Analyzing Global Business Environment: A Case Study of SASOL Limited

This report provides a comprehensive analysis of the global business environment, focusing on SASOL Limited, a leading chemical company. The report begins by defining the global business environment and its key internal and external factors, including market conditions, competition, and costs. It then delves into a PESTLE analysis to assess the political, economic, social, technological, environmental, and legal factors affecting SASOL's operations, particularly in the context of its international expansion. The report examines the challenges SASOL faces in the global market, such as cultural and language differences, legal complexities, and pricing strategies. Strategic challenges related to risk, diversification, and supply chain management are also analyzed. The report concludes by evaluating the influences of globalization on organizational governance and leadership, ethical and sustainable globalization on company functions, and global market influences in application to appropriate theories and models, offering insights into the company's strategic direction and operational effectiveness in the global market.

Global Business Environment

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
a) Describing the key factors of cost, market environment and competition that affect global
commerce and trade................................................................................................................1
b) Key factors that impact on the global business in terms of benefits and challenges.........2
TASK 2............................................................................................................................................3
a) Challenges faced by organisation SASOL limited while operating global environment...3
b) Critically analysing the strategic challenges in context of the risk and diversification
strategies and the supply chain flow.......................................................................................5
C Critically evaluate the global business environment including opportunities and challenges.
................................................................................................................................................6
TASK 3............................................................................................................................................6
a) Evaluate the influences of globalisation on organisational governance and leadership (P3). 6
b) Effects of ethical and sustainable globalisation on company functions. (P4)....................7
c) Evaluating global market influences in application to appropriate theories and models...8
TASK 4............................................................................................................................................8
a) Explaining the different ways decision making can work effectively in a global context.(P5)
................................................................................................................................................8
b) Different routes to internationalisation an organisation can adopt along with barriers.(P6). .9
c) Key barriers of operating business internationally along with recommendation to overcome.
..............................................................................................................................................10
d) Strategies of global business environment.......................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

INTRODUCTION
Global business environment defined the different companies, countries, with factors
exogenous to the home environment of the organisation. Global business has includes two most
crucial factors that affect businesses into direct or indirect manner such as internal & external
factors. These factors influenced from each other, that might be good or bad for the global
companies. Present study based on global business environment of the company SASOL Limited
which is the fast leading chemical company situated in South Africa. SASOL expanded its
business at places such in Mozambique. Canada, Gabon and Australia and planning to expand in
China. So that, present report will be focused on the term globalisation and their concepts
regarding opening company at some other places. In order to identify the global or new market,
company needs to reassume different dynamic environment and make strategies to deal with. For
that, Study uses PESTLE analysis in order to define culture, economic, political or social
changes. Also explaining the impact of those factors on the current business.
TASK 1
a) Describing the key factors of cost, market environment and competition that affect global
commerce and trade.
Market
Market is the another global factor that affect global business environment as well as
trading system of businesses. Market changes due to changes the demand of global customers
(Cavusgil and Knight, 2015). In 2018, Global demand of oil looks likely break first time by
100MMbbl/d. So on the other side, natural gas continues to grow its market share. So these
changes reflects the changes in market shares through which other company get affected. Market
factors get affected from different elements in chemical oil and gas industry such as exploitation
of gas and production, due to high demand of oilfield chemical needs etc.
Environment
Environment is the another key factor which affect the business their demand and supply.
This key driver get impact due to increasing consumer wealth, rapid information, transfer across
borders, publicity about the benefits of globalisation (Epstein, 2018). Environment changes also
create opportunity for SASOL Limited to get advantage of the increasing in trading regions with
new technologies.
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Competition
In order to make existing position in the global market SASOL Limited needs to
measure their existing competitors in the market. Competition is the leading key factor that affect
the business commerce trade. This identification process can help SASOL Limited to sustain
advantages in a long term. In order to get away from negative effects from competition, SASOL
Limited needs to make new product or services to their clients before any other can make. Due to
heavy competition, SASOL Limited needs to put strategic heavy inputs in order to get effective
outputs (Hamilton and Webster, 2018). In Oil and Gas chemical industry the level of
competition is not so much high. Such as the competitors of SASOL Limited are Royal Dutch,
Shell, BP Plc, ExxonMob, etc.
Cost
Cost is the big element or factor that affect the company profitability ratio. Company
needs to focus on maximizing the cost as a motivator for many global companies. Cost is the
term which always give tough competition to the company existing strategies. In present global
market, company faces customer global needs and the opportunities for scale and standardization
which deals with many other industries. So Overall, cost can affect the trading system of the
company development. Chemical industry having high cost involvement to develop a new plant.
b) Key factors that impact on the global business in terms of benefits and challenges.
