This assessment will cover the following questions:
- SASOL Limited is chemical industries of the United Kingdom. Explain the essential forces which promote globalisation.
- What are the complexities pertaining to operation of business in global environment and how it would impact the performance of the SASOL limited?
- Examine the impact of digital technology upon globalisation.
INTRODUCTION
The global business environment is referred as the overall environment in various sovereign countries along with the exogenous factors to home environment of the organisation that directly in indirectly influence decision making on resource uses and capabilities. The global business environment can be classified into two different categories which mainly includes external as well as internal environment (Apăvăloaie, 2014). The main issues that faced by global business are entirely different in compare with the domestic firms. There are many factors that includes political, economic and legal infrastructure of different countries that affect the overall global business environment. This report mainly covers about the SASOL Limited which is one of the fastest growing energy and chemical organisations that is South Africa based and expanded their businesses in various countries which includes Canada, Gabon, Australia and Mozambique. This report mainly covers about the key factors of cost, environment and market that directly drive global commerce and trade. This report covers about the strategic challenges and the influences of globalisation on organisational governance, leadership, structure, culture and functions. This report also emphasis on the influence of globalisation in decision making and strategy.
P1: The main key factors of market, cost, environment and competition in order to drive global trade and commerce
Global environment plays very crucial role in order to understand the overall scenario of the organisation to expand the business world wide. Whenever organisations tries to run and expand the business in a new geographical region they faces various problems that are related to barriers, taxes and competitors legislations. In order to drive global trade and commerce, it is crucial to emphasis on the key factors of cost, market, environment and competition to gain competitive advantage. This factors directly and indirectly affect the reputation and profitability of a firm. In context with SASOL Limited, it is really very crucial for the managers to analysis key factors of market, cost, competition to expand the business world wide. Some of the elements are discussed below:
Competition: Competition act as one the main element that should be undertaken in appropriate manner by the SASOL Limited while expanding their business worldwide. Competitors of the organisation directly and indirectly affect the productivity and profitability. It is important for the organisation to analysis the competitive products in the market along with the advance technology that is adopted by the competitors. Through this analysis it becomes very easy for the top management authorises of the organisation to take beneficial actions and decision in order to enhance their performance and attain competitive advantage in order to compete the competitors(Belás and et. al., 2014). Through proper analysis of competitor strategies SASOL Limited are able manufactures products and services according to the needs and wants of costumers. SASOL Limited is energy and chemical company that analysis the competitors techniques and strategies in order to expand their business in various countries by taking effective decisions.
Cost: In order to effectively expand the business world wide it is crucial for the organisations to allocate the important elements that directly aid organisation to reduce the prices of services and products. This directly allows organisations to gain attention of the customers in high quantity numbers. Therefore, it is important to analysis the manufacturing of quality products with low amount. By analysis of requirements of customers , management fix and target to produce product and serve services at low cost as per as required by the customers. In context with SASOL Limited, it is compulsory for the high management authorities to properly allocated the elements so that cost of the products and services can be minimised in order to sustain well in the market of South Africa (Axelrod and VanDeveer, 2014).
Market: In order to expand and sustain in the new market or new geographical area it is very crucial for the organisations to overview and analysis the market area or marketplace in order to prepare effective marketing strategy in order attain competitive advantage. In order to hit the the targetted market it is very crucial to analysis the market environment so that proper planning and strategy formulation can be done by the organisation. Expanding business in the new geographical area consists of various risks that directly create an impact on productivity as well as manufacturing of products. In context with the SASOL Limited, it is compulsory to analyse the market place and market share before expanding the business in new geographical areas. SASOL Limited need to understand and analyse customers needs and competencies in order to give tough competition at globalisation level.
Environment: Environmental analysis is another important element that is considered by high authorities of SASOL Limited in order to manufacture goods and services according to the requirements. With the help of environmental analysis it becomes simple to identify those products that are in need and demand of the customers. Moreover, the demand of the customers also varies time to time, through proper environment analysis SASOL Limited is able to recognize the needs and demand of the products in the market. SASOL Limited uses PESTLE analysis tool in order to identify all the external factors that directly and indirectly affect the organisation at globalisation level (Carneiro and Brenes, 2014).
It is very crucial for the SASOL Limited to work and analyse on all the above discussed factors before entering in new geographical area with their products and services. This will help SASOL Limited to gain competitive advantage and work accordingly to enhance profit margin.
