Global Business Environment: An Analysis of SASOL Limited

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GLOBAL BUSINESS ENVIRONMENT
GLOBAL BUSINESS ENVIRONMENT
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GLOBAL BUSINESS ENVIRONMENT
Table of Contents
Task 1...............................................................................................................................................3
Introduction......................................................................................................................................3
LO1: Concept of globalisation and the key factors driving business success.................................4
Factors driving business success and their impact......................................................................5
LO2: Strategic complexities that influenced operation in a global environment............................7
Strategic challenges faced by the organisation to operate in the global environment.................8
Task 2:...........................................................................................................................................10
LO3: Structure functions and culture of the organisation influenced by global market operation
of SASOL (P3, P4, M2).............................................................................................................10
Influence of globalisation on company governance and culture, leadership, structure, and
functions....................................................................................................................................10
Ethical and sustainable factors to be maintained in the organisation:.......................................12
LO4: Examining the influence of globalisation on organisational decision making and strategy 14
Examining the factors influencing decision making in global market:.....................................14
Strategic paths used by the company:........................................................................................15
Conclusion:....................................................................................................................................15
References......................................................................................................................................17
Task 1
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Introduction
The process by which the enhancements of the economies of both global and the organisations
can become interdependent on each other is termed as globalisation. The various factors that are
interrelated to globalisation have helped in the improvement of the companies and have helped
them to expand their businesses in the global market (Cramer, 2017). This study has focused on
the idea of globalisation and the manner by which it has influenced the functioning of a company
in the global environmental scenario. SASOL Limited, a chemical company will be analysed for
this study. The main concept of the process of globalisation and the strategic complexities, which
can be framed by the organisation when operating in the environment, will be analysed here. The
culture, structure and functions of the organisation, which are affected due to globalisation, will
be focused upon and the decision-making procedure and the techniques undertaken by the
organisation have been highlighted here in the context of globalisation.
LO1: Concept of globalisation and the key factors driving business success
One of the most crucial factors that have helped to interconnect the developing markets of the
emerging countries with the markets of the already developed countries in the global markets is
called globalisation (Potrafke, 2015). In earlier times, the transaction between the countries was
influences because of trade barriers constructed among the various countries. Globalisation has
helped to remove the trade barriers and has aided in the enhancement of the organisations. The
concept of globalisation applies to the expansion of the organisations to different countries of the
world even in the developing markets as well. Globalisation has also been successful in creating
huge number of employments in the markets of the developing countries (Rosenau, 2017). This
has been possible because of the expansion of the organisations in various markets and creation
of new vacancies for this expansion.
Factors driving business success and their impact
There are various factors within an organisation, which has helped in the development of the
process and taking it to the next level. Cost, market, competition and digital technology are some
of the important factors, which have helped in driving the success of any organisation (Netland,
2016).
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Cost of the products
The cost of functioning and operation of an organisation can be decreased by the developing
markets very effectively and efficiently. The cost of raw materials, which are required for the
process of producing and manufacturing goods and services, are less in case of the developing
and the underdeveloped economies. The organisations, which are functioning in the developing
and the underdeveloped markets of the countries, are easily getting labours and workforce by
spending less amount of finance in relation to the amount spend by them in their native
homelands (Laursen and Thorlund, 2016). The organisations that have extended their functioning
to the emerging markets, having the advantages of the concept of globalisation is getting the
benefit of getting raw materials at least prices and even cheap labour forces.
Markets
To develop and enhance the process of globalisation in case of the organisational factors is to
discover markets where the products offered by the organisation can be sold. The concept of
globalisation focuses upon developing the markets of the emerging countries therefore; the
products offered by the organisations can be sold a higher profit margin to the new markets of
the developed countries rather than in the markets of the developed countries where they already
have close substitutes of their products (Gruber-Muecke and Hofer, 2015). In the case of SASOL
Limited, chemicals are of high demand in construction and other countries, which is very regular
in the development of the emerging markets. The developing markets have fewer competitors as
compared to the developed markets. As a result, it is highly inexpensive to expand the
production of chemicals and other related products in the developing markets of the emerging
countries.
