Report on Global Business Environment Analysis: SASOL Limited

This report provides a comprehensive analysis of the global business environment, focusing on the energy and chemical company SASOL Limited. It begins with an introduction to globalization, exploring its core concepts and the key drivers that facilitate it, such as technology, political factors, market dynamics, and cost and competitive pressures. The report then delves into the impact of digital technology on globalization, highlighting its role in facilitating trade and reducing barriers. An external environment analysis of SASOL Limited is conducted using a PESTLE framework, examining political, economic, socio-cultural, and technological factors. The report identifies challenges associated with globalization, including monopolies and legal issues, and offers recommendations to overcome these challenges, such as cultural adaptation and global branding strategies. Furthermore, the report investigates the impact of globalization on organizational structures, ethical considerations, and decision-making processes within the context of SASOL Limited's operations. It also explores various international expansion routes the company could adopt, concluding with a summary of key findings and recommendations.

Global business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. An introduction concept of globalisation................................................................................1
2. Factors that drive globalization...............................................................................................2
3. Impact of digital technology on globalization........................................................................3
4. External environment analysis of the organization.................................................................3
5. Challenges for globalization...................................................................................................4
6.Recommendations to overcome challenges.............................................................................5
TASK 2............................................................................................................................................6
1. Impact of globalization on organizational structures..............................................................6
2. Impact of global operation within the organization................................................................8
3. Ethical and sustainable factors................................................................................................8
4. Access how these Factors affect the decision-making............................................................9
5. Expansion routes for the organization.....................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Global market is reflected to the production and selling of capacities of each industry of
country across the world. The global business environment defined as environment in different
country with the factors of local environment of the organisation, which are influencing decision
making on resource use and capabilities. The present report will be based on “SASOL Limited”
company which is fast growing energy and chemical company. The company has expended into
the different countries which are Canada, Gabon and Australia. The report will analysis key
factors of cost, market, environment and competition drives of global commerce and trade. Study
will explain by the complexity of strategic challenges which are faced by organisation. It will be
evaluate the influences of globalisation on organisational culture, structure and ethical or
sustainable globalisation on organisational functions. This will evaluate by different ways of
decision making and various routes to internationalisation an organisation may adopt including
key barriers.
TASK 1
1. An introduction concept of globalisation.
In today's world globalization has become the common usage of expanding various types
of businesses. For some people it may be the world without any barriers and for others it may be
like destruction of the world. Though there are various companies who are growing their
business by entering in new markets which gives them benefits in their profitability and
productivity. Globalization has many benefits both to the societies and the organization as they
share the economies by setting their profitable business in the country and also by sharing their
information, ideas, money, finance, goods and services. The main point of globalization is
networking and connection between people and countries (Cavusgil and Knight, 2015). The
integration of different countries depends upon the external environment of the company and the
country where they operate globally such as political, economic, social and technological. There
are many factors that drives globalization through trading goods and services, capital movement
and transfer of finance. The trading of resources increases the productivity and profitability of
the business and also help in developing the economies. In general, globalization increases the
standard of poor people and developing countries by giving opportunity to the unemployed
people and provide the people with excellent goods and services. The corporation can reduce the
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operating cost by moving into the country where raw materials are cheap and reduce the tariffs
and get interacted with new customers. Globalization is not a new concept, it has been used in
ancient times where traders travel across vast distances to sell their products but as the age of
industrialization knocked into the 19th century and the trading become easier across borders with
the advancement in communication and transportation.
2. Factors that drive globalization.
The globalization success over the years brings the increase in economies of different
countries, also increase the growth rates and GDP. The countries like China, Japan and Malaysia
is known for the fastest growing GDP by giving opportunities to the foreign business to set up
their business. The following are the factors that drives globalization which overall helps the
business and new market where the organization is going to operate globally.
 Technology – With the transformation in technology brings the globalization process
easier as the digital technology helps the business to trade their goods and services faster
and cheaper and also integrate the national markets. The business owner can expand their
network with the help of internet and the technology has become the base of modern
globalization. Most of the business operate their business globally through internet and
digital technology. As the improvement in telecommunication and computing at a very
low cost made the globalization process very easier (Chatterjee, 2017). Therefore, the
advancement in of internet has become the main technological driver that started the e-
commerce business.
