Analysis of Global Business Environment for SASOL Ltd. Report

This report provides a comprehensive analysis of the global business environment, focusing on the factors driving globalization, such as cost, market, environment, and competition. It delves into the complexities and strategic challenges faced by businesses operating internationally, including foreign laws, supply chain management, cultural differences, and currency exchange rates. The report further explores the influence of globalization on organizational structure, utilizing the McKinsey 7S model and Hofstede's cultural dimensions. Additionally, it examines the impact of ethical globalization on organizational functions like human resources, marketing, and finance. Finally, the report discusses various decision-making approaches to enhance global business operations. The report uses SASOL Ltd. as a case study to illustrate these concepts.

GLOBAL BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Factors driving globalisation..................................................................................................1
LO 2.................................................................................................................................................2
P2 Complexity of strategic challenges faced by global environment..........................................2
LO 3.................................................................................................................................................4
P3 Influence of globalisation.......................................................................................................4
P4 Influence of ethical globalisation on organisational functions...............................................6
LO 4.................................................................................................................................................7
P5 Different ways in which decision-making can work better for global business context........7
P6 Different routes adopted by organisations..............................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
.Global business environment refers to the overall environment at international level in which the
company operates its various business activities. SALSO Ltd. Is an international business which
was founded in the year 1950. the company is operating its business for commerce and trades. It
describes numerous complexities of challenges that is faced by the business of integrating energy
and chemical company. The present study shows a brief analysis of various factors of drivers of
the global, at the time of developing strategies. In addition, the present study also shows
influence of globalisation on the corporate governance, leadership, cultures and various
functions. Further, the study also provides information about various ways different ways
through which business takes their decisions and various routes that can be adopted by an
organisation.
LO 1
P1 Factors driving globalisation
Globalization is an increasing trend according to which companies are expanding their
business in foreign countries. Global Business Environment consists of different internal &
external factors which affects business of operations of companies operating their business in
global market. Various factors driving globalisation which are discussed below-
Cost
Cost is the most important element without which an organisation is unable to operate its
business in global market. Before the establishment of business in a new country a business firm
is required to analyse investment cost. Because, Cost of an expansion project may vary with
geographical area and its requirements thus, it is necessary for SASOL Limited to diversify its
business in countries like Mozambican, Canada, Australia and Gabon. Further, cost involved in
production of goods & services is also required to determine so that customer can get products at
an affordable price which in turn enhances profits and customers of a company which is thinking
to expand its business in global market.
Cost also benefits company in achieving global economies of scale and for creating
demand of its product and services by developing products & services offered by it.
Market

If a company offer its product and services in the local market only than it is unable to
gain more profits and it is also not able introduce new product line. With the emergence of
globalization a business firm can expand its business in new markets and it can introduce new
products according to the demand and preference of individuals of different countries. Thus,
availability of new market is the most important key driver of globalisation which influence
business organisations to operate their business in international market.
To increase market share and customer base of the company SASOL Limited is also
expanding its business across the globe(MacAskill and Guthrie, 2017).
Environment
Environment conditions of the countries is different and it benefits organisation
manufacturing of products and services which is favourable for the companies operations. As
SASOL Limited is producing and offering chemicals and energy it is most beneficial for the
company to expand its business in a geographical area which is more favourable and which
require less cost of manufacturing. Thus, with this driver a company can operate its business in
an environment which is most favorable.
Competition
With the establishment of business of SASOL Limited in new countries its competition
also increases and which further forces company to expand its business in more countries.
Because, with the increase competition exports and imports between the countries also gets
increased which enhance profitability and brand image of business firm. Further, companies
operating their business in international market also gets support from Foreign Direct Investment
(FDI).
Moreover, Technological and Legal Drivers are also most important for the companies
which are offering their products and services in a country other than the host country. Different
country uses different technology of production with which SASOL Limited can enhance its
performance and develop its production process.
LO 2
P2 Complexity of strategic challenges faced by global environment
Operating business at international level is not much easy. SASOL Limited has to face
various complexities while diversifying its business in different countries across the globe.
