Unit 18 Global Business Environment

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Table of Contents
Introduction................................................................................................................................2

Part 2 (LO3, LO4)......................................................................................................................3

Evaluate the influences of globalisation on organisational governance and leadership,

structure, culture, and functions. (P3)....................................................................................3

Evaluate the influences of ethical and sustainable globalisation on organisational functions.

(P4).........................................................................................................................................6

Critically evaluate influences of globalisation in application to appropriate theories and

models relating to organisational structure and culture. (M3)...............................................6

Evaluate the different ways decision making can work effectively in a global context. (P5)8

Determine and articulate the various routes to internationalisation an organisation may

adopt, including crucial barriers. (P6)....................................................................................9

Critically evaluate the key barriers in doing business internationally and make
recommendations on how they can be overcome. (M4).......................................................11

Conclusion................................................................................................................................13

References................................................................................................................................14

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 Introduction
SASOL Limited is a South African integrated chemical and energy-based company. The
company comprises fuel and chemical-related production and marketing operations that
further work in gas and oil exploration, production, and technology development. SASOL is
also active in liquid fuels and crude oil refining, and marketing related activities. It has its
operation in over 30 countries as SASOL Limited is committed to expanding its global reach.
In this report, how the organisational structure, culture and functions of SASOL Limited has
got affected by globalisation will be discussed. There'll also be an analysis of how
globalisation has affected its decision-making process.

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 Part 2 (LO3, LO4)
Evaluate the influences of globalisation on organisational governance and
leadership, structure, culture, and functions. (P3)
SASOL Limited is a major contributor to the socio-economic development of South Africa,
and It has evolved over the last five decades in becoming one of the largest and most
influential companies in South Africa. The vision of this company is to become an
honourable and important global enterprise by implementing unique, innovative and
competitive, technology to achieve a powerful position in the energy and chemical market of
South Africa and worldwide (Fleisher and Bensoussan 2008). However, the journey of being
a global company has influenced and changed a lot in its overall operations, which is going to
be discussed below with McKinsey 7s model.

Strategy

Strategy defines the well-structured plans and initiatives aligning with the culture and values
of the organisation to achieve sustainable competitive advantage over other companies in
both national and global market (Hague 2019). As for SASOL Limited, it considered both
opportunities and risks while developing strategies suitable with globalisation. Some of those
strategies are,

 To focus on differentiated global market's growth by offering high-value speciality

chemicals.
 To secure feedstock over 2050 for coal and gas.
 To continually improve value chain performance worldwide,
 To drive incremental digital value growth.
 To focus n programmes to respond to environmental and clean fuels landscapes
changes.

Structure

The structure defines the hierarchy or chain of command based on which the company is
getting operated. It explains the accountability and relationship among the employees of the
organisation that defines the roles, position, whom to report etc. (Shaqrah, 2018). SASOL
Limited has formed an organisational structure of 2 upstream business units, 3 regional
operating hubs, and 4 strategic business units for serving customers to manage the global
activities. Its organisational structure of managing the global operations are given below.

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 Figure: Organisational Structure of SASOL Limited (www.sasol.com 2019)

System

The system defines how the company operates its overall business operation, and the
decisions are made. The operating business units of SASOL consist of exploration and
production of oil and gas activities and mining division. These activities are done in
Mozambique, Australia, Canada, South Africa and Gabon to ensure the global reach. Also, its
international cluster of business operation is spread over Eurasia, North America, other than
South Africa. The projects in these places are responsible for operational and infrastructure-
related activities in the selected regions (Gokdeniz, Kartal and Komurcu 2017). The strategic
business units of SASOL are also designed by keeping globalisation in mind. It has both
South African and International SBU for energy and chemicals.

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Style

The style refers to the code of conduct or how the leader of the company directs and makes
certain decisions. It represents the leadership style and attitude. SASOL Limited is a
company with 70 years of journey (Boyd 2005). Throughout the time, it has faced many
challenges, and the leadership of SASOL swiftly and decisively responded to each situation
to ensure long-term sustainability. It has even revised the strategies and operating model
when needed. SASOL's leadership has simplified the previous complex and broad business
model and turned into a market-focused business to survive with other competitors in the
global marketplace.

