.
 Market entry strategies should be analyzed.
 Operational and organizational model should be recognized.
 Feasibility analysis should be conducted in order to know that it is profitable or not to
launching the product in the market.
 Road map and action plan should be prepared.
 Product facility location should be determined.

From the above points are considered in company’s expansion strategy. It is very important to
include all these steps as it is very necessary for the company to go before internationalization.
Every market has their own rules, regulations and competition so before investing company does
the analysis of all these points.
Barriers in international trade-
Mainly there are major barriers which includes the ethical barriers, cultural barriers,
Technological barriers and economical barriers. Ethical barriers are connected with ethics, values
and beliefs of the target country. It is challenge for company to overcome the ethical barriers. On
the other hand cultural barriers are also faced by company It includes different cultural activities
in the target country. Every country has their culture so it is important to overcome the cultural
barrier and increase the customer base in the target country. Language is also not similar in every
country. Sometimes it is hard for company to understand the requirement of consumers and
competitors take advantage of this situation. Company needs to focus on reducing the cultural
barrier in order to improve its sales which results in improved profitability.
Conclusion
Form the above report, it is analyzed that globalization is hard task for company as it
includes many barriers. If company can overcome all these barriers then it may lead to the great
success for company. In order to increase the profitability company should go for globalization
by using appropriate strategies which helps company in expansion. Thus, it is said that
globalization plays crucial role in growth of the company.

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