 Political drivers – Due to the reduction in tariffs and barriers gave the opportunities to
the business to operate globally with lower cost and also the government also allowed
foreign direct investments in many parts of the developing countries. World Trade
Organization is the latest example of development that drives globalization.
 Market drivers – The local market are becoming more competitive as compared to the
global market by reducing the opportunities for growth. The demographic and geographic
situation also matters in the growth of business, so most of the organization prefer global
expansion to come out of this situation.
 Cost drivers – The main aim of the business is to make efficiency and effectiveness in
the business by managing the productivity and profitability as the operating and
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manufacturing costs are different in country to country which can help the global firms to
operate at lower costs.
 Competitive drivers – The global market have strong competitors which can drive the
business to expand their growth by giving a competition to their rivalry in terms of
providing excellent goods and services.
3. Impact of digital technology on globalization
As the advancement in technology is increasing nowadays and also becoming the main
factor that driving globalization. It is providing benefits to various business enterprises to
increase their revenue and economy and expanding their size of market. With the help of digital
technology the trading of goods and services has become easier and cost-effective as it reduces
the costs of transportation and communication between countries. The digital technology reduces
many trade barriers in terms of selling products and business deals. It made the life of buyers and
sellers easier because they can transfer money from anywhere in the world at any time.
Therefore, the global firm who wants to enter in new market where advancement in technology
is higher can have many benefits in their business and technology can affect the business also as
earlier the high developed technology is only available in the developed countries but in this
information era it is available in developing countries also which can helps them in productivity
and profitability of the business. The technology has become the crucial part of any business who
wants to operate globally and also helping the management team to use telecommunications and
computing technology to grow their business in the new market and sustaining their organization
in the future.
4. External environment analysis of the organization.
The pestle analysis helps the organization to study about the upcoming challenges that will help
SASOL Limited before entering in the new market and help them to choose the highly profitable
market. The company has expanded their business in several countries like Canada, Australia
and planning to enter in the new countries as soon as possible.
 Political – This factors can help the SASOL Limited to choose the highly profitable
country whose economy is good but there are political risks also which can slow down
their business such as tax charges, trade barriers by the government. Therefore, to
maintain the stability of their business in the foreign country, the company must analyze
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the following factors such as labor laws and anti-trust laws regarding to chemicals, trade
barriers related to raw materials.
 Economic – The SASOL Limited is the fastest growing company in energy and chemical
production, therefore, the company must consider economic factors like inflation rate,
economy of the country where the company wants to operate globally can help them to
determine the aggregate demand and investments which will manage their growth rate
and consumer spending. The economic factors will decide the revenue of the company
and how they can sustain their business for future. The company provide their products at
reasonable rate which can help in satisfying the needs of the consumers and increase their
profitability by analyzing the demand and supply conditions of the economy.
 Socio-cultural – This factor can also have impact on operation of SASOL Limited as
there are different types of cultures and beliefs of the people in the foreign country.
Therefore, the organization must analyze the demographic, geographic, age and opinions
of the people before entering into the global market (Aguilera and Crespi-Cladera, 2016).
The company must have diversity in management team so that they can interact and
communicate with the people easily which will help them to promote their company on
global level. The company has good business ethics and culture which will help them to
gain the loyalty of their customers in foreign market.
 Technological – SASOL Limited is focus on high production development through
research and development to give competition in the market. This factor is also
responsible for the distribution of their products in the global level. The company can
target the audience easily with the help of this factor through communication and
interaction and it also uses advance technologies where they already set up business in
global market.
5. Challenges for globalization.
There are various challenges for the company when it enters into the global market such
as political stability of the global market and region, infrastructures, trade barriers and
regulations, shipment of products across country (Fabus, 2018). The political factors like labor
law, tax charges, skilled workforce can be the crucial factors which can be challenging for the
SASOL Limited in expanding their business on global level. The following are the strategic
challenges which can occur in entering the global market:
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 Monopoly - The major challenge faced by the companies can be monopoly in the global
market as the market monopoly gives us the details about the companies who have a
large market shares and are the first providers of goods and services in that market.
