Global Business Environment Report - Strategic Analysis of SASOL

This report provides an in-depth analysis of the global business environment, focusing on factors driving globalization such as cost, market, and competition, and explores strategic challenges faced by organizations. It uses SASOL Limited as a case study, examining how globalization influences organizational governance, leadership, structure, culture, and functions. The report covers topics like international trade, economic integration, the impact of digital technology, and international economic factors, providing a comprehensive understanding of the complexities and opportunities within the global business landscape. The report also utilizes PESTLE analysis to evaluate external factors affecting SASOL's operations and discusses international trade laws and government restrictions. It concludes by assessing the impact of globalization on various aspects of organizational management.

Global Business
Environment

INTRODUCTION
Global business environment refers to an environment in which different countries
collaborate with one other to formulate a frequent decision for development of economy of world
(Alkhafaji and Nelson, 2013). This will assist in bringing dependency of each nation on each
other for making improvisations in an area and build up decisions for quick development.
SASOL Limited is taken into consideration which is fastest growing energy as well as chemical
organisation within South Africa. They have expanded their business into diverse developing and
developed nations such as Canada, Australia, Gabon and Mozambique for seeking further
expansion within other countries. This report will analyse key factors which leads to
globalisation, including strategic challenges which are related with the same. It will also aid to
determine how this concept may influence its organizational culture, structure and functions, as
well as its decision making.
TASK 1
P1 Analysis of various key factors of cost, environment, market and competition which drive
global trade and commerce
Within present competitive world, globalization refers to a concept which renders different
opportunities to organisations like information, services, technology, transfer of goods and many
other factors across the territorial boundary (Amran, Lee and Devi, 2014). This can be attained
by development of new strategies as well as modification within existent plan and policies.
Along with this, by the assistance of business expansion, organisation can enhance their
profitability as well as enhancement within living standards. With reference to SASOL Limited,
it is already mentioned that they have expanded their operations in different countries around the
world. But they are looking to further expand their operations in new market in unlike nations. In
this case, it is crucial for management to acknowledge different factors which are responsible for
driving process of globalization. They are illustrated below:
 Cost driver: With the assistance of high quality services, products can be accessed easily
within global market. This will lead SASOL Limited to acquire cost advantage within
market. Along with this, management team furnishes goods at high prices and acquire
economies within scale through assistance of outsourcing (Bititci, Cocca and Ates, 2016).

Also organisations can acquire more profit as cost of shipping is declining on customary
basis as supply of products is in bulk.
 Competition drivers: It is one of the crucial factors as there exists intense competition
among organisations due to globalisation. Along with this, with the assistance of FDI
(Foreign Direct Investment), SASOL Limited is enhancing their interdependence in
different countries continuously. This will aid, organisation to attain competitive edge
within market (Cheng, Green and Ko, 2014).
 Environment: It denotes surroundings in which business functions and operations are
carried out. Different environmental factors impacts working conditions of organisation
in both affirmative and pessimistic way. It is the factor with whose assistance
organisation can attain success within business environment by forcing organisation for
adoption of alterations as per requirements of technologies, legislations and laws of
different countries and many other factors.
 Market drivers: From past few years, there has been saturation within domestic market
which leads to international expansion for accumulation of opportunities. With respect to
SASOL Limited, organisation can acquire large number of opportunities through
expansion of their business at international market. For this, it is necessary for them to
scrutinize market trends and then render services as per demands (Coltman and et. al.,
2015). By furnishing products within new markets, selected organisation can attain
vantage as well as enhance sales by confining large marketplace.
International economic integration- It is an agreement between various regions that
often consists the reduction or elimination of trade barriers and the coordination of monetary and
fiscal policy. With the help of it, SASOL Limited can improvement in its business. Economic
integration is the un9ification of economic policies between different states through the partial or
full abolition of tariff and non tariff restrictions on trade.
Foreign Direct Investment- It is a kind of investment which is in the form of a
controlling ownership in a business in on nation by an entity based in another state. It is thus
distinguished from a foreign portfolio investment by a country of direct control.
International Business and Trade- International business indicates to the business when
a company operating its business across the nation. It can be a trade of goods, services,
technology, capital and knowledge across the national boundaries and at a international or

