Global Business Environment Analysis: SASOL Limited Expansion Report

This report provides a comprehensive analysis of the global business environment, focusing on SASOL Limited and its expansion into new markets. It begins with an introduction to globalization, its drivers, and the impact of digital technology. A PESTLE analysis is conducted to assess the external macro-environment, followed by an examination of the challenges associated with globalization, including ethical business practices, organizational structure, technology, infrastructure, and international trade laws. The report then explores SASOL's culture, governance, and the application of the McKinsey 7S framework. Strategic expansion routes are evaluated, considering both benefits and drawbacks. Recommendations for addressing globalization challenges are provided, including collaborative partnerships and accessing competitive talent. The report concludes with an assessment of decision-making processes and strategic recommendations for SASOL's global operations.

Global Business
Environment

Table of Contents
PART 1 - Drivers and challenges for globalisation.........................................................................3
TASK 1............................................................................................................................................3
P1: An introduction to the concept of globalisation. ............................................................3
The significant impact of digital technology upon globalisation. .........................................4
Present a PEST/LE investigation of a organisation................................................................4
TASK 2............................................................................................................................................6
P2:State challenges of globalisation & important challenges for organisation. ....................6
PART 2 - Impact and Strategic Direction........................................................................................7
TASK 3............................................................................................................................................7
P3: An explanation of the culture, structure & governance ..................................................7
P4: Evaluation of various global operations & how the organisation is operating in the global
market.....................................................................................................................................9
An evaluation of ethical & sustainable factors for a organisation to be considered in the
changing global market. ......................................................................................................10
TASK 4..........................................................................................................................................11
P5: Assessment of how some of the factors can affect the process of decision making.....11
Evaluation of effectiveness of decision making process......................................................12
P6: Assess the strategic expansion routes and make a analysis both benefit and demerits. 14
CONCLUSION..............................................................................................................................16
REFERNCES.................................................................................................................................17

INTRODUCTION
Global business environment is a concept that is having relation with development of
understand if the external environment of business with the macro environment and its impact on
business. Present report is based on SASOL Limited that is a fast growing company that is based
in south Africa and now is willing to expand in Canada, Australia and Gabon. Report is based on
the discussion of basic concept of globalisation and the impact of changing digital technology.
There is use of PESTLE analysis to discuss the factors affecting organisation and various
strategic challenge that are part of organisation (Aithal, 2017). Further there has been application
of models like McKinsey 7s and hofstede's dimension help in understand the factors that are
influencing global operations of a organisation.
PART 1 - Drivers and challenges for globalisation
TASK 1
P1: An introduction to the concept of globalisation.
Globalisation is a concept that is related with developments that are part of changing
external environment. It is a process that takes place when there is exchange of culture that takes
place between different countries (Balli Pericoli and Pierucci, 2018). This is a process that takes
place when there is flow of goods & services across borders and is not limited to a single
domestic country.
Political view of globalisation related with how process are being considered and dealing
with political issues like sovereignty and impact of intergovernmental organisation. It is related
with the future challenges of globalisation and flow of regional governance, migration related
activities.
An explanation on the driving factors of globalisation.
There are some of the factors that are driving the objective of globalisation and these are
mentioned below:
Government: It is a main driver that leads towards reducing the trade barriers and a shift towards
a one market economy. There is more policies of trade liberalisation that is affecting the
reduction of restrictive policies like traffic 7 non tariff barriers.

