Impact of Globalization on SASOL Ltd.: Business Environment Report

This report offers a comprehensive analysis of SASOL Ltd.'s operations within the global business environment. It begins with an introduction to globalization and its impact on business decisions, followed by an examination of SASOL's structure, culture, and governance using the McKinsey 7S model. The report then evaluates the influence of global operations on these elements, highlighting the company's divisional structure and participative leadership style. A detailed analysis of SASOL's culture using Hofstede's cultural model is presented, providing insights into the company's approach to power distance, individualism, masculinity, uncertainty avoidance, and long-term orientation. Furthermore, the report explores the ethical and sustainable factors that SASOL considers in its global market operations, emphasizing their impact on decision-making. Finally, the report discusses strategic expansion routes, including concentration and diversification strategies, along with their respective advantages and disadvantages, offering a well-rounded perspective on SASOL's global business environment.

Global Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
PART A (covered in PPT)...............................................................................................................4
PART- B..........................................................................................................................................4
An explanation on structure, culture and governance of organization........................................4
Evaluation on influence of global operations on structure, culture and governance...................5
Hofstede cultural model of SASOL.............................................................................................6
Ethical and sustainable factors that are considered by organization in global market and its
impact on decision-making..........................................................................................................7
Strategic expansion routes along with advantages and disadvantages........................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Global business environment can be described as environment of different countries with
external factors that influence decision- making on use and capabilities of resources.
Globalization is referred as process through which various national and regional economies are
interconnected through global trade and commerce, foreign investment, communication and
transportation. The project is about SASOL Ltd. which is engaged in global market. The project
will highlight the impact of globalization on structure, culture and governance within
organization. The impact is identified by applying McKinsey's 7S model. It will also discuss
influence of sustainable and ethical globalization on functions of organization. In addition to this
it will also highlight expansion routes after analysing advantages and disadvantages.
PART A (covered in PPT)
PART- B
An explanation on structure, culture and governance of organization
There are various factors that are influenced by global expansion and these factors affect
operations and functions of business. McKinsey's 7s model is a tool that provides an
understanding of organization and its design. It covers seven areas in company which are divided
into hard and soft areas.
Hard elements- Hard elements consist of strategies, structure and systems that are easier to be
identified and controlled and are influenced by leadership and management of company. Strategy- Strategies are actions and plans that are made by SASOL to achieve
competitive advantages and success in industry. The company is formulating and
implementing various strategies for expansion of business and to gain an edge over its
competitors. Structure- Structure refers to organizational charts of different business divisions to
ensure proper accountability of employees (Gechkova and Kaleeva, 2020). The structure
of SASOL is divided into two upstream business units, regional operational hubs and
customer facing strategic business units. The company is following divisional
organizational structure as it has several business units and employees are divided
accordingly. All business units are further divided into different functional departments.
 Systems- Systems are procedures or process in organization that shows how activities in
business are executed. The company has well-defined system to ensure effective

management of business operations and to avoid conflicts and disputes. Each defined
system has especially designed tools to evaluate and control performance of business.
Soft elements- Soft elements consist of skills, staffs, shared value and style that are less tangible
in nature and are more influenced by organizational culture. Management don't have direct
influence or control over these elements. Shared value- The core values of SASOL creativity, honesty, transparency, trust, etc.
which allows employees to perform effectively and efficiently which also enhance
motivation and organizational commitments (Razmi, Mehrvar and Hassani, 2020). The
company is operating in global market therefore, organizational culture of entity is
structured in such a way that provides diversity support and reduces discriminations. Style- It refers to management and leadership style adopted by company. The leadership
style used by SASOL is participative leadership style where they are able to make
employees participate in decision-making process. This style is highly effective in
accomplishment of goals and objectives of company. This ensures internal collaboration
and coordination among employees and create an effective organizational culture. Staffs- The employees for different job roles are employed internally as well as externally
by company in accordance to skills required. The global team of company work in
synchronized manner to ensure achievement of goals and vision of business. There is a
systematic process of identifying requirement of employees within each department and
employees are hired according to demand in company.
 Skills- The workforce of SASOL are highly skilled and capable as they are recruited on
the basis of qualification and skills. Company ensures that the recruited employees have
required skills and knowledge to perform respective jobs in accordance to values and
culture of business. The core competitive advantage of company is its human resource.
Evaluation on influence of global operations on structure, culture and governance
Organization that are operating in global market is required to ensure they are able to
offer best combination of product, price, quality and delivery for products and services.
Company that is operating in global market have different structure, culture and governance in
comparison to that operating in domestic market (Odeh, 2021). Generally company dealing in
global market has divisional structure where different divisions operate at different areas. This
will reduce complexity and ensures effective accountability and responsibilities of employees

