Impact of Globalization on Business Operations

The provided report discusses various factors that can impact a company's decision-making process in a globalizing business environment. It covers topics such as social networks, customer relation management, international business, cultural dimensions, and the potential of e-commerce for SMEs. The report also touches on responsible leadership, production planning, and the impacts of business environment changes on global manufacturing outsourcing. It is intended to be published on Desklib, a platform providing past papers and solved assignments for students.

UNIT 18
Global Business
Environment

INTRODUCTION...........................................................................................................................1
Project 1...........................................................................................................................................1
Introduction to the concept of globalization................................................................................1
Driving factors of globalisation...................................................................................................2
Significant impact of digital technology upon globalization.......................................................2
PEST/LE analysis of the organization.........................................................................................3
Challenges of globalisation and the strategic challenges............................................................4
Recommendations on how to overcome these challenges...........................................................5
Project 2...........................................................................................................................................6
Structure, culture and governance of the organization by Applying...........................................6
McKinsey’s 7S model..................................................................................................................6
Evaluation of ethical and sustainable factors...............................................................................7
Factors have affected decision making in a global context.........................................................8
Strategic expansion routes the organization took and analyze both advantages and
disadvantages...............................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is a combination of all form of internal and external factors that lead
towards influencing a business organisation functioning. Factors that are covered in this include
health and safety regulation which is an external force that influence business operations internal
environment. In context with Global Business Environment, it has been termed as a place within
which more than two business organisations perform their operations with mutual profit and
engage in exchanging of products and services with each other (Alqahtani and Saba, 2013). The
external business environment is based on technological factor, economical factor, political and
legal factor social, competitive and demographics factor. Thus, it becomes necessary for all
business organisation to effectively understand these factors those who are persist in internal and
external segment range as to effectively perform their business functions with a growth
prospective. Present report has been conducted on SASOL Limited which is an integrated energy
and chemical organisation. Company was founded in the year 1950 and engage in the process of
developing commercial iris Technologies, different liquid fuels, synthetic fuel Technologies and
chemical and electric producers. In this report formative discussions have been made on the key
essential factor that lead towards impacting globalisation along with other form of strategic
complexities that may affect organisational functions at global level. In addition, with this report
explain the manner in which operational activity of global market may effect organisation
structure and culture. Lastly influence of globalisation on the process of decision making of an
organisation are also covered in this report.
Project 1
Introduction to the concept of globalization
Globalisation is a process in which interrelation and interactions of social, political and
economic factors are done across the culture boundaries. In simple term globalisation can be
understand as a spread of information, products, Technology and Labour across the culture and
national boundaries. While in economic expect this process is defined as an interdependence of
nation in all over the world in order to Foster free trade. Globalisation effectively outstand living
standard of individual by providing them organisation improved access to products, services and
job opportunity. While in terms of downside it can be said that globalisation lead towards
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destroying job opportunities within high wage countries. Thus it can be said that globalisation is
an exchange of expressions, ideas artistic among culture. With the help of this process there is a
remarkable increase in exchange of Technology trade and manpower that lead towards affecting
countries in developing way. As with the help of this investment standards along with education
Technology lead towards increasing with high phase. In addition, with this globalisation also aid
countries to boost their economic ratios in order to gain more advancements.
Driving factors of globalisation.
Globalisation is a formative process in which exchange of goods, services, products,
technologies and humans are made with an aim for economical advancements. In context with
this globalisation main drivers are International Investments, technological advancements and
international trade. International advancement effectively leads towards driving globalisation as
it makes it easier for individuals, ideas, goods to have free trade across borders. All these factors
are effectively responsible to carry globalisation operation with the help of which process are
more effective and long-term sustainable. All these factors lead towards providing benefits to
country to take the advantage of globalisation and boost their economical expects. While in
addition with this developing countries can take the advantage of lower labour cost and many
other technological factors with the help of which they can perform their operations in best
effective manner. While in context with technological advancement it is also been seen that
countries by taking advantage of technological expects can interact with number of countries by
exchanging information and data for the purpose of future research, it can also help them to
increase their speed of work that lead towards benefiting countries to gain long-term
advancements.
International Economic Integration: It is mainly a economic integration in between
countries within a particular geographical region for a reason to reduce and remove any kind of
non tariff barriers, tariff as to conduct free flow of gods and services.
