Globalization and Sasol Limited: A PESTEL Analysis

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Table of Contents
Introduction.................................................................................................................................................2
PART 1 - Drivers and challenges for globalization........................................................................................3
Political factors of SASOL limited.............................................................................................................4
Economic factors of SASOL Company......................................................................................................4
Social factors of Sasol Company..............................................................................................................5
Technological factors of Sasol Company..................................................................................................5
Environment factors which will affect Sasol industry..............................................................................5
Legal factors for the Sasol industry..........................................................................................................6
PART 2 - Impact and Strategic Direction......................................................................................................7
7S Strategy, Structure and Systems; the soft elements are Style, Shared Values, Skills and Staff...........7
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10

Introduction
Globalization is defined as the process in which people interact with other worldwide.
Globalization is also considered as the formation of the unregulated market where local
economies integrates with national economy to expand their economy. Globalization is
increasing so widely due to the advancement in the technologies, communication and
transportation. The interaction occurs globally it also helps in creating the new social aspects
along cultural aspects. The globalization is consisting of the following elements: velocity,
extensity, intensity and impact. Globalization is helps in extending the social relations or the
culture across the world.

PART 1 - Drivers and challenges for globalization
Economically globalization is defined as the interaction and integration in order to exchange
social aspects along cultural aspects. Globalization is made by the combination of services,
goods, technology, resources, and data. For an organization it is all about expanding the business
globally or combining with the local markets. Now it is easy to make global market after the
removal of cross-border barriers. The advancement in the process of globalization has enabled
the formation of an interdependence culture both economically and socially. There are many
factors which have contributed in the wide expansion of globalization. Some of the factors are
listed below which are responsible for driving changes for the process of globalization-
 Change in technology- the growth in technology has resulted in decreasing the cost of
communication for transmitting information. With the help of web technology,
knowledge of doing trade is also getting increased.
 Tax system- any business is in more profit if they pay less to the labor unit and for the
other factors responsible for the production of business. By observing this abroad has
permitted to the countries to fix their tax system according to the foreign direct
investment. By doing this the countries will get more foreign projects.
 Scale of economy- according to the economist’s minimum efficient scale is increasing for
the industries. If the minimum efficient scale increases then the domestic market does not
satisfy the small industries selling needs. This helps in the expansion of small industries
globally.
 Containerization- now the transportation is becoming cheap through ocean because of the
containerization. If the shipping cost of products in the global economy then it helps in
bringing the manufacturer price of exported product in the export market.
 Less protectionism- with the change in time old forms of protections has been discarded
such as foreign exchange and import licensing. The countries have achieved import
quotas with their struggle. This achievement has helped the countries to get their real
economic growth and are now capable of giving quick response in order to persistent
trade.
 Strategies of multinational companies and transnational- most of the organization are
expanding their business internationally by investing on the various brands significantly.
This is mostly performs by those business organization who own a particular brand to get
the faster economic growth. This expansion also helps in increasing the consumers
around the globe. (Crane et, al. , 2014)
Digital technology and its increasing generality are impacting “Human Life” from last few
decades. Today government is also serving the public digitally and enabled all the services
online. This drive the expansion in the GLOBALISATION because of this many citizens who
lives in rural areas now becoming familiar to what is INTERNET. They were learning how they
can become socialize to everyone across the world. The digital technology has also created new
opportunities for far-off employment. By residing in any country organization can sell or buy
product from any other country. This helps the organization to know where they can be serve
others and this buying and selling of goods or products through INTERNET is helping
organization to get interact all around the world, this is also helps in increasing the GDP OF THE

COUNTRY and it was observed that from last few years DIGITAL MARKETING is
contributing in the increment of organizations economic growth as well as of the country.
SOCIAL MEDIA is one of the best parts of digital technology which helps organization to
globalize all around the world. With the help of the application of the social media like
facebook , whats app, instragram and many other the organization can promote their
products or can sell the products and can communicate to consumers communicating to
consumers directly, this also removes the cost of intimidators. By enabling digital technology
the organization can get the knowledge of various countries culture and language .This part
of digital technology is escalating day by day .The people who are uneducated were also
willing to use social media to get globalised. Many were increasing their business through
this platform.
GLOBALISATION does not only mean exchange of goods and services it also means to share
our ideas , thoughts so that we all can be familiar to each other.
PESTEL define as political, economic, social, technological, environmental, and legal
factors. PESTEL analysis acts a tool which is used to know macro environment of any
organization. If the any change in macro environment occurs then it will not only create
impact on the fast growing energy and chemical company SASOL limited but it will also
impact the other energy and chemical companies too. This change of macro-environment
also affects the porter five forces which are used by an organization to plan the strategies in
order to get more economic growth. PESTEL analysis will provide the challenges and
opportunities which will be faced by the SASOL Company.
Political factors of SASOL limited
This factor will create a long term affect on the Sasol limited in terms of the profitability
which Sasol limited wants to achieve in certain company or in the market. The Sasol is an
organization which is growing fast in the energy and chemical industry if the company
expands their industry in different countries then the company will face dozen of problems in
the political environment of the particular country. In order to achieve success SASOL
Company need to analyze the following political factors before expanding the business in
other country.
 The most important to check is the political stability of the country and impact of
energy and chemical industry on the country’s economy.
 Rules and regulation for the materials which are required for the production of
chemical and energy industry.
 The organization that are in favor of energy and chemical industry.
 Requirement of the framework which is legal for enforcing the contract.
 Protection of property that is intellectual
 Incentives and rates of tax
 The benefits which are compulsory for the employees
 Regulations in the pricing system of the basic materials required by sasol industry.
 Safety requirements of the chemical industry