TASK 2
P2. Strategic challenges faced by organisation while operating in global environment
In order to be more competitive in this competitive world, organisations are out looking to expand their business along with their product and services at global level . Organisation emphasis on product development and alterations in their products and services to become unique in the marketplace. Many organisation uses internet facilities in order to deliver product and services. Organisation are using online applications that allows customers to purchase products from home. The organisations has developed different strategies in order to serve various facilities to customers that mainly involves buy one get one free, home delivery and discount & offers that maintain the interest of customers for long time duration. Different countries has different cultures and environment therefore, SASOL Limited has to face complexities in order to develop and implement new plan of action. Some of the issues that SASOL Limited faces at international level are discussed below:
Customer expectations: The high authorises and managers of SASOL Limited should analysis the factors that will develop issues in order to operate business at global level. The needs, demands as well as expectation of the customers varies location to location or areas to areas. In some location the product demand is very high when compared to other location. It is essential for the SASOL Limited to properly analysis the demand and need of the organisations and take decision accordingly. With this analysis it become easy to make modifications in the products as per as requirements. SASOL Limited outlook for the needs and demands of the customers and make modification to raise the value of product in order to raise market share at global level (Cavusgil and Knight, 2015).
Cost: While carrying various operational activities at international level, there are various risks that is associated with it. The organisations also faces many issues while planning and developing marketing strategies. While operating at the global level and introducing new product in new geographical area cost of products are fixed on the basis of excise duties, taxes etc. The high authorises and mangers of the SASOL Limited emphasis on the various strategies through which they can reduce down the prices of product and services.
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TASK 3
P3. Causes of globalisation on organisational governance and leadership, structure, culture and functions
Corporate governance is considered as the application of best management practices along with the compliance of law in order to adhere to ethical standards for making effective management along with proper distribution of wealth and discharge of social responsibility. Corporate governance mainly consist of several rights, principals, rights and laws by which several associates are handled in an appropriate way. The main associates and participants that are involved are directors, creditors, auditors, managers. It is essential for the organisation to involve and consider the suggestions of all the shareholders while taking or making decision-making as they act as crucial part of the organisation that helps in raising funds to attain organisation goals and objectives. Some of the other elements which directly or indirectly affected by globalisation that are discussed below:
Leadership: A leader act as an influencer that directs its subordinates in order to achieve organisation goals and objectives. Leaders also motivates their subordinates so that they feel motivated while performing their duties at workplace effectively. The impact of globalisation directly effects the strategies, plans, mission and vision that is developed by the leaders. In concern with SASOL Limited, leaders emphasis of their product distribution by keeping proper analysis of customers need and requirements.
Structure: Globalisation affect the overall structure of the organisation in various ways. While introducing various product and services at global level organisation has to set up new office at new area. In order to establish business in various countries SASOL Limited need to hire employees or high authorises from same country in which new businesses is established due to overall structure is affected (Cohen and Kietzmann, 2014).
Culture: Culture is another important element that directly and indirectly influenced by the globalisation. The overall high authorises and administration of the organisation emphasis on manufacturing products and services as per as needs and demands of customer. While introducing new product and services in new countries SASOL Limited should emphasis on culture issues.
Functions: All the organisation starts their business from domestic country to other international countries. There may be possibility that organisation has to alter some of their product and services as per needs of different countries. In context with SASOL, major alterations is done by the administration which is related to investments, profits, investments or any other functions (Doh, McGuire and Ozaki, 2015)
P4. Effects of ethical and sustainable globalisation on organisational functions
Today's world is considered as unprecedented transformations due to which many organisations uses various number of strategies that follows effectively rules and regulations of countries to run business in right directions. Ethics mainly involves with organisation's moral that directly involve in influencing staff members behaviour in positive directions. As SASOL Limited is out looking to expand their business in various countries which includes Canada, Australia(Epifanova and et. al., 2015). So it is very crucial for SASOL Limited to go through all the legislations rules and acts in order to understand well about different political and legal situation to run organisational functions in appropriate manner. All the operational activities should be carried by using and following ethics in an appropriate manner. Organisation faces various challenges while expanding the businesses at different global level. It is responsibility of high authorises and managers to examine various problems and solve them while expanding their business.
