Globalization's Drivers and Challenges: A Case Study of SASOL Limited

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Global Business Environment
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Executive Summary
Globalisation is termed as a system of integrating different countries, people, and business
organisations with each other. It is backed with all the forces that are technology, media, finance
and other factors, which together leads towards globalisation of the company. This assignment is
based on the aspects of globalisation aligned with the company. This assignment is consisted of
two reports that are drivers and the challenges and the second report is about impact and strategic
direction. The assignment has covered all the essentials of globalisation and the affects that can
impact the business of the organisation.
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Table of Contents
Introduction......................................................................................................................................4
Part -1...............................................................................................................................................5
Part- 2...............................................................................................................................................9
Conclusion.....................................................................................................................................14
Reference List................................................................................................................................15
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Introduction
Globalisation is basically, a system that helps the businesses to expand their business by moving
away from their home based countries to other countries for conducting their business. It helps
the business to expand their operations by giving them a dimension to extend their business. This
report will highlight the main topic that is globalisation of “Global business environment”. There
are two parts in this particular assignment where the first part will focus on the drivers and a
challenge for organisation and the second part is focused on the impact and strategic direction of
the organisation. In the first part, the assignment will mainly discuss about the factors that are
driving globalisation in the organization and the second part will focus on the discussion on
impact of globalisation on the organisational culture with the help of various models. Models
such as the Mckinsey’s 7S model and Hofstede’s culture dimension model have been used in
order to support the research.
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Part -1
Introduction
Globalisation has become trend in the recent years and business organisations are taking certain
initiatives in order to expand their business. This section of the assignment consists of the
different aspects of globalisation on the company “SASOL Limited”. This company is based in
South Africa and is aiming at expanding their business with the help of globalisation. This
business report will give an idea about globalisation and the challenges, which SASOL can face
through this concept of globalisation in order to analyse everything before entering the new
markets.
An introduction to the concept of globalisation
The increasing competitiveness in the economic market of the countries is leading organisations
to adopt the globalisation in order to expand and increase their business and targeted audience
(Banchorndhevakul and Ariyasajjakorn, 2015). Globalisation is termed as the integration of the
countries, culture, people for the purpose of coming together and making one big economy for
the world. This is beneficial as with the help of globalisation the organisation of one country can
integrate with the other, which will help them to know various cultures and traditions of other
countries. Globalisation has a great impact on the business organisations as with the help of this
concept the companies can expand their business in other countries, which will result in more
number of targeted customers and ultimately profitable growth for the company. In that case,
various companies are trying to adapt the concept of globalisation in their business aiming at
future growth prospects and good brand image globally. SASOL has expanded their business in
countries such as Mozambique, Australia, Canada and Gabon focusing to achieve humongous
growth in the future years.
An explanation on the driving factors of globalisation
Various driving factors of globalisation are paving the ways of this concept. These include the
factors such as the economical factors, social factors, political factors and technological factors.
These factors have their individual roles in paving globalisation that are:
Economical Factors: The major economic driving factor includes the lower rate of trade and the
barriers for investments. In that case, the company cannot conduct their business because of the
anticipation of the lower trade returns in their business. The company have to check the
economical and financial conditions of the organization in order to conduct their business in that
particular country. The financial state along with the liberalisation plays a major role in the
business of the companies.
Technological Factors: The technological factors also play the major role in driving the concept
of globalisation. With the improved technology, the companies can globalize their goods and
services with more ease. It creates the connectivity between companies. Internet is paving the
ways of globalisation in a positive way. The innovation of the E-business is also helping several
business organisations to globalise their business (Steger, 2017). With the growth of the
technological advancement, the chances of globalisation are high in the organisation because it
plays an important role in the functioning of this concept.
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Political Factors: The political factors that drive globalisation are the policies of the government
of that country that purely concentrates on the development of that country. The policies that are
made for the trade affect the foreign organisations to conduct their business in that particular
country.
Social Factors: The social factors are somehow the main driving factors of globalisation as the
organisation when shift their business to a different country face the problem of cultural
differences, which lead them towards losses in that country. The organisation, which is focused
in conducting their business in other countries, should understand the cultural gap and take
initiatives in order to meet them.
The significant impact of digital technology upon globalisation
The digital technology advancements have made significant impacts on globalisation.