Foreign Direct Investment: With the help of this expansion route investor can
effectively able to make an investigation from any country.
International business and Trade: It allow exchange of services, capital and goods
across the international boarders and any territories.
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Significant impact of digital technology upon globalization
With the increase in the intensity of Technology this factor plays a most essential role
within a business organisation and help them overcoming many hurdles of globalisation that
include, in the process international trade delay in the exchange of information, lack of common
ethical standards, transportation cost and trade barriers. Technology plays vital role in
globalisation as with the help of this diffusion of best form of information aspects can be
possibly exchange around the world in 24/7. With the help of electronic system advancement in
technology facilitate globalisation in best effective manner. As with the help of this organisation
can effectively able to increase their economies of scale and can maximize their growth ratio
prospects, forming communication across Nation and reducing cost of transfer functions. With
the help of which global sources of essential inputs and raw materials can be done in best
effective manner. With the advantage of digital resources such as internet processing of data can
be done in stipulated period of time. In context with Sasol Limited digital technology benefits
company to promote their organisation operations and wide range of locations and grab attention
of customers from desirable locations. In addition, with this technology also facilitate customers
to made a payment by single click. Technology also help SASOL limited to resolve any kind of
customers complain in real based time, while reducing the chances of online payment fraud. All
these technological expects effectively help SASOL limited to conduct their operations on
globalise manner and can further increase their profitability and productivity.
E-commerce: With the help of this medium business organisation can able to make
commercial transactions within which they can transfer their goods and services through
electronic medium.
Social Media Connectivity: This mode allow business organisation to connect with large
number of customer and can showcase them organisation products and services and can
further attract them.
Global Manufacturing and and Distribution systems: This strategy is mainly depend
on four key factors namely configuration, compatibility, coordination and control. With the
proper consideration of this business organisation cab able to make their foreign direct
investment decisions and competitive strategies in best effective manner.
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PEST/LE analysis of the organization
Sasol Limited is looking forward to conduct the business operations at international level.
In order to effectively facilitate this functions manager of company is required to evaluate overall
factors within external environment as to possibly gain more development opportunities and
analyse risk factors as to overcome them and initiate the plan of expanding in well-defined
manner. In order to conduct in formative manner organisation can take advantage for PEST
evaluation which is a strategic tool that helps organisation effectively analyse macro
environmental factors that lead towards affecting organisational internal functioning that can be
lead towards decreasing overall functioning efficiency of organisation. Mentioned below pest
analysis in context with Sasol limited has been done:
Political SASOL Limited effectively engage in the functions of oil and gas in many
different countries. In this it can be evaluated that if operations of company those countries have
stable political conditions then it may benefit SASOL to effectively increase their profitability. In
this risk factors that are related with government policies and context with oil and gas trade are
also included which is further essential for manager of SASOL limited to effectively evaluate all
the factors of a country where they are looking to expand their business. In context with this
manager are required to analyse wage legislation, product labelling exhibitions etc to effectively
perform their operations by gaining more growth opportunities.
Economic factors include elements that are related with, competencies norm, inflation
rates unemployment rates and interest rates. All these elements within economic sector can lead
towards providing benefits to salol Limited in many ways. Thus in order to effectively expand
the business in other location manager of salol Limited is required to evaluate the actual growth
rate of oil and industries within a country along with buying power of customers. With the help
of this they can effectively able to forecast their growth trajectory that will lead to which
benefiting them in many different phase.
Social factors are related with, population believe, values, culture and society prospectus.
These elements impact of on organisational functioning thus, in order to expand their business
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salol Limited manager is required to effectively analyse the society believes and culture that are
prevailing in a particular segment as to effectively offer their products and services as per
according to societal terms. With the help of this company can effectively able to gain individual
loyalty towards organisation that can further help them to perform their business with more
growth advancement prospectus.
Technological with the dynamic change in modern society technology is changing with
fast phase that lead towards impacting on smooth processing of business organisation. Due to the
regular advancements in Technologies companies are required to periodically change their old
techniques with advanced one in order to gain more competitive advancements. In context with
salol Limited it is essential for manager to effectively understand the benefits of Technology as
with the help of this they can effectively able to satisfy their customers demand and can further
increase their competitive ages while gaining long-term sustainability and profitability.
