Global Business Environment Analysis for SASOL Limited: Unit 18 Report

This report provides a comprehensive analysis of the global business environment, focusing on SASOL Limited as a case study. It begins by identifying the key drivers of global commerce, including cost, market, environment, and competition, and explores the impact of digital technology on business operations. The report then delves into the strategic challenges faced by organizations in a global context, such as compliance, economic factors, government restrictions, and the availability of financial resources, offering recommendations to overcome these hurdles. Furthermore, it examines the influence of globalization on organizational structure, culture, and decision-making, utilizing McKinsey's 7S model to assess the impact on strategy, structure, systems, shared values, skills, style, and staff. The report also discusses ethical and sustainable globalization, and different routes to internationalization, along with their associated barriers, providing a well-rounded view of the complexities and opportunities within the global business landscape.

Unit 18 – Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Key factors of cost, market, environment and competition...................................................1
TASK 2............................................................................................................................................3
P2. Strategic challenges...............................................................................................................3
TASK 3............................................................................................................................................5
P3. Influence of globalisation. ....................................................................................................5
P4.Ethical and sustainable globalisation......................................................................................8
TASK 4............................................................................................................................................8
P5. Different ways decision making can work effectively..........................................................8
P6. Routes to internationalisation along with barriers.................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment encompasses all the factors associated with internal as well as
external environment that influences working of any organisation in different situation
(Woerkom and Zeijl-Rozema, 2017). Global business environment includes environmental
factors of different countries where two or more business entities performs their operations
together on order to achieve mutual profits through exchanging products, services, information
technology, culture and so on that results in raising living standards of society and faster decision
making for improving economy of nation. To understand the concept of global business
environment, SASOL Limited is selected. The chosen organisation performs operations in
energy and chemical sector has expanded the business in various countries such as Gabon,
Mozambique, Australia and Canada along with this various provisions are formulated to expand
the business soon in different other countries. The present report discusses about key factors
which drive global commerce as well as trade, strategic challenges, ways in which global market
influences structure, culture and functions of organisation, influence of globalisation on
organisational decision making as well as strategy,. It also includes various routes to
internationalisation along with key barriers.
TASK 1
P1. Key factors of cost, market, environment and competition.
Concept of globalisation: Globalisation involves integration along with interaction
among individuals, businesses as well as government worldwide. It is considered as multifaceted
phenomenon that helps in boosting economic growth of multiple nations. This concept has
grown because of advancements in communication as well as transportation technology that
resulted in massive growth of international culture, ideas along with trade (Kannothra, Manning
and Haigh, 2018). The effects of globalisation as seen in developing as well as under developed
country which influences educational technology along with investment standards in positive
manner. On the other hand, the major negative impacts are visible in richest countries as the key
resources of developed country are used for the growth of different countries.
Key or driving factors: There are various factors that plays major role in carrying out
operations in effective manner that helps in sustaining in competitive market for longer time
period. Some of the key factors that drives global commerce along with trade are as follows:
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Cost: The cost driving factor is associated with global scope economies as well as
differential costs. Globalization process allows SASOL Limited to choose dispersing value
added or concentrating value added activities in order to achieve location advantages. The
company has access to multinational market along with human capital that impacts in selling
products in existing or new market in order to gain economies of scale that results in driving
commerce and trade. Global scope economies fosters operations in international business as
well as trade that drives the operations of SASOL Limited across multinational market.
Market: The key factors of market drivers are customer behavior as well as distribution
network structures. SASOL Limited delivers services to satisfy common requirements or
demands of targeted clients and offers existing products to new market segment that plays
important role in increasing sales performance and driving global trade and commerce. Market
drivers influences international economic integration of SASOL Limited with other economy
through reductions in trade barriers together with coordinating policies of other economy.
International economic integration benefits the business concern by reducing trade costs,
improves commodity availability, technology sharing together with market expansion n other
nations.
Environment: The key factors of environment that drive global trade along with
commerce are internal and external environment that impacts operations at great extent. Such
environment impacts on success of SASOL Limited by forcing managers to integrate with
changes according to requirements of political system, technology, international laws and hence
forth (Hunt and Raman, 2017).