Technology has been one of the most important factors that have helped in globalisation. It helps
the companies to globalize in multiple ways such as; with the help of technological
advancement, the companies can expect the reduction of the cost of communication and
transportation (Baylis et al., 2017). Technology is one of the key factors that help the
globalisation to making it a popular trend. Digital technology has enabled digitalised software
that helps in networking. This lowering of the cost in transportation aids the companies in
sourcing the raw materials, which can eliminate competition in the foreign market. It also
spreads the knowledge for the potential growth of the companies globally. It helps the companies
to overcome the major problems that can affect the profitability of the company it also helps in
overcoming the ethical barriers among the organisation, which conduct their business in different
countries.
In the recent years, it has been found that technology is showing their affects on the developing
countries as well by combining the technology with the cost of production. It helps the countries
in innovation and development for growth perspectives. This eases the exchange of data and
information to the companies. It has also provided a large scope for employment in this field.
This has a positive impact on globalisation and this can lead the companies towards success.
Complete and present a PEST/LE analysis of the organisation.
The PESTEL analysis is based on the industry SASOL operates in is given below:
Political Factors: The political environment affects business of the company SASOL, as there
are trade tensions in escalating and geopolitical conditions. The government of South Africa has
provided the facilities such as by giving the incentives and subsidies to the company, which
boosts the confidence of the company towards doing the successful trade in the country.
Economical Factors: The economical factors have their impacts on the company as being the
energy and oil company they had to face the volatility in the global oil and the energy market.
The change in the currency rates implicates the business of SASOL in expanding their business
to other countries.
Social Factors: The social factors are the main cause that is affecting the business of SASOL
such as the growing population is creating the demand for the SASOL market. The increase of
the sustainable sources of energy can affect and reduce the market for SASOL.
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Technological Factors: With the help of technological advancement, the company can expect
great future benefit prospects such as the transformation in the digital technology in the industry
of petrochemicals. The technology is helping in advancing their internal sources and helping
them to increase their efficiency.
Environmental Factors: Company is being impacted by the affects of climate change that is
affecting their resources as they are into power generation (Pieterse, 2019). SASOL being the
chemical manufacturing company has a great hand in the water pollution, they create a lot of
liquid waste that are emitted in the rivers which can cause great issues in the future. Because of
the certain initiatives of the wastewater management, the company can face serious issues in
their business in the recent years.
Legal Factors: The Company also faces certain legal issues, as being in this industry the
company may have to suffer the worker union strikes because of the low wages. This can
negatively affect the company as it can create a negative image of the company. There are
disputes in the company regarding tax that can also have the negative effects on the company.
Explain the challenges of globalisation and the strategic challenges this represents for the
organisation
Globalisation has a positive impact on the business of the organisation still there are some
challenges, which the organisations have to face in order to implement the globalisation in their
business such as:
Organisational structure: It can act, as one of the major challenges as incorporating their
business in a new region can be a challenge for the organisation, as they do not have any vast
knowledge about the new region (Milanovic, 2016). They have to take certain initiatives in order
to get the proper knowledge about the region in case of eliminating the challenges.
Public Relation: Maintaining public relation in new countries can be difficult for the company, as
they do not have any knowledge about the people of that country. It becomes a challenge for the
company in generating the relationship with that company.
Ethical Practices: The ethical practices in the different countries can act as the challenge for the
organisation as they are not habituated with the ethical practices in that country as there are
various risks incorporated with the ethics that are risk of labour, risk of out of corporation and
the environmental imbalances.
Legal Structure: It can be a challenge for the company as different companies have their own
legal policies, which can be difficult for the company to follow as they are habituated with a
single set of laws in their home country.
Leadership: Globalizing the company is one of the most important decisions of the company in
that case providing a good leadership is important for the company (Bourguignon, 2017). As
without a good leadership, the company can face significant downfall in their profitability.
Provide recommendations on how to overcome these challenges
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There are various challenges, which can eventually affect globalisation in a negative way. In that
case, in order to overcome these challenges there are few recommendations provided below,
which will ensure that to overcoming of these issues:
 Before expanding their business to a different country, the company should get the proper
knowledge about the surroundings in order to eliminate the challenges of organisational
structure.
 The company should analyse and have the cultural and traditional of the region where
they are expanding their business, which will help in overcoming the issues of public
relation, as the company would interact with the public with the help of their cultural
knowledge.
 It must ensure that the laws of the country can be followed by the organisation in order to
eliminate the legal factor
 The company should take initiatives in order to train the individuals and educate them
about the business keenly so that the leadership factor can be eliminated.
Conclusion
By the information provided above, it is cleared that globalisation is the key for the business
organisation to expand the business for profitability. The various aspects of globalisation, which
creates their impact on the company SASOL and it has been covered in this section.
