Globalisation refers to the process of setting up political, social, economical and cultural relation across the national boundaries. This allow businesses to perform its operations at global level by removing trade barriers and support in integrating with World market.
Evaluation of globalisation supported in restructuring relation among nations by removing barriers in area of culture, communication and commerce. This initiation supported ‘SASOL Limited' to expand its operations in other countries to achieve competitive advantage and to increase its customer base.
An explanation on driving factors of globalisation
Globalisation is one of the highly spread trend in marketplace nowadays which keep on attracting businesses as well as traders to exploit the expansion or growth opportunities that a business get after internationalisation. There are some common drivers that attract businesses toward globalisation which are as follows:
- Cost: Production cost is one of the major driver behind the global expansion of companies because the main aim any business to perform its operations over economies of scale. SASOL Limited is an integrated energy and chemical company which deals in providing fuels and other gas chemical. So, company is performing its operations in countries like Qatar which is reach in oil and natural gases. Main reason behind their expansion is the cost of setting up plant and then exporting natural oil are relatively lower as compare to other countries like UK which doesn't have much availability of such chemicals.
- Market: It refers to some favourable factors like growth opportunities, demanding product, low competitions etc. that are present in market which support company in moving to global market and achieve success. SASOL Limited is one of the leading integrated energy and chemical company which deals in global level by providing fuels other chemical substances to different countries with lower availability of such resources. It includes Canada which requires at least 208 million litres of fuel to be pumped in vehicle which provide a better place to SASOL Limited to provide fuels. The attractiveness of Canada market act as a driver for company to setup its plant.
- Environment: Another major factors that act as a driver for globalisation is favourable environmental factors that a potential company have which support company to grow its business. For instance SASOL Limited expanded its business operations in Australia due to its positive environmental factors that provide a favourable place to company for performing its operations most effectively and successfully as compare to other places. Because the government of Australia has committed to develop a policy framework for expanding country's resources base and improvement over regulatory regime that support in smooth execution of operations.
- Competition: It is one of the most essential factor that act as a driver for companies to expand its operations globally in countries where there is no or a little competition present. As the SASOL Limited perform its operation in country like UK where the availability of natural oil or chemical substance is very few. Hence, country have low competition this is the major driver which attract company to start its operations in UK.
Significant impact of digital technology over globalisation
Digital technology has an great emphases over the success of globalisation and growth of companies after internationalisation. Following are the impact of digital technology over globalisation:
- Technological advancement supported in reducing the cost of communication and transportation across nation that facilitate in global sourcing of raw material.
- Digital technology has reduces the barrier of time and place by providing a medium of performing transaction from any place and at any time.
PESTLE analysis of SASOL Limited
PEST analysis refers to an analytical tool that support a company to determine the macro-economical factors that may affect the operations and functioning of company. Following points describe about the PEST analysis of SASOL Limited:
- Political:- It includes factors like change in government policies, political structure and rule & regulations formulated by government. SASOL Limited operates its business at global level, therefore company get expose to different political environment. Hence it has now developed capabilities and policies in a way that make it easier for company to expand in other part of world.
- Economical:- This factors includes inflation rate, foreign exchange rate, interest rate and economical cycle that provide aggregate investment in economy. SASOL Limited can use economical factor of country such as growth rate, inflation & industry's economic indicators to forecast the growth trajectory of chemical industry.
- Social:- It includes forces like change in the taste & preference of customer that may affect the demand or supply of companies product. The increasing need of people in term of exploring and travelling new places or countries around the world had increases the demand transportation which in turn increases the need of fuel.
- Technological:- It includes factors like new technologies in market, up-gradation of existing technology etc. With the enhancement of technological environment the car industry is also emphases over expanding its operation by providing an option to customer related to getting anytime anywhere taxi services using mobile application booking process. This lead to increase in number of vehicle and use of fuel which provide an opportunity to SASOL Limited for expanding its business in other country and achieving success.
- Frequent changes:- The globalisation of company also bring a challenge of frequent changes in demand of customers which affect the operations performed by company and also result in loss of it. For instance, SASOL Limited operates in different countries where the demand of oil may fluctuate as per the increase or decrease in rate of fuel. Hence it affects the operations of company.
- Political & legal issues:- Another major issues that is faced by company while performing operations globally is political and legal framework that is followed by different countries are different.
- As SASOL Limited operates its business in different countries it has to follow standards as specified by government of particular nation which require company to change its policies before entering into new countries.In order to avoid the risk of getting affected by frequent changes it is very essential for SASOL Limited to analyse the target customer demand so that they can manager their oil supply in particular country.SASOL Limited is recommended to analyse the political statement of country from past few years for predicting the future changes. This will support in eliminating the risk of getting affected through changes in political environment of country.
Challenges faced in globalisation
In order to avoid the risk of getting affected by frequent changes it is very essential for SASOL Limited to analyse the target customer demand so that they can manager their oil supply in particular country.
SASOL Limited is recommended to analyse the political statement of country from past few years for predicting the future changes. This will support in eliminating the risk of getting affected through changes in political environment of country.