transnational level. It consist cross border transactions of products and services among two or
more nations.
Significant impact of digital technology
Digital technology is one of crucial factor which assist organisation to attain wide range
of opportunities within competitive market. It also leads to huge development within
organisation by enhancing communication, mobility, global level connectivity and many others.
As a result all these processes will aid SASOL Limited to bring innovation within their entire
working structure.
E-commerce-It is known as electronic commerce or internet commerce which indicates to rthe
purchasing and selling of goods and services using the internet and the transfer of fund and
information fro the execution of these translations. It can be used by SASOL Limited for the
expansion of the business because it create positive impact on the business in the from of profit
and productivity maximization.
Social media connectivity- Social media refer to computer based technology that facilitates the
sharing of ideas, thoughts, data and information through the building of virtual networks and
communities. It create favourable impact on the business of SASOL Limited because it help in
creating awareness about the products and services of this company with the utilization of
different social media channels. There are various social media tools like internet, Facebook,
Instagram, Twitter and others which are beneficial for generating awareness about the company
and its products.
Global manufacturing and distribution- It indicates to those companies and firms that
manufactures components, sub assemblies, assemblies and finished products for another
organisation. These kind of organisations provide raw material, manufacturing capabilities, cost
and an efficient supply chain that spans the world.
Thus, it can be concluded that all the mentioned elements will aid SASOL Limited to
expand their business operations effectively, innovatively and easily. Therefore, this organisation
needs to emphasise on various factors through which productivity can be enhanced at domestic
as well as international levels within market (Daley, 2012).

TASK 2
P2 Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples
When operating within a global environment, organisation has to go through ample of
strategic challenges which will enhance complexities in operations for performing in a stipulated
duration. It comprises of economics of globalisation, international trade and environmental
challenges associated with the same (Dubihlela and Sandada, 2014). Along with this, there is a
lot of risk involved within strategies associated with diversification, complexities of global
supply chain management and many others. With respect to SASOL Limited, as they deal with
chemical business, therefore, they needs to acknowledge critical problems which are faced by
them while entering within new market will be global supply chain due to enhanced needs of
sustainability. To acknowledge these challenging roles, it is necessary to for SASOL Limited to
make use Pestle analysis. This has been elaborated below:
Pestle Analysis of SASOL Limited:
Political factors: SASOL Limited is operating business in chemicals industry that shows
its major diversification in global market and expose itself to a wide environment of political and
associated risks (Eden and Ackermann, 2013).
Economical factors: Micro environment factors comprises of competition norms which
influence competitive edge of organisations. SASOL Limited can make use of economic factor
of organisation in which they are looking forward to expand their business. Organisation need to
take into consideration various economic indicators.
Social factors: Shared beliefs as well as perception of targeted audience play a great role
in analysing how SASOL Limited can design its marketing strategies to spread message related
to chemicals and its major diversification (Elbanna, Andrews and Pollanen, 2016).
Technological factors: Technology is enhancing which makes it necessary for firms to opt
for them to remain competitive within market. This will aid in diversifying their business. This
will strongly affect supply chain management of SASOL Limited.
Legal factors: There lies various rules as well as regulations to which firm must comply
to. SASOL Limited must carefully formulate strategies for protecting their business idea from
other organisations before they enter in a new market.

