Global Business Environment Report: Impact of Globalization on Sasol

This report examines the global business environment, using Sasol as a case study. It explores the impact of globalization on governance, culture, and organizational structure, referencing the McKinsey 7S model to analyze hard and soft elements. The report delves into ethical and sustainable factors, including employment laws, corruption, and pollution concerns, and discusses Hofstede's cultural dimensions. It analyzes the impact of decision-making on organizations, considering factors like customer base and sales. Finally, the report outlines strategies for internationalization, such as licensing. The report aims to provide a comprehensive understanding of how businesses navigate the complexities of the global environment.

HNBS 318 GLOBAL
BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
LO 3.................................................................................................................................................3
P3 Impact of globalisation on governance, culture and structure of organization.......................3
P4 Ethical and sustainable factors in globalization......................................................................5
LO 4.................................................................................................................................................7
P5 Impact of decision-making on organization...........................................................................7
P6 Strategies for internationalisation...........................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
.........................................................................................11

INTRODUCTION
Global business environment is primarily the environment outside the home country
which influences decision making of the organizations and thus shows the way for utilizing
resources. Sasol limited is basically the energy as well as chemical company being established in
1950. The company has its headquarter in Sandton, South Africa and currently operates in more
than 33 countries. Company is listed in New York Stock Exchange and conducts operations
related to fuels and oil.
This report gives a brief about Impact of globalisation on governance, culture and
structure of organization, Ethical and sustainable factors in globalization, impact of decision-
making on organization and strategies adopted by organization to overcome barriers.
MAIN BODY
LO 1 & LO 2 covered in ppt
LO 3
P3 Impact of globalisation on governance, culture and structure of organization
McKinsey 7S model is basically the model and the framework which addressees the
seven factors within organization which are required to be aligned as well as reinforced for
achieving business objectives. It consists of hard elements as well as soft elements. Hard
elements are
Strategy
This is the plan which is being developed by organization to attain competitive advantage
and to establish their position in the market. Sasol has a well-defined strategy and thus is clearly
articulated which helps them to gain competitive advantage and thus helps them to enlarge their
customer base (Wood and et.al.,2015).
Structure
This is basically the units as well as division in which the business organized and consists
of hierarchical structure. The structure of Sasol is basically organized within two business units
and have three regional operating hubs. Besides this, it has four customer-facing units of the
business. The operating unites of Sasol mainly consist of the mining sector and thus is involved
in production of gas as well as oil activities.
System

This comprises of the processes as well as procedures within organization and thus
involves the daily activities of business. Sasol has a well defined process where they are mainly
involved inn production of the oil and other coal related products. It is the daily activities consist
of generating the electricity and maintaining the stream of coals and power generation.
On the other hand, soft elements consist of
Shared values
This is generally the variety of norms as well as standards which helps in guiding the
behaviour of employees and thus increases their motivational level. The core values reflects the
corporate culture which exist within company. Sasol has a well-defined culture of cooperation
and teamwork where the employees are highly motivated to work in teams and enhance their
communication skills.
Skills
This is the most important element of this model which describes the range of skills
present within employees that help them to perform well and achieve goals. Being the chemical
company, the employees in Sasol have a highly technical skills and most of the employees are
basically engineers which have a high level of software and other skills (Carneiro, Salter and
Punnett, 2015).
Staff
This basically concerns with the number of employees which are present within
organization and what nature of duties they are performing. Sasol have around more than 30100
employees which are widely distributed among different department like operating departments,
regional units, chemicals divisions etc. Besides this, they have a well-defined recruitment
strategy where the candidates are required to go through a series of steps for securing position in
organization (Lasserre, 2017).
Style
It usually represents the manner in which top-level employees and managers are placed.
This consist of the way in which they interact and the various actions which they take for the
interest of company. The corporate governance of Sasol consist of the board of directors which
are responsible for managing the affairs of company. It has a statutory as well as board
committees. Lower than it cones the group executive committee which consist of different
committees like operational, sustainability, investment etc.