SASOL Limited can face this challenge if they expand their business in the developed
country where competition is highly occupied with the successful companies.
 Legal factors – This factor can be other major challenge in international market where
the company doesn't get the good legal protection in terms of Intellectual Property Rights
which causes issues in settling the business. In some countries, it is difficult to get
effective legal protection which can sustain their business in the global market.
Therefore, SASOL Limited must ensure the legal system of SASOL Limited the country
where they want to enter before making the market entry strategies.
6.Recommendations to overcome challenges.
The following are the recommendations which will help the company to overcome the
globalization challenges:
 Cultural differences – The company can diversify its product and give it a cultural
identity and localize their products in the selected market which will raise the consumer
awareness among the people and encourage them to buy their products.
 Legal problems – This can be minimized by keeping the track of update safety protocols
and regulatory policies. The laws related to environment laws can be overcome by
managing the Corporate Social Responsibility (Hitt and Xu, 2016). For Example, The
European Commission has issued a new strategy for CSR which will help the business to
overcome these laws.
 Global branding – This is the major challenge for any enterprise to sustain their business
in the foreign market. SASOL Ltd can hire a manager who has strong vision for the
company and aware about the local and global markets which can turn this opportunity to
highly profitable venture for the organization. The company must globalize their brand in
order to increase their level in the marketplace.
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TASK 2
1. Impact of globalization on organizational structures.
The globalization has a great impact on the organization structure and culture who wants
to enter in the global market, therefore, it is necessary for the SASOL Limited to consider the
McKinsey 7S model to improve their organization structure and strategies before entering into
the new marketplace which are as follows:
 Strategy – The overall strategy of the company makes you different from other
competitors and depending upon the position will help them sustain in the industry. For
example, SASOL Ltd manufactures oil, natural gas, metals and minerals through raw
materials into more than 70,000 products. Therefore, they need to make proper marketing
strategies which will help them to promote their products easily.
 Structure – As the company is expanding their business in the global market as soon as
possible so they need to manage their organizational structure effectively and efficiently.
The company structure must be well organized in order to complete the given task within
given time framework (Kasemsap, 2016). The company need to expand their structure so
that they can be capable of managing their staff and accomplish organization goals. For
example, SASOL is divided into main teams such as manufacturing team, production
team and operation team which have individual manager in each team.
 Systems – The system which is used to manage the employees and marketing of the
products must be clear and successfully managed which will help to manage the team
work within the organization. For example, the company can carry out the market
research where they want to operate globally and gain the customer feedback which can
be stored in their systems for carrying out further testing.
 Staff – The workforce is the important part of any business as they are responsible for
producing and completing the tasks given by the organization with full potential. Due to
impact of globalization, the company must have diverse workforce and must not
discriminate based on their gender, age, religion etc. For example, SASOL Ltd can hire
diverse people in their organization which will bring innovative ideas and grow their
business rapidly.
 Skills – The employees with highly occupied skills can increase the productivity and
profitability of the company as they have abilities to finish the task with full potential.
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The team managers of SASOL Limited must maintain training and development
programs in order to monitor and develop their skills according to their capabilities.
 Style – It is the major factor that can influence the organization structure at global level.
It includes the leadership and management style adopted within the organization. The
managers with good vision will be focused on achieving the goals of the organization.
The manager will also have the responsibility in maintaining the cultural difference
within the staff.
 Shared value – The SASOL Ltd must consider this factor before entering in the market
as it will help them to share their values with their employees in order to feel them
recognized and part of team which will reduce the chance of getting lost in the
competition and hence increase the productivity.
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Illustration 1: Mckinsey 7S framework
Source: How to use the McKinsey 7S model in
marketing,2019.

2. Impact of global operation within the organization.
The culture all around the world are getting interconnected and business are going more
towards globalization (Kolk, 2016). The managers have thinking to work with different types of
people and countries in order to expand their business all around the world. To demonstrate the
factors that influence organization can be explained through most-used framework in
determining the cultural difference is Hofstede's Cultural dimension are given as below:
Power Distance – This factor can influence the organization culture and structure if they want
enter into the global market as this dimension expresses the inequalities within the society.