Digital revolution effectively impact on globalisation, as it allows manufacturers and
distributes to connect with customers on wide stage with the help of social media. With the help
of this connectivity medium easy access with customers can be accomplished. It also accounted
in attraction of foreign direct investment along with international business and trade that results
in increase in economic growth of a country.
Challenges of globalisation and the strategic challenges
External environment effectively creates many challenges for organisations in order to
perform their business in international level. These factors include employment legislations,
fluctuations in rate of currency exchange, governmental legislations etc. Thus in order to
effectively perform business functions in best effective manner it is essential for Sasol Limited
managers to take advantage of formatting Strategies and measures with the help of which they
can challenge these external environment factors. Mentioned below some of the challenge are
described in context with present company:
Slow GDP rate slow rate of GDP lead towards creating numerous challenges that are
entitled with low level of economic growth that lead towards affecting on organisational
productivity and profitability in overall manner. In context with Sasol Limited while expanding
their business in international level company may face certain issues in terms with risk and
geographical change. For this manager of company is required to frame strategic measures that
will help them to effectively cope up with this challenge and gain advancements.
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Cost finance acts as a backbone of an organisation for smooth functioning as they are the
most essential element with the help of which overall function of organisation can be conducted
in best effective manner. In order to process the procedure of expanding operations in other
countries Sasol Limited is require to evaluate the adequate source of finance. This will help them
to move their business at international level. In addition, with this it is essential for Sasol Limited
managers to evaluate formative strategies with the help of which they can effectively able to
evaluate valuable funds sources that can aid them in functioning in best effective manner.
In addition with this, there are factors that comes as a challenging elements in
globalisation that are international trade laws, economic factors such as, national income,
inflation, exchange rates, quotas of export and import and tariff that create numerous obstacles in
smooth functioning Thus, it becomes essential to evaluate and have regular check on these
measures as to overcomes these barriers and reduce their negative impact in order to conduct
smooth functioning.
International Trade laws: This barrier can hamper organization to easily conduct their
operations, thus for this it is essential for business organizations to abide all related international
trade laws as to effectively perform organizational functions.
Currency exchange rates:In order to make balance in between organization internal and
external standard business organization is required to manage currency exchange rates and
business operations as to manage financial requirements.
National income: This is one the major barrier within which organization is required to
evolution per capita income in a nation as to operate business operations in smooth and effective
way.
Recommendations on how to overcome these challenges.
As to effectively overcome strategic culture challenge Sasol Limited manager has been
advised to take advantage of formative managerial decisions in context with bringing certain
modifications in organisational structure. In addition, with this, it has been advised to managers
to monitor and regulate the organisational change so to evaluate that change is implemented in
best effective manner. Further they are advised to take advantage of digital technology and as
with the help of this they can increase performance of employees as well as business in formative
manner. As with the help of technology they can effectively able to satisfy their customers as per
according to their taste and preferences. In addition, that this Sasol Limited managers is required
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to frame strategies in which they are required to invest capital for Welfare of society, as this will
help them to effectively increase organisation brand image in society that will lead towards
attracting loyalty from large based of customers that will lead towards expanding productivity
and profitability of company.
Project 2
Structure, culture and governance of the organization by Applying
McKinsey’s 7S model
SASOL Limited is expanding its business over global level. Through the whole process
of globalization the company is required to update their current organizational structure, culture
and governance in order to become successful in future (Alqahtani and Saba, 2013). For this, top
management of company is adopting various element of McKinsey 7s model. This model mainly
reflects inter-dependency of Hard and Soft element and these elements are described as below:
Hard:
 Strategy(Governance): The company mainly opts strategy which helps them to deal
with different situation during expansions. It can be said that management team of
SASOL Limited should formulate most effective rules and legislation which are required
for dealing with companies.
 Structure: SASOL Limited is using functional organizational structure as in this
employees of company are grouped according to its their skills and area of specification.
Management of SASOL Limited should follow the same structure as it is successful for
expansion.
 System: System is considered as the pattern in which organizations performs their
business activities. SASOL Limited is expanding its business at global level, it will
directly influence the system of the company. Hence, it is better for organization to
update its system according to requirement of operating company.
Soft:
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 Shared values: SASOL Limited is mainly giving preference to its values which believes
in performing all activities within their ethics (Zhang, A. and Huang, G. Q., 2012). It can
be said there will be negligible of influence of globalization on ethics of company.
