Unit 18 � Global Business Environment Assignment Sample

Introduction Of Globalisation, The Process Of Increasing Cultural And Economic Convergence. Materials, People, Technologies, And Resources Are Now All Part Of One Global Market Assignment

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Part 1: Drivers and challenges for globalization

 Concept of globalization.

"Globalisation” is the process of increasing cultural and economic convergence. Materials, people, technologies, and resources are now all part of one global market. Businesses can now interchange products, advanced technologies, knowledge, and trends across markets due to the continuous growth of globalisation. The idea of globalisation gained increasing traction during the 18th century as telecommunications and transportation technologies became advanced (Yameogo et al., 2021). Primarily globalisation is viewed as a "economic process" that involves the fusion and interaction of social and cultural components. By permitting the free flow of people, knowledge, information, and things across borders, globalisation aims to secure socioeconomic integration and the advancement of people's standard of living worldwide. A corporation can sell products to its clients at a much-reduced price thanks to the reduction in production costs brought about by globalisation. Businesses can contribute more effectively to raise the level of living by expanding the globalisation concept. Overall, it can be said that Globalisation has created the opportunity for all the worldwide customers to choose from a wide variety of options.

2. PESTLE analysis illustrating the broader and global influences on SASOL

SASOL Limited is a global corporation that provides customers all over the world with comprehensive energy and chemical goods. It was founded in 1950 and is a South African business. The company's headquarters are in Sandton, South Africa, and Fleetwood Grobler most recently served as the company's CEO. In 2020, the company expects to earn an average of 1,226 crores USD. More than 30,000 people are employed by it, and they are significantly giving their continuous hard work to meet all the requirements of the clients. The brand operates in the oil and gas chemical business in which it has to confront many obstacles owing to the impact of macro environment variables. The PESTEL study of SASOL described below will assist the company in making wise strategic decisions by following some trends of the market.

Political factors - It refers to the problems relating to a nation's influence and political stability that may have an impact on a company's development and success. SASOL can grow regionally, nationally, and worldwide when the government is stable. Due to the several countries' differing tax policies, SASOL has to deal with issues. Different laws and rules that the company must abide by in various nations have an impact on how smoothly corporate operations go. Political factors that monitor, regulate, and restrict free company activities and have an impact on growth and profitability also heavily weigh competition regulation.

Economic factors- Economical variables include a number of concerns with the economies of the many nations in which a corporation works. Inflation, unemployment, interest rates, taxation, and other economic conditions are only a few examples (Achinas et al., 2019). Changes in various taxes that may have an impact on the cost of producing goods and services for the business provide challenges for SASOL. Additionally, due to Brexit policy's high expenditures and decreased profit margin, the brand must pay additional rates and fees. Consumer income is another economic aspect that may have an impact on a nation's business climate. Businesses may easily flourish and succeed in a highly productive nation where people have great affordability.

Social factors: Social considerations influence a variety of difficulties in the community in which a firm operates (CFI Education Inc, 2022). It covers consumer purchasing patterns, national cultural influences, individual status and socioeconomic class, public health awareness, and more. In underdeveloped nations,the people don't have the affordability to purchase premium products and services. The profitability of the company can be impacted by how a country's culture is seen, as well as how smoothly commercial processes run. The sales of goods in many nations are also influenced by consumer health consciousness. To match consumer demands and expectations, companies should manufacture more healthful goods.

Technological factors: Technological factors include problems with technical advancement and growth. It encompasses a number of challenges, including advancements in technology, greater research and development, accessibility to and connectivity with the internet, and the development of artificial intelligence. By investing in development and research that will examine better scope and chances for business expansion, SASOL can ensure higher success and profitability. Better technological infrastructure, including 5G technology, enables businesses to better serve their customers and expand their global reach. SASOL should make use of process automation that will enable tasks to be completed more quickly and with less expense.

Environmental factors: Environmental variables cover a wide range of topics, including waste management, the number of disposable materials used in product manufacturing, and carbon emission rates, among others. SASOL must be concerned with preserving a suitable global carbon rate that will raise the value of the brand. The company should practise effective waste management to win over more loyal customers. It can employ disposable items that will improve the company's CSR and the expansion and sustainability of the brand.

