Analysis of Globalisation Drivers, Challenges, and SASOL's Strategies

This report provides a detailed analysis of globalisation, focusing on its drivers, challenges, and impact on SASOL Limited, a major energy and chemical company. The report begins with an introduction to the concept of globalisation, followed by an examination of the key driving factors, including technology, competition, market dynamics, and government policies. It then explores the significant impact of digital technology on globalisation, including e-commerce, customer engagement, and information technology. A PESTLE analysis of SASOL is presented, evaluating the political, economic, socio-cultural, technological, environmental, and legal factors affecting the company. The report identifies the challenges of globalisation for SASOL and offers recommendations to overcome them. Furthermore, it examines the influence of globalisation on SASOL's organisational governance, leadership, structure, and culture, as well as ethical and sustainable factors. Finally, the report assesses the advantages and disadvantages of strategic expansion routes taken by SASOL.

DRIVERS AND
CHALLENGES FOR
GLOBALISATION

Table of Contents
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
1. An introduction to the concept of globalisation.................................................................2
2. Driving factors of globalisation..........................................................................................2
3. Significant impact of digital technology upon globalisation..............................................4
4. PESTLE analysis of SASOL Limited................................................................................5
5. Challenges of globalisation for SASOL Limited...............................................................7
6. Recommendation to overcome the challenges...................................................................8
TASK 2............................................................................................................................................9
1. Structure, Culture and Governance of SASOL Limited.....................................................9
2. Influence of globalisation on organisational governance, leadership, structure, culture and
functions...............................................................................................................................10
3. Ethical and Sustainable factors that has to consider by the organisation in global market10
4. Assessing how Ethical and Sustainable factors affect decision making in global context11
5. Advantage and Disadvantage of strategic expansion:......................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
Globalisation can be defined as growth to a global or worldwide scale. The chosen
organisation in the report on 'Drivers and Challenges of Globalisation' is SASOL Limited, a fast
growing energy, oil and chemical company. It is based in South Africa. The study will made in
two parts. The first part will present the concept of globalisation and explain driving factors of
globalisation. The significant impact of digital technology will also evaluate. PESTLE analysis
of the organisation and challenges of globalisation will present with practical examples. Lastly
the study will cover the necessary recommendation to overcome the challenges.
The second part will evaluate how globalisation influence the governance, culture,
structure and functions of Sasol as well as it will also analyse influence of ethical and sustainable
globalisation on the functions of the company. Lastly the report assess the best strategic
expansion routes that was taken by the organisation including its advantage and disadvantage.
TASK 1
1. An introduction to the concept of globalisation
Concept of globalisation
Globalisation is a term that defines the growing interdependence of the economies,
cultures and population of the world, brought by cross-border trade in service and goods. In other
word globalisation is the spread of goods, technologies, information across the border of nation
and culture. It deals with the increasing breakdown the barriers of trade and integration of global
market. It is an ever changing element that pressured by international environment and factors.
2. Driving factors of globalisation
Technology
Technology shaped and set the foundation for modern globalisation, thus, faster and
cheaper technological advancement in the digital global economy of the internet era has broken
the national barrier and encourage global business as well as e-commerce. It allows integration
of national market with ease. The technological advancement has led to growth of different
sectors of economies throughout the world. Inventions in the area of telecommunication and
microprocessors allow effective communication at low cost. Technological factor can be a
positive driver or may be a negative barrier in the globalisation of Sasol. They need to improve
their transportation technology, allow communication to effectively being the global market
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(Gakusi and et. al., 2015). The advantage of this driver is that it allows integration of national
market with ease and is beneficial for the organisation to enhance their technological capabilities
that makes the globalisation process easy and give advantage to the company to make their
position in globalised market effectively. The disadvantage of technological factor is that the
globalising economy and technological change requires highly skilled labour force.
Competitive drivers
In the technological advancement market, competition is increasing and organisations are
facing threat of rivalry. More competitors gave the opportunity to the company to gain more
competitive advantage. Competitive diversity, high level of trade and interdependence influence
industry for globalization. Mostly this is the main reason that drive organisation towards
globalisation. Globalisation removes the commercialism barrier that increase the rate of trade
within the countries. It is beneficial for Sasol as it makes distribution channel better that
effectively protect the goods and services and give company a competitive edge. Thus, the
organisation enter other countries to expand their market share. This is an advantage for Sasol as
it makes distribution channel better that effectively protect the goods and services and give
company a competitive edge. Depending and affecting from competitive driver is can be a
disadvantage for the company as it present the organisation weak in the market.