Pestle Analysis
Political factor : China already surrounded with top three oil companies. Such as in
PetroChina, Sinopec and China National Offshore Oil corporation. Political factor is the
significant factor that can impact on the cited company in terms of profitability and sustainability
in China. For that, company needs to analyse industry into more deeper manner. In order to meet
out the best global resources (Peng, 2016). Company can affected from political factors such as
risk of military invasion, level of corruption, trade regulations & tariffs related to basic materials,
policies of wage legislations etc. for that, company needs to adopt all political changes to make
better market appearance.
Economic factor : Economic factor includes inflation rate, savings rate, interest rate,
foreign exchange rate economic cycle etc. sometimes changes are good for the industry or
sometimes not. It depends on the relatable factors like inflation rate, saving rate, interest rate etc.
before entering into the China market. SASOL Limited should review the positive and negative
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possibilities of the economic environment. Economic factor may be benefited for the company if
government interventions are low or good labour law as well. In case of bad laws and restriction.
Company could not run as much they can.
Social factors
Society culture affect the business in both positive and negative manner. Beliefs and
thoughts of the society play a most important role in China. Before making any new strategies,
SASOL Limited should review the society welfare needs. Otherwise, society will not accept the
services or products company provides (Sassen, 2016).
Technological factor
Technology is the most affective and leading factor that majorly gives positive results
and outcomes to the company. Advanced technology can give SASOL Limited benefit in terms
of trading in the market. But on the same side, technology can also affect the supply or demand
of oil&gas industry. In terms of replacement by some automatic innovation.
Environmental factor
Different country or market has different form of environmental standard which can
impact the profitability of an organisations in those markets. Before entering into the China
market, company needs to review the market of China environment such as environmental laws,
liability laws etc. Environmental factor can also give positive outcomes, if company adopt some
green projects for society development.
Legal Factor
Legal factor is the final factor which relates to the code of conduct that all company
needs to be follows. Government made legal framework for each and every type of
organisations. Company only has to put those laws into their own structure (Sassen, 2016). Legal
factor give positive impact to the business, if SASOL Limited adopt all legal implications by
law.
TASK 2
a) Challenges faced by organisation SASOL limited while operating global environment.
While operating business into international level, Individual company has facing global
operating challenges. Such as language difference, culture difference, business attitude, technical
development, it is very tough for the company to handle the operation department of other
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companies (Cavusgil and Knight, 2015). Global environment has been given significant impact
on the business growth in case company fails to adopt the other country culture and their
environment. At global level company face been pressurised by both national or local market.
Apart from that, below there are some challenges has been given of global environment.
In order to understanding other cultures and languages
This is the first challenge that company might be facing in case of lack of understanding
in initial level. It doesn't mean that, company adopts all changes suddenly, it takes time to
manage all required goals. Due to this language issues, SASOL limited needs to adopt new
environment and learning sources to develop individual understanding.
The legal Landscape
This is the another challenges that might be faced by SASOL limited while
implementing the market in China (Epstein, 20188). Company needs to adopt all legal
requirement and all laws regulations into the business function in order to keep maintained the
effective business growth. This compliance is challenging in the sense that it changes from
country to country. So that, SASOL limited should always need to adopt all current regulations
to make government happy and satisfied. Overall, it brings new managing and implementing
target goals in order to meet out the better environmental goals.
it is the another possible challenges that company might be facing while handling the
global trading (Hamilton and Webster, 2018). in order to meet those challenges company needs
to adopt strategic plans and business development plans.
International accounting
In order to handle the business at international level, company needs to maintained the
their legal regulations and try to make the best outcomes for the company regulations. Company
might be facing issues with international accounting which based for corporation tax abroad.
In other terms, Accounting strategy is key to earn enough profit maximization where the
business going to be established (Wheelen and et.al., 2017). As SASOL limited will planning to
expand business in China, they need to understand the accounting system. So in order to that,
SASOL limited needs to adopt all required tax treaties between countries where the business is
trading to ensure the safety as well.
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Setting the price for your products and services can present challenges when doing
business overseas.
Pricing strategy also reflect the position of the brand or the status of the company status
as well. In terms of oil & gas industry, company decides prices as per their competitors.
b) Critically analysing the strategic challenges in context of the risk and diversification strategies
and the supply chain flow.
Diversification is the process of company growth or development in an more appropriate
model. This is the significant concern which involves a significant increase performance of the
company in an different performing manner (Epstein, 2018). Rewards managers are usually
greater when firm is pursuing a growth strategy.
Strategic issues in diversification processing
In order to implementing the strategies, company can face several challenges in
formulation of policies, implementation etc. In order to control one business to another place is
quite difficult task for the company in this competitive environment. After implementation
diversification strategy, Company needs to change leadership structure, information and control
systems, modification in human resource system. There are other day to day challenges that
company facing while implementing the new business at other place, such challenges would be
political changes, policies, culture, ownership of the strategy etc.