Legal factors: Due to numerous acts and laws of many countries, SASOL has to deal with challenges. To carry on conducting lawful business, it must abide by the rules and limitations set forth by the legislation. A number of Acts, including the Employees Equality Act, Consumer Protection Act, Minority Act, Migrant Worker Act, Data Protection Act, Free Trade and Tariff Act, and others, can have an impact on the development and effectiveness of a firm.

3. An analysis of the key driving factors of globalisation

Environmentally responsible technology

In order to reduce overall pollution, governments in every nation have recently implemented restrictions for the use of environmentally friendly technology. Many businesses now aim to use technology that will enhance their company's CSR. Businesses today function globally and attain more success and profitability by utilising "Go green technology." SASOL provides organisations the policies, governance frameworks, objectives, and reporting systems required to deal with the opportunities and threats brought on by a fast changing global environment through our environmental sustainability management framework (SASOL sustainability, 2022). As part of our group's commitment to sustainable development, these policies, frameworks, and targets help our businesses create and implement processes and procedures.

Artificial intelligence

Artificial intelligence is becoming essential for managing successful global corporate operations. Today's ease of access to the internet widens the market for businesses, which significantly boosts the nation's economic growth. Thanks to artificial intelligence, a corporation can increase its chances of exchanging knowledge with partners around the world. SASOL has been incorporating the advanced technologies to cater to the needs and demands of the customers. They are gaining the competitive advantage with the implementation of various technologies like Refinery technologies, chemical and analytical technologies (Technological Innovation, 2022).

Data Protection

Data privacy has become increasingly important in recent years for the collection and preservation of consumer and personal business information. Modern software should be used by businesses to safeguard and protect client data. Data confidentiality violations will reduce business productivity and have an adverse impact on the economy.

Effects of the Covid 19 Epidemic

The most disastrous event that impacts a business's growth, performance, and profitability is COVID 19. The world's economic stability has been severely impacted during COVID 19, which has a significant negative influence on corporate operations and lowers profitability (Meyer et al., 2022). The majority of enterprises suffered significant losses during the epidemic, which decreased their viability and eligibility.

Climate change: Climate change has been one of the major issues that most of the companies face in the contemporary period. The arte of carbon emission and CHG gases have increased a lot which has been negatively affecting the environment. It has led the companies to focus on the level of emission level that has been restricting the companies to remain sustainable.

Ukraine War: The recent situation between Russia and Ukraine poses hazards to the world economy. Following the conflict, Russia imposed export restrictions on gas and energy, which is the primary cause of the global environmental disaster and high gas prices. Popular energy colossus Sasol provides oil to the entire nation. Sasol is concentrating on increasing energy production during the current energy crisis in order to support the brand's continued growth and profitability. Although it must contend with challenges for an increase in import and export rates as a result of the crisis between Russia and Ukraine.

4. The significant impact of digital technology on globalisation.

Digital technology has recently become one of the most important factors in a company's growth, profitability, and overall performance. Digital technology broadens the business's geographic reach and draws a sizable audience to the brand. Digital trading, machine learning (AI), cloud computing, financial technology, and other digital technologies are now widely used. With the use of digital technology, firms can communicate, trade, and invest more effectively and explore additional business possibilities (Arogyaswamy and Hunter, 2019). Businesses will be able to adapt and work together with changing client needs, choices, expectations, and affordability thanks to digital technology. The digital innovation helped the companies to ensure their economic stability.

Since the foundation in the 1950s, SASOL has been a leader in technological advancement and quality. They have been creating and commercialising cutting-edge energy-related technology for more than 60 years, initially using coal as a feedstock, then moving on to gas, and eventually turning to renewable energy sources. It has accelerated the growth of business in the contemporary period (Radovi? et al., 2019). The successful businesses are not only using technology as the automated process but act as the tool of improving their business operations. The digital presence is necessary in the organisation for sustainability and survival in the challenging market. If there is lack of digital automation the companies can fail to compete and survive in the market. Therefore in order to gain the competitive advantage SASOL have been using the most upgraded technology to gain the competitive advantage. They are utilising the SASOL Hydrocarbon Synthesis, Refinery technologies, chemical and analytical technologies to satisfy the needs and requirements of the customers. By enhancing the digital technologies they are boosting the productivity of their performance. The digital technology has reduced the costs of their production, time and hardship of the employees. Digital technology has improved the efficiency of the employees. SASOL has been engaging innovative technologies to target a wide audience. Enhanced network activity is obtained due to effective use of technology and services.