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Part- 2
Introduction
This part of the study will be focused on exploring the way in which operating in a global market
is associated with the functions, culture, and structure of a particular organisation and will
identify the influence of globalisation on such organisational practices. It will also help to
identify the need for globalisation and its influence on the strategy and decision making of the
firm.
An explanation of the structure, culture and governance of the organisation. Applying
McKinsey’s 7S model and checklist to illustrate an overview of the organisation
In order to understand more about the impact of the global market on the structure of the SASOL
the McKinsey 7s model will be applied.
Style The company always invests a lot of money on corporate social responsibility and
the benefits of the public, and these are associated in such a way that they are not
much distinguished in accordance with the business strategies. It employs different
policies and approaches that can help to highlight the social impact of the
commodities offered.
Shared
Values
The company always maintains its ethics while operating in the market and
therefore, all the operations are carried out with complete openness, flexibility,
honesty, and integrity (Hamilton and Webster, 2018). Moreover, the company
provides the employees with their rights at all times and always protects the
interests of the people. They also consider criticism from the stakeholders and try to
make changes that can bring success, and respects the lawful interests of the
stakeholders, which increases flexibility with the people.
Systems The company uses a completely new configuration in which every process is
almost automated; especially the manufacturing process, and they also use a cloud
application provider that helps in the processes of financial activities and human
resources. The company uses different analytical applications and they use to
standardise the business processes in the global context, making the operations
much more flexible by minimising complexities (Beugelsdijk et al., 2017)
Structure The company uses a hierarchical structure, as it allows the company to breaking
down information according to the needs of different departments, and allows the
management to manage and supervise the activities easily. It also allows the
business heads and managers to take decisions effortlessly and allow complete
control over different departments.
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Staff The company has a completely diverse workforce and people from different
cultures and backgrounds work within the company. The company also has a set of
rules that increases the diversity of the workforce and allows the company to carry
on businesses in different parts of the world (Deresky, 2017)
Skills The company believes that skills among the employees are extremely important for
the success of the organisation and therefore, it conducts continuous training and
development sessions that allows the company to increase the skills of the workers,
and make the operations flexible with the use of the latest technologies available in
the market.
Strategy The primary aim of the company is to provide the customers with sustainable
product and services and allowed to have a wide range of commodities that can
ensure the fulfilment of the needs and allows them to have a sustainable living
standard.
An evaluation of how the above has been influenced by global operations and how the
organisation has adapted to operating in a global market. Applying Hofstede’s Dimensions
of Culture to demonstrate how the organisation has been influenced.
Organisations are becoming more and more associated with globalisation and therefore, they are
forced to survive in a much more complex environment than before, which has resulted in
increased competitiveness and lack of transparency in business procedures. Therefore, every
company has to maintain a good relationship with the stakeholders. Stakeholders are extremely
essential for every company and these people are responsible for the growth or the downfall of
an organisation (Perez, 2017). Moreover, the companies have to focus on facilitating effective
and prudent management within the organisation that can ensure the better success of the
company. They must apply corporate governance so that the policies of the SASOL can be
directed or controlled towards the benefit of the organisation. With the help of the modern-day
globalisation, the companies will have to maintain a network of relationships with the
stakeholders, corporate managers, and directors, and this has become recognised by world
leaders as this is helping a business in a particular economy to strive effortlessly and make the
operations much more flexible and advantageous (Dholakia and Atik, 2016).
There has been a rising interconnection between the nations in terms of capital flows, trade,
harmonization of the economy and better business practices, which has been the sole result of
globalisation plus the presence of public corporations, investing themselves in various countries.
Many countries like the United Kingdom has been affected both positively and negatively by the
entrance of transnational and multinational corporations acting as major players in their markets.
To maintain their position, every company like SASOL operating in the market will have to have
a complete corporate governance structure and they will have to create practices that can meet
the minimum standards (Goyat and Nain, 2016). This will allow a certain measure of uniformity
or corporate consistency in companies like SASOL using the governance rules and strategies all
around the world.
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The Hofstede model of organisational culture can be applied to the business context and it will
consist of five factors that continuously influence the culture within the workplace of this
organisation. The first factor includes the power distance in which the company distributes every
employee equally and therefore, exert power equally irrespective of the designations of the
people working inside the organisation (Jensen and Snaith, 2016). All the employees have equal
rights and benefits regardless of the hierarchy within the organisational context. The company
does not allow any special treatment from the management of the team leaders and therefore,
nobody is compared with other people and everybody is given their preferences while their
interests are respected.