P4 Ethical and sustainable factors in globalization
Sustainable factors
Employment laws
This is one of the most important ethical factor which Sasol should consider while
expanding its business in wider geographies. Wages as well as working environment varies
within overseas location and thus are different in different countries. Besides the factor, this is
one of the most effective approach which will helps the company to operate efficiently across
different countries. Sasol should analyse the market in which is it planning to expand and thus
should be aware of the various employment laws that prevails in it. For example in Canada The
employment standards are different and thus recently the government has made the employment
law which states that employees cannot be forced to work 8 hours a days and thus have
established the policy of flexible working hours (Laudon and Traver, 2016). Thus, Sasol should
assess the employment laws of different countries.
Corruption as well as bribery
This is another ethical issue which the organization should consider in order to establish
their business across the world. Not all the countries work on the same rule and regulations and
thus it differs from place to place. The law of bribery also differs from country to country and
thus Sasol should consider this factor while expanding its operations across globe. For example
in some of the Australian countries where the company has expanded, bribery as well as
Kickbacks are not a major issue and is considered as normal part of performing business. While
in some of the other countries like Gabon, bribery is considered as the serious offence and the
punishment varies from country top country. Therefore, this one of the ethical issue which Sasol
should consider as hindrance to any of the law would damage their reputation in market and their
diversification will not be worth (Mamic, 2017).
Pollution concern
This is the another remarkable environmental issue which Sasol should consider in order
to diversify its business across the globe. Different countries have different environmental laws
and the government and local communities remain strict towards its aspects. Not in all the
foreign countries there are environmental laws which makes it unlawful to pollute. In some of
the Australian countries, There is no harm and is allowed to discharge the harmful chemicals and
materials into ecosystem and are not bound to follow the anti-pollution measures (Kasemsap,

2016). On the other hand, most of the other countries have strict environmental laws and
regulations violation of which the society and organizations are punished to a great extent. Thus,
Sasol should consider this factor while expanding their business overseas as this can affect them
in both positive as well as negative way.
Hofstede's dimension of culture
Hofstede's cultural dimensions is basically the framework as well as tool which is used
for understanding the cross-cultural differences across the globe and thus tells the organisation
about the ways in which business is to be done. The application of this theory gives the
organization an insight of the various cultures and its importance.
International communication
This is one of the dimension of this model which shows the impact of globalisation on
organization and its culture (Kasemsap, 2016). As communication is one of the most important
aspect in organization thus Sasol operating in wider geographies are required to understand the
cultures of different places and how they induce the working of organization. Due to the
globalization, company is able to gain an insight of the various culture. A diverse workforce
have a great impact on Sasol and thus understanding the cultural values often leads to effective
communication.
International negotiation
In this, communication styles, expectations etc. changes as per the countries of origin.
This is an important element of this theory which shows the influence of globalisation on the
international organizations. If this negotiation is applied properly then it helps the organization to
increase the productivity of the employees and also helps to increase their motivational level.
The negotiation is one of the most important factor which helps Sasol to reach a particular
consensus and then agree to a mutual decision. Thus also pose a heavy impact on the culture of
Sasol and thus helps the workforce to understand the cultural differences.
International management
This basically addresses the various decisions which the organizations take on the basis
of customs as well as values of the country. This encompasses the cross-cultural leadership.
When Sasol plans to operate in wider geographies and the countries then the managers of the
company are required to offer a well-though training to the employees for making them aware of
the different cross-cultural differences and develop a common business practices across countries

(Oriesek and Schwarz, 2016). Thus, this factor and the element of theory shows the influence of
globalisation on Sasol and enables them to shape the skills of employees by providing training.
International marketing
The another element of the model is international marketing which shows the impact of
globalization on the various international organization. Due to globalization, Sasol is able to
market its products across the world at much lower cost due to less cost in transportation. This
forms the main aspect of international marketing and thus globalisation have a great influence on
culture as well as the overall organization (Tregear, 2015).
LO 4
P5 Impact of decision-making on organization
The decision which is being taken by Sasol affects them in a great way and thus impacts
their operations in both positive and negative way.
Customer base
The various decision which is being taken by the organization eventually lead to the
enlargement of customer base and thus impacts them in positive way. For example- Sasol decide
to enter the new market and adopts market development strategy where they decide to enter the
new market with the existing market. This decision taken by the company will eventually help
them in increasing the customers and serving new customers (Boshyk, 2016). Thus this will have
a positive impacts on the operations of organization and will eventually raise their profit ratio.
Increased sales
The decision making of the company also results in increasing the sales ratio of the
products. The number of decisions taken by Sasol somewhat affects their functioning and thus
affects them in a positive way. For example the decision taken to expand across the world will
help the company to capture the great market share and serve tye new customers. This will
eventually raise the sales ratio of company and thus will help them to establish their position in
new market. When the decision is taken in the favour of organization, then it ultimately leads to
the sale of grater units of the products. Thus, when the decision regarding product or anything is
effective and efficient then the sale of the products increases.
Greater turnover
The numerous decisions taken by the Sasol not always leads to the positive effect but also
sometimes results in the negative impact. When the decision is not effective and reliable enough