5. The various challenges and complexities globalisation brings to an organisation such as SASOL.

The various challenges that are associated with globalisation can be described as follows.

Exploitation in the workplaces : Workers' exploitation is a major issue that the globalisation of the economy has brought to organisations. Employers who abuse their workers in order to make money are said to be engaging in worker exploitation. Employers take advantage of their employees by giving them inadequate salary, no paid holidays, lengthy work hours, and other unfair conditions. Because of exploitation, job seekers choose to work in industrialised nations where they will receive fair pay for their contributions (Zürn, 2019.). Organisations in developing nations must engage workers from other nations to hire highly qualified and skilled personnel. SASOL have to cope with this situation by providing effective wages and incentives to motivate the employees.

Political instability:  There may be certain political instability within that poses threat to the organisations. If the political turmoil is present within the nations the companies will fail to thrive in the market. They have to experience some critical rules and regulations within the nation (Polinkevych et al., 2021). SASOL have to deal with various export and import tariffs to carry out their business functions. They might face difficulty while operating their business in other nations. SASOL while expanding their business to other nations they have to deal with the political issues.

Inefficient infrastructure: Due to a lack of infrastructure or resources, organisations must also deal with challenges while expanding their business into other countries (Blandi, 2018). Huge challenges, such as a lack of transportation infrastructure, a skilled labour shortage, an absence of government support, a lack of money, etc., can arise in developing nations. Due to these challenges, a business will find it challenging to establish outstanding results in a developing nation. If SASOL do not have effective infrastructure they will fail to grow their business.

6. Recommendations of overcoming the challenges

SASOL has to incorporate efficient strategies to overcome the challenges that they are currently facing. A company like SASOL can sustain successful methods to address globalisation-related issues and include successful operations in many nations throughout the world. The business should give employees improved possibilities for skill and knowledge growth through better training and coaching. Businesses should give employees fair pay and benefits, which will encourage them to put up more effort at work and lower the likelihood of worker exploitation. Businesses can raise funds from investors, sell shares to the general public, and form partnerships to expand their operations to new nations in order to control their investment costs.

Part 2: Impact and Strategic Direction

1. Introduction

The company SASOL mainly deals in a large amount of consolidated oil and gas and also involves other chemical activities and is mainly based out of South Africa. The business produces energy by mining coal and utilising Fischer-Tropsch technology to convert it into fuels and other chemicals. The company, which specialises in both energy and chemicals, started operating in the global market at the starting of the early 1990s (SASOL, 2022). Global market factors are the variables that affect a company's marketing plan and its capacity to successfully maintain and develop relationships with its target customers globally. Globalisation leads to changes in a company's organisational structure, culture, and roles. The study will be based on the company SASOL ltd. and also Mckinsey’s 7s model will be explained. When appropriate theories are applied, a variety of other more significant factors have an impact on the company's decision to go global. We'll examine the elements that drove the company's decision to grow worldwide and how they altered its business practices. Examples of Hofstede's Cultural Dimensions will be discussed in this study. The business's ethical and environmentally friendly practices would be taken into consideration in the global marketplace as well. The context of the global market, the company's organisational structure, and decision-making processes will all be taken into account when examining strategic decision-making related to risk and diversification.

 SASOL

(Source: SASOL, 2022)

2. McKinsey’s 7S model for the organisation SASOL

The Mckinsey 7s model is a basic strategic tool that aids in assessing business performance. To enhance consistent performance and effectively implement change management, the organisation SASOL should emphasise seven factors.

 McKinsey 7S

(Source: Mckinsey 7S Model, 2022)

The following is a discussion of the 7 Mckinsey model components:

3. The organisation for international operations and Extension is influenced by the model.

When a company's management is implementing changes that could have an influence on the shared values of the organisation, Mckinsey's 7s model is a relevant. In the event that the company merges, the new hires will be assigned in accordance with their degree of skill. The model will have an effect on the company's structure, which also takes strategic changes into account. The model aids the company in finding contradictions. SASOL has been utilising several cutting-edge technologies so it can quickly adjust its business practices to a new market. It could involve the organisation, the strategy, and the staff (Torales et al., 2020). The business can make wise decisions about how to run its operations and make improvements in anticipation of a merger after anomalies are discovered. A thorough analysis should be conducted by the organisation before deciding to modify the business. In terms of administration, leadership, environment, and structure, many firms have a variety of goals. To assess the effects of globalisation, the organisational structure must be changed. The structure of an organisation refers to the framework that it employs to establish direct power, assign rights, and handle communications. The culture of an organisation is defined as the shared principles, values, and presumptions held by all of its constituents. 

