Global Business Environment

1. Concept of globalisation

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

2. Explanation on 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 have impacted positively on growth rate and raised real per capital GDP in the nations which are having open economies. Here, Africa in which SASOL Limited is mainly doing its business consist with an open economy and some of driving factors of globalisation are given below:

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

Liberalisation: This factor was introduced by 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 barriers removal have given an opportunity to business organisations like SASOL Limited reduce problems related to time and capital and this raised growth rate of the world trade which helped firms in performing business operations in much 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 along with cognition, and agents related to production of SASOL Limited & nations at global level have smoothed the growth rate of firms and economy of world at the same time.

3. The significant impact of digital technology upon globalisation

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

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

4.PEST Analysis of SASOL Limited

This technique is using by SASOL Limited for analysing macro environment. It includes four type of factor which directly affects to this company growth as describing below:

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

Economic factors: It gives a clear picture to business's experts about 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 message are going in society. SASOL Limited corporation analyse these aspect such society's structure class, education standard, culture, leisure interest, attitude and so on. It provides a better assistance in creating positive message  into society.

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

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

External environment has various impact on SASOL's ability which can increase or decrease its profitability. It involves currency exchange rate, labour volatility and governmental rules and regulations. Here, some crucial challenges are discussing below:

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

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

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

6. Recommendations on how to overcome these challenges

It has also been recommended that organisation need to use new and updated digital technology and IT systems which may aid SASOL Limited in performing operations at global business market in 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 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 model represents the interdependence of 7s main element which belongs to hard and soft elements of organisation. Hard element of this includes the strategy, structure and system, whereas soft element involves values, skills, styles and staff of organisation. In relation to SASOL Limited, its manager have adopted McKinsey model to understand actual status of the  firm related to its structure, culture and governance. The model is described as below including its elements.

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

• Strategy(Governance):Top Management of SASOL limited are formulating various kind of strategies in order to expand their business in new countries for increasing their  command at international market.  
• Structures:Basically, SASOL Limited follows organisational structure in which 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 with SASOL Limited, employees of the company works according to project requirements.

Soft element (Culture): These elements are very minimal tangible and are mainly influenced with the culture of organisation. It can be said that soft elements are equally important for the success of company same as hard elements. Soft element includes various components such as shared value, skills, style and staff. All of these are described as 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. But, the employees are trained enough to not ignore their organisational ethics while performing business activities.
• Skills:Management staff of SASOL Limited hires skilled employees in order to enhance efficiency of work at workplace. Employees are highly skilled according to the requirement of their job role.
• Style: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 of work among the working staff. This develops interest of employees in the assigned work.
• Staff:SASOL Limited handles staff of  approximately 30100. The strength of manpower is owns the capability to perform operational activities of the company. Along with this, employees are well qualified to work at international market and deal with situation which occurs during the 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 international level. In relation to SASOL Limited, the company is expanding its business at international by adding some more countries in the list of trading countries. As the company is growing, it can be said that all of the operational activities, management system and strategy are required to be refresh in order to meet global standards.  There are various dimensions of culture on the basis of  which functioning of the SASOL will be influenced. Some of these dimensions are described as 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 be  comes up with distinctive principles, standards, rules, norms of conduct that make cooperation, justice, and freedom possible which helps in executing the programmes at global market. Here, it has been analysed that if companies like SASOL Limited does not focuses on its ethics and sustainable factors, organisation may not reach to an all new level. In this context, ethics stays under inseparable from questions related to cultural meaning and social power. Some of ethical and sustainable factors of Global market which needs to be followed by SOSAL Limited or other countries are given beneath:-

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

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

4. Factors have affected decision making in a global context

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

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

5. Strategic expansion routes the organisation took and analyse both advantages and disadvantages

In this context, it has been found that for expansion of business in national and international market, 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: Combination of two or more organisations by giving securities of one company to stakeholders is known as merger process. While when one firm takes over another as well as clearly established itself as owner, is called acquisition. Both methodologies are considered as effective way of business expansions. In this regard, integrated the management of a company into overall strategies and gain control over acquired business are some main benefits of merger and acquisition. But it increase liabilities also.
• Franchising: Under this method, a company can operate its business by the name of another organisation, who is also known as franchisor. For this assistance, franchisee has to pay some amount of fee to company whose name they have used. Therefore, main advantage factor of this route is low financial risks and less-cost for assessing market potential. But dependence on franchisee and limited opportunities in profitability are considered as major disadvantage of this method.    

CONCLUSION

From above mentioned report, it has been concluded that globalisation process have led business organisations to reach to consumers at 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 organisation in understanding the impact of external environment on business.

REFERENCES

• Apăvăloaie, E. I., 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 meduim-sized enterprises. Economics & Sociology. 7(3). p.22. 

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