Individualism – This can influence the company's culture as this dimension expected to take
care of themselves and their family members only.
Masculinity – This factor can create conflicts between the male and female employees as in
today's women can also do things that man can do so this dimension can also create the
inequalities between the employees.
Uncertainty avoidance – In this dimension, the employees can feel uncomfortable with
uncertainty. SASOL Limited in order to reduce this conflict can work with high uncertainty and
stronger beliefs and behavior.
3. Ethical and sustainable factors
Ethical consideration and sustainable factors are very important to improve standards of
people and community in which the business is going to operate.
 Environment and Regulatory Considerations – The foreign markets are concerned
with the environmental laws mostly in developing countries. To operate business
globally, the company must consider the environmental factors like pollution, extraction
of natural resources will affect the business growth.
 Social and Cultural Impacts – The company must understand rthe culture and social
norms in order to sell their products in the market. SASOL Limited can accept the
countries norms to make profit which is easily acceptable by the society.
 Wages and benefits – This are the major factor which can affect the organization in
global market as the employees are the primary resource in order to run the business
effectively and efficiently (Coe, 2018). Therefore, the company must pay focus on their
basic needs in order to feel them satisfied with their job such as flexible working hours,
compensation and benefits etc.
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4. Access how these Factors affect the decision-making.
The factors like environmental and regulation considerations can affect the decision
making of organization in terms of setting up their infrastructure in the global market
(Kasemsap, 2016.). The regulatory factors like labor law, trade barrier which can influence their
decision making related to their existing business plan and growth.
Today the world is growing very fast yet there are many social factors that influence the
decision making process. Companies have to design their products according to different cultures
in mind. Therefore, the companies are using transnational project teams for implementing new
processes ,products and system solutions. Labour and wages highly influence any organisation's
decision making process. Slight change in wage rate can affect the productivity highly and at the
same time increase in wages can increase its productivity to a new level.
5. Expansion routes for the organization.
Expansion routes for Sasol ltd.
There are various ways by which Sasol can enter into global market for expansion in
which most commonly known are.
Franchise
Franchise is a licence acquired by a party for allowing them to access business's
processes, propriety knowledge and trademarks for allowing them to sell product or services
under the business's name. For gaining the franchise ,the franchisee has to pay initial start-up
plus licensing fees.
 Advantages – SASOL Ltd would be having capital expansion as franchisees invest their
own funds to expanding the business
 Disadvantages - Franchising requires compliance with state and federal franchise laws
for which SASOL would be requiring a lawyer, thereby increasing its cost.
Joint Venture
Joint venture means sharing ownership, returns and risks and the governanc. Emerging
markets for gaining scale of efficiencies by combining assets for sharing risk on investments and
projects.
 Advantage – SASOL would be provided with new expertise and insights. It would be
provided access to better resources like specialized staff and technology.
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 Disadvantage - Objectives may not be clear to everyone involved. Sasol might have to
face flexibility restriction, as a result its individual business might suffer. There may not
be equal involvement and participation of the other venture.
Partnership
Partnership means where two or more people share ownership responsibilty of managing
business as well as income and losses (Amankwah-Amoah, 2016). The company may enter into
general partnership or limited partnership.
 Advantages - It does not require legal formalities for its formation like joint stock
companies. They may be benefited with the large scale of economies. Risk reduction as it
would be shared between partners.
 Disadvantage – SASOL Ltd may have to suffer if there is instability among the partners.
Wrongful act of one of the partners can affect the market status of the company. Liability
of the enterprise may be regarded excessive.
CONCLUSION
From the above report it had been summarized that globalization is the basic part of every
business in order to expand their business in other country. This report highlighted the pestle
analysis of the chemical company called SASOL Limited which is a highly growing company. It
also shows the challenges like monopoly and legal factors which can cause problem in entering
the foreign market and also shows the recommendation to overcome this challenges by
understanding the cultural differences and legal norms and regulations. This report also covers
the impact of globalization on the organization structure with the help of Mckinsey 7S model
which can improves their organization structure and culture.
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