Global Business Environment Analysis and Challenges

This report provides a comprehensive analysis of the global business environment, focusing on key factors driving global commerce, strategic challenges, and the influence of globalization on organizational functions. The report uses SASOL Limited as a case study to illustrate market, cost, competition, and environmental factors impacting global business operations. It delves into the complexity of strategic challenges faced by organizations, utilizing PESTEL analysis to examine political, economic, social, technological, and environmental influences. Furthermore, the report evaluates the impact of globalization on organizational governance, leadership, structure, culture, and functions, including ethical and sustainable considerations. It explores decision-making in a global context and examines various routes to internationalization, including potential barriers. The report emphasizes the importance of adapting strategies to navigate the complexities of the global market and achieve sustainable growth.

Global business environment
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Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
TASK 1............................................................................................................................................4
P1 Analyse key factors of cost, market, environment and competition that drive global
commerce and trade.....................................................................................................................4
TASK 2............................................................................................................................................7
P2 Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples...................................................................7
TASK 3..........................................................................................................................................10
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions..................................................................................................10
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions
...................................................................................................................................................12
P5 Evaluate the different ways decision making can work effectively in a global context......14
P6. Determine the different routes to internationalisation an organisation may adopt, including
key barriers................................................................................................................................14
CONCLUSION..............................................................................................................................15
References......................................................................................................................................17
Books and journals:...................................................................................................................17
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INTRODUCTION
It is the aim of every business to work in to go global environment. Globalization is necessary
for Business expansion and growth. Global environment is basically more particular and specific
related to the home country. There are various components of global environment which affect
positively or negatively to business operations. These factors are known as Technology, climate
politic legal regulations and economic crisis. Working into Global contact leads to many
opportunities, International brand name Business expansion and many other relations. This
report is based on SASOLLimited; it is one of the growing company works for energy and
chemical solutions which has their headquarters in South Africa(Abugre, and Anlesinya, A.,
2019). The aim of the company is to expand their business globally for that instance they require
to understand various factors , challenges, barriers and which good influence on organization
profitability. This report is going to cover all the key factors of environment and competition for
undertaking effective business strategic decision. The report has covered into two sections in
which part 1 cover the concept of globalization with the help of pestle analysis and driving key
factors. Part 2 will emphasis on the influence of globalization on the functions of organization.
Also it will show the significance of ethical consideration and a range of routes for global
expansion.
MAIN BODY
TASK 1
P1 Analyse key factors of cost, market, environment and competition that drive global commerce
and trade
Globalisation is termed as a most integrated and required aspect for every business organisation.
It is mainly coherent by exchange of goods and services into international market and different
countries. There are a number of factors that affect Global Business and its functioning into the
large competitive environment. Basically globalisation is in for every business due to having
number of opportunities and foreign reputation which leads to create a strong brand name and
more profitability into long run. A business could look for presenting their services in two
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different countries so that they could enable more profits and undertake those customers towards
their organisation. There are many firms who involved their business in to global context in order
to create job opportunities, take advantages of resources and boost capital market. Globalisations
contribute in economic stability and provide new ways to explore the business operations by
attending new and potential customers through three trade technology and Data Services. So that,
SASOLlimited is also looking forward to establish their globalising market into other countries
there globalising market into different countries which are left to their reach. For that instant's,
there are many key driver that could contribute in the success of their globalisation these factors
are mainly market cost competition and various other which are described below:
Market Factor: one of the best factors that contribute effectively in globalisation is the
market. A business should take high market share by grooming into different countries. Global
market leads to results in global opportunities and expansion at vast level. SASOL Limited could
easily gain market share by operating their energy solutions into different countries and fulfil the
requirements of customer. One of the best drivers for globalisation is to market the product and
services as per customer needs in order to gain success and efficiency. The more SASOL limited
will analyse the market better, the more it get success in globalisation. The more regularly
research the market on the basis of customers income, choice and culture the much better they
regulate trade.