Staff

The staff defines the human resource or talent management of a company. In the leadership
panel of SASOL, it has people working as Independent non-Executive Director and
Chairman, CEO, executive director of finance, sustainability and integrated services, energy
operations, chemicals, stakeholder management etc. under whom multiple other middle and
lower level-management works who oversees the whole management of the company. It has
over 30000 employees, and 4000 of them are working for its global operations.

Skills

The skills define the competencies and talent of the human assets of a company. It indicates
the capacity of a company to face and deal with challenges (Mcdonal et al. 2002). SASOL
Limited values people with experience and knowledge in the sector the company is situated
in. However, it has been seen that the company has strong talent management where people
with the best skills are working, which is helping SASOL to react to any current issue quickly
and effectively.

Shared Values

The shared values define the mission, vision, objective and policies based on which the
company proceed towards its common goal. After proceeding with the global marketplace,
SASOL has revised its business policies. It's now more focused on sustainability, growth
prospects with lower-carbon intensity, responding to the evolving customer needs and
adapting to megatrends.

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Evaluate the influences of ethical and sustainable globalisation on
organisational functions. (P4)
SASOL Limited has adopted sustainability as a strategic approach for its organisation. It has
identified that without being sustainable, it won't be able to capture the global market and
gain the benefits of globalisation (Becker 2013). This company is committed to creating long-
term values for all of its stakeholders. SASOL has effectively balanced between sustainability
and ethics in its organisational functions. The sustainable statement of SASOL for its global
operation is, "Advancing chemical and energy solutions that contribute to a thriving planet,
society and enterprise."

This company uses six of its capitals: human, social and relationship, natural, financial,
manufactured, and intellectual capitals to create a strong position to offer value worldwide. It
has established revised functions to accelerate sustainability action in the global context. At
present, it's working to advance sustainability through resilience in a lower-carbon future
where it's committed to reducing its GHG emission, ensuring a safe and enduring operation
for its employees and communities, minimising its environmental footprints, and creating
shared values for the shareholders and each society it is operating into. It has even prioritised
four SDGs on its organisational functions to ensure that SASOL Limited is economically,
socially and environmentally sustainable.

There's no denying that SASOL always puts importance on the influence of globalisation and
responds as quickly as possible (Kibert 2012). In 2020, SASOL unveiled a new business
structure due to the effects of weaker oil prices and the global impact of Covid-19, as the
company lost a considerable portion of its market value. It has decided to reposition the
company where the future will be less reliant on the oil industry. What effects this
repositioning will bring are yet to see. But it has been clear that the influence of globalisation
is very visible in SASOL, as it has to implement a whole new business structure because of
its effects.

Critically evaluate influences of globalisation in application to appropriate

theories and models relating to organisational structure and culture. (M3)
SASOL Limited is a global organisation operating in over 30 countries around the world.
Indeed, globalisation has opened many doors and facilitated trade opportunities. However,
while trading in different countries, a company at first faces one common barrier: cultural
differences (Hofstede 2001). Each country upholds different cultural values, and without
adapting to those distinct cultures, it becomes difficult for a company to survive in a specific

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country. As a result, it has to implement different cultural practices within the branches or
plants in a different country. The same goes for SASOL Limited, and these influences in
analysed below based on Hofstede's Cultural Dimensions Theory.

Power Distance Index

This cultural dimension expresses the degree to which an equal and unequal practice of
power is visible. A culture with high power distance shows that the people in there accepts
power inequality without any questions asked, and organisations are arranged in a
bureaucratic or autocratic culture (De 2019). On the other hand, cultures with low power
distance believe in equality and use a decentralised decision-making structure. As for
SASOL, it has its operation in China and Germany. But China has high power distance
culture, and Germany has low power distance culture. As a result, SASOL has to develop a
different organisational structure for these countries,

Collectivism VS Individualism

In an individualistic culture, people give more importance to personal gain instead of team
achievements. But in the collectivist culture, people believe in collaborative working. As for
SASOL, it has to manage its employees USA and Japan differently. Because people in USA
wants to work in an individualistic environment, whereas in Japan employees are comfortable
in teamwork.

