Strategic Analysis of Sasol in the Global Business Environment

This report provides an overview of Sasol's operations in the global business environment, focusing on key factors driving globalization and strategic challenges. It examines the impact of the global market on Sasol's structure, culture, and governance, utilizing McKinsey's 7S model to analyze the company's strategy, structure, systems, style, skills, staff, and shared values. The report evaluates how global operations have influenced Sasol and how the organization has adapted to operating in a global market, considering Hofstede's cultural dimensions, ethical and sustainable factors, and strategic decision-making related to risk and diversification. Additionally, it assesses different strategic global expansion routes available to Sasol, providing a comprehensive analysis of the company's position and strategies in the international arena.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Part 1................................................................................................................................................1
Covered in PPT.......................................................................................................................1
Part 2..............................................................................................................................................10
An explanation of structure, culture and governance within an organization such as SASOL
applying McKinsey’s 7S model to the organization............................................................10
McKinsey’s 7S model..........................................................................................................10
An evaluation of how the above has been influenced by global operations and how the
organisation has adapted to operating in a global market....................................................12
Hofstede’s Culture Dimensions............................................................................................12
An evaluation of ethical and sustainable factors that the organisation has to consider in a
global market........................................................................................................................13
Critical evaluation of strategic decision making in relation to risk and diversification in a
global context.......................................................................................................................14
Evaluation of different strategic global expansion routes....................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Global business environment defines the nature of international trade business which is
evolving in a significant way which helps in shaping the nature in changing global commerce.
Global business means selling goods and services in different countries across the globe for
gaining more reach and growth (Abu Bakar, Ahmad and Ahmad, 2019). International business
gives more scope for expanding business in new markets which helps in gaining competitive
advantage in different countries. Sasol is an international chemical and integrated energy
company, which is headquartered in Sandton, South Africa. The report outlines about different
key factors that directs globalisation in Sasol company and explains about strategic problems
related with operating globally. The report also discussed about the impact of global market on
company structure, function and culture, and defines the effect of globalisation on company
strategy and decision making.
MAIN BODY
Part 1
Covered in PPT
Notes:
International business Sasol is an international chemical and integrated energy company, which
1

is headquartered in Sandton, South Africa. The report outlines about different key factors that
directs globalisation in Sasol company and explains about strategic problems related with
operating globally. The report also discussed about the impact of global market on company
structure, function and culture, and defines the effect of globalisation on company strategy and
decision making.
ness gives more scope for expanding business in new markets which helps in gaining
competitive advantage in different countries (Abu Bakar, Ahmad and Ahmad, 2019).
Notes:
Globalisation is explained as a theory of comparative advantage which defines that countries that
are expert in producing a specific product are at a benefit of exporting products to countries
which are less efficient in producing (Aghaei, 2019).
2

Notes:
Technology advancement – It is one of the most important factor which drives globalisation
and helps in growing in different sectors of economies across the world. New technology and
better communication system helps Sasol limited in exchanging goods and services, ideas,
resources easily irrespective of any geographical location.
Notes:
 High competition – Organizations try hard to achieve competitive advantage in the
market for achieving success and growth of the company. Increased competition in the
3

domestic market forces company to operate globally. Sasol faces competition from
several companies and focus on selling good quality products for customers to expand
market share in different countries.
 Economies of scale – Due to rise in competition, companies try to reduce the cost so that
they achieve economies of scale in the market. Sasol limited focus on producing similar
product in large market to reduce costs and for sustaining in the competitive market. The
company needs to invest large amount of money for promoting products globally.
Notes:
This helps buyers and sellers of the company to make transactions at any part and any time of the
world which reduces communication barriers between people (Betti and Sarens,
2020).Technology is transferred easily to developing countries where need of high tech
production is needed to combine with low wages. Digital technology enables people to connect
anywhere through social media which is used by almost half of the population all over the world.
Many companies are moving towards digitalization as people are more facilitated with the
changing technology and which also reduces the cost of operations. Digital economy brings
several changes like connecting with good producers through online modes, education, health
services and entertainment which is delivered online. New technologies such as artificial
intelligence, 3D printing 5G and cloud computing brings the economy into the 'Fourth Industrial
Revolution' and next move of globalisation
4

Notes:
This will allow them to accomplish their tasks more easily and effectively. Programming
techniques, internet sites, as well as software could enable organization divisions raise its
functions toward the new stage. As a response, adopting use of digital technology has now
become vital for firms seeking a global edge over its competitors. It moreover helps them
promote innovative thoughts to the individual functional units.
Notes:
Factors are explained below:
5