Market drivers
Opportunities for growth are limited due to saturation of domestic market and many
organisation select the way for global expanding. Market drivers that forces an organisation to
expanding global are; common demand of customers as well as convergence of lifestyle and
tastes, cultural diversity, presence of potential global consumers, chances of transferable
marketing, etc. encourage companies to expand its market in the global context. Sasol is also
driven for globalisation due to high demand of oils and chemicals across the borders that is
produced by the company. With globalisation it is essential for the company to understands and
implement effective strategies that standardize elements of the service and products without
sacrificing local preference and responsiveness (Ulusoy and Özdurak, 2018). This factor drive
globalisation decision of Sascol as many countries have demand of oils and chemicals that is an
opportunity for the organisation to grab the global market that positively impact on organisation's
sales. Benefit of the market driver is that it enable the organisation to have in-depth knowledge
of where the demand is arising and deliver the services accordingly. This factor drive
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globalisation decision of Sascol as many countries have demand of oils and chemicals that is an
opportunity for the organisation to grab the global market that positively impact on organisation's
sales. The only disadvantage of this factor is that company can only operates in rich country
market that dominate world trade.
Government driver
This driver include; lack of favourable trade policies, common marketing laws and
regulations, compatible technical standards, affects all the elements of global strategy and that is
essential in shaping the global competitive environment in Sasol. The other drivers in
government that influence the organisation to globalisation such as; uniform or similar marketing
regulation, reduction in tariff barriers, declination in the role of government as producers and
customers. It can be a barrier for the Sasol to expand their market internationally because of
change in policies and laws of various countries may impact on the cost of goods. The
disadvantage of this driver is that it can be a barrier for the Sasol to expand their market
internationally because of change in policies and laws of various countries may impact on the
cost of goods.
3. Significant impact of digital technology upon globalisation
Globalisation is the process of international integration that arise from the interchange of
world in products, views, ideas and in other aspects. The digital technology reduce the time
aspect of analysing any areas' capitalisation and it enhances the communication that is beneficial
for the company. Through internet, physical distance is less that encourage the communication of
people that open up the market for the company to expand its market in other region.
Encouraging e-commerce
The technological advancement allow organisation to provide their services and products
in many countries through internet without building the physical structure. It is beneficial for
SASOL as it reduce the cost and increase the activity across the border. The technology makes
easier and hassle free process of the import and export of the products and services from
different countries. The world wide web has reduced the barriers of time and place in business
dealing. Buyer and seller make transaction at any time and from any place tat makes the
globalisation process effective (Arslan and et.al., 2018).
Engagement
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Digital technology encourage the marketing activity and reach of the company. It makes
the process easier to introduce and promote the product and service to the community easily that
ensure the successfulness of globalisation. It is beneficial for better engagement with the
potential customers and company can analyse the demand and need of oil, gas and chemical as
well as it help in allowing the feedback from the customers that will help the company to make
effective strategies.
Information technology
Digital technology make the process of collecting the data of customers as well as its
other branches in every country easier. They can gather buying behaviour of consumer trough
internet. SASOL Limited can also manage the communication process through the technology in
its all the branches in different countries (Beumer and et.al., 2018).
Along with it, they need to develop more strategies to step up with the digital technology.
For example; organisation can develop website from where the potential consumers can buy the
product as well the payment system that they can receive the payment.
4. PESTLE analysis of SASOL Limited
PESTLE analysis is a strategic tool to analyse the macro environment of the organisation.
PESTLE stands for; Political, Economic, Socio-Cultural, Technological, Environmental and
Legal factors that affects SASOL Limited.
Political- SASOL Limited operates in leading incorporate oil and gas industry in more
than a dozen countries and expose itself to various types of political environment and political
system risks. For example; many countries have high taxation rate that demotivate the
organisation from maximising their profits. Before entering into new market or planning to
globalising, organisation need to analyse following factors; Level of corruption in the country,
political stability the level of importance of major integrated gas and oil sector in the economy of
a country, intellectual property protection, the laws that the country enforces, etc.
