Global Business Environment: An Analysis of Sasol Limited

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GLOBAL BUSINESS ENVIRONMENT
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Table of Contents
Introduction......................................................................................................................................4
LO1..................................................................................................................................................5
P1 Analyze key factors of cost, market, environment and competition that drive global
commerce and trade.....................................................................................................................5
M1 Critically analyze the impact that key factors have upon the global business environment
in terms of benefits and challenges..............................................................................................6
LO2..................................................................................................................................................6
P2 Explain the complexity of strategic challenges faced by organizations when operating in a
global environment supported by specific examples...................................................................6
M2 Critically analyze strategic challenges in context of risk and diversification strategies and
the supply chain flow...................................................................................................................7
LO3..................................................................................................................................................8
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions....................................................................................................8
P4 Evaluate the influences of ethical and sustainable globalization on organizational functions.
...................................................................................................................................................10
M3 Critically evaluate global market influences in application to appropriate theories and
models relating to organizational structure and culture.........................................................11
D2 Critique strategies that can be adopted by organizations operating in a global business
environment, making valid and justified recommendations of how they should adapt their
organizational structure and decision-making processes.......................................................11
LO4................................................................................................................................................11
P5 Evaluate the different ways decision making can work effectively in a global context......11
P6 Determine and articulate the various routes to internationalization an organization may
adopt, including key barriers.....................................................................................................13
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M4 Critically evaluates the key barriers in doing business internationally and makes
recommendations on how they can be overcome..................................................................14
D2 Critique strategies that can be adopted by organizations operating in a global business
environment, making valid and justified recommendations of how they should adapt their
organizational structure and decision-making processes.......................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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Introduction
The global business environment is the addition of both the external and internal environment in
the company so that management can analyze the pros and cons easily of the organization plan.
“Sasol Limited” is an integrated chemical and energy company that is situated in Sandton, South
Africa. This company commercializes and develops technologies consisting of technologies of
synthetic fuels and generates various chemicals, fuels, and electricity. It is also involved in
energy, mining, synfuels, and chemicals, etc. specifically they produce diesel, petrol, natural gas,
and coal by using the process of Fischer-Tropsch. The present report analyzes the purpose of
various organization and it addresses the objectives of Sasol Limited for employees,
stakeholders, etc. This study describes the Sasol Limited’s responsibilities regarding safety and
health, social responsibilities, same opportunities, taxation and assessing the monetary and
fiscal’s impact. It also assesses the impact of competition policies on the management activities
and describing the demand forces and supply also affects the sales and pricing decisions of the
organization. This report analyzes international trade’s benefits to business organizations and
addresses the global factors that have an impact on the organization. The global market also
reflects the selling and production capacities of industries of countries all over the world.
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LO1
P1 Analyze key factors of cost, market, environment, and competition that drive
global commerce and trade.
There are four major drivers of globalization that our government, market, competition, and cost.
These drivers affect the conditions of globalization potential across industries that make the
individual firm uncomfortable. Government influence is the main driver including policies that
leads to trade barriers reduction and shifting for the open market economy. There can be used
PESTLE analysis including cultural, political, economic and social dimensions. PESTLE
analysis is essential for any business for entering a new market and it is used for tracking the
business environment from a specific industry. There is described the globalization in the context
of various dimensions-
Cultural- Cultural globalization refers to the interaction between the countries without losing the
tradition of that country. For example- Products of Sasol Limited have promoted in the
international market because of the customer’s increasing level outside the country.
Characteristics of local sociocultural consist of attitude towards environmentalism, consumerism,
and roles of women and men in society (Nohria, 2017).
Political- It includes the decision of countries and political activities. It also permits for political
discussion among all the countries and it has an impact on business. Such as- if government
increase or decreases prices of petrol or diesel it affects the business of Sasol Limited. Policies of
government can also vary on taxation and regulation across the nation and from state to state
boundaries.
Economic- Managers of Sasol Limited require to address macroeconomic factors that have long
term and short term effects on the strategy accomplishment. Tariffs, inflation rates, growth of
foreign and local national economies, interest rates and exchange rates are essential. Critical
labor availability, unemployment, and labor’s local cost have a strong bearing on business
strategy that is related to business facilities and functions (Kasemsap, 2018).
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Social- The social factors have an impact on business that varies from state to state and country
to country. It all depends on business type and the factors such as the dominant religions, local
languages, the cultural views on the age, leisure time, and lifespan demographics can be crucial.