Which are discussed below-
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Foreign Laws & Regulations
Different countries are having different provisions and laws and a business firm is
required to follow all the legal; requirements applicable on its business in each country its is
doing its business activity. Fort Example- As SASOL Limited diversified its business in more
countries like Canada, Australia and Gabon it has to follow government policy of all the
countries which is very complicated for the company and if company is not able adapt
regulation of any of the country than it has to pay penalties. Like taxation policy introduced by
government of different countries is different than firm has to file tax return in accordance with
guidelines of different countries(Bustinza, Vendrell-Herrero and Baines, 2017).
Complexity of International Supply Chain Management
Supply Chain Management of different countries are different and with the increase in
requirements of supply chain management unethical & illegal practices are increasing in an
economy which is a threat & challenge for multinational companies. Further, companies are
forcing employees and workers for the supply of goods and services.
If there is an adverse impact on supply chain of any company than that reduces
production level which in turn increases risk of profit reduction. As Supply Chain in
International Market is very large it is difficult for SASOL Limited to manage as its require huge
amount of cost and time. On the other hand , if supply chain management is not managed than
company is not able to offer its products and services(Tallman, Luo and Buckley, 2018).
Cultural Difference
Different country has their own culture and languages thus a SASOA Limited is required
to manufacture and offer its goods and services in accordance with demand and preference of
customers of countries it expanded its business. Further, use of different languages is also a
challenge because without which an organisation is not able to communicate with its employees
and customers.
For Example- SASOA Limited expand its business in Australia and it does not know
language of Australia than it can not hire talented employees and unable to promote its products
and services in the local market of Australia.
Currency Exchange Rate
Currency Rate of countries fluctuates with the change in economic variable of particular
country which leads to change in prices and payment methods used by business organisations.
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For Example- If there is an increase in exchange rate of Canada than that leads to decrease in
purchasing power of its individuals with the result of this SASOA Limited is required to revise
prices of its products & Services which are affordable for individuals.
Thus, change in currency rates is complexity as it has an impact on pricing policy and
demand and supply. For reducing risk of this complexity management of SASOA Limited is
required to monitor currency rates of countries in which its business is operating(Hamilton and
Webster, 2018).
LO 3
P3 Influence of globalisation
Influence of Organizational Structure
Structure of an organisation depicts ist overall business charts. It gives detailed
information of all the departments operating with in the organisation and functions of each
department. An organizational structure is a framework which shows that which shows authority
and power of individuals working at different department. For analysing influence of
organisational structure mod McKinsey’s 7S model is used(Salvatore, 2015).
McKinsey’s 7S model- This model is beneficial for improving business performance and
profitability of business organisations. With this model a company can formulate its
organisational structure and able to manage various elements such as staff, shared values, skills,
styles(Soft Skills), structure, system and system(Hard Skills). All this elements influence
structure of an organisation as without them a company is unable to manufacture its products and
services in the market.
 Structure- Hierarchy and framework of and organisation is based on its business rich as
if a company is operating its business at international level it is required to adapt a central
organisational structure so that it can control operations of all its businesses.
 System- Globalisation also influence production process and other informal & formal
methods related to business procedures followed by SASOA Limited. Company has to
adapt different production process according to geographical requirements.
 Strategy- Strategy is an element which influence Mission and Vision of a company. As
SASOA Limited is an international company it is required to set its mission and vision by
keeping in mind various global factors.
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 Style- Management and leadership styles are also gets influenced with globalisation
because now managers and leaders of SASOA Limited has to follow styles with which it
can make effective decisions.
 Shared Values- With the emergence of globalisation SASOA Limited has to regulate
business ethics which can be adaptable by all the business operating in different
countries(Kapoor, 2017).
 Staff- Globalisation differs qualification and competencies of the staff members and
worker of SASOA Limited.
 Skills- Further, skills used by organisations and employees are also influenced with
globalisation as individuals of different countries are having different skills and
knowledge.
Hofstede’s Dimensions of Culture- This is a cultural dimension theory which provide a
structured framework of cross cultural communication. According to this theory values, beliefs,
ethics and culture of a society differs with the geographical area and this theory divide this
culture in 6 areas according to global culture(Hu and Wang, 2016.).
