Global Business Environment

1. Concept of globalisation

Globalisation refers to the process through which organisation expand their businesses at the international level. The concept of globalisation has been initiated with the aim of enhancing economic, social and political interaction across the national boundaries. Globalisation is also considered as the overall growth of the world together by sharing interdependency of production of products and services, consumption of similar goods etc. It has increased expectations of businesses in order to grow their organisation by connecting internationally with high profit margins. It can be said that technology contributes to connecting organisations like SASOL Limited with others for the purpose of making their business successful. Globalisation is also helpful for the economic growth of the overall world as people can easily interact with each other and perform their business activities with the highest profit margin.

2. Explanation of the driving factors of globalisation

Over the years, driving factors of globalisation are some key elements that have led economy of a particular nation or of world enhanced or improved foreign trade along with capital flows. This has impacted positively on growth rate and raised real per capita GDP in the nations which are having open economies. Here, Africa in which SASOL Limited is mainly doing its business consists of an open economy and some of the driving factors of globalisation are given below:

Technology: This is considered the major driving factor of globalisation where faster and cheaper technology (digital technology) in the global economy has reduced domestic barriers related to both time and space. This led firms like SASOL Limited to perform their business at a global level with ease.

Liberalisation: This factor was introduced by the World Trade Organisation. Here, unilateral negotiations and decisions are being taken by the SASOL Limited and countries or nations in which they are performing operations.

Trade Flows: Trade barrier removal has given an opportunity to business organisations like SASOL Limited to reduce problems related to time and capital and this raised the growth rate of world trade which helped firms in performing business operations in a much more effective manner.

Capital Flows: Capital flows among different open economy-based nations have become much mobile which has helped companies like SASOL Limited to perform well among different countries.

Mobility: Individuals, data cognition, and agents related to the production of SASOL Limited & nations at the global level have smoothed the growth rate of firms and the economy of the world at the same time.

3. The significant impact of digital technology on globalisation

Digital technology has contributed to the growth of the organisation as it supports businesses in performing their transaction. It can be said it has been identified that digital technology has impacted positively globalisation. Advancements in telecommunication have made communication among business-associated people easier as an organisation can share their required information in less period of time with the related person. In relation to SASOL Limited, the usage of digital technology is beneficial for this company as it will be easier for the new CEO to communicate with new employees in order to discuss important issues with them. This will also contribute to the further expansion in new countries with digital technology.

Digital technology is also helpful in the exchange of ideas, popular culture and language which contributes to developing positive relations among employees who work together. It can be said digital technology has not only made work businesses easier at a global level, but it has also increased the number of opportunities for organisations. With the adoption of digital technology organisations can expand their business in the international market.

4. PEST Analysis of SASOL Limited

This technique is used by SASOL Limited for analysing the macro environment. It includes four types of factors which directly affect this company's growth as described below:

Political factor: As the company is contributing to gas and oil in different countries so here needs to be concern about their political environment. Managers should analyse its stability, military invasion, trade regulation, tax rates, wage legislation, product labelling and property protection. consideration of such aspects, SASOL Ltd. can sustain long-term profitability in the market.

Economic factors: It gives a clear picture to business experts about the economic cycle after determining this system. In respect of SASOL Limited, it involves exchange rate, government intervention, growth, inflation, workforce skill, education standards and discretionary rate.

Social factors: It provides knowledge about what type of messages are going on in society. SASOL Limited corporation analyses these aspects such as society's structure class, education standard, culture, leisure interest, attitude and so on. It provides better assistance in creating a positive message in society.

Technology factor: For the last few years company has been growing rapidly. SASOL's experts observe and analyse these situations for instance: technical diffusion rate, impact on cost structure and rival's technical challenges in the market. Such aspects of understanding help to company in increasing high productivity along with different images of products.

5. Challenges of globalisation and the strategic challenges this represents for the organisation

The external environment has various impacts on SASOL's ability which can increase or decrease its profitability. It involves currency exchange rates, labour volatility and governmental rules and regulations. Here, some crucial challenges are discussed below:

Changing digital landscape: By adopting new digital technologies, the company aspires to transfer more returns on this journey. To increase efficiencies SASOL managers should embrace more effective solutions and explore operational efforts.

Global commodity prices: Price expectations are driven by short-term continuity in the global market. It is directly related to the target market demand for natural and LNG gas. So, a high rate of chemical commodity requirement supports long-term profitability.

Weak economic growth: It creates many uncertainties such as the GDP growth rate in the market which affects to business productivity. SASOL Limited corporation faces many challenges which involve timing risks, geographical change and so on.

6. Recommendations on how to overcome these challenges

It has also been recommended that organisations need to use new and updated digital technology and IT systems which may aid SASOL Limited in performing operations at a global business market in a much more effective and efficient manner. On the other hand, it has also been recommended that CSR activities for developing public relations may aid in performing tasks in a much more effective and efficient manner.

TASK 2

1. Explanation of the structure, culture and governance of the organisation through applying McKinsey's 7S model

Mckinsey's model represents the interdependence of 7s main elements which belong to hard and soft elements of organisation. The hard element of this includes the strategy, structure and system, whereas the soft element involves values, skills, styles and staff of the organisation. In relation to SASOL Limited, its managers have adopted the McKinsey model to understand the actual status of the firm related to its structure, culture and governance. The model is described below including its elements.

Hard element: These elements can be identified by the management team of the organisation as it include strategies, structures systems etc. In the context of SASOL Limited, hard elements for this organisation are described below:

• Strategy(Governance): The top Management of SASOL Limited are formulating various kind of strategies in order to expand their business in new countries to increase their command at the international market.  
• Structures: Basically, SASOL Limited follows an organisational structure in which the organisation is subdivided into small sections which are finalised on separate specific functions such as finance, marketing, IT, operations etc.
• Systems: It refers to the working pattern of employees in performing business activities. In relation to SASOL Limited, employees of the company work according to project requirements.