The company has a diverse workforce and therefore, it does not have any male-dominated or
female-dominated workspace and believes in an organisational context where every employee
exerts their full potential towards the success of the company.
In the case of individualism, the company believes in decreasing individual work and increasing
teamwork and therefore, the company always focuses on increasing the common interest and
unison as a team. It also believes that the output is always more whenever the people work
together as a team and exchange ideas among themselves, which results in innovative activities
creating a healthy relationship between each other (Dholakia and Atik, 2016).
The uncertainty avoidance index within the organisation is much more associated with dealing
with unforeseen circumstances and the employees are continuously trained and developed for the
same (Lydgate et al., 2016). This is because the demand for products and services continuously
change and therefore, it is important for the company to deal with unforeseen circumstances and
prepare the employees to adjust well in every situation.
The company believes in long-term orientation and always focuses on a good long-term
relationship with employees and have a steady approach so that they can thrive in the market and
live up to the expectations of the management. Short-term objectives are created when the
demand continuously changes in the market, and other than that, the company focuses on long-
term relationships so that they can maintain their position, image, and culture that help the
company to retain the employees.
An evaluation of ethical and sustainable factors that the organisation has to consider in a
global market
The ethical factors that the company has to follow include the diversity and respectful
workplace, the fundamental ethical factors, decision-making issues, and issues with governance
and compliance. The company will have to maintain ethics related to discrimination and equality
among the people. The company must also comply with the rules and regulations that can
maintain integrity and trust among the stakeholders and conduct business activities with
commitment and fair approaches (Deresky, 2017). It is important for the company to maintain
diversity within the workplace and respect the employees even if they have differences among
them regarding their caste, creed, race, beliefs, and other factors.
The company must maximize the value of every contribution by the employees. Another factor
that can be seen is the decision making factor and the company have different ethical activities
regarding the behaviour within the company, which increases fairness extensively. Finally, the
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company has to consider factors like compliance and governance and the business have to
comply with the federal, environmental and safety regulations along with the fiscal and monetary
reporting statutes (Gurnani, 2015). The company must comply with the approaches of corporate
governance and conduct business according to different business policies.
The company must consider different pillars of sustainability, which includes human,
environmental, economic, and social sustainability. The company will have to focus on human
sustainability by maintaining human capital and allowing investments in different factors like
education systems, health systems, nutrition, knowledge, services, and skills, which will act as an
umbrella for the people of the society (Radebaugh et al., 2015). The company must also preserve
social capital by creating and investing actions that can help to constitute the society and provide
a larger view of the globe by integrating globalisation, cultures, and communities. The company
must also maintain economic sustainability by maintaining the capital, which can help to
increase economic sustainability, social equality, and help in improving the standard of living.
Finally, the company will have to focus on environmental sustainability where it must improve
the welfare of human beings by protecting natural capital like minerals, water, air, and land and
meeting the needs of the people without increasing risks for future generations.
Assess how these factors have affected decision making in a global context
The company has always focused on diversifying the workplace and therefore, they are focused
on decreasing differences between the people working within the organisation. The company has
started to introduce policies regarding discrimination and equality among the people and has
started respecting the interests of the employees. To increase brand image and goodwill in the
market, the company has started to introduce rules and regulations that can help the business to
conduct its activities in fair and committed approaches and decrease differences as much as
possible (Eriksen, 2014).
The company has focused on retaining the employees and therefore, they have focused on
valuing the contribution and being ethical towards them so that they can increase fairness and
carry on the business processes to allow success in the future. The company had to introduce
different policies and alter some of the activities so that they can comply with the environmental,
federal, safety, fiscal and monetary approaches and increase corporate governance. The company
introduced several policies in all types of activities so that they can create sustainability and
introduce activities like corporate social responsibility, helping the nearby societies to have a
better life (Guay, 2014). They have also focused on reducing industrial wastage as much as
possible and it focuses on improving human welfare by saving natural and artificial resources
while meeting the needs of the people.
Assess which strategic expansion routes the organisation took and analyse both advantages
and disadvantages.
The company has chosen the expansion route of market penetration and reducing the prices of
the product and services so that they can increase customer attraction as well as the sales. With
the help of this technique, the company is looking to move forward into the new markets and
create new products and services that can allow it to increase its knowledge among the customers
(Daniels et al., 2018). This has been one of the most advantageous options for the company as
this has allowed the company to increase market share by providing products and services to the
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