Cost Factor: Cost is the major factor for business to maximize it and use into efficient
manner. Different countries enable different cost structure as per the resources availability
(Banker, and Bhal, 2020). So that, SASOL limited needs to effectively analyse overall cost of
their production and sale procedure in to different countries so that their profit would not get this
balance. In globalisation, shipping charges would be a high cost and expense which must be
lower down by taking effective shipping policies. For example, the company bearing low cost
operation in Asia and high cost in US. So that, they need to mainly focus on the supplies from
Asia which maintain financial position of company in global locations.
Competition: In context of globalisation competition is the most focusing factor for all
the business. In global context there are many businesses that are existing with brand name.
Therefore, SASOL Limited needs to research and analyse the entire market environment so that
they could not get effect with the competition. Also, they must come up with imitate product and
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services that has not already seen in the market. Taking growth into a competitive market is one
of the steps towards organisation success. This could be in any form whether products and
services, pricing policies and employees efficiency so that all the factors must be balanced as per
market requirement. For example, analysing completion in way through keeping eye on rivals
actions and make strategies better than them. But is requires high research on industry market.
Environmental Factor: Environment is the major key concern for country as well as
business is running into the society. There are many components of environment that create
influence on organisation to behave in well manner. So that it is work as a key driver if you want
to get success into globalisation they must fulfil all the environmental formalities like
ascertaining legal regulation, work as per society needs, reduce wastage and promote eco
friendly environment. Doing so, SASOL Limited will achieve target and objective into fruitful
manner by being concerned about the country and environment. This could be better understood
with example that, harming environment which is a part of society will not make the people
satisfied and happy. As SASOL company is a chemical producer that requires utmost safety in
chemical substances for both people and employees.
Significant impact of digital technology upon globalising business operations
In the context of global world, Technology and digital empower are rapidly Rising for
business as well as customers. It is the most affected and significant for the driver of
globalisation. In today's digital world, organisation need not to operate outlet in two different
countries as it becomes easiest way bi enable selling through digital sources and serve the global
environment simultaneously. So that this technological advancement leads to have many impact
on business and their profitability. Another hand, Technologies create opportunities to to
promote and market the product and services in order to reach Global customers. Also it benefits
to analyse different demands of customers by directly connecting with them through digital
Technologies(Bing, and Amran, 2017). Globalisation becomes easy with IT Solutions in which
organisation could check and assist reactions of their potential customer through effective
software and technologies. Social platforms like Facebook, Twitter, Instagram and websites are
significantly taking lead in promoting the business at global level. This helps in become
innovative and attract number of customers in a easiest way. So that Technologies could help for
SASOL Limited as they are dealing in energy and chemical solutions they could attract many
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investors from the globe to be a part of their organisation by enabling digital ITsoftware’s and
promote their services as much as they can.
It has evaluated that there are many key drivers that would help in achieving Global
Business with profitability and productivity hand-in-hand. For that instance, the SASOL Limited
must require to analyse and identify all the factors relating to market cost technology and
environment so that they could not left with any e benefit of globalisation into their business
operation. As all the above mentioned factors are the most significant to undertake to be a global
provider so that it would not affect any country and its people. The SASOL Limited needs to
come up with Highly Effective Strategies and planning for expansion in order to work in a global
manner.
TASK 2
P2 Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples.
There are numbers ofchallenges a business face duringtheir operations. In which,
strategicchallenges are those which lowers down the significance of strategies of one
organisation due to having large options or competition into global market. These issues and
hurdles are drive with long leading dynamic micro or macro environment that must be e\identify
within specific time. Internal challenges could be in terms of ineffective production procedure,
insufficient labour force and decision and lack of efficiency(Bogatyreva, and Shirokova, 20170).