Soft element (Culture): These elements are very minimal and tangible and are mainly influenced by the culture of the organisation. It can be said that soft elements are equally important for the success of a company as hard elements. Soft elements include various components such as shared value, skills, style and staff. All of these are described below:

• Shared values(Culture): Value for SASOL Limited represents their business ethics. It can be said that the culture of the organisation is based on overall corporate culture. However, the employees are trained enough to not ignore their organisational ethics while performing business activities.
• Skills: The management staff of SASOL Limited hires skilled employees in order to enhance the efficiency of work at the workplace. Employees are highly skilled according to the requirements of their job role.
• Style: The democratic leadership style is followed by SASOL Limited as it gives equal importance to all employees at the time of decision-making. In this type of leadership style leader mainly delegates responsibility for work among the working staff. This develops the interest of employees in the assigned work.
• Staff: SASOL Limited handles a staff of approximately 30100. The strength of manpower is the capability to perform operational activities of the company. Along with this, employees are well qualified to work in international market and deal with the situation which occurs during work.

2. Applying Hofstede's Dimensions of Culture to demonstrate how the organisation has been influenced

Hofstede Model was developed by Dr Geert Hofstede in the ending of 1970s. This model is generally based on different cultural dimension which varies from each other at the international level. In relation to SASOL Limited, the company is expanding its business internationally by adding some more countries to the list of trading countries. As the company is growing, it can be said that all of the operational activities, management systems and strategies are required to be refreshed in order to meet global standards.  There are various dimensions of culture on the basis of which the functioning of the SASOL will be influenced. Some of these dimensions are described below:

Power distance Index:

Uncertainty avoidance:

3. Evaluation of ethical and sustainable factors

Ethics or morality along with sustainable factors of a business organisation needs to come up with distinctive principles, standards, rules, and norms of conduct that make cooperation, justice, and freedom possible which helps in executing the programmes at the global market. Here, it has been analysed that if companies like SASOL Limited do not focus on their ethics and sustainability factors, the organisation may not reach an all-new level. In this context, ethics stays inseparable from questions related to cultural meaning and social power. Some of the ethical and sustainable factors of the Global market which need to be followed by SOSAL Limited or other countries are given beneath:-

Corporate social responsibility (CSR):- This is considered as one of the crucial factors of global business environment which needs to be followed by every single business organisation while performing business at the international level. As SASOL Limited is doing business at the international level the following organisation if does not consider CSR activities and performs them for welfare of the society then the organisation may not sustain itself at the global market for a long period of time.

Legislations:- Business organisations that are doing business at the international level face an ample number of antithetic legislations made by different nations' governments. When it comes to performing well in the global market it is required for SASOL Limited to follow every single legislation that has been made by different nations in which the company is doing its business. Failure to do this may lead the firm to face a number of issues or maybe their licence can also be cancelled for performing operations at the international level.

4. Factors Have Affected Decision-making in a Global Context

In this context, it has been analysed that there is an ample number of factors which mainly impact the decision-making process of business organisations at the global level. Here, it is required for SASOL Limited to focus on cultural values, social responsibilities and legislations that are being followed by the public all over the world. Let's suppose SASOL have made its decision to expand its business in the United Kingdom where citizens mainly consider their life with roles that they have related to values of living the life. Because firms have developed all the strategies to target customers in Africa, they might have to make changes among these strategies so that they can improve their customer base in the United Kingdom because of cultural changes and values that are being followed by targeted customers of United Kingdom.

On the other hand, as the society of the UK is different from Africa, it might be possible that organisations have to make alterations in their activities related to corporate social responsibility. Therefore, effective changes in the decision-making process related to CSR activities may lead SASOL Limited to perform business at a global level with much more effectiveness.

5. Strategic Expansion Routes the Organisation Took and Analysis Both Advantages and Disadvantages

In this context, it has been found that for the expansion of business in the national and international market, the employer of SASOL must consider the role of globalisation. Through this process, they can evaluate effective strategies for business expansions. With this assistance, some major routes while constructing a firm internationally stated as beneath:-

• Merger and acquisitions: The combination of two or more organisations by giving securities of one company to stakeholders is known as the merger process. When one firm takes over another as well as clearly establishes itself as owner, is called acquisition. Both methodologies are considered an effective way of business expansion. In this regard, integrating the management of a company into overall strategies and gaining control over acquired business are some main benefits of merger and acquisition. But it increases liabilities also.
• Franchising: Under this method, a company can operate its business by the name of another organisation, which is also known as a franchisor. For this assistance, the franchisee has to pay some amount of fee to the company whose name they have used. Therefore, main advantage factor of this route is low financial risks and less cost for assessing market potential. However, dependence on franchisees and limited opportunities for profitability are considered major disadvantages of this method.    

CONCLUSION

From the above-mentioned report, it has been concluded that the globalisation process has led business organisations to reach consumers at the international level. Removal of trade barriers may aid firms in doing business without fear of facing issues related to different policies of governments of different nations. On the other hand, it has also been summarised that Pestle Analysis can help organisations understand the impact of the external environment on business.

Also Read: Role of Globalization in the Growth of Company

REFERENCES

• EI Apăvăloaie, 2014. The impact of the Internet on the business environment. Procedia Economics and finance. 15. pp.951-958.
• Axelrod, R. S. and VanDeveer, S. D. eds., 2014. The global environment: institutions, law, and policy. CQ Press.
• Belás, J. and et. al., 2014. Significant attributes of the business environment in small and medium-sized enterprises. Economics & Sociology. 7(3). p.22. 

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