Technological- It has an essential role in innovation and advancement in different countries
working pattern. Obsolete technology needs to replace and advanced technology should be used
for modernization and for increasing the production level.
Legal- It refers to different enactment and laws of different guidelines and policies for any
matter. These guidelines should be followed by the organization as this is for security and
worker’s health and as there are many risks for workers in this type of chemical companies.
M1 Critically analyze the impact that key factors have upon the global business
environment in terms of benefits and challenges.
Global key factors have an impact on the organization “Sasol Limited” in negative and positive
ways that enhance the organization’s efficiency and can reduce the organization’s profits. There
are different factors such as social, political, technological, economic factors can affect business
productivity. Entry in the new market can also affect business growth. The company can get an
international platform and decrease business efficiency. Organization’s profit can increase
through global factors and it can also design platform for new customers at the organization. It
enhances the market’s global competition and is helpful in the management for getting the sale’s
foreign exchange. There are different platforms for countries that can be helpful for managing. It
also gives the country global growth and decreases the market recession impact. The major
advantage of a global factor is to offer an international platform for the organization to get
success. With the emergence of big level multinational corporations and enhancing economic
globalization includes great concern regarding business ethics in a global environment. Customer
is also expecting now to the business to be more responsible socially and so businesses are
increasing their marketing including social issues for positive social differences (Groşanu, et.al.,
2015).
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LO2
P2 Explain the complexity of strategic challenges faced by organizations when
operating in a global environment supported by specific examples.
Expanding business overseas refers to new customers and clients and potential benefits. But with
lots of benefits, there also come some strategic challenges by operating a company at a global
level. Many companies believe that it is difficult to adaptable and locally flexible. These strategic
challenges include different legal landscapes, cultures and languages, technology and
communication, various environmental concerns and complex costs, etc. that are described as
below-
Understanding the culture and other languages
When a business is started in some other country or region, it is very difficult for them to adopt
their culture and their languages for understanding the local customer's demand. While the
culture is the same across many western countries, still there can be unambiguous differences
when the culture is from other parts of the world such as Africa, East, and Middle-East. As
“Sasol limited” want to expand their business in different countries like Canada, Mozambique,
Gabon, and Australia, etc. so it is necessary for them to learn essential cultural differences.
The legal landscape
When an organization’s business crosses their border, they have to follow many tax rules, laws
and different regulations that are surrounded in various countries and it doesn’t depend on the
type of business. There is a need for keeping the differ jurisdictions for making sure the business
is conducting as per the law (Tregear 2015).
Environmental conservation
In different countries, there can be faced with different rules such as recycling, energy
consumption, and green packaging, etc. that should be considered in business operations. So any
business should take care of these things while planning and designing the business idea and for
environmentally friendly office.
Complex costs
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When global companies get more diverse and bigger, there is also a high level of complexity
costs. For standardization of common function elements like legal or sales services can collapse
with the local requirements.
M2 Critically analyze strategic challenges in the context of risk and diversification
strategies and the supply chain flow.
Managing the organization globally has been a challenge for “Sasol limited” but there is need of
moving the economic business activity from Africa to Europe, Australia, North America, Asia,
and Latin America, etc. a company globally gets benefits from a business portfolio that is
geographically diverse which offers a natural verge against the country risk, local growth
volatility, and currency risk. But there are also unfamiliar risks that are difficult to address.
Processes of exhaustive risk-management can’t be the best approach for dealing with market
risks. If an organization doesn’t understand the emerging markets then they can lose chances
through risk processes (Cavusgil and Knight 2015).
LO3
P3 Evaluate the influences of globalization on organizational governance and
leadership, structure, culture, and functions.
Sasol Limited is the fastest growing company in South Africa and they are planning to expand
them in global trading and commercialization. There can be used the McKinsey 7S model for
evaluating the globalization influences on Sasol Limited’s structure, governance, culture,
leadership, and functions, etc. Sasol Limited implements this model for the issue of vacillation
regarding organization governance and structure for some specific activities. The McKinsey 7S
model described below:
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Figure 1: McKinsey 7S model
Source: (Ovidijus, 2013)
Strategy- It can be described as a plan that is beneficial for a company to get market existence
and competitive advantage. Sasol limited tries to apply the strategy for getting competitive
advantage about the governance, structure, and culture. For this, they also contemplate some
check-list questions that are-
 Regional market
 Customers type
 Local market
 Global market
 Market position
 Management
Structure- It refers to organization structure and accessibility of various divisions and units of
business for making sure the appropriate accountability. Sasol Limited executes the operation in
various region. They also have some checklist for determining the structure as mentioned-
 Dependent on expertise
 Dependent on skills.