Uncertainty Avoidance Index

This cultural dimension expresses the degree to which people of culture have the tolerance of
uncertainty, risk taking, etc. Cultures with high index have less tolerance for uncertainty,
whereas the low index culture is more prone to take risks and deal with uncertainty (Henk
Vinken, J Soeters and Ester 2004). As for SASOL, when it is operating in France, it should
involve in projects with low uncertainty and risks because French people doesn't like to take
risks. Simultaneously, SASOL can offer uncertain and risky projects to the people of Ireland
as they favour such activities.

Femininity VS Masculinity

This cultural index shows the degree to which people of culture is defending as tender or
tough. Feminine culture shows that people are modest, gentle and show empathy. Whereas in
a masculine culture, people are aggressive, assertive, don't put much importance on emotions.

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As for SASOL, Japanese people are masculine, and they need to be handled based on that.
Whereas people of the Netherlands and feminine in characteristics who needs to be handled
according to that.

Short-Term VS Long-Term Orientations

Cultures with short-term orientations are focused more on the present than the future. They
are happy with quick results and short-term success. However, cultures with long term
orientations are focused on the future and have the patience for slow yet more beneficial
results for a longer period (Kibert 2012). SASOL has to understand that the people of
Norway are more interested in quick and short-term results, so their ideas and activities will
be according to that, and SASOL has to adapt to that. In contrast, Asian countries such as
China and Japan work to secure their future and are motivated by such activities.

Restraints VS Indulgence

It shows that how much a culture can express or restraint its desires. A society with
indulgence shows that people are free to express their desires and enjoys their life full of fun.
In comparison, restrained cultures don't express their feelings and live their lives within strict
regulations (Hofstede 2001). As for SASOL, The US and Australia represent indulgence, but
people in middle east countries live their lives within rules and boundaries and comfortable
working with people who respects such attitude.

Evaluate the different ways decision making can work effectively in a

global context. (P5)
SASOL Limited recognises its real commitment to sustainability for achieving its long-term
strategic objectives. It knows that it can't make any decision to pursue growth. The company
has to understand the interest of all the stakeholders worldwide to partner with them to find
solutions for the sustainability challenges (Minkov, Blagoev and Hofstede 2012). SASOL
Limited responds to its moral obligation for promoting sustainability and acting to integrate
the commercial value with social and environmental benefits. However, in doing to it had to
face many challenges and below, it's explained that how made decisions to work effectively
in the global context.

Subscribing to national and global sustainability initiatives

The governance perspective says that the organisations taken by the organisations are the
reflection of society's changing expectations. To meet those expectations both nationally and

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globally, SASOL has subscribed to many of those initiatives such as the Global Reporting
Initiative (GRI), UN Global Compact, The UN CEO Water Mandate, the World Business
Council for Sustainable Development etc. All these initiatives and strategies are continuously
evolving to match the global context.

Balancing complex sustainability drivers

The macro-economic perspective indicates the growing energy demand. However, meeting
this increasing demand and reducing the carbon footprint is a significant challenge (Leslie
Paul Thiele 2016). SASOL Limited has recognised the interconnection of these challenges.
Its growth strategy has intended to leverage its competitive advantages to meet this demand
in providing energy with sustainability.

Delivering value in a changing world

Difficult times require innovative vision and leadership, and SASOL believes that there's
both risk and opportunity (Pieter Winsemius and Ulrich Guntram 2016). As a result, it has
developed a strategy where it'll accelerate growth and optimise its business by creating value
based on its proprietary licensed technologies. In this way, a continued global sustainable
progress will be achieved.

Maximising contribution, minimising the impact

To survive in the global context and make the suitable decision for ensuring sustainability,
SASOL believes there's a powerful connection in addressing environmental and socio-
economic challenges and achieving strategic growth objectives. It has focused on achieving
some elements that'll help SASOL in this dynamic globalised era, managing its risks in
countries with less political stability, attracting and retaining the best skilled employees in
every branches worldwide, and maintaining a positive and trusted relationship with major
global stakeholders etc.