Political – Political factors plays an important role in determining the effect of different factors
on long term profitability of a company in certain market or country. Sasol limited operates its
functions in several countries with political instability which reduce the growth opportunities for
the company. The company needs to carefully analyse and study the recent trends of government
in order to keep updates of each and every aspect of change in policy. The other political factors
that affects the company is taxation policy as well as tariff and non-tariff barriers of the country.
Economic – There are several economic factors that affect growth of the company such as
inflation rate, tax rate, cost of living and wage rates. Sasol limited chooses countries which have
strong financial markets for earning more growth rate and achieving success and helps in gaining
competitive advantage. Any rise in the rate of inflation will affect the revenue of company
negatively which reduces the spending power of the customer and affects the demand of goods
and services. The company also consider employment rate of the country as it also affects the
spending power of the consumer.
Social – Social factors include population growth, lifestyle, health and safety, cultural norms and
age distribution. Sasol limited analyses the consumption and spending patterns of the customer
for introduction of new products and services in the market. The company needs to focus on
improving its business management activities while entering into a particular market with low or
high power distance. The culture of the company is also different this will also need to be
understand by the company while making decision in order to enter in another country.
Technological - Rapid change in technology in international market effects the operations of the
company for adopting to the new changes for sustaining in the competitive market. Adopting
social media practices will help the company in improving its performance and develop online
brand channels for better reach to the customers (Al-Abrrow, Ali and Alnoor, 2019). By
focusing on new technological advancements like 5G which provides high speed and experience
to the customers for increasing market share and customer loyalty. The company can also use
virtual reality and augmented reality service in order to offer innovative service in another
country.
Legal - Any change in the policies and regulation of the government will affect the business
performance of the company. Providing secure and safe working environment to employees will
help in improving the stability and performance of Sasol limited. The company needs to study
about data protection laws which helps in safeguarding data and information of customers to
reduce fraudulent marketing practices. By complying these laws makes easier for the company in
order to enter in another country in better manner.
Environmental – Environmental factors affect the company surroundings such as weather
conditions, climate change, pollution and temperature. Investing in renewable technology will
help Sasol limited in assuring long term sustainability which also increase satisfaction of
stakeholders and grow customer base. Changes in weather conditions will increase the operations
cost which increase the prices of the product in the market, so company needs to stimulate the to
develop flexible value chain. The company also use sustainable material for making their
products in order to maintain sustainability of the country.
6

Notes:
In case of SASOL Ltd, the key driving factors of globalization are described below:
Containerisation- Costs which involve in ocean shipping is cutting down which makes
company in order to export and import goods and service country to country to gain more profit.
This will also help SASOL Ltd to sell their offerings in another country in better manner.
Technological change- As the technologies are developing rapidly which helps in decreasing the
cost of transmitting as well as communicating information. This will also make easier for the
people to have information about other country product and service which leads globalization in
all over the world.
7

Notes:
High Tariffs and Export fees – Different countries have their own tax regime on which
companies need to pay taxes according to rules and regulations. Globalisation is making high
fees and tariffs for exports and import of goods and services which increases the operations cost
of Sasol company which hinders the growth and sale of products and services in international
market.
Confusing localised systems – Companies faces confusion while setting up business in
international because of different legal laws in different countries (Biloslavo, Bagnoli and Edgar,
2018). This challenge creates problem while expanding business in any country as it leads to
severe legal and financial issues. So the company needs to be aware of new legal system in
which the company operates its functions.
International recruiting- The other strategic challenge faced by the company due to globalization
is international recruitment as the company need to more employees to perform their different
function while expanding their business in another country. Due to different time zones, cultural
differences and language barriers many problem faced by the company in order to recruit
talented employees in the organization.
8

9

Notes:
Abu Bakar, A.R., Ahmad, S.Z. and Ahmad, N., 2019. SME social media use: A study of
predictive factors in the United Arab Emirates. Global Business and Organizational Excellence,
38(5). pp.53-68.
Aghaei, I., 2019. Discovering Institutional Dynamics of Entrepreneurial Business Environment
Development Evidence from MENA’s Oil-Richest Countries.
Al-Abrrow, H., Ali, J. and Alnoor, A., 2019. Multilevel influence of routine redesigning,
legitimacy and functional affordance on sustainability accounting: Mediating role of
organizational sense-making. Global Business Review. p.0972150919869726.
Bergquist, A.K., 2019. Renewing business history in the era of the Anthropocene. Business
History Review, 93(1). pp.3-24.
Betti, N. and Sarens, G., 2020. Understanding the internal audit function in a digitalised business
environment. Journal of Accounting & Organizational Change.
Biloslavo, R., Bagnoli, C. and Edgar, D., 2018. An eco-critical perspective on business models:
The value triangle as an approach to closing the sustainability gap. Journal of Cleaner
Production, 174. pp.746-762.
Part 2
An explanation of structure, culture and governance within an organization such as SASOL
applying McKinsey’s 7S model to the organization.
McKinsey’s 7S model
McKinsey's model consists of 7 factors that help companies in identifying areas where
they need to work to create an efficient workforce for better productivity and growth. For
10