Economics of scale: There has been cost benefit when production is expand it is helping
organisation to get advantages of lower production cost and outsourcing measures.
FDI: It has helped in increasing the overall interdependence among organisation and countries
there is more exposure to new competitors.
Above mentioned are some of the driving factors towards globalisation and making it
easy for organisation like SASOL to establish themselves successfully in other countries that is
Canada and Australia in present scenario (Althouse, Allan and Hartt, , 2016).
The significant impact of digital technology upon globalisation.
Advancements in technology have helped a great way in facilitation of the process of
globalisation. Technological progress is one of the major factors that are driving the process of
globalisation. Technological breakthroughs are compelling the business to be global and enhance
the process of economies of scale and overall market size ( BATAKA, 2020). In case of SASOL
Ltd. Digital technology will help in the process of facilitation of the source of raw materials and
various inputs. There is also use of patent technology so that there can be exploitation of foreign
markets without dealing with high competition scenario.
Use of digital technology has lead to conversion of available resources in the most effective
manner as there is requirements of very less financial resources to deal with the situation of
changing technology.
Present a PEST/LE investigation of a organisation
PESTLE analysis a great tool in developing a detail understand of the operating changes
that will be faced by this organisation and is part of external macro environment. It consist of
various competitive forces:
Political factors: There are some factors that are affecting long run profitability of a organisation.
It consist of political stability, military invasion risk, corruption level, trade regulations,
legislation wages, high taxation rates and increasing wage legislation are some of the crucial
requirements that have to be considered by SASOL in course of adopting the process of
globalisation and develop a detail view points so that there can be appropriate strategy
formulation to deal with such increasing challenges.

Economic factors: Macro environment consist of those elements that are part of the economy of
a country such as inflation rate, savings rate, foreign exchange rate, interest rate and economic
cycle to determine the future demand and investment require in economy. SASOL Ltd. Can
make use of various economic factors like inflation rate, growth rate, consumer spending to
forecast the industry growth rate in a particular country's economy.
Social factors: There are some factors that are having relation with the way society's culture is
prevailing. It consist of the shared beliefs and attitudes that the population is playing in
understand the customers of a target market (Bedianashvili, 2016). Factors to be taken into
consideration include class structure, entrepreneurial spirit, leisure interest, attitudes, education
standard etc.
Technological factors: Technology is changing very fats and disrupting the way organisations
and industries are functioning. Auto-mobile industry has seen lot of changes in a time period pf
last 10 years such as Tesla has done the electronic car revolution. There is a need of
technological analysis to understand the process of technological disruption (SWOT & PESTLE,
2020).
Legal factors:There are many institutions and frameworks that are majorly affected by the
prevailing legal legislation and frameworks of a organisation. Such as a organisation must
carefully make a evaluation of these factors before entering a particular industry. These factors
include anti trust law, consumer protection laws, data protection laws and the health and safety
laws which are commonly prevailing in every country and have to be taken into consideration by
a organisation while they are entering in another country (Chasdi, 2017).
Environmental factors: There are different environmental standards that can affect the
profitability of a organisation. It consist of liability laws and different environmental laws. Such
as in UK organisation like Texas have to follow assorted liability clause in case of environmental
disaster and mishaps. Many European countries have to provide healthy taxation breaks to
increase their operations in the renewable sectors. These considerations lead to increase in
responsibility of organisation towards the external environment in which they are functioning.

TASK 2
P2:State challenges of globalisation & important challenges for organisation.
There are many challenges to the process of globalisation that are mentioned below:
 Ethical business: It is one of the most crucial challenges that is related with ethical
business practices in terms if safety, labour, corruption and regulatory compliance.
Especially in countries where there is a rule of law there is a strong need to maintain the
high ethical standards and consider them while organisation is operating in fast changing
environment.
 Organisation structure: There is always a hurdle that is related with the ability to
effectively and efficiently incorporate in new economies, SASOL has to work on
developing some strategic business units to manage all hypertensions and accounts. This
will help in capturing higher value and is one of important initiatives for all global
organisation.
 Technology: Technology is a driver of globalisation but it can be a challenges also in
some situations like in SASOL there is a possibility of technological challenges for
business that are prevailing in foreign nations (Cherunilam, 2016). It includes worker
training, poor transportation, communication facilities, low level technological. Literacy
that can affect the quality of workforce and lack of proper access to internet.
 Infrastructure: This includes organisational structure and physical requirement to operate
on a society and part of economies to have appropriate function, SASOL has to consider
the system of proper infrastructure facilities, banking & financial systems, judicial
systems, all these aspects are part of infrastructure and help in smooth functioning of a
business organisation (DohLuthans and Slocum, 2016). Poor infrastructure leads to
higher cost and there is a need to incur additional cost and assume higher risk.
 International trade laws: It is a governing regulation of trading of goods & services by
WTO. It is a global organisation that is having transactions related to member driven
organisations. GATT is applying on trading of goods according to which members agree
of not making any discrimination among imported products.
 TBT: It is also applying on technical regulation that are related to imports for WTO
members and various imported products. It is dealing with areas like trade discrimination

