Global Business Environment: Challenges and Opportunities for Sasol

This report provides a comprehensive analysis of the global business environment, focusing on its impact on organizations. It begins with an introduction to the global business environment and the factors driving globalization, emphasizing technological advancements and economic integration. The...Read More

GLOBAL BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
• INTRODUCTION
• MAIN BODY
• CONCLUSION
• REFERENCES

INTRODUCTION
• Global business environment is
primarily the environment outside the
home country which influences decision
making of the organizations and thus
shows the way for utilizing resources.
• This presentation gives a brief about
factors driving globalization, PESTEL
analysis of Sasol limited and strategic
challenges faced by organizations.

COMPANY OVERVIEW
• Sasol limited is basically the energy as
well as chemical company being
established in 1950.
• The company has its headquarter in
Sandton, South Africa and currently
operates in more than 33 countries.
• Company is listed in New York stock
exchange and conducts operations related
to fuels and oil.

GLOBALIZATION
• Globalization is basically the process and
method of integrations as well as interaction
among individuals, organizations as well as
government of different countries which drives
the international trade (DOH, MCGUIRE AND
OZAKI, 2015).
• In short, globalization is predominately the
spread and distribution of products and jobs
across the borders and cultures.
• It addresses the interdependence of the nations
across globe which fosters free trade.

DRIVING FACTORS OF GLOBALIZATION
• There are various factors which drives the globalization in
different direction and these factors not only affects the entire
society but also the wide number of organizations. the various
driving factors are
• Technological advancement
• The rapid as well as the sustained technological changes which
has occurred since the inception of globalization has eventually
decreased the cost of interacting, communicating as well as
transmitting the information and data which is sometimes
known by the name demise of distance.
• This is one of the key factor which has drive the globalization
in a positive direction. it is considered as one of the major
facilitator as well, as stimulator within globalization process.

CONTINUED
• Economic integration
• With the development of minimum efficient
scale(MES) which is associated with some of the
industries, the domestic markets are also able to
satisfy the various selling needs within these
industries.
• This economic factor is one of the most
remarkable factor which has stimulated
globalisation and has helped in its development.
• The economic factors mainly involves lower
trade as well as investment barriers.

CONTINUED
• Cost
• This is the another key stimulator within globalization process
which has assisted the wide number of organizations.
• Because of containerisation as well as other efficiencies, the cost
of the ocean eventually came down which helped in fostering
globalization.
• This in turn helped to bring costs within country of
manufacturing much closer to cost in import and export.
• Therefore, this made the markets more stable and constant
globally and helped Sasol and wide number of organization to
trade their products and export them at much lower cost.

PESTEL ANALYSIS OF SASOL
• Political factors
• various political factors like tax rate, political stability, foreign
trade policy etc. impacted the company to a great extent.
• positive effect- the decreasing tax rate in the country has
benefited the organization in a great way. due to low tax rate,
company is able to import and export the various products
across the various countries (HAMILTON AND WEBSTER,
2018).
• Economic factors
• some economic factors like employment rate, foreign exchange
rate, interest rates etc. affects the company in a great way.
• positive effect- the low interest rates within the country has
been advantageous for the company as they are able to take
loans easily from banks and financial institution at low rates.

CONTINUED
• Social factors
• Various social factors like lifestyle, culture, health consciousness,
attitude has affected Sasol to a great extent.
• Positive effect- the growing awareness of the customers for health
standards and environmental protection has benefited the company in a
great way and thus increased the sale of their energy efficient products.
• Technological factors
• These factors consist of automation, r & d, innovation, online demand
etc. have influenced the organization in a great way.
• Positive effect- the recent technological advancement for reducing the
emission of harmful gases and the contaminants have ultimately
increased the revenue of the company and has increased the sale of
liquid fuel.

CONTINUED
• As the company has expanded into various
countries like Mozambique, Canada, Gabon
and Australia thus the political, economical,
socio-cultural factors within these countries
are different (SALVATORE, 2015).
• For example in Australia, the political
situation in not stable enough due to high
corruption and changing government thus
this will affect the operations of Sasol in
great way.

CHALLENGES OF GLOBALISATION
• Organizational structure
• This is one of the most important challenge
which the organizations are facing. while
operating in different regions, it becomes difficult
for the organization to adopt the new
organizational structure and modify the entire
value chain.
• As the expansion required huge amount of
investment thus it becomes challenging for
organizations to set new business unit and
manage it.

CONTINUED
• Challenges and opportunities faced by organization
• Opportunities
• Diversification
• Due to the impact of globalization, Sasol has been able
to expand.
• Thus, globalization has presented the opportunity to
Sasol for diversifying in wider geographies.
• As globalization has given a kick to free trade and
reduction in the cost of transportation, this has provided
a global opportunity to Sasol for expanding it's supply
chain across the globe.

CONTINUED
• As Sasol has expanded in various countries thus
it has presented a wide range of opportunities for
it like it has helped the company to diversify its
business and thus serve the new customers
(HOOPER, 2016).
• It has provided the opportunity of competitive
advantage to the company due to its expansion.
like in Australia, company has entered with the
new product line which has enabled it to target
the new customer base.

RECOMMENDATION
• As the company faces wide variety of challenges and thus
this might hinder their operations, it becomes highly
important for Sasol to design various strategies for
overcoming these challenges.
• The most important risk and challenge which the company
might face is market entry and the cost of investment
(AITHAL, 2017).
• When the company will expand in wider geographies, then
they will incur a high amount of expenses in setting new
business unit, equipment's, structure etc.
• Thus, in order to overcome this challenge, Sasol should
manage their financial resources appropriately and thus
should focus their efforts on allocating the resources
properly.

CONCLUSION
• It has been summarized that globalization has
helped organizations to trade overseas and thus
expand on wider geographies.
• There are various driving factors which have
contributed to the growth of globalization in
different ways like economic integration, cost
etc.
• The most important framework that is PESTEL
helps the organizations to review various factors
which impacts their operations and overall
performance.

REFERENCES
• DOH, J., MCGUIRE, S. AND OZAKI, T., 2015. THE JOURNAL OF WORLD BUSINESS SPECIAL ISSUE: GLOBAL GOVERNANCE
AND INTERNATIONAL NONMARKET STRATEGIES: INTRODUCTION TO THE SPECIAL ISSUE. JOURNAL OF WORLD
BUSINESS.50(2). PP.256-261.
• HAMILTON, L. AND WEBSTER, P., 2018. THE INTERNATIONAL BUSINESS ENVIRONMENT. OXFORD UNIVERSITY PRESS.
• SALVATORE, D., 2015. MANAGERIAL ECONOMICS IN A GLOBAL ECONOMY. OUP CATALOGUE.
• AITHAL, P.S., 2017. IMPACT OF DOMESTIC, FOREIGN, AND GLOBAL ENVIRONMENTS ON INTERNATIONAL BUSINESS
DECISIONS OF MULTINATIONAL FIRMS: A SYSTEMATIC STUDY. INTERNATIONAL JOURNAL OF MANAGEMENT, TECHNOLOGY,
AND SOCIAL SCIENCES (IJMTS).2(2). PP.93-104.
• HOOPER, M.J., 2016. THE GLOBAL BUSINESS HANDBOOK: THE EIGHT DIMENSIONS OF INTERNATIONAL MANAGEMENT. CRC
PRESS.