Competition: Competition driver includes actions, strategies or policies of competing
firm that builds inter-dependency among geographical market. Marketers of SASOL Limited at
the time of planning to expand the business in new market conducts market research and
understand the competition level in the industry. High competitive diversity impacts on driving
competition edge that results in driving global trade. Due to the globalization, high competition
level is built where foreign direct investment encourages SASOL Limited interdependence
among distinct nations addition to companies that impacts on enhancement of business
operations in competitive world. The investment provides local economic advantages at multiple
locations, makes trading procedures easy, increases collaboration with other companies and
grabbing opportunities in competitive market.
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Impact of digital technology on global business operation: Digital technology has
resulted in various impacts on business operations. Digital technology helps any organization to
grab new opportunities by adopting e commerce technologies together with connecting through
customers through social media so to provide them detailed information about organizational
commodities that impacts on improving global distribution system as with such technologies or
media new customers are attracted and they demand more and to fulfill their demand or
preferences business has to adopt more chains of distribution systems. Adoption of such
technology at SASOL Limited impacts in positive manner as it helps in improving business
strategies, expanding promotional areas, dropping business costs, making easy communication
with customers and understanding their perceptions. All these leads towards expansion of
business and making more profits. On the other hand, it also results in negative impacts as it
increases dependence on technologies that decreases employee performances as well as increases
cognitive load on business operations.
TASK 2
P2. Strategic challenges
Every organization faces some challenges at the time of performing activities in global
economy. SASOL Limited operates business in various countries that results in facing strategic
challenges to accomplish objectives in effective manner. In order to expand the business in
global level, managers of SASOL Limited have analyzed various factors by using PESTLE
framework. Such framework is a strategic tool or technique that evaluates key factors of macro
environment.
Strategic challenges of globalisation: All the organizations whether small or large faces
some or other challenges at the time of operating at global level. Macro environment of business
resulted in creating large impacts on the aspects of growth and profitability. Some of the strategic
challenges faced by SASOL Limited are as follows:
Compliance and regulations: Different countries have different compliance as well as
regulations that are mandatory to be followed by any organization in order to perform activities
in particular country. As SASOL Limited performs business operations in various countries,
managers needs to comply with legislation, taxation laws as well as statutory export regulations.
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Understanding and following compliance as well as rules is a strategic challenge in front of the
company.
International economic factors: In order to perform day to day operations, business has
to concentrate economic factors pertaining in international environment. The economic factors
are associated with currency exchange rates, national income together with inflation rates.
Changes in such factors due to business cycle impacts the working of any company by
influencing customer spending as well as monetary issues at global level and hence are the
strategic challenges. For instance, SASOL Limited operates at global level and changes in the
international economic factors becomes strategic challenges to attain objectives.
Government restrictions: Different countries has framed different policies to perform
operations at the home country. Organizations if performing activities in different countries have
to go through the regulations and rules made by the government. For instance, government of
Australia has made certain restrictions on tariffs, import as well as export quotas addition to
subsidies that impacts on the operations of SASOL Limited. The strategic challenge is to
perform operations by following government restrictions and making desired profits by the
management of SASOL Limited.
Availability of financial resources: All the businessmen requires adequate funds to
conduct day to day as well as entire business activities in effective manner. In order to perform
the operations in rich countries introduction of adequate funds is very necessary. For example,
Australia and Canada comes under the category of rich country and SASOL Limited requires
huge investments to perform operations in systematic manner. Various funds are given to attain
license and patent rights for manufacturing of chemical substances by managers of the company.
Thus, the strategic challenge is to making available the funds required by managers of SASOL
Limited.
Recommendations to overcome challenges: It is recommended to financial managers of
SASOL Limited to overcome from strategic challenges that they should hire professional
accountants who can make available the required amount of funds as to conduct operations
without any hurdles and should make investments in such manner that befits company as well as
fulfill social responsibility (Amankwah-Amoah, Osabutey and Egbetokun, 2018). They should
also carry out market research to understand the perceptions of clients and should manufacture
and provide demanded products with the help of advanced supply chain technologies. The
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managers should implement digital technology to promote the products that will result in
improving organizational image in the society.
TASK 3
P3. Influence of globalisation.