and trade restrictiveness. These are some issues that may create a trade restrictions on the
functioning of organisations like SASOL.
Recommendations to deal with such challenges.
There are some strategies that can be used by organisations like Sasol to deal with the high
amount of challenges that occur in the process of globalisation:
Going global with right partner: To deals with the high amount of regulatory challenges
it is very critical for organisations to deal with high amount of challenges. For this there comes a
solution to establish the presence in new markets without incurring high cost and time by using
techniques of collaborative partnership and co branding to deal with the challenges of new
country.
Accessing to competitive talent and skills: Globalisation is helping various organisations
to fined the most competitive and competent candidates that can provided a competitive
advantage to their organisation in terms of achievement of their objectives in the most effective
manner. SASOL can also take benefits of of the skills that are present in people of Australia and
Canada so that they are able to lay down their functioning in the most appropriate manner.
Supporting foreign customers: It is a aspects that is related with supporting of foreign
customers in such a so that they have appropriate measures of customer services & supporting
channels in these new countries so that they are bale to satisfy their new market (Figge, Oebels
and Offermans, 2017). Consideration that has to be given in this factor by SASOL is that in
Australia and Canada there are differences in languages and time zones that have to be
considered before hand while they are establishing their functions.
PART 2 - Impact and Strategic Direction
TASK 3
P3: An explanation of the culture, structure & governance
Culture: The main culture that is promoted in SASOL by their CEO Bongani Nqwababa is that
they are responsibility addressing all the challenges that are part of environment with
consideration given to interest of their stakeholders. They are also willing to uphold their values
& commitments towards ensuring that they are providing zero harm and having a safe,
sustainable and reliable operations ( NATIONAL CULTURE, 2020).

Governance: SASOL has a sound policies of corporate governance in their process and structures
that is considered by board to deliver a proper sustainable growth and Interest to all their
stakeholders. They are also considering the policies of corporate governance and willing to
going beyond the necessity of minimum compliance regulatory framework (Jacobsen, 2018).
McKinsey 7s framework is a model that has been developed by various business
consultants like Tom peters and Robert waterman in the year 1980 with a motive of developing a
strategic vision that consist of business, teams and business units, it consist of seven basic
elements that are mentioned below:
Strategy: It is the organisations overall plan for building up and then further maintaining of a
competitive advantage in comparison with their competitors.
Systems: The system plays a crucial part on the workforce and functional management of every
organisation. Safety approach is used in SASOL where there is commitment towards having a
healthy, safe and engaged workforce with the necessary skills and experience that is require to be
present in achievement of higher success in foreign markets.
Skills: These are regarded as the general capabilities and competence of staff of employees in a
organisation.
Style: The system that has been adopted by SASOL is focussed towards building of a strong
foundation is that there can be visible leadership & high competency. They are also willing to
build up clear procedures and polices (Kasemsap, 2018).
Illustration 1: McKinsey 7s framework

Staff: Effective management of staff is a very critical activity for every organisation while
planing their global strategies such as there is need of proper cultural transformational and
attraction of high talent to engage all employees and then respect human rights so that they are
able to operate their facilities and deliver high growth.
Shared values: SASOL is a organisation that having major focus for sustainable development.
They are following a structured approach towards selection of the content and then confirming
its validity to make it understand to their stakeholders so that there can be proper solution to all
the challenges (Sustainability report, 2018).
Structure: the overall structure of SASOL is organised in tow major business units. There is
further classification based on regional operating hubs and there is a strategic business units that
has been built up separately for the customers who are facing any type of issues.
P4: Evaluation of various global operations & how the organisation is operating in the global
market
For the purpose of developing a detail overview of organisation operating in global
environment there is use of Hofstede’s model of national culture that consist six basic
dimensions as mentioned below:
Power distance index:
This is a dimension that is expressing the degree that is related with less powerful
member's of society and power may be distributed in a unequal manner (Keivanpour, Ait Kadi,
Illustration 2: Hofstede’s model