Whereas, external business environment will lead to affect though macro factors like political,
social, environmental, technological and economical. For that instance, Pestle analysis’ would be
a better solution for SASOL limited to undertake all the positive and negative impact of these
factors which tare explained below:
PESTEL -
Pestle analysis is a Framework which guide and create a path for better performance of
business. It would be done by analysing the factors of analysis which highly impact on business
environment and their working operations. Analysing all the factors, SASOL Limited could
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easily amplifies their Strategies and plans in two more effective manners which reduce this in
uncertainty:
Political: The SASOL Limited is already establishment their business into different
countries like Europe and Asia. Every country consist different political interference is in terms
of taxation, terrorism and political decisions which could create negative impact on organisation.
So that, form a limited must analyse all the political interference is and work in accordance with
the relevant influence on business.
Economical: The factor is related to the economic condition of country. It includes the
influence of business practices on demand and supply inflation rate and money flow into the
economy. For SASOLLimited, they are mainly affected by employment grades which get
enhance into UK by 4.4% for the age above 25 years(Bong, and Premaratne, 2018). So that it
affect the SASOL Limited by rising into the wage rate that could minimise their profit level.
Social:This factor is concerned about the society and their preference. The organisation
must provide products and services which are acceptable by the people. This creates positive
impact for the business as they are effectively fulfil all the requirements of customer by
providing some value into products and services. In context of SASOL Limited, they need to
provide their energy solutions which are in the favour of customers and purchasing power. The
more they make connections with customers are the most they goes deeper down into the
success. Therefore, this factor positively impact on SASOL Limited as the customers are highly
satisfied with their services in two different countries.
Technological: Technological advancement is the most required factor into the
environment. The organisation must work in to the technological upgradation so that customer's
will get attract with the efficient services and maintain the profitability into more efficient
manner. The sulphur Limited must analyse all the technological resources they can optimise for
the globalisation so that it good contribute in developing a country and providing a better
assistance to the customer in terms of payment, delivery and quick information about
organisation working.
Environmental: An organisation must undertake and concerned about the environment in
which they are working. The chemical energy industry is highly impacted through this factor due
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to having fast mechanism and procedure to produce the energy and chemicals which would harm
the environment and its creature(Chatterjee, 2020). So that, the SASOL Limited must reduce
carbon emissions and any hazardous substances that it affects the natural resources for present
and future purpose.
Legal: this factor is all about ascertain laws and regulations regarding equality diversity
and fair Welfare of every individual related with the organisation. the organisation need to other
about all the laws before delivering chemical substances for the customers and maintain safety
and security for the employees who are working in two dangerous situation. The industry is
highly affected by legal regulations that could impact negatively on business existence.The
policies and strategies must be in favour of every individual so to not impact on their life with
business practices and provide treat them with equal Diligence. Therefore, SASOL Limited
pertaining all the rules of equality act 2010, health and safety at work act 1974. Trade law is also
a part of legal existence which put boundaries on trading oversees. So that, the company needs to
analyse all the regulation and make decision appropriately.
It has evaluated that all the factors have significantly influence to the environment of
SASOL Limited. So the organisation must perform under the environmental regulation to better
expand into global market.
Globalisation and strategic challenges:
There are a lot of challenges and issues faced during the planning and practicalphase of
globalbusiness. In global aspect, perfection in strategies and human resources is the most vital as
they are only factors on which success isdepend upon.
Cultural differences: different countries have different cultures and their values, this
effect the communication between individual and set a language barrier among them(de Bakker,
Rasche, and Ponte, 2019). This is the most critical challenge that must be resolved while
practicing into Global context.
Resource allocation: it is not necessary that the resource available in the host country
will be available at different location with minimum price level. Is it depends on the availability
and suitability of resources. Therefore it could be a challenge for unlimited 2 to undertake
resources that may acquire high transportation cost.
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Risk and diversification: it is also a major challenge in business at global level. Risk in
diversification could harm all the organisation profitability as it require new product within new
market which needs to be prominent and effective.