Competition
Another essential factor, which has influenced the development of globalisation in the
developing countries, is strict competition. The competition is very stiff in the markets of
developed countries and the organisations functioning within the market have to adopt strict
policies so that they can obtain competitive advantage. On the other hand, in the case of the
markets of developing countries, the competition is very less as compared with other
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marketplaces. Competition aids in the success of the organisations and the enhancements of the
concepts of globalisation as well (Simionescu, 2016). It should be developed to analyse and
understand the target market and the potential of an organisation regarding the products they can
offer into the developing markets. Along with this, the success of any organisation depends on
the concept of globalisation as the removal of trade barriers can be done and it aids in enhancing
the competitive nature of any organisation.
Digital technology
The advancement and improvement of digital technology is on the factors, which have
contributed for the growth of the concept of globalisation. The use of internet and social media
platforms have helped to uplift the improvement and expansion of any organisation. To make
interconnection with companies and their policies and strategies, technology has played a
significant role. The tools of communication have also developed by means of digital
technology, which in turn contributes to the success factor of any business (Hess et al., 2016).
LO2: Strategic complexities that influenced operation in a global environment
The global environment has been influenced because of many factors where strategic
complexities are involved and are affecting the business operation. To examine and understand
the complexities of the organisation, SWOT analysis will be done.
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Strengths Weaknesses
 Having capability to conduct business
in the developing countries
 Having ample and skilled workers
 The cost of operation of the
organisation can be diminished
 Resource optimization
 Aid to the environment
 Cultural and linguistic differences can
pose problem to the businesses
 Problem in maintain legal obligations
 The synchronization of the tools of
communications among various units
of a business can be problematic
Opportunities Threats
 Globalisation aids in expansion of
organisations which is helpful for the
countries (Phadermrod et al., 2019)
 More revenue can be collected by
expanding business in developing
countries
 Globalisation aids in creation of new
employment opportunities
 Organisation’s future is affected by the
conservatism concept of the
environment
 Exploitation of workforces are causing
a threat for the developing countries
 It is not possible for SASOL Limited to
maintain the international outlook of
the company in case of expanding their
business in developing nations
Table 1: SWOT Analysis
(Source: Learner)
Strategic challenges faced by the organisation to operate in the global environment
Globalisation though has helped to expand business, but it has several challenges that are faced
by companies. A central strategy cannot be developed by organisations in the market they are
functioning. They also face hindrances in operations related to maintaining core competencies.
The weakening of such competencies may cause loss of market share of the organisation as
compared to its competitors, which affects the business in future. The development and
exploitation of such talents is a major challenge in the developing markets (Epstein, 2018). The
different cultural background of an individual may not match with the desired growth rate of the
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organisation because of style of communication, educational qualifications and cultural thoughts.
Such employees prefer to work in local markets to avoid problems arising out of cultural
indifferences. Therefore, it becomes difficult to frame a competent team.
PESTEL analysis will be done to understand the challenges faced by the organisation by the
political, social, economic and technological factors.
Political factors: This factor helps in the growth of globalisation but implementation of Brexit in
UK has affected small and medium organisations. The chemical industry has received huge
contribution from many foreign countries. There is around 20% corporation tax for the profit of
the organisation but the government has decided to lessen such tax (Cho et al., 2016)
Economic factors: The nominal GDP of UK has made it the fifth largest economy of the world.
The government has taken steps to handle the situation of recession, which affected the country
in 2008. The increase of rate of inflation to 3.1% and reduction of cost of goods in 2017 has
affected the country badly (Hodgson et al., 2016)
Social factors: UK market being the greatest market for consumers has helped medium and
small business to get their desired consumers. The population of UK being around 70 million has
helped other organisations to expand businesses there. The country being educated the concept of
social classes has helped in the development of organisations there (Govindan et al., 2016). The
people belonging to different classes, cultures and age group have helped to introduce new
products and new markets to meet their demands. The development of opportunities for
employment and market penetration of small and medium enterprises are easy in case of UK.