Cultural challenges is the another challenge in diversification strategies that affect by
values, traditions and behavioural pattern of new country where company operate its new
business operation (Crane and Matten, 2016). For example: SASOL limited can face different
culture environment of China. In order to that, they need to adopt China culture environment in
terms of both employees or customer preferences.
Another major challenges is to understand and utilise the organisations structure to aid
them in the implementation of the strategy. Another challenge for the company is brand damage.
In case of company fails to implement effective diversification strategies. They need to face low
brand value in the China Market. Due to moving business to other business area can affect the
company profit and revenue. It also increase the level of employee stress more than is worth.
SASOL limited also faced another challenge that is operational stress due to which
company also facing the issue of operational stress which might be strain the ability of company
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to operate the activities in an appropriate manner. Besides, this challenge can also affect the
productivity level of employees as well.
Strategic issues in supply chain flow
Globalisation challenge
In order to reduce cost, now companies moving to countries to operate its business to
offering lower lobar costs, lower taxes, lower costs of transport for raw material (Key issues in
supply chain management, 2018). Due to having different supplier in different places may occur
the complication in the process of supply chain flow.
Fast changing Market
This is the another challenge which occurred due to dynamic environment of market.
Changes affected by personal, psychological or cultural factors. SASOL limited needs to
analyse the market and their clients preferences.
C Critically evaluate the global business environment including opportunities and challenges.
SASOL limited facing different opportunities and threat while operating business at
global level. Global business environment is full of different dynamic features which affect the
business growth. In other term, globalisation is the term which define the process of operating
business in other country (Epstein, 2018).
SASOL limited can gain market opportunity to enhance the wider array of products,
services, technologies. Company can get the lower labour costs, less expensive natural resources
and other inputs. On the other hand, SASOL limited cal also facing challenges in terms of
ethical business exercises, organisation structure, maintained public relations, etc.
TASK 3
a) Evaluate the influences of globalisation on organisational governance and leadership (P3)
Organisation governance : Globalisation practices influences different aspect of current
business. Like globalisation influences and changes the company governance policies and
structure. It lead high competition in the market which influenced by target market, technological
adaption, quick response etc. Beside this, globalisation also influence the technological
department, knowledge transfer and the market integration. Such that as it leads to create high
competition in the market and as the firm produces the best products to their customers which
helps to satisfy the needs of their customers.
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Leadership: Globalisation influenced different leadership styles and give pressure on
leaders. So in order to that, SASOL limited needs to adopt global leadership skills and practices
for effective leadership in a globalised environment. As globalisation leads to high competition,
therefore, it helps leaders to develop new communication strategies which leads to make their
employees comfortable in a working place. On the other side, high competition also helps to
change the leadership style in order to cope up the market situation.
Structure : SASOL limited operate its business at different location. Due to which they
need to set company structure accordingly (Hanson and et.al., 2016). Globalisation create
pressure on HR department to make the company structure. As if the firm wants to enter into
new country, then it is quite necessary for it to change its structure accordingly in order to adjust
into the competitive market.
Culture : Globalisation make company culture diverse and challenging which sometimes
create conflicts, miscommunication between employees.
Company Functions : Company functions also get influenced by globalisation changes.
According to new practices or regulations, company needs to follow accordingly that affect
business functions or activity. On the other side, globalisation also creates negative impact upon
the company's function such that uneven distribution of the profits and also divides between the
generation etc.
b) Effects of ethical and sustainable globalisation on company functions. (P4)
The major influencing factor is ethical and sustainability of the business in global market.
This challenge of globalisation can affect company in different manner. Ethical and
sustainability can reduce the brand value of the company or might be it affect the company
functions. It can be change the policies of the company, strategies as well. Ethical and
sustainability is the major concern for the company to ensure the company protection. Otherwise
it affects directly on the company brand value.
Moreover, the effects of ethical and sustainable globalisation also helps to improve the
quality of services which are offered by the quoted firm and maintain the relationship with the
suppliers. It also helps the HR department in order to fulfilling the requirement of an
organization change and then increases the business sustainability. It has been further analysed
that the sustainability of a globalisation may or may not be in the same direction for all the firms.
Therefore, the globalisation is also unlikely to achieve the objectives at the same time.
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Ethical factor affect the overall business environment in order to meet out the best
developing results and growth. Company might be facing different forms of developing results
and effective management task. SASOL limited needs to adopt child labour, health and safety act
in order to meet out the social needs and wants. Apart from that, company needs to make
commitments to reduce carbon footprints in order to invest in social welfare.
Child labour act, employment act all the necessary act should abide by the company in
order to meet out the company standards.
c) Evaluating global market influences in application to appropriate theories and models.