The business can make wise decisions about how to run its operations and make improvements in anticipation of a merger after anomalies are discovered. A thorough analysis should be conducted by the organisation before deciding to modify the business. In terms of administration, leadership, environment, and structure, many firms have a variety of goals. To assess the effects of globalisation, the organisational structure must be changed. The structure of an organisation refers to the framework that it employs to establish direct power, assign rights, and handle communications. The culture of an organisation is defined as the shared principles, values, and presumptions held by all of its constituents. In 2017, the company has created a strategy and is working diligently to achieve Life Cycle Climate Performance. The company desires for all of its employees to advance internationally. SASOL is committed to achieving its zero-damage objective. The company has a strong market position in the chemical process sectors and is concentrating more on growing its clientele to advance Life Cycle Climate Performance. 

4. Hofstede's Dimensions of Culture are used to illustrate the impact of the organisation

The principles of Hofstede form the cornerstone of multidimensional psychological research. It aids in the study of a variety of aspects of connections and trade on a global scale. Hofstede's dimensions illustrate how different civilizations have deeply rooted morals and values. It shows how people from different ethnic backgrounds behave. It also demonstrates how they work.

 Hofstede's Dimensions of Culture

(Source: Hofstede's Dimensions, 2022)

Power Distance: It illustrates how accustomed cultures with less power have grown to a system of uneven authority or power. High scorers on the power distance index emphasise position and power, are accepting of differences and power disparities, and are pro-bureaucracy. Low power distance cultures are more likely to favour flat organisational structures with decentralised decision-making, participatory management, and an emphasis on power sharing. This Hofstede power distance dimension has had a big impact on SASOL Ltd.

Uncertainty Index: The degree to which a person avoids uncertainty is referred to as the level of avoidance. Low susceptibility to risk-taking, ambiguity, and unexpectedness is reflected in a substantial uncertainty avoidance advantage. The improbability is stopped by the establishment of strict standards, rules, etc. Low confidence in uncertainty, contradiction, and impossible is indicated by low scores on the avoidance of uncertainty scale. There are clear boundaries and more chances to venture into uncharted areas for the company SASOL Ltd (Beugelsdijk and Welzel, 2018). This uncertainty index aids the business in maintaining a watchful eye over its work improbability.

Collaboration with Individuals: The responders to this poll were asked if they preferred working individually or in a team. Most people think that accomplishing their own goals should come first. In this category, "I" relates to a person's perception of themselves. According to collectivism, the goals and welfare of the group should come first. This aspect will assist in working cooperatively with others and then in a joint venture for increased profitability. This concept will help the employees of SASOL Ltd. to work together and also increase their productivity of employees.

Masculine vs Feminine: When a person values success, they are said to be masculine. Cooperation and simplicity are given a high value in female personality qualities. Men frequently have clear gender roles, are aggressive, and place more importance on success and riches. Femininity is characterised by flexible traditional gender roles, kindness, and care for the welfare of others. This promotes equality within the company SASOL Ltd (Alsswey and Al-Samarraie, 2021).

Long-term and short-term goals: A long-term perspective excludes short-term achievement and is focused on the future. It inspires perseverance to accomplish great things in the future. Short-term goals are related to them and put an emphasis on goals for the near future. They include quick outcomes and emphasise the present more frequently. The long-term goals of the company SASOL Ltd. are being set for achieving future goals whereas the short-term goals are set by the company for quick outcomes. 

5. An evaluation of the moral and environmental issues the organisation must address in a global market

When considering the global market, businesses must take a variety of ethical factors into accounts, such as workplace diversity, equal opportunity, equitable working conditions, and child labour. The organisations had to support sustainable development while conducting business globally. They must reduce carbon emissions while maintaining levels of diversification if they want to gain a competitive advantage and remain viable in the market. According to organisations, all employees should have the same rights and opportunities at work. SASOL must promote equality and diversity in order to make sure that no employee is ever the target of harassment or bullying (Hameed et al., 2021). The company should ethically pool its resources when creating its products and services. SASOL's CSR programmes are effective since they show how to reduce their environmental impact. They are producing more jobs by focusing on the expansion of employment that is sustainable.

