Global Business Environment: SASOL Ltd.'s Strategic Expansion

Desklib provides solved assignments and past papers to help students succeed.

GLOBAL BUSINESS ENVIRONMENT
GLOBAL BUSINESS ENVIRONMENT
Name of the student:
Name of the University:
Author’s Note:

GLOBAL BUSINESS ENVIRONMENT
Table of Contents
Introduction......................................................................................................................................3
Concept of globalisation:.................................................................................................................3
Factors driving business success:....................................................................................................3
Strategic complexities that affected operating in the global environment......................................5
Structure, culture and governance of SASOL Ltd...........................................................................8
Evaluation on how structure, culture and governance of SASOL Ltd. has been influenced by
globalisation...................................................................................................................................10
Ethical and sustainable factors that SASOL Limited must consider in a globalised market........11
Assessing the affects of the factors on decision making of SASOL Ltd.......................................12
Strategic expansion routes adapted by SASOL Ltd. and their pros and cons...............................12
Recommendation...........................................................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15
2

GLOBAL BUSINESS ENVIRONMENT
Introduction
Globalisation is one of the processes that connected the developments of the economies and so
that the national and the organisational economies can be becoming reliant on each other. The
connection of the different factors related to the globalisation has helped into development of the
companies and their global expansions. The study has reflected over the concept of globalisation
and the way it affected the operation of a company in to the global environment. Here, a
chemical company, SASOL Limited has been taken for developing the study. The key concept of
the globalisation process has been evaluated here along with the strategic complexities that can
be developed into the organisation while it is operating in to the global environment. At the same
time, organisational culture, function and the structure has been affected due to the globalisation,
which has been analysed here. Decision making processes and the strategies adapted by the
organisation has been developed here in the context of the globalisation as well.
Concept of globalisation:
The globalisation is one of the factors that have connected the development of the emerging
market economies along with the markets of the economies of the countries that are already
established in the business market. Moreover, in the previous transaction among the countries
could be affected due to a number of trade barriers that has been implemented among them. At
the same time, it can also be stated that the elimination of the trade barriers that has been
developed due to the globalisation, has also helped in the improvement of the business
(Lambregts et al. 2016). Apart from that, the concept of the globalisation also refers to the
expansion of the business organisation to other countries, especially in the emerging market
economies. Moreover, it is also can be stated that the employment in the emerging countries are
being developing due to the globalisation as many companies are expanding and the job
opportunities are being developed (Picciotto and Mayne, 2016).
3

GLOBAL BUSINESS ENVIRONMENT
Factors driving business success:
A number of factors are present in the development of the organisation that contributed into the
process and driven it forward. Among them, cost, market, environment, and competition are
some major factors that have contributed in to it.
Cost of the products: It is seen that the emerging markets are more effective in order to
decrease the cost of operation for a company. Due to the developing and emerging economies,
they have the much lower prices of the raw materials that are required for the production process
(Adekola and Sergi, 2016). It is also seen that the companies from the developed countries can
get workforce by investing lesser amount in comparison with their native country. Thus, the
overall cost of the products and the low staff turnover can be got by the companies that have
expanded their business to the developing countries that have the emerging economies and
having the benefits of the globalisation process.
Market: Another reason of developing the globalisation process in the business factors is to have
the market where the products can be sold. As the globalisation process is to be developed in the
emerging markets of the developing markets, it is evident that the produced things would have
been effectively sold in the new market of the developing countries, rather than in the market off
the developed countries, where people are already have some substitute products (Crane and
Matten, 2016). In case of the companies like SASOL Limited, chemicals can be needed in the
construction and in the other industries, which is very common in the global development in the
emerging countries. Moreover, the emerging markets have lesser competition in comparison with
that of the markets in developed countries. Therefore, it is economical to expand business of the
chemical and the other products in the market of emerging economies of developing countries.
Competition: The market competition is another factor that influenced the development of
globalisation in the emerging economies. It is seen that in the developed countries, the
competition is strict and the companies have to work hard in order to achieve the competitive
advantage. On the contrary, in case of the developing countries and their markets, it is seen that
the market competition is much lower in comparison with the other markets (Masteikiene and
Venckuviene, 2015). Thus, competition is another factor that drives the business success in the
development of the globalisation as well. Competition is also required to be developed in order
to understand the potential market and the business potentiality about products in to the certain
4