Environmental factors: Before SASOL Limited enters in a new market, they must examine
environmental standards in an appropriate way which will ensure that they are furnishing their
services in an appropriate manner.
International trade laws- It is a set of laws and agreements that govern commerce
between countries. International trade laws generate the rule that nations and business must
follows in order to do business across borders. In UK, there are different kind of trade laws such
as federal law, The general agreement on Tariffs and trade and others. Its impact is affirmative in
terms of employment, political cooperation and trade benefits. It leads in elimination of cost of
trade, enhanced availability of services and goods. Political cooperation in between countries can
improvise stronger economic ties through which conflicts can be resolved.
International economic factors- It refer to those components which are affected by the
dynamic economic environment conditions prevalent in the market. Globalisation denotes
international trading which means that there will be a wider scope for growth of the firms within
market. Its impact is affirmative as industrial needs can be met which will lead to quick
economic growth. There are various factors which affect international economy, they are as
following:
Currency exchange rates- It refer to the price of the domestic currency stated in terms of
another currency. It is also regarded as the value of one country's currency in relation to another
currency. Within the countries whose economy is enhancing there will be probability of higher
growth for firms as there currency rate will be also higher. This will lead organisation to enhance
their benefits in terms of profitability also.
Inflation- It indicates to an economic terms that refers to an environment of generally
rising prices of goods and services within a specific economy. The growth of FDI has lead to rise
within globalisation. There have been significant benefits that can be generated by making
investments within multinational organisation. It eliminates transportation cost for locating
manufacturing plant in different countries. Firms can avoid barriers with respect to trade like
quotas and tariffs within different industries.
National income-Basically it refer to the total amount of money which is earned within a
country in a specific time period. It can be a variety of national income and output which are
used in economies to estimate the total economic activity in a country or region, consisting gross
domestic product, gross national product etc. The profits earned by firm entirely depends on

economy of country like if people earn more they will spend more on other requirements in
terms their will be enhancement within national income.
Government restrictions- Basically it is related to those laws and legislations which are
formulated by the government for tariff, subsidies, export and import goods from one nation to
another. Tariffs or import duties or taxes levied on the imported goods to make them costlier.
Import and export licences are prepared for trading goods and services from one nation to
another in a legal manner. This do not have favourable impact on firms as certain limitations
have been imposed by government. For an instance import duties leads them to spend extra
which also leads in increase within prices of commodities.
TASK 3
P3 Evaluation of influences of globalisation on organisational governance and leadership,
structure, culture and their functions
Globalisation within business environment aids different organisations to move within
new markets and develop their business in specific country (Kirchoff, Tate and Mollenkopf,
2016). This impact different aspect associated with business environment such as organisational
structure, culture, governance, leadership and many more. Corporate governance denotes set of
rules as well as practices which aids organisation in management as well as controlling different
tasks and activities of business. The SASOL Limited is a chemical organisation which operates
their operations at global level and thereby, this company needs to adhere to corporate
governance as per international regulations and rules. These are essential for acknowledging
demands and needs of customers at international level. This organisation needs to make
alterations within leadership style as well as encourage workers for working harder so that
organisational goals can be attained and also expectations of customers are fulfilled. For
analysing other elements of globalisation that impact on functions as well as other aspects
associated with SASOL business, McKinsey’s 7’s model can be used. This model is explicated
below:
 Strategy: This denotes a tool which aids in evaluation of alterations within business
environment and ways in alterations are opted within existent business environment.
Enhanced strategies will organisation to opt for modifications in global business as well

as operate in different countries (Liu and Wang, 2014). This aids organisation to analyse
the ways in which barriers can be minimised. Employees of SASOL Limited chemical
organisation are rendered with effectual training as well as development sessions through
which they can gain competitive edge within their business. These trainings will assist
employees to opt for new technologies, thereby leads to affirmative working
environment. Structure: It will assist to acknowledge the working culture of organisation. The leader
as well as managers of SASOL Limited needs to have hierarchal organisational structure
for addressing international requirements and demands of customers.
 System: SASOL Limited is a chemical organisation which is furnishing their operations
at international level but they have started at time when there were not a lot of
advancements in terms of technology. But at present scenario, for being sustainable and
compete with other businesses it is crucial to opt for latest techniques and tools through
which functions can be carried out smoothly (Noble and Nwanekezie, 2017).
 Shared value: Excellence and enthusiasm will assist in development of values among
employees. Leader as well as managersdefine ethical globalisation of SASOL Limited
needs to have transactional style of leadership and as per this management can
acknowledge basic requirements of employees and render affirmative working
environment.
 Style: Management of alterations within business is crucial and leaders of SASOL
Limited must opt for transactional style of leadership as well as chaotic style of
management through which they can ensure that employees carry out their roles and
responsibilities in an appropriate manner.
 Staff: Employees are major assets of organisation. Therefore, it is mandatory that
appropriate culture must be executed within business in which every employee will be
treated equally (Okeke, Onuorah and Jakpa, 2016).
 Skills: It is essential to have effectual analytical as well as managerial skills so that
organisational goals of SASOL Limited can be attained through accomplishment of
requirements and demands of international customers.