McKinsey's 7s Model
Globalisation helps in grabbing various opportunities to a firm at the time of expanding
business into new market but also affects leadership, culture, governance and son on. In context
to this, corporate governance includes set of practices that are used by managers to manage as
well as control activities of business. Globalization has forced managers of SASOL Limited to
comply with corporate governance associated with international legislation as to meet changing
demands of customers. As to corporate with changes managers of the company have to modify
their leadership and management style which results in influencing staff members to perform
operations according to global requirements. In order to ascertain globalisation factors that
influences operations or functions of SASOL Limited, the executives should adopt framework of
McKinsey's 7s Model (Chandwani, Agrawal and Kedia, 2016). The model reflects
interrelationship of soft as well as hard elements. The applicability is as follows:
Hard elements:
Strategy (Governance): This element is related with analyzing the changes and
implementing appropriate strategy that helps in reducing barriers to achieve the objectives. The
organizational managers of SASOL Limited adopts strategy of penetrating pricing that helps in
setting reasonable prices in order to attract larger customer base. At the same time, leaders
adopts training and development programs that provides aids to workforce to work with new
culture as well as advanced technology to deal with critical situations at workplace.
Structure: Organizational structure defines the working culture. SASOL Limited
performs operations under hierarchical structure in which they lacks communication due to long
distance locations between top level management and lower level management. In order to fulfill
international requirements, executives needs to replace it with functional organizational structure
in which different functional departments will get appropriate information about new changes on
time and can deliver same to employees as to expand successfully.
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System: It is defines as the patterns or ways in which activities of any company are
performed. As SASOL Limited planning to expand operations at global level, managers needs to
replace old systems with new systems such as recruitment system, selection system, business
intelligence system, team development system and many more along with latest technologies that
helps in increasing quality of chemical products. It is very important to update the systems as per
the requirements of operating business at global level (Maak, Pless and Voegtlin, 2016).
Soft elements:
Shared values: Managers of SASOL Limited are mainly focusing on excellence along
with enthusiasm by adopting democratic style of leadership in order to satisfy basic needs of
staff members and providing favorable environment for the purpose of increasing shared
collaborations as well as performing activities with ethics.
Skills: It is very important to have highly skilled employees as to maintain performance
of business at the time of globalization. The skills of SASOL Limited members are
communication skills, decision making skills, presentation skills that helps in performing duties
and meeting requirements in effective manner.
Style: To manage all the operations as per the strategies, democratic leadership style will
helps in exchanging views, thoughts and ideas to face challenges and building positive employee
relations.
Staff: Staff members are key assets for any business. Hence, proper environment must be
provided to staff members. Staff members of SASOL Limited are experts who coordinated with
team members in order to conduct smooth business operations at global level.
Furthermore, in order to incorporate or modifying changes in existing work culture,
managers of SASOL Limited should also adopt framework of Hofstede's cultural dimensions.
The description is as follows:
Power distance index: In context to SASOL Limited, managers uses power distance
index to analyses acceptance of qualities as well as acceptance of inequalities at workplace. Such
index encourages situations of bureaucracy as well as power distribution among team members.
Uncertainty avoidance index: Such element is used to acknowledge tolerance of
ambiguity along with uncertainty (Ganamotse And et.al., 2017). The low index level of staff
members of SASOL Limited describes high tolerance of uncertainty and acceptance of new rules
where as high index level shows low tolerance of uncertainty, ambiguity.
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Individualism versus collectivism: In reference to SASOL Limited, collectivism is
followed at workplace that helps in managing as well as adopting relevant cultures that benefits
both individuals and organization.
Masculinity versus femininity: Managers of SASOL Limited prefers towards feminity
rather than masculinity as to build effective relationships and empower womens at workplance. It
results in bridging the gap between men and women in order to reduce situations of biasness,
unfair or discrimination.
Pragmatic versus normative: in context to SASOL Limited, magares adopts normative
approach as to provide values, strong conviction and rights to employees. More emphasis is
given to Why rather than What is happening that motivates other to grow as per the global
environment.
Indulgence versus restraint: Managers of SASOL Limited chooses indulgence in place
of restraint that provides freedom to conduct activities as well as to speak that results in
enhancing communication skills. Such concept focuses towards employee happiness to perform
operations in global market.
Thus, analysis of all such dimensions helps in making modifications in work culture
according to short term as well as long term orientation that provides higher beneficiary results.
P4.Ethical and sustainable globalisation.
Ethical globalisation is defined to integration, interaction and transforming of
information, goods or services in ethical manner at the time of performing operations in
international market. Some of the ethical factors that managers of SASOL Limited have to
consider while operating internationally includes working standards, equal opportunity,
outsourcing, human rights, environment, workplace diversity and supervisory oversights. For
such, managers of SASOL Limited are required to establish effective corporate governance to
run the business and gaining more beneficiary results from globalisation.