Economic factors of SASOL Company
The factors which are responsible for demand and investment aggregate in an economy are
saving rate, foreign exchange rate, inflation rate and cycle of economy. The economic factors
that are observed for the Sasol Company are as follows-
 The type of economic system on which the country is operating and the how much that
type economy has stability.
 Rate of exchange and the currency value of country
 Quality of the infrastructure – is according to the demand of the industry or not.
 Cycle of business stages
 Cost of labor along the productivity of the industry
 The rate of unemployment
 Citizens level of education
 Growth rate of the country’s economy
Social factors of Sasol Company
The culture of society defines the behavior of country towards the Sasol Company. This factor is
also responsible for defining the culture of Sasol Company. Social factors which defines the
leadership of Sasol industry are as follows-
 Structure of class, power and hierarchy within the society.
 Culture (role of gender,
 Standard of education on which the Sasol company will appoint the employees
 Behavior of the society or the support for entrepreneurial
 Attitude of the society
 Level of skill of citizens
Technological factors of Sasol Company
Due to the technology many industries are transforming very fast. For the establishment of any
industry it is also important to measure speed of the technology along the analysis of technology.
The slow speed of the technology will affect the growth and production of the industry. The
analysis of technology includes the following factors for Sasol company-
 Knowledge of new developed technology and the technologies used by the competitors of
Sasol Company for the production of chemical and energy.
 Impact produce by technology on the product.
 Changes in the technological diffusion.
Environment factors which will affect Sasol industry
This factor is also responsible for the profitability of the organization because every country has
different norms for the environment. Within the country even each state can have different rules
and regulation in order to protect environment. As Sasol Company is related to production of
chemical also develops the energy. It is important to analysis environment factor before Sasol
Company enters the new market. The factors which Sasol industry has to analysis before setting
the business are as follows-
 Weather is supportive or not.

 Changes in the climate are favorable or not.
 Rules and regulation regarding the air, water and soil pollution.
 How the Sasol Company will manage their waste.
 To check the possibility of recycling the product or energy is possible or not.
 Protection of species which are endangered
Legal factors for the Sasol industry
Many of the countries rules and regulations are not enough to protect the organization. Before
establishing business the organization must become familiar to the rules and regulation of the
place where the organization wants to expand the business. The legal factors that are analysis for
Sasol industry are as follow-
 The laws against discrimination
 Laws for the copyright and for the properties intellectual
 Rights of the consumer
 Laws for the safety and health of employees and customers.
The expansion of chemical industry is facing many challenges globally. The challenges are also
responsible for change in operation process of the company. The trends which are observed in
order to expand chemical industry globally are as follow-
 Increase in competition- in the chemical industry new competitors are emerging day by
day not only from the another industry but also competitors are emerging from inside the
industry. This completion mainly comes from those sectors which are involved in the
sector of mining, utilities and mining. Sasol Company can only retain its growth for the
production of chemical by making strategies for the business process.
 Customer’s demand of intimacy- the behavior of customers is also getting change now
customers demand to check and track their orders.
 Changes in distribution channel- it is challenging for the chemical companies to cover
the supply chain challenge from both the sides. Sometimes customers place small order
so the distribution channel needs to work efficiently.
The challenges of globalization can be overcome by forming microeconomic policies. This
involves providing training related to career, education, and formation of market which requires
less rigid labor. The policies makers should make the polices to develop the economic growth.
The countries government also needs to develop to unlock the growth of institutions and
infrastructure. This involves removing the corruption and the prices which are distorting
economic growth. The organizations need to make more investments on the technology. The
implementation of new technology will make the workplace more flexible, changes in the
distribution system will help in reducing the cost. The advancement in the technology is also
helpful in decreasing the cost required for healthcare. The development with technology provides
many opportunities which can help in reducing the rate of corruption.

