Analysis of Global Commerce and Strategic Challenges Report

This report provides a comprehensive analysis of the global business environment, focusing on the key factors that drive global commerce and trade. Using SASOL Limited as a case study, it examines the influence of cost, market, environment, and competition. The report delves into the strategic challenges organizations face when operating globally, considering political, economic, social, technological, environmental, and legal complexities. Furthermore, it evaluates the impact of globalization on organizational governance, leadership, structure, culture, and functions. The report also explores various decision-making processes and routes to internationalization, offering valuable insights for business students and professionals. The report is contributed by a student to be published on the website Desklib. Desklib is a platform which provides all the necessary AI based study tools for students.

INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
P1 Analyse key factors of cost, market, environment and competition that drive global
commerce and trade.....................................................................................................................3
Covered in PPT............................................................................................................................3
P2 Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples ..................................................................3
Covered in PPT............................................................................................................................3
PART 2............................................................................................................................................3
P3 Evaluate the influences of globalization on organizational governance and leadership,
structure, culture and functions....................................................................................................3
P4 Evaluation of influence of ethical and sustainable globalization on organizational functions-
......................................................................................................................................................4
P5 Different ways of decision making that helps in working effectively in globalization........10
P6 Determination of various routes to internationalization organization may adopt.................10
Conclusion.....................................................................................................................................14
References-....................................................................................................................................15
INTRODUCTION
Global business environment are described as an environment that exists in different self-
overseeing nations with components endogenous to home climate of an association alongside

impacting cycle of dynamic on usage of assets and capacities. In basic terms, global business
environment alluded as an over overall climate where an association work their activities. This
idea developmentally incorporates wide scope of components that are, innovation, culture,
governmental issues, geographic area and financial status. There are various sorts of components
that impact associations to globalize their tasks in worldwide market, a portion of that variables
incorporate, benefit creating open doors, worldwide development, business development, global
standing and that's just the beginning. Present report has been led on, SASOL Limited participate
in the area of fast-growing energy alongside chemical company. This company is operating its
business services in South Africa. Organization is looking advances to extend their business
activities into different nations. In this report, conversations has been made on, significant key
factors that drive globalization alongside issues that happens while directed business on
worldwide commercial center. Furthermore with this, report incorporate, various kinds of
components that leads towards affecting activities of an organization along mind interaction of
dynamic.
PART 1
P1 Analyze key factors of cost, market, environment and competition that drive global
commerce and trade

It is also understood as spread of goods, products, information and technology all over the world.
Company which works at large scale in developed nations gives competition to other companies
with the help of globalization. If a country facing is economic down then it creates the domino
effect with the help of trade partners (Gopinath, 2018). It is clear result of globalization.
Globalization helps in creating the competition worldwide. Competition created is related to
product, service, target market and technology. If a company is producing with less cost and
selling cheaper then, it can capture the large market share. It is used in economic context in order
to describe the integrated economy which is market by free trade, free flow of capital and use of
foreign labor. It maximizes the return and benefits of the common goods.

Cost - Globalization and cost of products and services has positive correlation with each other.
With the help of globalization products and services can be sold at the lower prices. If a company
wants to sell their product in other countries then it has to pay the environmental cost, tax
competition and avoidance. Every country has different tax rates. Developed countries have
more tax rate then poor economic condition countries (Salles-Djelic, and Quack, 2018)
Market - Main goal of globalization is to boost the economy all around the world by making
efficient the market. Global trade leads to high competition. It also helps in spreading the wealth
more equally.
Environment - Globalization affects the environment in various ways such as increased
emissions. When more fuel is consumed it increases the levels of greenhouse gas. Company
deals with chemicals so it leads to pollute the environment which is not good for the company.
Company should control the pollution.
Competition - As the term globalization indicates the competition. It makes market competitive
and company can survive in the market by using the innovation. Customer attention is grabbed
with the help of innovative products and services.

M1 Critically analyze the impact that key factors have upon the global business environment in
terms of opportunities and challenges
Political Factor - As the changes in tax rate affect the company and it has to pay the taxes
accordingly. Geopolitical and escalation of trade sessions by government is threat for the
company. It plays crucial role in determining the factors that affect the SASOL limited. It
operates in more than dozen countries that’s why it is facing political issues. Every country has
their rules and regulations and company needs to follow that.
Economical Factor - As company is dealing with another country so it is needed to be checked
that quality of infrastructure of oil and gas and oil industry should be accordingly in order to
generate the profit. Economic growth rate should be high of country as it helps company to grow.
If country is not performing well in terms of economy, then it is threat for the company. Before
launching product or service in any country SASOL limited needs to check the economic
condition or system of the country. Economic system should be stable in order to earn the profit
(Tsiklashvili, Chanidze, and Surmanidze, 2019).
Social Factor - It is important for the company to know that product launched in the country will
be successful or not. Skills of population and demographics must be analysed. It is important to
know the power structure in the society. Population and belief play important role in success of
the product. Culture, age group of people and social conventions are very important for company
to know of target country.