Technological factors: UK is highly developed in terms of technology and many technological
and financial institutions are situated in the country. Even small and medium sized businesses
use technological tools to maintain a good relationship with their employees and provide the
customers with suitable solutions by means of them. A huge sum of revenue has been earned by
means of the technological sector of the economy of UK (Read et al., 2016).
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Task 2:
LO3: Structure functions and culture of the organisation influenced by global market
operation of SASOL (P3, P4, M2)
Influence of globalisation on company governance and culture, leadership, structure, and
functions
The prime focus of the organisation is to influence innovation that provides environmental and
ethical importance to the world. The objective of the mentioned company, SASOL is to achieve
efficiency and effectiveness in terms of sustainability that can result into growth and profit
making in the organisation. Thus, in order to understand and examine the governance and the
structure in the company, the 7S model by MCkinsey can be implemented.
Strategy: This initial stage of the model is strategy where the company can develop personalized
plan in order to secure their profits in the business and sustain their development in the future.
The main strategy of the organisation is developing a plan that can help the company to achieve
the competitive advantage in this field (Cramer, 2017). The company initially developed their
business in the domestic market; however, they are planning to expand their business in the
international market in near future. In order to generate resources and set the target market, they
are also developing proper strategies.
Structure: The structure of the organisation is also responsible for the profit generation and
allocates the roles and responsibilities to the people working in the company in order to the done
the business in the right method. It has been seen that different operational departments present
in the organisation that have their own role and responsibilities to be mitigated. HR department,
operation department, manufacturing, sales and marketing, employee health and safety – these
are some of the departments present in SASOL Ltd. that have their own roles to be played in the
organisation (Hill et al. 2015). Moreover, the employees in the mentioned departments are to be
employed according to the skills, experience and expertise as well.
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Systems: The regular activities the organisation conduct among the different departments in
order to get their jobs done can be referred to as the system of the mentioned company. As the
company deals with the chemical, they need to check the quality of their products on a regular
basis. On the other hand, the waste management system of the company has been checked here.
Constant availability of the raw materials is to be managed by the company. Processes are
monitored regularly and the production process of the organisation is to be developed at the same
time.
Shared values: Shared values in an organisation indicated to the development of the common
goals that are present in the organisation and achieved by the employees. It is seen that in the
mentioned organisation, SASOL Ltd, sustainability of the business and doing the business in the
ethical way is one of the shared values developed among the workforce. It has been seen that the
development of the efficient and effective sustainable solutions to the organisation is one of the
common goals of the employees that are working in the company (Camillus, 2016).
Skills: For achieving the competitive advantage and the development of the objectives, expertise
and skills of the employees are necessary for an organisation. It has been seen that in the
mentioned organisation, the employees has been appointed according to the specifications of the
designated job roles as well as their expertise over the roles. As SASOL Ltd. works as a
chemical company, it is not possible for them to work for a specified duration. Rather they have
to provide services for 24*7. Thus, the employees are to be dedicated and flexible for the
working in the company.
Staffs: Highly efficient staffs are there in the organisation that should be dynamic and
innovative. As the mentioned company deals with the chemical properties, it is required that the
organisation needs to appoint the employees that are expert in this field and can perform in all
conditions. Moreover, the company hires from the different cast and cultures and as a result, a
rich diversified culture is present in the organisation (Hanson et al. 2016). Apart from that,
different skills and knowledge is there that helped the organisation to develop their business in
future.
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On the other hand, the organisation has its sustainability to be developed as one of the objectives
and their governance is being developed according to that. On the other hand, it can be stated
that cultural aspect of the mentioned company cannot be avoided and globalisation works
accordingly. Hofstede’s cultural dimensions can be implemented in case of the organisation for
understanding the cultural perspectives and the influence of culture on the company in terms of
their structure and overall culture.