Economic- The searching for petroleum has left a big influence on the economies of the
nations, where it is recovered and refined. The OPEC nations have generated huge revenues
through the sale of oil and gas to other nations as it is essential for various commercial and
domestic use. Economic factors are those that pertain to the economy of the specific country.
This macro environment factor include; inflation rate, interest rate, foreign exchange rate,
competition norms impact the competitive advantage of SASOL Limited. The factors have
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impact on aggregate demand and investment as well as to the climate and culture of business.
The organisation need to consider various points before globalising such as; the rate of GDP
growth in the particular country, exchange rates and stability of host country currency, labour
cost and the productivity in the economy (Gakusi and et. al., 2015).
Socio-Cultural- The social factor in the oil and gas industry demonstrate the income ,
migration, culture, religion, demography and idealogical views on the problems. The
professional and skilled employees work in this particular sector and earn good wages along with
relaxing working hours. It directly reflects to the society, where the SASOL Limited operates in,
attitude, belief and value that is hold by the majority of population as a community. The socio-
cultural factor have impact on operational aspect as well as on marketing aspects of the
company. It is essential for the industry to understand the lifestyle, demand fluctuation, level of
education of the customers that would help the marketing manager of SASOL Limited to design
both marketing message and products/services that will lead the company towards the success.
Before globalisation followings are the points that should consider by the company; Class
structure, culture, demographic level of community, etc. that help the organisation to meet the
consumer need effectively.
Technological- While talking about technological factor, it refer to various technologies ,
ways and techniques that can influence the business operations or activities. It can also affect the
company with the requirement to get modern technology, learn new and innovative techniques as
well as use different methods. This factor can rapidly dismantle the structure of price of the
industry in very short amount of time. Thus, it becomes more important for the company to
constantly and consistently innovate that help in maximise possible profits (Larch and et. al.,
2016). The technological factor have positive impact on the globalisation context of the
company. The company should develop effective strategies and encounters new technology to
break down the impact of new technology made by its competitors globally. This factor have
major impact on cost structure of integrated oil and gas industry.
Environmental- The geographical position of the oil reserves and refinery has a high
impact on the business activities of the oil and gas companies. The recent report of OPEC
demonstrate that most of the gas and natural oil is manufactured in the nations like Kuwait,
Saudi Arabia, Iran, Russia etc. Various markets have different environmental standards that can
impact the profitability of the company. SASOL Limited affects from different environmental
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laws and liability laws in various countries as the company is global industry. The oil, gas and
chemical that are produced by the enterprise have negative impact on the environment and in
return the build in policies and laws in specific country may place a financial strain on SASOL.
Furthermore, the weather condition may affect the transportation of the organisation for both
resources and finished product, etc (Mondliwa and Roberts, 2017).
Legal- As the Sasol Limited is a global company thus, the government institution and
frameworks are not enough to protect the intellectual property rights. The legal factors that may
affect the company are; intellectual property laws, data protection laws, discrimination law,
health and safety law, etc. should be consider to maintain and follow the rules and regulations of
various countries.
5. Challenges of globalisation for SASOL Limited
As the company do business in new global markets, they may encounter several
significant challenges;
Cultural differences- The differences of culture may affect the globalisation strategy of
SASOL Limited. Customers and workforce have cultural and religious differences that can a
hurdle in operates globally. Cultural differences also are responsible for different mind set and
perspective whether they are employee or consumer. Different mind-set of consumer comes as a
barrier in fulfilment of the need and requirement and in the context of employee can creates the
confusion and conflict at the workplace. For instance; SASOL Limited is working in America,
some workforce is African and obvious they need the workforce of the region, it can differ in the
way of thinking of both side of employees regarding; decisions, strategies, etc. that can be a
challenge for the company.
Shortage of resources- Shortage of the necessary resources can became the hurdle in
globalisation and imbalance of the organisational activity. Globalisation can build a gap in
infrastructure and technologies that have a greater impact on the organisation. It is also
challenging for SASOL if they are planning to expand their market in financial and technological
backward nation. It makes the operational process difficult and can have impact on the sales.