Legal factors - Law of discrimination, Copyrights and patents, Protection of consumer,
Employment law, Data Protection, Health and safety law etc. needs to be considered by the
organisation.
Technological Factor – These factors affect the company most of the times. Competitors of the
company recently done development of technology which leads to give more competition.
Company can take competitive advantage by pursuing new innovations. It also impacts the
offering of the products. Cost structure of the product is impacted due to technological
developments. In the basic material sector, it also gives its impacts.
Environmental factor – Markets are of various types and each market has different environment.
Change in environment may impact the profitability of the company. Company also deals with
market of USA and it has different liability and environment laws. Company needs to consider
the factors which includes weather, climate change, laws regulating environment pollution,
recycling and waste management. Company produces gases and chemical so it should be
concerned about the pollution in the target country. Company should minimize the pollution and
wastage should be reduced (Kourula and et. al. 2019).

P2 Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples
When an organisation is planning to expand their business in global market then this will lead
them to develop their capabilities and at the same time this will inhale some challenges which are
directly related with their objectives of expansion. In global business environment there are
numerous dimensions which are required to be inculcated with the business and these external
challenges are termed and social, economic, technological, legal and many more.
Political complexities: SASOL is having business operations in more than 12 countries such as
Asia, Europe and many more. In this manner political factors are having direct impact over
decision making of SASOL as political factors are linked with political stability, tax rate and
other factor. While making decision related to global expansion aligned to this complexities
manager of SASOL is required to frame various strategies so that to conduct and operate their
business in global position in effective manner (UDESIANI, and UDESIANI, 2018).
Economical complexities: These factors are linked with economic condition of the country in
which business functions are executed. Economic factors are linked with rate of employment,
inflation rate and such other factors. In this manner in UK wage rate has been increased to 4.4%
in the year of 2018 due to which SASOL had to pay more wages than before. In this manner
direct impact has led down on the business of SASOL.
Social complexities: Social factors are linked with needs and preferences of customers along
with market trend which is possessed and acquired by customers. In this manner for SASOL the
management is making and executing various plans and actions in this manner only with major

aim of attracting customers and retaining them for longer period of time. These complexities are
highly impacting business functions of SASOL as the company is having operations in global
level and in order to gain higher market prominence they are required to aligned with global
standard of their customers (Vyhovska, and 2018).
Technological complexities: In current time technology is growing at higher pace and due to this
reason SASOL is gaining higher opportunities. By using updated technology SASOL may attain
significant edge in competitive market and gain differential growth opportunities as well.
SASOL has invested huge capital in energy so that to minimise carbon footprints as this is the
long term goal of the organisation. On the other side, SASOL has also opted a new payment
technology named PayQwid in order to provide ease to their customers and to adopt new
technologies as well.
Environmental complexities: Business are required to undertake various environmental
initiatives so that to put their impression in global market. There are various factors such as
climate, weather and many more those are linked with business functions of SASOL and in this
manner the company is highly focused into minimising carbon footprints to level of 50%.
Besides this SASOL is planning to use renewable resources so that to produce electricity by the
year end of 2030 (Kopnina, and Blewitt, 2018).
Legal complexities: Legal complexities are defined as various significant laws and legal aspects
which are required to be inhaled by the business in order to get smooth functioning. As SASOL
is having operations in global manner so legal laws of various countries are required to be
followed by them. In the year of 2014 Oil pricing Act was introduced and SASOL is required to
stay adhere to the same. In the year of 2016 SASOL has faced litigation against 16 employees in
respect of discrimination and gender gap pay (Gigauri, and Devidze, 2019).
M2 Evaluate strategic challenges in context of risk and diversification strategies and the supply
chain flow.

Globalization is very important for company as it helps in increasing the profit margin of Sasol.
Thus, it is said that globalization has some benefits and challenges too if company wants to grow
then it is important that challenges should be managed in an efficient manner.

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STATEMENTS, AUDIT RISK AND BASIC ASSESSMENT OFFINANCIAL
STATEMENTS. Globalization & Business.
Gigauri, L. and Devidze, E., 2019. INTANGIBLE CULTURAL HERITAGE AS AN
INNOVATIVE APPROACH FOR TOURISM DEVELOPMENT IN GEORGIA. Globalization
& Business.
Vyhovska, N.H., Aleksandrova, M.M., Dovgaliuk, V.V., Diachek, S.M. and Lytvynchuk, I.V.,
2018. Transformation of financial relations of business entities in the context of
globalization. Journal of Advanced Research in Law and Economics, 9(8 (38)), pp.2869-2884.
Kopnina, H. and Blewitt, J., 2018. Sustainable business: Key issues. Routledge.