GLOBAL BUSINESS ENVIRONMENT
market of the emergent economics. Apart from that, it is also seen that the business success can
be driven due to the globalisation, as it is evident that the development of the trade barriers can
be removed and hence it helps to increase the competition in the business.
Digital technology: Technological Advancement is one of the factors that contributed in the
growth of globalisation. Technological advancements like the use of internet and social media
has provided a lift in business development as well as the expansion of the business at the same
time. Moreover, in order to connect with the other companies and their strategies, technology has
played an important role (Enderle, 2015). Apart from that, the success of the business can be
ensured as the communication tools have been improved through the digital technology.
Strategic complexities that affected operating in the global environment
The global environment has been affected due to a number of factors where strategic
complexities are being included and affecting the operation of the organisation.
SWOT analysis will be justified in order to understand the complexities that are included in the
business of the organisation.
Strength Weaknesses
 To have the ability to develop the
business in the emerging economies
 Having a sound workforce
 Operating cost of the companies can be
reduced
 Optimization of resource
 Helping the environment
 Due to differences in culture and
language, companies or business
sectors can face problems
 Legal obligations are to be maintained
and sometimes it is difficult to
maintain them properly
 Synchronizing the communicational
tools into the various departments of
the company can be problematic
sometimes for the company
Opportunities Threat
 Due to the globalisation, expansion of
the business can be developed, which is
 Environmental conservation is one of
the threats which is effecting the future
5

GLOBAL BUSINESS ENVIRONMENT
effective for the country
 Revenue generation of the country can
be improved with the expansion of the
business which is developing in the
emerging economies
 Employment opportunities can be
created within the business due to the
globalisation factors
of the company, as well as the future of
the sector
 Labor exploitation is another threat
which is developing into the scenario of
the business of the developing and the
emerging economies
 Sometimes, maintaining the
international company structure is
required for the development of the
business, in the emerging countries,
however, it is not possible for the
companies like SASOL Limited
Table 1: SWOT Analysis
(Source: Learner)
Strategic challenges faced by the organisation to operate in the global environment
Globalisation is the most common phenomenon in the business world and it has helped most
companies to expand its business beyond national borders. However, it has brought forth several
challenges along with it that has hampered operations. This section deals with the challenges that
are faced by the companies in this context
The most common challenges that organisations face are to develop a central strategy that will
work in all the markets, where it is operating. It might be possible for employees from two
different countries to collaborate and work but the strategy might not work in the two different
markets (Lasserre, 2017). Hence, it often becomes a challenge to devise different strategies in
different countries in order to achieve common business goals.
It has often been seen that companies face challenges regarding operations associated with
maintenance of core competencies. These competencies are usually strategically developed that
an advantage can be built in each market. The weakening of theses competencies might lead to
6

GLOBAL BUSINESS ENVIRONMENT
loss of market share of the company to its competitors. Hence, this might hamper its business in
the long run.
Another major challenge that businesses face is regarding deployment and development of talent
in the emerging markets. It is often seen that employees from a different culture than the
company fails to match the expected growth of the company. This gap is created because of
different education levels, different cultural upbringing, and different style of communication
and others (Hooghe and Marks, 2015). As a result, it becomes difficult to develop them in an
international market. Moreover, the employees themselves prefer to work in local markets in
order to avoid such challenges relating to difference of culture. Thus developing a competent
team becomes difficult.
Pestel analysis of the UK can be developed in order to understand the challenges of the
organisation in respect to the political, economical, social and technological factors.
Political factors: Political stability is one of the greatest strong points of the UK that helps in to
the development of business as well as globalisation (Hirst,et al. 2015). However, the
implementation of Brexit has been developed and effective the business purpose and perspective.
Mostly small and medium organisations have been affected due to this.
Foreign direct investment has been there in the organisation as well as in the business sectors as
it is one of the popular destinations for FDI. The Overseas countries invested a large amount of
money into the various business sectors included the chemical industry. The corporation tax for
company profit is about 19 % however, the government has declared to reduce the corporation
tax in near future (Den Hond and de Bakker, 2016).
Economic factors: According to the economic landscape of the country, it can be declared that
the UK is the fifth largest economy of the world. It is also can be recommended that the position
have been achieved from the nominal GDP of the country. Due to the recession in 2008, the
economy of the country has been affected badly. However, the government steps have been
taken in order to have the necessary implementation to improve the condition. Cost of importing
goods has been reduced in 2017, which also affected the country negatively. The inflation rate
has been increase to 3.1% in the last financial year, which is also a factor that affected the
economy of the country (Chua et al. 2015).
7