Global market also affect the organisation structure and culture in terms of different
manner. In order to adopt the 7S framework of McKinsey to organise company structure in an
more appropriate model (Huang and Chiu, 2015).
Shared Value : this feature based on the values on which company stand or the main purpose of
the SASOL limited which is providing effective oil & gas services.
Strategy : Strategy refers to the company resources, over time, environment, competition
and clients.
Structure : It refers to the structure that company followed, Such as SASOL limited
followed the hierarchy system.
System : System term refers to the term which defines the procedures, process that followed by
the company. Such systems are hiring, promotion, performance appraisal systems etc.
Staff : As per the demand or requirements, SASOL limited need to hire employee and
make a productive team for new operated company.
Style : Cultural style of the organisation and how key managers behave, this helps to face
the negative impact (Dodds, Ali and Galaski, 2018).
Skill : Distinctive capabilities of personnel or of the organisation as a whole. That helps
employees to facing challenges of globalisation.
TASK 4
a) Explaining the different ways decision making can work effectively in a global context.(P5)
In order to manage global business environment SASOL limited needs to adopt proactive
decision making strategy where decision are made on the basis of before an event happens
(Ingram and et.al., 2015). Through this decision making strategy, manager of SASOL limited
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can take decision with some brainstorm activity along with some effective approaches. This
terms helps company to sustain in the global market.
International market provide organisation with different resources as well as competition
causes encourages companies to increase the standards of their operations. In context of
international business an effective decision making can be achieved by following systematic
procedure: first step of which includes defining of the problem. Second phase involves collection
of the information related to issue. Third step is, reviewing the data, management and developing
several possible solutions. Fourth, evaluating the possible solutions carefully, management
makes a decision regarding the optimal solution. Fifth, this solution is implemented in a top-
down approach that is evaluated constantly by management in an enterprise.
In order to make decision making approach and effective learning outcomes, company
needs to go through from different process to make effective decision making approach. For
example, to adopt new market and analyse different aspects of new marketing strategies. In order
to focus on the effectiveness company should need to analyse all global context and should know
about the new culture, taxation policy of China, remove language barrier, that helps business to
make effective planning decision at global context.
b) Different routes to internationalisation an organisation can adopt along with barriers.(P6)
Routes to entered into international market
Exporting : This is the traditional way to en route into the new market, in which
company produced goods and sell to the another country. On the other side, it includes barriers
of Tariffs, Export license, local content requirements etc. Expanding is considered to be as the
best strategy as it enables an organisation to become lees depended on single market. It will
help an organisation in increasing sales and profitability. It is less risky technique in context of
expanding business at international level. Exporting enables firm to direct communicate with
customer and retain their control on sales.
Licensing : This is the contract between two companies. In which one country accept the
offer of another company to use the manufacturing, processing and trademark provided by the
licensor. The major Barriers involves in this way is government regulation, Involves heavy
competitors. It allows organisation to “jump” border and tariff barriers. In addition to this, less
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capital is required for entering into international marketing through licensing. Through licensing
large return on investment (ROI), which can be realised fairly quickly.
Joint venture : Joint venture is the another effective way for SASOL limited to get
entered into the China Market. Where more than two investors share the ownership, rights,
responsibilities of an enterprise (Kuada, 2016). In the contrast, JV involves barrier that is, In
which partners does not fave full right to make decision by own, possibilities of conflict etc.
from the above, the advantages of using joint venture is to provide new expertise and insight for
the customers and on the other side it also have another disadvantages such that its flexibility is
also restricted in the company that is why many firms did not uses this method.
c) Key barriers of operating business internationally along with recommendation to overcome.
Tackle local market expertise : Company should always aware about the latest trend or
knowledge of the market where they wants to established their business. SASOL limited needs to
evaluate the China market and analyse the valuable insight. This helps company to get overcome
from the market expertise.
Navigating new legislation : this is the way to get over from the issue of new legislation
that company faced in new country. SASOL limited should aware about the laws of China in
order to implement into their own business practices (Turnes, P. B. and Ernst, R., 2015).
Cross Border Knowledge sharing : Due to lack of knowledge about the core business
can decrease the performance of the company (Vakkayil and Chatterjee, 2017). So for that,
SASOL limited need to share knowledge and adopt changes in the business accordingly. It helps
to manage global effects and health and safety issues effectively.
d) Strategies of global business environment
Multi domestic Strategy : this strategy focusses on the local responsivity by
customizing the international needs. This is the best approach to enhance the economy growth as
well.
Global Strategy : Global strategy largely focused on international needs rather than local
requirements. This strategy includes two more areas such as global, multinational or international
(Dimitratos and et.al., 2016). This is the best and suitable strategy for SASOL limited to
expanding the business at other market. Global strategy is more fruitful for the company to get
new sales and profit revenues.
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