When SASOL limited uses McKinsey model in it's organisation then it will be able to
make effective strategies and plans for achieving the goals and objectives in less time. In order to
accomplish the targets of the company it is advisable for company to provide effective trainings
and development sessions to its employees. According to the McKinsey model, it is stated that
SASOL limited can follow hierarchical structure for conveying various message between top
level management and lower level management. A skilled staff is hired in SASOL limited for
define ethical globalisationincreasing the profits and sales of the company. SASOL limited can
provide quality products and services to international customers if it has skilled and
knowledgable employees and workers.
Globalisation on culture:
It denotes knowledge possessed by an individuals or team with respect to habits,
languages, religion, etc. It creates an impact on SASOL Limited which is defined with the usage
of Hofstede's theory. It denotes concept that was given by Greet Hofstede that is shown by the
assistance of six dimensions. Along with this, it acts as a tool for cross cultural communication
which will explicate influence of culture depending on culture of society and individuals. They
are illustrated below: Power distance index:It denotes measures of difference which is recognised as well as
disapproved by people who possess power or do not have it. Management of SASOL
Limited have the power through which they are liable to allocate responsibilities to
employees as per their job role. Individualism Vs Collectivism: If work is carried out by entire team members altogether
then objectives can be attained quickly. Similarly, when individual members of SASOL
Limited carry out their work then it is likeable that they will undergo certain problems
which will lead to affect attainment of their goals within given time frame. Uncertainty Avoidance: It is condition in which team members undergo feeling of
anxiety for unsuitable conditions that can take place within working premises of SASOL
Limited. Masculinity Vs Femininity: Here, it is taken into consideration comparison among males
and females working within organisation. Both should be rendered with identical
opportunities.

 Long Term Vs Short term orientation: It is taken as union interrelationship among
recent as well as upcoming challenges and actions. SASOL Limited needs to abide to
short as well as long term orientation through which goals can be accomplished
completely.
 Indulgence Vs Restraint: It denotes level of freedom which facilitates people for
accomplishment of expectations. Entire individuals, management of SASOL Limited
need to work as per comfort level for attaining enhanced outcomes.
In case of SASOL limited, Hofstede Model is helpful for knowing about culture and
values which are adopted by organisation for achieving the targets and goals of the company in
time. The leaders of SASOL limited allot various ;tasks to their workers on the basis of skills and
knowledge of them. Employees of SASOL limited work effectively as individuals and within
groups. The leaders and managers of this company make short term as well as long term goals so
that they can guide their subordinates to achieve them in specified time frame. Employees of
SASOL Limited have enough freedom to do business tasks and activities in an effective manner.
In addition to this, it will aid in incorporation of alterations within present working culture.
The management of SASOL Limited organisation can opt for Hofstede cultural dimension that
consist of power distance, long-term v/s short-term orientation, masculinity v/s femininity,
individualism v/s collectivism and indulge v/s restrain. By evaluation of these dimensions,
organisations can opt for good culture within their working structure for attainment of short as
well as long term goals of organisation.
P4 Evaluate impact of ethical and sustainable globalisation on organisational functions.
Ethical globalization is defined as a process which states that while carrying out business
at international level; it must be ensured that transfer of services, information, products, etc. must
be carried out in an ethical manner (Shi, Sun and Prescott, 2012). Along with this, in this process
SASOL Limited needs to formulate effectual corporate governance strategies by taking into
account interest of stakeholders, needs at global level and many others. As a result of this
organization is required to conduct their business operations in an ethical manner so that desired
outcomes can be attained from international market.
Sustainable globalization refers to process of representing breakthrough as well as
fundamental transformation with respect to ways in which people approach doing business