It is crucial to follow and implement business ethics that includes rules and regulations for planning various marketing strategies. With the help and following the appropriate business ethics organisations are able to perform well and expand their business at global level. Moreover,
high authorities and managers formulate effective strategies and policies in order to improve performance of the organisations along with productivity. By following ethical practices and policies organisations are able to capture high market share and they are able to develop strong positive image in the market. So, SASOL Limited has should follow appropriate strategy that are developed by managers in order to gain competitive advantage. By following ethical practices organisations are able to enhance their profitability level by serving quality products and services to customers at global level. Therefore, both effect of ethical and suitable globalisation develops positive impact on the organisational interconnected functions.
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TASK 4
P5. Various ways through which decision making can work effectively in global context
In order to improve the profitability and increase productivity rate at global level both leaders and managers of organisation keep on making changes in the operational activities. It is duty of SASOL Limited managers and leaders to continuously look forward the strategies and make modifications according to the requirement on regular basis. As the SASOL Limited is planning to expand the business in various countries which includes Australia, Canada in order to sustain well with their products and enhance market share. It is very crucial for the SASOL Limited to understand well about all the strategies, techniques, tools and technologies that is used by the competitors so that they can plan for effective decision-making in order to achieve organisations goals and objectives. Leaders and managers formulates the goals and objectives of the organisations and they are responsible to assign roles and responsibilities to staff members. SASOL Limited managers generally uses two type of decision making that are discussed below:
Programmed decision making: By proper locating of previous determined results both leader as well as mangers take the further decisions. This decision making process is stated as tested process that gives appropriate final outcomes. It is also involved with different organisational policies that directly affect the targets in more effective manner. There are some traditional strategies that is being used and gives positive outcomes. It is important for the SASOL Limited to locate all the previous planned and implemented decision that gives positive outcomes (Huhtala and et. al., 2014).
Unprogrammed decision making: Global business firms are nowadays taking a lot of risks due to which many times high authorises has to take decision at a particular time without taking much time. The managers has to take quick actions whether it is related to adopting the new technology or tools in order to enhance the productivity of the organisations.
In order to enlarge business at global level SASOL Limited has to face various problems
so to overcome this, they need to take both types of decisions that is programmed and unprogrammed decisions.
P6. Assorted routes to internationalisation which can adopt by organisation, including key barriers
There are various kinds of barriers that comes in the way of organisation development in order to achieve growth and development. In order to maintain good strong image and reputation it is important to emphasis on various risks factors so that in future effective actions can be taken to overcome this barriers that blocks the growth and development of the organisations. In order to attain competitive advantage in market it is important for the SASOL Limited to focus well on the operational activities . Merger and joint ventures can help the organisations to gain competitive advantage and increase the market share at international level. Some of the barriers that are faced by SASOL Limited are as follows:
- There is crucial need of funding in order to expand the business world wide. Without proper funds it is nearly impossible to launch and expand the business at international level. Organisations can take loan from financial generator institutes and banks, then sell their shareholders through which high funds can be raised.
- The another barrier mainly involves with technology that should be kept well in mind while entering the new area and market. Technology can bring positive as well as negative impact on the organisation so it is important to consider appropriate type of technology while expanding the business.
CONCLUSION
It is concluded from the report that global business environment has various elements that should be undertaken in an appropriate way by organisation which is looking forward to expand its business at international level. By following ethical practices organisations are able to enhance their profitability level by serving quality products and services to customers at global level. It is essential for the organisation to involve and consider the suggestions of all the shareholders while taking or making decision-making as they act as crucial part of the organisation that helps in raising funds to attain organisation goals and objectives.
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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.
Belás, J. and et. al., 2015. The business environment of small and medium-sized enterprises in selected regions of the Czech Republic and Slovakia. E+ M Ekonomie a Management. (1). p.95.
Carneiro, J. and Brenes, E. R., 2014. Latin American firms competing in the global economy. Journal of Business Research. 67(5). pp.831-836.
Cavusgil, S. T. and Knight, G., 2015. The born global firm: An entrepreneurial and capabilities perspective on early and rapid internationalization. Journal of International Business Studies. 46(1). pp.3-16.
Cohen, B. and Kietzmann, J., 2014. Ride on! Mobility business models for the sharing economy. Organization & Environment. 27(3). pp.279-296.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Doh, J., McGuire, S. and Ozaki, T., 2015. The Journal of World Business Special Issue: Global governance and international nonmarket strategies: Introduction to the special issue. Journal of World Business. 50(2). pp.256-261.
Epifanova, T. and et. al., 2015. Modernization of institutional environment of entrepreneurship in Russia for development of innovation initiative in small business structures. European Research Studies. 18(3). p.137.
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