and Mascle, 2017). The major issue is how society is handling the inequalities that is present
among people. In SASOL there is a hierarchical order that is used as a part of further justification
and there is equal distribution of power and the scenario of demand justification.
Masculinity vs Femininity:
Masculinity refers to developing society's preference for achievement and assertiveness
for attainment of higher success. Femininity request the preferences for quality of life, modesty,
cooperation and caring.
Individualism vs collectivism:
Individualism is a framework that is having more preferences for a closely knitted social
framework where individuals are taking care of themselves and collectivism is related with
individuals willing to remain in a close knitted framework.
Long term vs Short term:
Long term orientation is used for having inclination for society and short term orientation
is having strong inclination for establishment of truth. Short term orientation is pertaining to
society and having inclination for achievement of higher truth (Pauwels, 2019). Globalisation
has resulted into SASOL adopting a long term orientation approach for society.
Indulgence vs Restraint:
It is revolving around the rate at which society is exercising a control over the desires and
impulses. Restraint refers to society suppressing gratification needs and having strict norms. In
SASOL there is more restraining factors as there are some strict norms that have to been
followed by the organisation while they are moving themselves to new countries that posses
completely different norms and legislations.
Uncertainty avoidance index:
This is a index that is expressing the degree of members of society that may feel
uncomfortable with ambiguity and uncertainty. The main issue is society enabling with future
prospectives.
An evaluation of ethical & sustainable factors for a organisation to be considered in the changing
global market.
Ethical globalisation:

It is related with policies of effective stakeholder management that has been develops by
organisation. SASOL is willing to develop some strategies that can helps them in expansion
producer to their countries like Australia and Canada for those there is a need to support all
stakeholder and society as large so that they can follow and adopt all ethical working practices
that are part of their organisation (Sustainability report, 2018). SASOL is focussing on their
values where they can enhance quality of lives of people and have potential to enable the process
of economic development and commitment towards supply chains and enabling the economies to
develop critical skills.
Sustainable globalisation:
SASOL is depended on various natural resources like crude oil, natural gas, coal & water
for all their business functions. Their activities may have a unattainable impact on the external
business environment. They are having high commitment towards minimising these impacts and
then recognition of challenges that are part of material environment (Reyes, Roberts and Xu,
2017). They follow policies towards transparency approach of environmental compliance.
Reporting against target of environmental incidents, water efficiency and improvement of air
quality. They are also striving towards health and safety impact of environmental performance
on their product development (Sustainability report, 2018).
TASK 4
P5: Assessment of how some of the factors can affect the process of decision making
Above discussed factors have affected the process of decision making as mentioned
below:
There has been a economic information that is adopted by SASOL where they are having focus
on procurement practices and providing them a profitable opportunity to drive towards economic
transformation. They are making progress towards Broad-based black economic empowerment
(B-BBEE).
Suppliers: There has been a implementation of line community supplier strategy for
achievement of preferential procurement towards micro enterprises and qualifying the small
enterprises. There is supplier development teams that is providing existing suppliers with

financial support and interventions to enhance the Present skill level of their suppliers (Stan,
2016).
Meeting commitments: There is a policy of SASOL that is focussing towards
incorporation of a coed of conduct and that is guided by UK guiding principles. SASOL is
having focus on conducting due diligence reviews of all new bushiness opportunities so that they
can avoid adverse human rights impacts on their service providers, workforce and communities.
Evaluation of effectiveness of decision making process
Decision making is a one of the crucial task of mangers in every organisation. This can
be understood with the help of strategy diamond that can be adopted by SASOL as part of
decision making process:
There are five major elements of this strategy:
Arenas: It will help in identification of areas where a organisation will be very active and
understand of the aspects such as core technologies, market segments, product categories, value
certain stages and geographic areas of SASOL.
Illustration 3: Decision making elements