each division. This enables company to achieve competitive advantage in global market.
Therefore, SASOL which is operating in global market has divisional structure as there are
various business units that are operating in different areas. The company has decentralized
system as this enables employees or managers to take decisions at some extent. This also ensure
quick decision-making which helps company in efficient business operations. The global
operations of company also influenced leadership style as SASOL has adapted participative
leadership style this enables it to involve employees in decision-making process. Global market
influences the organizational culture as company is required to support and encourage
diversification and motivate employees to coordinate with each other for accomplishment of
goals and objectives of entity. Global market requires staff from different culture and
background therefore, company ensures effective and efficient work culture.
Hofstede cultural model of SASOL
Hofstede model helps SASOL to understand the culture of specific country in which it is
operating. There are six specific factors of culture that enables company in taking strategic
decisions and designing marketing plans.
Power distance index
Power distance refers to degree of inequality between individuals in organization on the
basis of power they hold. The organizational structure of SASOL makes it easier and less
complex and allows more visibility and access to management (Gerlach and Eriksson, 2021).
The decentralized decision-making structure which enables regional team authority to take
decisions pertaining to meeting a goal. The pay scale of company is in accordance to duties and
roles of employees. The leadership style of company is participative style which ensures
participation of all employees and boost their morale.
Individualism vs collectivism
Individualism refers to focus more on individual achievements and employees work by
challenging each other for similar tasks. This is done through motivating employees to increase
their performance through monetary and non monetary sources. Whereas, collectivism refers to
working in group or team with common goals that are achieved by collaboration and
cooperation. SASOL maintains a healthy balance between individualism and collectivism in its
organizational culture to enhance employees performance and business growth.
Masculinity vs femininity

This refers to distribution of how job roles and tasks are distributed between male and
female employees of company (Gallego-Álvarez and Pucheta-Martínez, 2021). The
organizational culture of SASOL promotes less egoistic culture and all tasks and jobs are
allocated in accordance to job qualification of employees to encourage equality between male
and female employees.
Uncertainty avoidance index
Uncertainty avoidance refers to situation where people become uneasy and try to avoid
situations that are unclear or unpredictable. SASOL encourages open culture where company
frequently changes management programs to process and culture through team building
activities. It is a risk taking company that tries to explore and take risk to get huge rewards. The
strategies of entity are flexible and has tendency to adapt changes in environment.
Long term vs short term orientation
SASOL implements both strategies i.e. long term strategies for focus and development of
organization and these long term strategies are accomplished through short term goals.
Indulgence vs restraint
Indulgence culture refers to culture that is more affording towards people's personal
happiness and needs. On the other hand restraint culture emphasis on social norms and values.
The organizational culture of SASOL is mixture of both culture with more emphasis on
indulgence culture.
Ethical and sustainable factors that are considered by organization in global market and its
impact on decision-making
An organization that is operating in global market is not only required to understand
organization's vision, mission and goals but also required to take into account legal and ethical
factors in international business. The company must tackle with serious ethical and legal
challenges in foreign environment to get business success and expansion. Ethics impacts various
aspects of management and business operations and it even affects business goals (Tur-Porcar,
Roig-Tierno and Llorca Mestre, 2018). There are various ethical issues in international business
which includes child labour, working standards, workplace diversity and equality, human rights,
environment, etc. The business that are operating in global market are required to comply with
all laws and regulations of different countries in which it is operating. Cultural barriers may also
make or break company in international market. The employees employed in company are of