GLOBAL BUSINESS ENVIRONMENT
Social factors: The UK market has been considered as one of the greatest consumer market of
the world. Therefore, the small and medium organisations are able to get their desired group of
consumers from the social and economical classes. The population of the country is about 68.9
million and thus it helped into the expansion of the organisations in the countries. Apart from
that, the concept of social classes is prevalent in the UK society, which helped the organisation to
develop their target market. UK has been considered as one of the most educated countries of the
world and it helps to develop the business of the organisations (Den Hond and de Bakker, 2016).
New products and Markets can be introduced in order to cater the needs and demands of the
customers that belong to the various caste, cultures and age groups. Thus, the development of
employment opportunity and market penetration for the small and medium companies is easier in
the UK than any other developed country.
Technological factors: Among the technological advanced developed countries of the world, the
UK has been considered as one of the first and foremost countries. Many financial and
technological Institutions are there situated in London and in the other cities of the country.
Businesses, irrespective of their sizes, use the technological advancement and technological tools
for communicating with their customers and the employees at the same time and the try to offer
their customers the best probable solution using the technology (Hooghe and Marks, 2015).
Moreover, a large amount of revenue also has been developed from that of the technological
sector of the UK economy
Structure, culture and governance of SASOL Ltd.
The basic management policy of the company is to focus on developing innovations and
providing social and environmental value to the globe. The main objective of SASOL is to
achieve optimum efficiency and sustainability in growth and profitability (White and Games,
2016). In order to evaluate the structure and governance of SASOL Ltd. the Mckinsey’s 7S
model is adapted as follows:
Strategy: It can be distinct as a preparation that helps the company to procure a competitive
edge over the competitors and to retain a prominence in the global market (Cox, et al., 2019).
SASOL Ltd. attempts to eloquent their organisational strategies to get a competitive advantage
concerning the structure, cultural and governing aspects. The company always makes sure about
8

GLOBAL BUSINESS ENVIRONMENT
the market they are to venture. The company may venture into the local, global or regional
market on which SASOL systematically analyse them. The customer type present in these
markets are also analysed by them. The company also develops strategies related to the
arrangements of the resources and their impacts.
Structure: Structure, here, refers of the convenience and organisational structure of various
business departments to guarantee a proper responsibility (Ravanfar, 2015). SASOL has various
structures in each department that helps the department to operate in a systematic manner. The
chief strategy that the company undertakes in order to develop a structure is dividing the
different operations of the organisation into different fragments that will be specialized in one
task. These departments are not mixed together and each department does their own job. The
departments are based on the skills and expertise of the individuals.
Systems: This factor is related to the day-to-day activities that the staffs use to get their job done.
SASOL ltd. regularly checks the equipment conditions and pipe leakages. The raw materials are
an essential part of a chemical or energy company that is mandatorily checked for its constant
availability (Mitchell, et al., 2015). The company also looks for better way of production
processes and monitors any unwanted changes in the chemical floor heads.
Shared values: The shared values are the core principles of the organisation that acts as the
common goal of the organisation, which must be achieved by the company as a whole. These
subordinate goals are given proper attention by the organisation (Channon and Caldart, 2015).
SASOL Ltd. strives to achieve efficiency and sustainability in the market by providing them with
the best possible product with utmost safety. This goal is on the mind of all the individuals
working for SASOL and achievement of it aids them to prevail in the business market.
Staff: Staffs are the employees that play a pivotal role in enhancing the efficiency of the
company with the help of their skills and knowledge (Shaqrah, 2018). A chemical company, like
SASOL, requires a diversified group of individuals working for them. The company requires
different set of people with different skills and knowledge.
Skills: This aspect deals with the actual competencies and skills of the workforce of the
company. SASOL, being a chemical company, operates for 24 hours and does not shut their
office. Hence, the companies generally need dynamic, educated and dedicated employees. The
9