then it reduces the satisfaction level of employees and thus the turnover ratio increases. For
example with expanding in different countries, the management of Sasol decide to apply lay-off
and retrenchment for decreasing the excessive number of employees. This will decrease the
motivational level of the employees and thus the turnover ratio will increase. Thus, at the end
when the decisions is not in the favour of company then the employees tend to feel less valued
and they leave the organization (Motohashi, 2015).
P6 Strategies for internationalisation
There are various way to internationalisation its market:
Licensing
Licensing is a technique where a company gives right to other entities to use its product
or brand name to sell its product or services. Licensing is a very useful technique where the other
entity has a very effective customer base established already. License can be given for the
production , marketing purpose or for providing the customer service.
Direct Exporting
Direct Exporting is a way to sell its product directly in the market to the end consumer.
Sasol Limited can directly enter into the market with the help of suppliers and distributors and
such intermediaries will be the face of the company in the selling process or providing services
to the customers on company's behalf.
Franchising
Sasol Limited can give its franchise to the entities who are working in that particular area
to gain the benefit of the already established customer base in that area . With the help of
franchising model it can undertake the whole market without investing any money and even it
helps in establishing business in those particular area very smoothly and helps for marketing
purpose as well.
Divisional Structure
Through the divisional structure Sasol Limited can best establish its organisation
structure in international market. In this structure organisation can link up with certain
organisations and each organisation will have its own divisional function and that will connect
directly to either product or service (Tregea, 2015). Each division will contain all the necessary
resources which is require to function its operation successfully.

Another way to function its divisional structure is the multiple divisional structure which is
known as M- form in this structure company can owns several subsidiary companies, each of
them will work under the brand name of Sasol Limited.
This structure is more beneficial for the company because with the help of this structure every
company can operate its function independently irrespective the failure of the function of other
subsidiary company. Each subsidiary company will have its own operation cycle who will not be
influenced by any of the other subsidiaries. This structure offers the systematic flow of
operations for the parent company without any hustle of interdepartmental issues raised within
the organisation.
Through various decision making process that company can easily establish its market
internationally.
Harnessing local market expertise
A new market always require quality research about the people , culture and their working
environment (Wood and et.al.,2015). Organisation should work with local specialist to get the
complete overview about the market and the people.
Navigate new legislation
Sasol Limited needs to cultivate their business as per the legislation of the country and it is
mandatory to have the complete knowledge about the laws of the company specifically in
regards to your business.
Managing Expectation
To establish your business it is very important to cope up with the need of the people and their
demands. To be successful enough Sasol Limited needs to fulfil the expectations of the
customers in new market.
There are various barriers which Sasol faced while entering new markets of Australia,
Canada etc. For example- during the entrance into Canada, company faced the cultural barriers
as the values and the cultural norms of Canadian were totally different from those of South
Africans. Like, Canadians faces much emphasis on energy consumption in comparison to the
people of South Africa thus this was an important barrier.
Another barrier which Sasol faced was the economic situation of countries. Like for
example the unemployment rate in Australia is high in comparison to South Africa thus this was
the challenge and barrier for company for hiring talented employees.

CONCLUSION
It has been summarized that the culture, structure as well as the governance of
organization impacts it in a great way and through the applications of model, organizations are
able to know whether their organizational culture is effective or not. When the organization
decide to expand in wider geographies then there are various ethical as well as sustainable issues
which they need to consider in order to function effectively and establish position in the market.
With the help of Hofstede cultural dimensions, organizations are able to evaluate the impact of
globalisation on them. Apart from this, the various decisions which is taken by the organizations
affects them in both positive and negative way and thus impacts to a great extent.

REFERENCES
Books & Journals
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