diverse culture and background. Company is required to maintain a culture where diversification
is encouraged and equality culture is promoted. All the employees are given opportunities
according to their skills and capabilities. Acting in accordance to ethical and cultural values are
very much essential for company to effectively operate in international market.
Sustainability refers to programs or actions taken to preserve a particular resource. There
are four areas of sustainability i.e. human, social, economic and environmental. Human
sustainability aims to maintain and improve human resource in society. Social capital are
preserved in social sustainability through investing and creating services that constitute a
framework for society. Economic sustainability aims at maintaining capital intact. Where social
sustainability focuses on improving social equality, economic sustainability focuses on
improving living standards. Environmental sustainability aims at protecting natural capital.
Company has to consider both the factors before taking any decision (Fichter and Tiemann,
2018). The sustainable and ethical factor will enable it in growth and development through
expansion in new market and new country. Organization that takes care of both the factors are
able to build positive image in eyes of stakeholders and this enables it to achieve organizational
goals and expansion.
Strategic expansion routes along with advantages and disadvantages
Expansion strategies are adopted by company to achieve high growth and increase its
market share. The reason for expansion can be higher growth, higher profit margin, economies of
scale, larger market shares, etc. There are three expansion strategies for company to accomplish
its objectives.
Expansion through concentration
This strategy involves investment in product line or services in accordance to customers'
needs and preferences with the help of proven and tested technologies (Stallkamp and Schotter,
2021). There are three types of concentration expansion:
Market penetration- Company focuses on existing market with existing products and try to
increase volume of sales through various promotional schemes.
Market development- Company move into new market with its existing products to expand its
business and attract new customers.
Product development- Company introduces new product into existing market in accordance to
customer taste.

Advantages
 Benefits of specialization
 Competitive advantages
 Cheap factor of production
Disadvantages
 Lack of diversification
 Saturation of demand for products
 Low customer base
Expansion through diversification
Diversification refers to branching of existing entity into new business opportunities. This
strategy enables entity to enter into new market with new products in which it has never
operated. The decision of diversification may be challenging for organization as it involves great
risk with higher rewards (Expansion strategies, 2022). Diversification strategy enables company
to grow and expand in new market and increase loyal customers. This will ensure maximum
utilization of existing resources and capabilities.
Advantages
 Helps organization to create a balance during changing preferences of customers and
changing market demand.
 Helps in maximum utilization of resources.
Disadvantages
 It involves huge risk
 Lack of expertise in new field may adversely impact business of organization.
 A widely diversified company will not be able to quickly respond to changes in market
and environment.
Expansion through integration
Expansion of integration refers to merger of two companies competing in same industry
to decrease the level of competition (Wang, Yao and Li, 2022). These companies unify to
increase resources and funds for expansion of business.
Advantages
 Larger market shares
 Increased revenue

 Bigger customer base
 Creation of economies of scale
Disadvantages
 Reduction in flexibility
 Regulatory scrutiny- There may be higher level of scrutiny from government agencies as
law doesn't allow merger of big companies.
CONCLUSION
The project was about impact of globalization on organizational structure, culture and
governance in the context of SASOL Ltd. The impact was analysed using Mckinsey's 7s model
and culture was evaluated through Hofstede's dimensions of culture. The project had also
highlighted impact of ethical and sustainable factors on decision-making of organization in
global context. It included different expansion strategies along with advantages and
disadvantages of each strategy.

REFERENCES
Books and Journals
Gechkova, T. and Kaleeva, T., 2020. The mckinsey 7s model in the airport system
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Razmi, J., Mehrvar, M. and Hassani, A., 2020. An assessment model of McKinsey 7s model-
based framework for knowledge management maturity in agility promotion. Journal of
Information & Knowledge Management. 19(04). p.2050036.
Odeh, G., 2021. Implementing Mckinsey 7S Model of Organizational Diagnosis and Planned
Change, Best Western Italy Case Analysis. Journal of International Business and
Management. 11(4). pp.01-08.
Gerlach, P. and Eriksson, K., 2021. Measuring cultural dimensions: External validity and internal
consistency of Hofstede's VSM 2013 Scales. Frontiers in psychology. 12. p.662604.
Gallego-Álvarez, I. and Pucheta-Martínez, M. C., 2021. Hofstede’s cultural dimensions and
R&D intensity as an innovation strategy: a view from different institutional
contexts. Eurasian Business Review. 11(2). pp.191-220.
Tur-Porcar, A., Roig-Tierno, N. and Llorca Mestre, A., 2018. Factors affecting entrepreneurship
and business sustainability. Sustainability. 10(2). p.452.
Fichter, K. and Tiemann, I., 2018. Factors influencing university support for sustainable
entrepreneurship: Insights from explorative case studies. Journal of Cleaner Production.
175. pp.512-524.
Stallkamp, M. and Schotter, A. P., 2021. Platforms without borders? The international strategies
of digital platform firms. Global Strategy Journal. 11(1). pp.58-80.
Wang, Y., Yao, X. and Li, K., 2022. Imitation and rapid internationalization of emerging market
firms. Journal of World Business. 57(6). p.101364.
Online
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