International supply chain: this factor is also challenging as supply chain at oversees
leads in high cost, labour supply and unsold stocks which is not beneficial for organisation.
Therefore, supply management and logistics must be on point.
Recommendations on overcoming challenges
By evaluating all the above aspects and challenges for globalisation, it is recommended
that SASOL Limited must formulate Strategies and the whole planning to analyse their market in
which they are looking forward for globalisation. It is also a challenge to choose an effective
market so that the product and services get some value by customers. So that, the company must
analyse the entire customer demands and eliminate cultural differences by providing effective
training to their employees so that they could eliminate the gap of language barrier. Also they
need to create job opportunities, undertake available resources and make contact with suppliers
as well as customers so that they would not like with any material during the production
procedure. Remove the Economics of scale by contributing in demand and supply of country.
Also it is necessary to identify the needs of customers by segmenting potential individuals under
the demographic, psychological context.
TASK 3
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions.
The organisation differentiates and varies into their goals and objectives. Due to these
differentiations, the organisational structure culture leadership and governance also varies. These
concepts are vital for every organisation as it define working criteria, duties and authorities,
delegation, working environment and standard of the organisation. The culture of organisations
shows devalued and believes while working which set monitor and control and obligations for
employees(Dhir, and Dhir, 2018). This governance help the organisation to maintain workflow
and eliminate any leniency that could affect its productivity. It could be analysed by applying
McKinsey 7s model which is defined below:
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McKinsey 7 S model:
This model is design for the functioning of organisation. It provides seven strategies that must be
enable while running a business. It helps in in promoting best way of leadership, ascertaining
goals and targets, build Strategies and promotes coordination among all the departments of
organisation. The elements are discussed below:
Strategy: it defines how the organisation looking forward to achieve their goals over
competitors. These strategies are in terms of plans and practical implementation in order to
maintain a competitive advantage. The SASOL Limited preparing strategy for sustainable and
noble business by less carbon emissions, organic Chemicals and eliminate hazardous production
process to support the environment and Nation.
Structure: it shows how the teams and departments communicating with each other by
understanding the authority and rules(Evenett, 2019). SASOL Limited has a decentralized
structure in which a chain of and follows in which lower management could not directly
approach to top management and first report to the team leader or supervisors for decision
making process.
System: this shows how the employees and the leader perform their task in order to complete
daily work routine. In summer Limited, employees are entitled to work in a system the leaders
assign different types as per the requirement of market.
Shared values: it defines the values and ethics followed by the organisation which contain some
standard and boundaries. The SASOL Limited shares their ethical and values to maintain the
power culture and treat every employee equally. The shows they follow a culture of diversity and
encourage to promote women workforce.
Style: the styles are present in the form of leadership as there are different and significant Styles
of leadership as per the structure and requirement of organisation(Giacomin, 2017). The Limited
follow an autocratic leadership style in which leaders are quite strict about their roles and
required their work done before the deadline. In which, less or more employees be a part of
group decision.
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Staff: this element and faces on the employees and their knowledge potential to work into the
organisation. This shows whether they are effective for achieving goals and targets into
international level or not. The staff of SASOL Limited are much professional and experienced in
their work so that they would not lack with any misconceptions.
Skills: it shows the skills and capabilities of employees who are working in two organisation.
For SASOL Limited, it is essential to analyse each and every employee and its capabilities in
order to work overseas and internationally so that the organisation could not suffer with any
lossand gain competitive advantage( Hudáková, and Masár, 2018).
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions
Ethics are an integrated part of every business. It defines the right and wrong full X they
are performing with their practices which could affect the sentiments and values of their
customers and Society. The organization is entitled to take decision as per the ethical
surroundings. So in context of globalization, ethics play a vital role in setting down the image of
organization for the Government and Society. Therefore, sustainability is a part of ethical
consideration that put emphasis on society welfare, analyses the need of consumer; do not adopt
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