 Skills: It will be important for SASOL limited to hire highly skilled employees for
maintaining business performance during globalization.
 Staff: Influence of Globalization will increase requirement of more employees in order to
operate business transaction.
 Style: As a influence of Globalization, SASOL limited will be going to opt democratic
leadership style for building positive relationship with employees.
With the help of this model SASOL can effectively able to structure their organizational
culture that will allow them to operate their functions in best effective manner. As with the help
of this model company can able to recruit skilled and potential employees with the help of which
they can effectively able to increase their overall probability and productivity. In addition with
this, McKinsey model provide SASOL to effectively develop a formative framework that further
allow them to reinforce their internal organizational factors in a successful manner. Thus, with
the help of both of these factors SASOL limited can effectively able to conduct their decision-
making operations in order to strengthen future corporate strategy.
Evaluation of ethical and sustainable factors
Ethics is termed as a behaviour practices which is required to be effectively considered by
individual while performing their operations in organisations. Ethics can be also considered in
terms of business organisations which is required by them as to effectively conduct their business
operations in external and internal environment in ethical manner. Main aim of ethics is to
effectively ensure that companies are performing their operations without engaging in any
malpractices that can lead towards harming society and environment. While sustainability termed
as a procedure that can be used to operate business functions without harming community or
environment within which organisation is performing their operations. In this organisations are
required to effectively considered their techniques and processes as to safeguard environment
and community. Mention below there are some sustainable and ethical standards which are
effectively required to be understand by Sasol Limited as to successfully operate the functions of
business in international markets:
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Offering education that can be focused on the aspects of improving school based education in
context with literacy Science and Technology, along with this by facilitating higher education is
company can effectively able to develop skilled and potential work skills.
Offering numerous forms of opportunities in context with employment individuals mainly to
unskilled and marginal groups that include women and youth.
Effectively put organisational focus on welfare and health issues and determine challenges
within society such as Malaria age and tuberculosis.
Effective development of sports, arts and culture with an aim to effectively increase local
talents.
Compliance with laws and regulations Sasol Limited is effectively required to considered
legislation, rules and guidelines that are force upon their organisational functions as with the help
of this they can effectively able to perform their operations without any legal obstacles. By
performing roles in within statutory contact company can able to provide safer environment to
their employees. In addition, with this manager of company is required to comply with health
and safety measure, law of employment measures, trade barriers and other form of legal laws. By
understanding need of all these compliances company can able to expand their operations in
international markets in best effective manner.
The sustainable as well as ethical factors which SASOL limited have been consider into
international market are mentioned below:
Treat staff equally: This is the accountability of SASOL limited to treat it staff members
equally for efficacious results. As this is exploring enterprises into various part of world so that
fair treatment is needed. Whole ethical employment laws have to be comply through firm fro
attaining their objectives.
Insist on integrity in business relationship: For expanding its business at international
market, this is crucial for company to develop relationship with foreign organizations. SASOL
limited also required to build relation with customers, suppliers and many others for attaining
their objectives.
Carbon emissions in environment and the emissions of another GHG's are related with
fossils fuel burning such as natural gas, crude etc. while it is harmful to surroundings, carbon
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offsets can be buy in order to deal with these harmful effects. This cause environmental problem
as it damages plants, man made products and impact the human health and many others.
Factors have affected decision making in a global context
There are different types of factor that may lead towards affecting decision making of
company in global context. All these functions impact on organisational internal and external
environment thus, it is essential for manager of Sasol limited to evaluate all these factors impacts
on organisational activities. In this they are required to evaluate cultural, values, social
responsibilities and make formative plans and procedures to effectively comply with them as to
operate business at International scale in formative manner. As SASOL Limited is looking
forward to expand their business operations within provinces of United Kingdom, in this
segment area individuals are tending towards roles and responsibilities that are linked with life
events. For this company is required to frame Strategies and policies as to accomplish the
objective. For targeting large pace of consumers in South Africa in this company is required to
adopt change in context with their strategies with the help of which they can effectively able to
retain their loyal customers those who are the major source of company hire sales and
profitability ratio.