Resources not just meant by human resources or any other resources within the company it also
means by the available and enough resource in the selected country that are essential in operating
in new market such as; infrastructure, transportation, communication, networks, etc (Mondliwa
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and Roberts, 2019). Resources include; natural resources, Human resources, capital resources as
well as entrepreneurship.
Lack of skill- It is the major challenge that may be face by the company if expand in new
market. Main problem in globalisation is lack of skills and knowledge of oil and gas industry
may affect and control the expansion as it can affect the brand image and the overall operations
of the company. This challenge limits the operations of the organisation and can make impact on
the cost if they give training to the employees of other country or ire their people to the area of
new market.
Regulatory obstacles- It is the major challenge that can be faced by any company to
globalise. Regional laws and policies by national government in different countries have a barrier
in front of SOSAL Limited to globalise effectively. It leads to uncertainty in rapid growth
markets. Along with it, the availability of oil and gas is limited that is challenging for the
company. The restriction of oil and gas as well as for the chemical can be a hurdle for the
organisation.
6. Recommendation to overcome the challenges
To overcome the obstacle of regulatory, company have to adopt global platform for
making project portfolio and they have to gain greater visibility to overcome regional barrier.
They should make contingency plans concentrating on regions and nations.
To overcome the challenge of cultural difference organisation must be able to refine
portfolio management and develop infrastructure that maintain the diversity of international team
as well as they should empower local delivery.
To overcome the lack of skill in the people that are going to work in the company,
SASOL Limited can give the training in the needed sector to make them effective (Sloan, 2018).
To overcome the challenge of shortage of resource, organisation should analyse the
particular area to ensure that they can have necessary resources of transportation, human
resource, etc.
Effectively overcoming the challenges can help the organisation to reduce the barriers
that can come in the way of globalisation.
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TASK 2
1. Structure, Culture and Governance of SASOL Limited
Sasol Limited is an integrated chemical and energy company in South Africa. The
industry operates through exploration, mining, Base chemical, performance chemical segment,
energy. It explores and produce in South Africa, Canada, Australia, Mozambique, Gabon. They
also known for markets and sells gas, liquid fuels and electricity.
Organisational structure refers to the framework that helps an industry to determine its
line authorities, communication and allocates rights and duties. The structure of the company is
organised into four customers facing strategic business unit, two upstream business units and
three regional operating hubs. It is value-based organisation that is committed to high standard of
business ethics and integrity. The structure starts from the top positioned member that is the CEO
and director of the company- Mr. Stephen Russel Cornell and Mr. Bongani Nqwababa including
there are 15 more executives and non-executive directors (Sasol Limited, 2019). Sasol's ordinary
shares are listed on the Johannesburg stock exchange operates by JSE limited and on New York
Stock Exchange.
Organisational culture refers to the set of beliefs, values and assumptions that shared by
members of Sasol. The culture of the organisation is safe, healthy, productive and engaged
workforce with required skills and experience and knowledge. The purpose of the company is
“To create superior value for our consumers, stakeholders and shareholders”. Through our
talented people, we use selected technologies to safely and sustainably source, produce and
market chemical and energy products competitively. The vision of the organisation is to be a
leading integrated global energy and chemical company. Organisational governance is a set of
processes, policies and laws, customs that affect or control the procedure of the operation of
Sasol. To understand structure and culture McKinsey's 7s model is applied on Sasol limited;
Tom peter and Robert waterman is describes this model as a framework for organizational
effectiveness and for this seven internal factors are aligned and reinforced in organization (Tur-
Porcar, Roig-Tierno and Llorca Mestre, 2018). These are as strategy, structure, system, shared
values, skills, style, staff.
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2. Influence of globalisation on organisational governance, leadership, structure, culture and
functions
Various organisation have different goals, according to the goals the leadership,
governance, structure and culture varies of the company. Sasol limited is high growth and
developing company in South Africa and now it develops a plan to participate in global trading
and commercialisation. To evaluate the influence of globalisation. To measure the organization
influence Hofstede's theory will apply, Greet Hofested describe this theory as a framework for
cross cultural communication. This helps to identify effects of a society's culture on the values of
its members. This theory proposed four dimensions such as individualism-collectivism,
uncertainty avoidance, power distance and masculinity femininity. Individualism-collectivism
explains the degree to which people in a society are integrated into groups this dimension in
Sasol emphasizes “I” versus “We” in its counterpart. Where as Uncertainty avoidance is a
society's tolerance for ambiguity it means it shows acceptance of a society. In this a lower degree
in this index shows more acceptance of different thought and ideas. Hofested identify strength of
social hierarchy through power distance means identify the extent to which the less powerful
members of organization accept and expect that power distributed unequally. Masculinity define
a preference in society for achievement, heroism, assertiveness, and material reward for success,
and feminine describes that women in the respective societies tend to display different values.