Sustainable globalisation refers to fundamental transformation in context to approaches
adopted by people to perform business activities at global level. Sustainable factors hat requires
consideration of management of SASOL Limited while performing business at international
level includes optimising usage of scarce resources, eliminating wastage, reducing pollution,
recovering energy and recycling resources. Likewise, it helps the managers of SASOL Limited
in breakthrough to develop sustainability as well as fundamental transformation to achieve
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competitive advantages at the time of doing business in global context. Thus, in the present
world, performing activities by considering sustainable as well as ethical globalisation is viable
for the organisation.
Influences of ethical and sustainable globalisation on organisational functions are as follows:
Human resource management: The staff members are key assets of any business so it is
very important for managers of SASOL Limited to hire new talent and modifies their existing
human resource practices for the purpose of meeting objectives of company in effective manner.
In context to this, making modifications in policies will results in developing ethical practices
that can impact on working procedures and increases motivation of labour as well (Boddewyn,
2016). By providing extra benefits such as rewards, flexible working hours and quality at
workplace according to global standards will results in sustainability of business for longer time
period in global market.
Finance: In order to enter into emerging market managers of SASOL Limited requires to
raise financial resources from global market as well as optimise available financial resources in
ethical manner that impacts in performing entire activities, tasks and operations in well
structured aspect. To achieve sustainable growth, managers are required to make large
investments that can impact on financial problems as well as increasing production costs.
Social: Social factors includes economic status, race as well as ethnicity together with
social taboos. By carefully understanding preferences as well as demands of society and
delivering products accordingly by SASOL Limited can upgrade the aspects of living standards
of society and can help the company to implement ethical practices in order to develop
infrastructure that increases business sustainability in context to international.
Hence, from the above evaluation it can be said that making modifications or
improvements in current functions, management of SASOL Limited can gain benefits to perform
operations in global market in successful manner. Such procedures will aid towards performing
all activities in ethical manner as to sustain long term position.
TASK 4
P5. Different ways decision making can work effectively
In order to expand business towards new market it is very important to respond all factors
that has chances to impact the business in negative manner. Some of the ethical addition to
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sustainable factors that influences decision making procedures together with strategies of the
organisation are working standards, outsourcing, workplace diversity, eliminating wastage,
recycling resources. If decisions or strategies are not framed as per the factors then it directly
impacts on implementation as well as following strategies towards goals. For instance, strategies
framed by top management of SASOL Limited are against the working standards or organisation
is forcing workforce to perform work for more then the standard time then it is unethical way
that can impact on more attrition of employees and decreases productive of the company that
will impact on decision making addition to framed strategies. In addition, if organisation has not
opted any of the provisions to recycle materials or resources and making more wastage then the
managers of the entity have to bear more losses then can also impact on decision making as well
as strategies to make more profits. Managers along with leaders makes decision on time by
formulating effective plans, policies and strategies along with implementing the plans according
to the requirement of globalisation. Different ways of decision making are as follows:
Guardian: Such type of decision making helps in formulating effective decisions.
Managers of SASOL Limited considers fact based information in order to take decisions and
develops plans that effectively works in global market (Kostova and Hult, 2016).
Visionary: Managers of SASOL Limited establishes clear vision for the purpose of
framing decisions. They inform all members of organisation and provides detailed information
regarding how to implement modified or new changes that results in working effectively while
entering in new global market.
PESTLE Analysis of SASOL Limited:
Political factors: It includes taxation, government policies, funding grants, political
stability and so on. SASOL Limited is an energy and chemical company that performs operations
in many countries (Pinfield, Salter and Bath, 2016). If managers formulate provisions to trade
with countries that has stable political system then there are chances to reduce risk of changes in
policies framed by government authorities in relation to energy and chemical substances or
products trade that can impact on performing operations in stable manner.
Economic factors: These factors includes interest rate, competency norms, inflation rate
and many more. If there are sudden changes in such factors influences customer spending and
monetary issues that impacts on achieving competitive advantages of company. In reference to
SASOL Limited, managers frames decisions by carefully examine factors related to customer
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purchasing power along with growing rates of energy and chemical products for the purpose of
forecasting growth trajectory.