PART 2 - Impact and Strategic Direction
Any organization can work efficiently if the organization is capable of finding internal factors
which regulates the growth of organization and must be capable of understanding them. The
framework of 7S or McKinsey 7S model helps the organization to understand internal factors. In
this model all the hard and soft factors are analyzed. The soft factor involves the culture of
organization and hard factor forms the
7S Strategy, Structure and Systems; the soft elements are Style, Shared Values,
Skills and Staff.
1. Strategy- this involves planning a clear vision about the motto of organization. The
formation of strategy helps the organization to achieve goal as early as possible.
2. Structure- this factor describes the structure on which organization is performing.
3. System- this involves the process and methods used for the operation of organization and
also the procedure used for the communication.
4. Style- this is about the way company manages to perform their work or describes the
leadership style.
5. Skills- this is describe the organizations and the employee’s skill to work to achieve their
goal.
6. Staff- this factor is all about the employees and the job they are performing for
organization as well as for themselves.
7. Shared values- this factor describes the beliefs and values of organization in the corporate
culture. (Shiri et, al., 2014)
This model is mainly used by the organization to figure out problems related to the
performance of organization. This model fulfills all the internal gap of an organization and
helps the organization to grow globally. When the organization gets involve in the global
market then the first priority of the organization is to make happy consumers belonging to
different culture. In order to maintain communication between cross-culture the framework
of the Hofstede’s cultural can be applied. This model examines the values and the culture of
society. Culture creates conflict by making the differences between the values. This model
helps in making power distance which means by the application of this model organization
can make the capable leader. The marketing strategy of leader must influence the customer
for this the leader needs to describe how their product is beneficial to the consumers. In the
countries where the rate of individualism is high a good leader can take decide to target the
particular consumer depending upon the demand of consumer. This model is helpful in
knowing the general overview of culture on the organization.
Managing and making of the decision is an important part for the growth of organization. The
correct decision will define the well-functioning of organization. The implementations of above
two describe models helps in making the genuine decision in the favor of organization by also
considering the impact of culture in the organization. The above describe model firstly gathers
all the information related to the lacking of organization and after this determines the correct
decision which can be taken in order to resolve problems. After understanding the issue clearly
these models are also helpful in identifying another alternative decision, and provide the choice

of taking better decision. This model helps in determining the acceptability, desirability and the
feasibility for managing the organization. At last the decision is taken and execute effectively
with all the planning. The concept of sustainability is becoming important for any organization.
This concept effects the various marginal decisions of the organization. The concept of business
sustainability and ethics involves the three pillars as follows-
 Environmental pillar- this pillar needs more attention by the organization. To focus on
this pillar the companies need to decrease carbon-footprints, water usage and the effect
produce by their production of the company on the environment. If the companies
contribute in saving planet then the company will also get economic growth. Not all the
companies produce effect on environment.
 Social pillar- this involves the support of employees, stakeholders and of the community
where the company is running. This pillar approaches to support and secure employees
fairly. Also this pillar helps the organization to become a responsible member of society
in both the ways globally as well as locally. From the employees side this pillar involves
formation of policies which will provide feature of flexibility, opportunity and learning to
the employees. For the community this pillar helps in making contribution by the
organization for the public projects locally or globally.
 Economic pillar- if the business is profitable than it means business is sustainable. This
pilaar involves the risk management, compliance and proper governance. This pillar can
also be called as governance pillar which helps in the formation of corporate organization
with proper governance. In this the formation of those policies occur which can provide
profit to the organization. (Assembly et, al., 2015)
If all these pillars are followed by the organization they it helps in building the good
reputation of organization along the goodwill of public. The growth of any organization
depends on the strategy followed by the organization. If the plans and strategy of
organization increases then the inorganic growth approach is beneficial. This type of
expansion involves the expansion of organization from the bottom line with the use of
acquisitions and mergers. The advantage of using this approach is that it helps in making
more investments on the productive mergers. On the other hand organic growth helps in
knowing the identity of organization in front of others. (Weiss et, al. , 2014)

Conclusion
In this report the growth of organization Sasol which is fast growing in energy and chemical
industry has been analyzed. The different ways by which the organization can be get
globalized are discussed. The process of globalization is expanding because of advancement
in technology and communication and transportation process. The main factor which is
responsible for driving changes in the globalization is due to digital technology. This
technology is enabling awareness among the people about the various business organizations.
in order to establish company for the profitable growth and to get better economic growth the
7S model along the Hofstede’s cultural model. These models help the organization to
determine internal lacking factors of organization. After knowing the internal issues these
concepts also helps in taking correct decisions for the favor of organization. In order to
achieve better economic growth organization also needs to follow required business ethics
and the sustainability.

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