While on the other hand United Kingdom social environment is totally different as
compared to Africa thus, it is required for SASOL limited to change their Strategies and comply
operation as per according to different countries corporate social responsibilities .With the help
of change in decision making process company can effectively able to satisfy their customers
while performing their operations within CSR segment and can game for the advancements in
effective manner at Global scale.
`Ethical and sustainable factors in globalization impact on an organizational decision-
making strategies as in order to effectively perform functions it becomes essential business
organizations to evaluate strategical measures in those geographical areas where they perform
their operations as to attract attention of customers and conduct smooth functioning.
With enhancement in globalization, many decision have to be developed through firm for
handling all aspects effectively. Initially manager of SASOL limited has to accept modification
that is expected either they can be national or globalization. To formulate decision with aspects
of traditional ideas may be dangerous decisions for firm. This is crucial for respective company
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to know about external changes which can be in domestic, international trends of economic level.
Decision taking within firm can impact activities of leadership as well as management that can
effect development, growth and objectives attainment into present enterprises. In case decision
are developed after effective examination then goal scan be accomplished easily. Likewise. In
case decisions at SASOL limited are not made according to staff then this may effect enterprises
and their operations. As they are operating at international market so decision have to developed
appropriately that gain profitability and sustainability for organization and their activities. There
fore, through this manner decisions can be formulated within company efficiently.
Strategic expansion routes the organization took and analyze both advantages and disadvantages
In order to perform operations in best effective manner it is essential for company to analyse
both the prospects of advantages and disadvantages. Main objective of business is related with
expansion at International borders for this companies are required to take advantage of numerous
business strategies. In context with Sasol Limited company management is required to
considered two main policies that are company growth by acquisition of existing business
entities and performing operations with Other industries in Cooperative manner. With the help of
this company can easily able to access local areas. In addition, with this Sasol Limited is required
to adopt formative Advertising and Marketing measures with the help of which they can reach
out to maximum customer’s base. With the help of expansion strategies company can effectively
able to facilitate their expansions in many different countries. Apart from this it has some
adverse effect as a company is required to take many risk that can lead toward impacting on their
internal business processes on larger scales that can lead toward creating numerical obstacles in
company growth path which acts as a challenge for company. To effectively overcome this in
this regard manager of SASOL Limited is required to track their inventory management and
regular tracking of development of labour resources with the help of this they can effectively
able to accomplish their expansion process in best effective manner. In addition, with this in
order to expand business in other countries company required to have highly skilled individuals
that have completed and she's to perform organisational objectives in best effective manner
(Simic and Dimitrijevic, 2012). Thus, with the help of these expansion strategies organisation
can effectively able to expand their productivity and profitability margin areas that further allow
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them to increase their profitability. While if it is seen in disadvantage expansion strategies
include high risk and cost that can adversely impact on business organisation.
Joint venture:
This is one of the most effective expansion route within which organisation can have
agreement related to utilization of pool of resources as to accomplish particular set of objectives.
With the help of this route SASOL limited can able to share profits, costs and losses and can
overcome barrier in well effective measure. Advantage: SASOL limited cab obtain benefits through sharing of risk, expenditure, cost
and so on among two business.
 Disadvantages: When two firm joint and become one company then there is more
restriction as well as flexibility are less.
Franchising: This is defined as moving towards international market area. This is
considered as the expansion route in which franchisor facilitates process of operating enterprises,
ongoing methods of business and so on. Franchisor provides rights to franchisee for utilising
product for certain time duration. Moreover, this is known as the most simple manner to expand
enterprise that have some advantages and disadvantages which as discussed below: Advantage: It facilitates benefits to respective firm for using trademark as well as brand
name at international level that develops less possibilities for business failures.
 Disadvantages: It is the costly as well as time taking that needs huge amount of funds fro
expanding their business in all over world. As all country have different culture so the
succession of business is not sure.
After examining various expansion routes to globalisation, it can be concluded that
SASOL limited can adopt franchising in its business as it aids them to utilise products or service
of another firm in effective way in order to accomplish their objectives.
CONCLUSION
As per the above mentioned report it has been concluded that, business environment is a
combination of different types of internal and external factors that can affect and Organisation in
negative and positive way. In this regard company is required to evaluate all these measures as to
effectively operate their business at globalization. Along with this report include different types
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of factor that can impact on decision making process of company which is required by
organisation to effectively considered as took a more profitability and productivity.
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