Social factors: Social factors are associated with population growth rate, attitude of
customers, income statistics, perception of audiences and social beliefs. All these factors helps in
understanding requirements, demand and preferences of marketplace. If perception of customers
changes and they demands more products of selected company then it impacts on improving
distribution of wealth to develop favorable marketplace and expansion of operations to generate
more profits.
Technological factors: This factors includes new advancements or changes in
technological circumstances that results in changing working system of any industry. By using
updated or technological aspects, marketeers of a business can promote their products in such
manner that provides adequate information to end users of the products at distant locations. Due
to the advancements in technological system, SASOL Limited adopt new as well as advance
technologies such as Search engine optimization as well as Artificial Intelligence that impacts on
increasing productivity along with profitability in competitive marketplace by fulfilling
preferences of clients on accurate period of time.
Legal factors: It includes law determinants, legislation, lax regulations that results in
decision making as well as market actions in particular country. All legal elements should be
considered by all organizations in order to operate businesses in appropriate manner. Following
all legislation as per governed by regulatory authorities results in gaining recognition from
political authorities and plays important role in influencing working in any sector. If any new
legislation or laws are governed and managers of SASOL Limited are forced to adopt them then
it will impact on formulating new strategies as well as making modifications in the existing one
and at the same time affect productivity of selected company (Reyes, Roberts and Xu, 2017).
Environmental factors: there are various environmental situations that impacts on
performance, growth and survival or any company. SASOL Limited performs operations related
to energy as well as chemical which are affected by sustainability concerns, waste reductions and
so on. By following all environmental laws and using renewable resources or technologies that
helps in recycling of wastes results in impacting towards positive manner as such technologies
are good influencers that creating positive image in the competitive market.
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P6. Routes to internationalisation along with barriers.
When an organisation enters into a new market at global level they experiences various
barriers to achieve high profits. Some of the barriers in front of SASOL Limited are as follows:
Financial barriers: To expand the business in new market SASOL Limited is facing the
financial barrier. They do not have adequate funds to invest to conduct market research.
Managerial barriers: Various difficulties arises at the time of making changes in
organisational structure, work culture, working procedures and many more. All such difficulties
acts as barriers for managers of SASOL Limited to expand the business in global market.
Market based barriers: These barriers are related with inappropriate market
information, legal entry restrictions, monopoly in the market and so on. Having inappropriate
information about perceptions, demands of customers and market acts as a barrier to perform
business operations internationally.
For the purpose of removing, reducing or elimination such barriers of internationalism
managers of SASOL Limited should adopt best routes to internationalism. Some of the routes to
internationalism are as follows:
Merger and acquisition: Such route refers to consolidation of organisations as well as
assets between two companies (Yin, 2017). It benefits in merging as well as acquiring human
resources along with capitals in order to work effectively in global market. It results in increasing
costs, reducing risks, increasing market share and more at the time of move business
internationally.
Joint venture: Another medium to go international in which more than two businesses
forms contractual agreements with the aim to combine business operations for particular time
period is joint venture. It benefits both companies in sharing skills together with assets and funds
of one entity with another. On other other, both companies are equally responsible to attain
profits or bearing losses. SASOL Limited can also makes contractual agreements with other
companies performing same business in order to achieve targets in specified time limit.
Licensing: Licensing refers to making contractual agreements with already existing
company that is performing operations in new market. It reduces chances of risk of losses but
charges royalty for using brand name to sell the products.
Franchising: An arrangement where one company provides rights to another company
for using trade name together with systems of existing business in order to produce goods
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according to specifications is franchising. If SASOL Limited adopts such route then they have to
make agreements of franchise with an entity in another nation.
From the above routes, managers of SASOL Limited can adopt merger and acquisition
method which will help in globalising the business with less chances of risks (Rohlfer and
Zhang, 2016).
CONCLUSION
From the above report it can be concluded that globalisation plays essential role in
integration and interaction of people, business as well as government that provides various
opportunities to enter into new global market. Key factors that drives globalisation are cost,
market, environment and competition. Strategic challenges of globalisation are compliance and
regulations, availability of financial resources and so on. PESTLE analysis is done to understand
the impact of external factors on business. McKinsey's 7s Model is applies to analyze the
interrelation of hard elements and soft elements. Hofstede's cultural dimensions is used to
evaluate cross cultural communication in the global environment. Barriers to internationalization
are financial barriers, managerial barriers and market based barriers. Organization can adopt
methods of merger and acquisition as well as licensing to expand the operations internationally.
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