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Illustration 1: Hofstede’s Dimensions of Culture
Source:

Globalisation also influence culture as culture difference from nation to nation.
According to Individualism Culture performance of individuals is valued. On the other hand,
People of Power Distance culture thinks that all the employees are treated equally. Different
countries consider different time horizon for their business which also affects business of the
companies operating in global market.
P4 Influence of ethical globalisation on organisational functions
An ethical & Sustainable organisation means when a business organisation operates its
business by considering all the ethics and values. If an organisation operates its business in an
ethical and sustainable manner than it can earn more profits and can enhance its brand image. A
company which is operating its business in global market and following all the ethics and values
of global market has to perform its functions in accordance with those values.
For Example- If managers of SASOA Limited is following an ethic that they will treat all
of its employees equally and no differentiation is being made between employees of different
location or countries than company has to organise its Human Resource functions by keeping in
mind that ethics and values(Verma, 2016).
Human Resources, Marketing, Information Technology, Finance and Customer Services
are functions of organisation. According to globalisation ethics a company is required to offer
products & services in accordance with demand and preference of customers. Further, it is also
necessary for a company to resolve queries of the customers which influence Customer Services
function in business organisation. Whereas, Marketing Function gets influenced because
advertisement and promotion strategies used by global business should not harm values and not
against any religion or culture. Finance Function influenced by ethical globalisation as business
firms needs to decide prices according to the income level of individuals of different countries so
that customers can gets satisfied.
LO 4
P5 Different ways in which decision-making can work better for global business context
The decision making may be defined as the process through which the person or the
business takes the necessary decision. For doing any work there are many ways but all these
ways cannot be used to do that particular work (Wirtz, Tuzovic and Ehret, 2015). So at this time
the decision making process helps and makes the work easy for the company to perform. The
decision making process includes choosing from various alternatives or options to choose the
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best suitable option for doing the work or for taking the decision. The global business refers to a
business deal or structure wherein the company or business from one country do the business
with the company situated in the another country. In short the global business or the international
business is a type of business wherein the business takes place between two companies of
different geographical boundaries that is from two different countries.
In this dynamic business environment wherein there are changes and developments in
every minute and every seconds and to meet these changes the business has to be very quick and
prompt in taking decision (Hakanen, Helander and Valkokari, 2017). For running the business
successfully it is very necessary for everyone in the company to make the decision. When the
company operates in the global business environment the decision making becomes more hard
and difficult. In every second the manager and the top management has to take decisions. The
decisions may be related to planning, organizing, directing, staffing, controlling, coordinating,
compiling, decision relating to recruitment, selection, training, performance appraisal, increase
or decrease in the size of the businesses and many other areas where the decision are to be taken.
The decision making is very helpful in the global business environment because the
better decision making helps the company in achieving the business goals and objectives
(Scherer, Palazzo and Matten, 2014). Decision making helps the business take on time and
proper decisions which ultimately helps the business in achieving its goals, objectives and
mission and vision on time.
Another reason is that while doing the business at the global level needs high cost and the
company has to bear high cost of doing the business at international level (Doh, McGuire and
Ozaki, 2015). So here also the decision making helps the business in properly managing its costs,
finds and the expenses. Before going for the international business with help of decision making
process the company is properly able to analyse and evaluate beforehand all the cost that will be
incurred if the company goes for the international business.
Also, the decision making helps the company in analysing and optimally use the
resources. All the resources are limited and scarce and the competition is very tough and cut
throat hard (Shenkar, Luo and Chi, 2014). So for managing these scarce and limited resources
the company needs to take very efficient and effective decisions so that all the scarce and limited
resources can be used optimally and efficiently by the companies.
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P6 Different routes adopted by organisations
Globalisation is basically the process of developing or expanding the business across the
national borders that is expanding the business internationality. This will help the business in
capturing larger share of the market across the globe. this generally includes the prices of
integration and interaction among people, countries and government at international level which
ultimately facilitate the organisation in expanding their business towards the growth and
development .