6. Critical evaluation of risk and diversity considerations in global strategic decision-making

SASOL Ltd. is dedicated to risk management because it intends to sustainably increase shareholder value while pursuing its corporate goals. Risk management is a key component of the company's value-based strategy in day-to-day operations and governance. The organisation aims to utilise its potential in order to meet its strategic objectives. Within a flexible strategic framework, the company pledges to maintain a healthy balance between strategy and risk in 2018 (Barbé and Morillas, 2019). The company's approach to managing risk appetite includes defining risk appetite, upholding standards, monitoring applications, and analysing metrics.

The risk management strategy of the organisation is value-based, and its main goal is to steadily raise shareholder value. In 2019, the risks will be discussed at the board level by the company. One of the key answers in relation to the top risk for the company is reputational harm. The firm's ability to gain the support of its shareholders is related to reputational risk. The macroeconomic climate is taken into account in the company's financial risk management. In order to lower its debt, the firm has taken measures to maintain its working capital and income statement (Nkrumah, 2021). The company's hedging programme was expanded to cover ethane in addition to crude oil prices and currency exchange rates. The business made the initiative to choose investments that are clear-cut and better suited for managing the business's projects. Increasing environmental sustainability is essential for a company like this. The business determined that sustainability posed the biggest threat to them, thus they are more inclined to focus on environmental problems, particularly climate change. Consistent pledges and efforts to preserve are made by SASOL Ltd. The business focuses on operational risks as well as hazards related to safety that it faces every day. Since the organisation is committed to preventing any harm, handling the risks on a daily basis offers challenges. The business determined the key operational areas to focus on, including the choice of essential controls: safety laws for life-saving, knowledge of human nature, and institutional learning (Barbé and Morillas, 2019).

The business is implementing methods to expand in the global market. Customers, digitization, and asset usage were prioritised highly by SASOL Ltd. The company diversified its assets based on the risks and protected those assets in order to disperse its channels internationally. The business has also improved its new shops across numerous nations and improved its sales and marketing tactics.

7. An assessment and analysis of the organization's potential avenues for strategic global expansion

SASOL Ltd., which enjoys a competitive edge and is a pioneer in cutting-edge technology, focuses on the efficacy of its chemical product line. The business intends to increase the value of chemicals by using cheaper expenses. The company's mission is to be a global leader in energy and chemicals, with a primary focus on South Africa. The company wants to value its clients, shareholders, and stakeholders, so it hires qualified staff and develops its digital capabilities. The business has a trustworthy source to grow in the global market. The business has a trustworthy source to grow in the global market. Coal, crude oil, natural gas, and freshwater are essential natural resources for the industry. Future goals for SASOL include gaining control of the gas supply chain, achieving outstanding growth in the liquid fuels industry, and pursuing only the finest gas-to-power possibilities (Torales et al., 2020). The company's primary products include petroleum, kerosene, liquid petroleum, olefins, alcohols, plastics, detergents, ammonia, methanol, sulphur, lighting wax, and many other items. The trade agreement will also grow in the future and support the economy by lowering unemployment and generating opportunities across the entire value chain.

8. CSR Initiatives

SASOL, a firm with its headquarters in South Africa, has undertaken numerous CSR projects both locally and internationally. The business intends to support community development that is both sustainable and centred on the needs of the individual. A total of R345,9 million has previously been provided for worldwide socioeconomic development by the company's community. A portion of the money was given exclusively for South Africa, and the remainder went to other nations across the world.

9. Conclusion

The dimensions of the Hofstede culture model and the Mckinsey 7s model are examined in this study for the SASOL company. The organization's structure, culture, and governance have all been discussed. The evaluation of the company that affected its foreign operations and the strategy the company adopted have also been displayed. The Hofstede cultural dimensions have also demonstrated how the organisation was impacted following a discussion of Mckinsey's 7s model. Moral standards and environmental sustainability have been priorities for the company. The business considers a wide range of things while making any important decision. On a worldwide basis, natural resources constitute the organization's main growth engine. The business produces a wide range of products. It is probable to say that the company has expanded its global clientele and started working to keep sustainability while reducing pollution.

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