3. Ethical and Sustainable factors that has to consider by the organisation in global market
Ethical and sustainable factors are essential to be consider while planning for
globalisation. Business ethics refers to contemporary organisational standard, sets of values,
motives, way of functioning, norms that govern the actions and behaviours of an individual in
the organisation. Business ethics ensures that a certain required level of trust that exists between
consumers and various forms of market participants with businesses as well as it is essential to
consider by Sasol and operate under the law of ethical factors.
Sustainability is an enduring and balanced approach to the economic activity, societal
benefits and environmental responsibilities. Globalization is the growing economic
interdependence of countries worldwide through the increasing volume and variety of cross
border goods and services. Where as sustainable development means the development of
organization which lasts. These are some factors which can influence Sasol
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Make wider use of markets
Strengthen decision making process
Harness of latest technology
Manage links to global economy and others
Sasol can represent itself in global market by improving the quality of products and relationship
with suppliers, improving human resource management according to requirement of
organizational change, implementing the organizational change process in Sasol limited by
increase the business sustainability. These are challenges for Sasol in global market such as
corporate social responsibility, ethical policy tools for sustainable development and others.
4. Assessing how Ethical and Sustainable factors affect decision making in global context
Each factor affects Sasol limited decisions it can be either positively or negatively. There are
some ethical factors are discussed which affect decision making in global context like values,
personal goals, morals, personality of individual, individual judgement, business ethics, ethical
behaviour, behaviour of person and others they affect a decision making as individual and group
both. Sustainable factors which affect business are balance economic, social and environmental
factors, equal harmony, natural resources and others. These are factors which affect business
internally and externally these are uncontrollable factors for Sasol limited and they affect
decision directly and indirectly manner. In global market ethical behaviour of organization is
based on employees who are working in this. And sustainable factors are which stays for long
time and out from control of Sasol. In global market these factors are very crucial. Because a
growth of organization is based on all elements which related to organization.
5. Advantage and Disadvantage of strategic expansion:
Advantages of strategic expansion help to attract new customers, economies of scale that
it is helpful to reduce the potential or one product or operating in multiple markets with many
products. Establishing multiple revenue streams can be a disadvantage also for Sasol in global
market because it helps to earn more profit by different sources. When a strategy is expanded in
global market then offers a branding opportunity can also be a big advantage for Sasol also
because business growth are not limited to revenue, revenue diversification can be possible
through offering a branding name (Tsangas and et.al., 2019).
Disadvantage of expanding a strategy can be shortage of cash, compromised with quality,
loss of control, increased capital requirements, increased staff turnover and others. Because these
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factors affect organization negatively if Sasol compromised with quality than customer loyalty
will be reduced. Financial challenges also become disadvantage because if any financial issues
are present then it affect productivity and quality of products. Right strategy must be applied at
right time otherwise it become disadvantage for organization in place of advantage.
Strategy expansion is good and bad for Sasol because some factors of this are work
according to situation and some are against to Sasol.
CONCLUSION
From the above report it had been concluded that globalisation is the reason behind the
success of SASOL limited. There bus are many driving factors such as; technology, competition,
market, cost, etc. that force the organisations towards the globalisation and many challenges such
as; language barriers, cultural difference, lack of skills, etc. can be faced by the organisation to
globalisation but they can overcome the challenges and hurdles with effective strategies. It had
also been seen that the macro environment including political, technological, social and
economic factors also responsible in affecting the globalisation decision of Sasol.
The report stated that governance, culture, structure of the company is based on their
goals and values and it can be affected by the globalisation
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Sasol Limited. 2019. [Online]. Available Through:
<https://www.sasol.com/about-sasol/company-profile/leadership/sasol-limited-
board#parent>.
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