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System- It has procedures and processes of an organization that reveals the decisions and
business activities of Sasol limited. It also determines the main focus of managers at the time of
organization changes (Noe, et.al., 2017).
Skills- It includes the activities that are performed by employees of the company. It consists of
completeness and capabilities. It describes the company skills for new structure and strategy.
Staff- It defines the types of employees an organization has and how they are hired, trained,
rewarded and motivated.
Style- It presents the method through which an organization is arranged by managers and how
they behave and symbolic value. It is a management style of leaders of the organization.
Shared values- It is the core of the McKinsey 7S model, they are standards and norms for
guiding the staff’s behavior.
There is also used Hofstede’s Dimensions of Culture for showing the influence by global
operation in the global market. When a company enters a new market then they have to deal with
different culture and different people. So the Psychologist Dr. Geert Hofstede developed six
cultural dimensions for individual customers in different countries. Here it is mentioned below-
 Power Distance
 Traditional and masculinity Roles
 Ambiguity tolerance
 Community and individualism ties
 Quick and indulgence gratification
 Long term orientation (Kasemsap 2016)
P4 Evaluate the influences of ethical and sustainable globalization on organizational
functions.
The practice of sustainable business requires to be within a business ethics framework.
Sustainability is used by organization leaders for sustainable business practice into the
organizational objectives, mission, and goals. There can be a market segment that defines pro-
sustainability for the general public for sustainable business evidence practice. There are also
some key issues business ethics as mentioned below-
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 Bad and illegal actions
 Good and legal actions but not a legal obligation
 Good actions but illegal
 Legal actions but bad
 Social supporting and responsibility
Sustainability and ethical business practice provide possible suggestions for the business. These
also concentrates on operating procedures and workplace behavior that work towards potential
avoidance by compliance with codes.
M3 Critically evaluate global market influences in application to appropriate theories and
models relating to organizational structure and culture.
Organizational culture and structure are the two most essential elements of the organization for
sustainable advantage. There is also analyzed the interconnection between creating the link for
competitive industry and aforementioned aspects. There is a two-dimensional model for an
organizational structure that concentrates on people and production and objective factors like
managerial ability and subjective characteristics. Organization culture also defines shared values,
assumption, and beliefs. Strong culture presents the behavior of people in the workplace. It also
has codes of conduct and common values for staff for accomplishing the goals and mission
(Chatterjee 2017).
D2 Critique strategies that can be adopted by organizations operating in a global business
environment, making valid and justified recommendations of how they should adapt their
organizational structure and decision-making processes.
There are used international business strategy that defines the plans that help in commercial
transactions between different countries entities. Also, it refers to the action and plans of
companies rather than the government for increasing profit. Strategy for globalization defines the
connected world that permits revenue of business not to limit by the borders. It can get the
trading rewards by global business strategy in a worldwide market and also for helping in
decision-making processes.
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LO4
P5 Evaluate the different ways decision making can work effectively in a global
context.
The global market is more competitive as compared to other businesses. Every business can
operate in the global market by the balanced use of technology, communication, transportation,
and other techniques. Success in the global market can be uncertain depending on various factors
one of which is decision making. For successful business operation in the global market firm
should need to manage all resources and factors efficiently and decisions should be quick and
efficient. Every firm should maintain a proper decision-making strategy for successful business
operation. Decision making helps businesses to solve problems efficiently (Evans et.al., 2017).
Steps decision-making process:
 Identifying problem
 Defining factors of limitation
 Developing alternatives
 Analyzing developed alternatives
 Selecting potential alternative
 Implementing proper decision
 Establishing an evaluated and controlled system
Types of decision making:
Personal Decision Making is the decisions which include possible outcomes affecting individuals
only.
Business Decision Making: This category includes decisions which are taken in the context of
any firm and organization for profit outcomes.
Consumer Decision Making contains a choice of decisions to provide an effective outcome for
both personal as well as organizational (Doh, et. al., 2015).
Decision making helps firms to analyze the previous or past performance of the organization to
make a change in future performance with the help of proper decision making. For effective
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