The economic process of interaction mad integration leads the many organisation'
towards the path of the globalisation in view of achieving the overall goal and objectives which
helps them to expand their market share also. Globalisation generally involves the trading of the
goods, services, economic resource of capital from country to country in order to enhance the
foreign exchange . Expansion of the global market also liberalize the economic activities of gods
and service import and export.
There are many factors which helps in facilitating the globalisation among te different
organisation are explained as follows:
 Improvement in the communication and transportation facilities expand the company's
strength to import and export their goods in order to encourage the globalisation and
expand their business
 Effective and efficient research and development ls leads to creation of the consumer
modern trade supply chain which also contributed towards the facilitation
 Modernized and globalized banking systems enhances the foreign exchange
 taxation policies in context to the international transactions
 governmental support
 globalized education
 efficient scientific research is generally available all over and support the entire
globalisation.
 Different growth strategies also helps the business in expanding and diversifying their
business activities.
Some natural resources which includes coal, minerals , oil, gas etc are also considered to
be the important contribution in the globalisation. The expansion of the business towards the
globalisation for one of the most important reason is to win over the competitive advantage and
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by expanding their business effectively and efficiently they are capable of earning higher amount
of profit and also tom capture the larger share of the market. This is also the reason for more
customer retention which ultimately helps the business in achieving their overall busmen goals
and also to provide satisfaction to the needs and wants of the consumer.
Though there are some barriers which affect the expansion of the business towards the
globalisation which might includes the followings:
Technological change is considerer to be barrier in expanding the business as
globalisation requires huge investment of the capital by the business and organisation after
investing into the particular country and if their resources is not capable of meeting the
technology of that particular country than organisation will fail and loses in long run.
Legal obstacles can also be considered as the great barrier for the organisation as
investing and running in the another country is not easy task as the business needs to follow all
the laws and legislations of that particular country in order to operate smoothly and efficiently.
Legal disruptions might disturb the entire operations of the business.
Hence, it can be conclude that there are many factors which helps the business to run at
path of the globalisation and also some factors which act as barrier for the globalisation.
CONCLUSION
From the study of above study it can be concluded that with the help of various factors of
globalisation. The company can face a range of complexities at the time of making decisions. In
this regard, the SASLO ltd. Shouyld develop effective strategies in this regard. Further, there are
various factors of globalisation that influences the globalized business. Ethical globalisation have
a great influence over the company's function. In addition, there are various ways in which the
business can take more effective decisions for the business for global context.
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REFERENCES
Books and Journals
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governance and international nonmarket strategies: Introduction to the special
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Hakanen, T., Helander, N. and Valkokari, K., 2017. Servitization in global business-to-business
distribution: The central activities of manufacturers. Industrial Marketing
Management. 63. pp.167-178.
Scherer, A.G., Palazzo, G. and Matten, D., 2014. The business firm as a political actor: A new
theory of the firm for a globalized world. Business & Society. 53(2). pp.143-156.
Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge.
Wirtz, J., Tuzovic, S. and Ehret, M., 2015. Global business services: Increasing specialization
and integration of the world economy as drivers of economic growth. Journal of Service
Management. 26(4). pp.565-587.
Verma, S.K., 2016. 15_Development, Human Rights and Globlisation of Economy.
Hu, Y. and Wang, H., 2016. Multiplicity one for the mod $ p $ cohomology of Shimura curves:
the tame case. arXiv preprint arXiv:1608.07992.
Kapoor, B., 2017. Importance of Live Stock (Cattles) in Human Life (Study of Relationship
between Live Stock and Export of Meat of Countries). Asian Journal of Research in
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Salvatore, D., 2015. Managerial economics in a global economy. OUP Catalogue.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Tallman, S., Luo, Y. and Buckley, P.J., 2018. Business models in global competition. Global
Strategy Journal. 8(4). pp.517-535.
Bustinza, O.F., Vendrell-Herrero, F. and Baines, T., 2017. Service implementation in
manufacturing: An organisational transformation perspective.
MacAskill, K. and Guthrie, P., 2017. Organisational complexity in infrastructure reconstruction–
A case study of recovering land drainage functions in Christchurch. International
Journal of Project Management. 35(5). pp.864-874.
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