Power Distance Index: It helps to understand the level of inequality present in the company. It
has been seen that in SASOL Ltd, low power distance index can be found in the organisation and
it can be stated, that due to the prevalent power index, it can be assured that the employees are
provided with the authority to develop their own decision. Rather, it can also be stated that the
employees are involved in the decision making of the organisation. Delegation is present in the
company as well.
Individualism versus Collectivism (IDV): The Company believes in the development of the
interpersonal connectivity and thus, they have the ability to develop a team environment. It is
important to develop the team environment in the organisation to make the employees feel
comfortable in the organisation.
Low uncertainty avoidance: It has been seen that the development of decision can be made
perfectly, if the situation can be understood from the initial stage. Thus, the risk of failing can
also be avoided (Rasche et al. 2015). Moreover, it indicates to lower the risk of failing in any
project that is going on.
Masculine culture: It is to be ensured that in many countries, masculine culture is prevalent;
however, it is needed to provide importance to the female employees as well as it may help in the
development of balance in the social structure of the respective country. It is seen that in case of
the SASOL Ltd., the organisation have moderate value in their organisation, however, they
provide adequate space to their employees so that the employee retention rate in the organisation
can be longer in comparison than the other companies.
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Ethical and sustainable factors to be maintained in the organisation:
SASOL Ltd. has maintained a level of sustainable efforts in order to develop their importance in
the business market of the UK. These efforts have been listed below:
 Transparency: Transparency is done for dealing with the suppliers, employees,
customers and the other internal and the external stakeholders of the organisation. It has
been seen that this technique has been beneficial for the organisation (Colander, 2017).
 Law-abiding framework: As the organisation is dealing with the chemical properties,
which include high risks, it can be stated that legal framework for employee health and
safety has been maintained by the company. It has been seen that the brand image and the
sustainability factors in the organisation has been developed in the organisation.
 Business integrity: The Company maintains their business ethics and integrity in order
to sustain in the business market. The productivity of the business is being developed as
they try to make their consumers happy by providing them with them right products in
the right price.
 Technological development: It has been seen that the technological development is one
of the major influence to increase the business of SASOL Ltd. The organisation has
developed a major database of their previous clients that helped them to repeat their
orders in the future (Surugiu and Surugiu, 2015). Moreover, the productivity of the
company can be increased due to the technological development.
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LO4: Examining the influence of globalisation on organisational decision making and
strategy
Examining the factors influencing decision making in global market:
As the organisation is developing their business market in the domestic as well as in the
international market, it can be stated that maintaining the sustainable factors that has been
mentioned above would be beneficial for them. Moreover, it can also be stated that following the
rule and regulations regarding the company framework has been one of the factors that helped
the company to develop their business and the reputation of the company as well. At the same
time, as the company provides importance to their employees in terms of decision making, the
employees take an important part in the decision making process of the organisation (Kharas,
2017).
Employees’ role: As the company maintains transparency to their employees and their
importance to their decision-making has been taken an important part. In order to make any
decision in the organisational context, thus, the organisation thus has to take their opinion. If the
decisions are taken without their consent, they may restrict to the changes.
Technological development: For developing business in the global business environment, the
organisation must look after the advancement of technology. It is seen that in order to work with
the chemical properties, it is required that the safety measures should be taken. Internet can help
the organisation in this regard (Kopnina and Blewitt, 2018). Moreover, for operations like
checking the stocks and alerting the low stock, the technological help can be taken. Moreover,
the use of the upgraded technology can help to mitigate the roles of inefficient employees
successfully and the cost cutting operations can be performed in the organisation successfully.
Use of the legal framework: As the organisation is dealing with the chemical properties, it is
necessary that they maintain the entire legal framework regarding the chemicals and the
employee health and safety. Thus, in order to make any decision, these frameworks are to be
used (Crane et al. 2016).
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