GLOBAL BUSINESS ENVIRONMENT
company recruits individuals that have a dynamic mind and works with full efficiency and
dedication. The employee base of the company is significantly high and must be strategically
dealt (Ravanfar, 2015).
Evaluation on how structure, culture and governance of SASOL Ltd. has been influenced
by globalisation
The sustainability and acceptance can only be achieved after the company considers the culture
of the market and act accordingly. In order to assess the impacts of globalisation on the cultural
aspect of SASOL Ltd. the Hofstede’s cultural dimensions have been used, which will help the
company to form a primary framework of viewing the perspective of other cultural backgrounds.
 According to the theory, the individuals in a collectivist society, like Gabon and
Mozambique, emphasize mostly towards their in-group members and they are agreeable
to sacrifice their needs for the benefits of the community (Mazanec, et al., 2015). The
individuals possess a sense of togetherness, harmony and conformity that can be
advantageous for SASOL Ltd, since they have expanded their business in such countries.
The company must operate in way that helps the community of the local people that will
help them get a competitive advantage and sustain in the market.
 Most of the African nations, like Mozambique and Gabon, have a high power society that
generally accepts power as an integral part of the society. Hierarchy power is considered
suitable and valuable in such societies (Huang and Crotts, 2019). Hence, SASOL Ltd.
must make sure that their business must not affect the leaders of the society and given
high value to build the brand image of the company among the local people.
 In cultures with low uncertainty avoidance, such as Canada, people are contented with
unstructured situations. The society feels that uncertainty and vagueness is essential and
expected (Khlif, 2016). Therefore, SASOL Ltd, Canada must have the organisational
structure in an uncertain manner that will help them adapt to the business environment of
such markets.
 Countries like Australia have a masculine culture, where strong values like achievements,
ambition and power is given utmost preference over other values (Bakir, et al., 2015).
The gender roles in such societies are also divergent and harmonizing. SASOL Ltd. must
10

GLOBAL BUSINESS ENVIRONMENT
keep the cultural aspect of Australia while operating there and must have their
operational structure based on the values of the society that will give the men tough jobs
and the women with tender jobs in the company.
Hence, from the Hofstede’s cultural dimension theory, it can be seen that the countries that
SASOL has ventured in, namely Australia, Gabon, Mozambique and Canada, have a different
cultural believes and virtues which must be taken into consideration while operating.
Ethical and sustainable factors that SASOL Limited must consider in a globalised market
Maintaining transparency
In order to maintain sustainability and efficiency, SASOL Ltd. must maintain its transparency
with employees, customers and other stakeholders. The employees working in a chemical
company like SASOL must know about the pros and cons of working in such an environment.
This enhances the brand image and employee retention rate as the employees are aware of the
situation they are working in. The products sold by the company must also mention about the
ingredients and health hazards of the products that will prevent the customers from getting in
danger due to lack of awareness (Ozdamar Ertekin and Atik, 2015). The other external
stakeholder also must be aware of the knowhow of business done by the company.
Abiding to the legal framework
Each market has their own sets of legal obligations that must be duly followed by SASOL Ltd.
This will help the company to prevent the legal obstacles that might negatively affect the
company’s productivity. The company must duly abide by the rules and regulations of each
country they operate in to enhance their sustainability and brand image (Broggiato, et al., 2015).
Maintaining business integrity
Maintaining the correct business ethics and integrity is a critical part of an organisation. SASOL
Ltd. must follow proper business ethics and integrity to help them operate in an efficient manner.
The company must not follow procedures that might be profitable but put a negative effect on
others (Anderson, et al., 2018). The company’s customers and employees must be happy with
the company’s offerings that will help them build their brand image and productivity.
11

GLOBAL BUSINESS ENVIRONMENT
Efficient use of technology
A chemical firm, like SASOL Ltd. largely depends on technology for production and operations.
The technologies used by the company must be efficient and safe that will help the company to
operate in an efficient way that will help them earn profit and sustain in the market. The
technologies used must be cost effective and be environmental free. The technologies must be
eco-friendly that will help them to operate with efficiency without harming the environment
(Caplan, et al., 2015). This not only enhances the productivity of the company but also enhance
the brand image of the company.
Assessing the affects of the factors on decision making of SASOL Ltd.
The above-mentioned factors might not be profitable initially but will eventually help SASOL to
sustain and grow in the market. A transparent and honest company will help to build the trust of
the stakeholders of the company that will help them retain a loyal and trustworthy group of
customers, employees and other stakeholders, which will prove to be highly beneficial for the
company (Mondliwa and Roberts, 2019). The company must also have a legal framework and
duly follow the rules and regulation of the market they operate. This might not help the company
to earn high profit in the initial stage but will benefit them from enhancing the brand image and
trust from the market, which will help the company to sustain in the market and have a profitable
future (Mondliwa and Roberts, 2017). Business ethics and integrity is another essential part of
enhancing the sustainability of a company. SASOL Ltd. must be ethical in operating their
business, which will significantly help them to gain trust and integrity in the market. The use of
upgraded technologies also will help the company to curtail their operating cost prominently that
will enhance their productivity and efficiency. The use of modern eco-friendly technologies will
prevent them from harming the environment that will significantly enhance their brand image
(Udayachalam, et al., 2018).
Strategic expansion routes adapted by SASOL Ltd. and their pros and cons
The SASOL Ltd. adapted to the licensing strategy for expansion in the global market. The
company gives the other local companies of the market the right to manufacture their products
12