Determine and articulate the various routes to internationalisation an

organisation may adopt, including crucial barriers. (P6)
The era of globalisation has lessened the trade barriers and facilitated entry to the global
market. However, depending on the type of organisation and nature of the business activities,
different organisations require different internationalisation routes (Gerike et al. 2016). As for
SASOL Limited, it can consider the below explained routes for further internationalisation.

Route to Internationalisation
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  Licensing

Licensing is a process where the parent company allows another foreign company to use or
manufacture the products and service in return for a certain amount of royalty. It's a very
popular type of internationalisation that requires minimal investment, the firm is rarely
exposed to trade barriers, and receives access to local knowledge to serve the customers
better. However, it’s hard to find a suitable and trustworthy local company who will not
damage the parent company’s impression and may end up in creating competitors.

 Joint-Venture

Join-venture is a type of shared ownership where two or more companies work together
(Adam 2015). However, the venture has a separate entity from the participants or other
businesses. SASOL Limited can look for energy-based local businesses in a foreign country
and do a joint venture with that company. Joint venture is beneficial as the risk gets shared
with the partner company, less investment is needed, and the legal barriers are more easily
handled. However, the parent company won’t have the power to control function completely,
disagreements may occur and sometimes results in producing poor quality products and
services.

 Foreign Acquisition

The foreign acquisition is when a company buys the majority of the shares or assets of
another company in a foreign country (Sweeney 2011). In this way, that company gets the
control and decision-making power. It can be a beneficial way of internalisation for SASOL
Limited. It’s beneficial as the parent company will be able to utilise the fame of the local
company, the whole process is quicker than other routes, and the access to existing value
chain developed by the company. However, acquiring the assets and dealing with the lenders
becomes difficult and also the employees may get reluctant to follow the new rules of the
parent company.

 Greenfield Project

Greenfield project is a Foreign Direct Investment (FDI) where the parent company starts a
completely new project in a foreign country (Perkins 2010). Here, everything starts from
scratch without any prior imposed works of a previous company. SASOL can utilise this
process depending on the policies and regulations of FDI. It’s beneficial as there won’t be
any lengthy process of integration or dealing with old business. The firs will have the

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complete privilege to do things on its own. However, it requires a huge investment that
increases the risk and may provide weak position in targeting the foreign market.

Key Barriers

Entering into a foreign market doesn't come without any barriers any issues. Here're some of
those key barriers which SASOL Limited may face.

 Legal Barrier

While entering into a new country, legal barriers would be the first and foremost issue.
Different countries have different policies for the entrance of a foreign company (Leslie Paul
Thiele 2016). Many times, this barrier causes serious issues regarding the business operation.

 Managerial Barriers

The managerial barriers are the different organisational structure practices of different
countries. Here, SASOL has to face the cultural barriers of different organisational structure
and employee management as well.

 Market-Based Barriers

The operation culture of different markets has distinctive characteristics. In some countries, it
is easy to convince the local wholesale and retailers for their cooperation. In other countries,
it's not (Gerike et al. 2016). Because some government imposes special rules to protect their
local businesses and, in that case, SASOL has to gather enough importation of the overall
market condition, customer buying pattern etc. of the new country.

 Industry-Specific Barriers

Globalisation has facilitated trading within countries; however, it has increased the
competition too (Adam 2015). Both the local and international competition has increased, and
while entering a new country, it will create a huge barrier against the operational activities for
SASOL Limited. Also, if the resources are available or not in a specific industry, that's an
issue too.

 Technological Barriers

At present, it's hard for a company to run its activities without technology and innovation.
However, not every country is technologically fulfilled and have the capability to support

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recent trends. It'd be hard for an energy-based company like SASOL to operate in such a
country with fewer technological advancements.

Critically evaluate the key barriers in doing business internationally and

make recommendations on how they can be overcome. (M4)
There are different key barriers that exist in doing international business. Some of the
primary factors have discussed above. These are the barriers that SASOL Limited have
chances to face in a future expansion (Sweeney 2011). However, in this dynamic era of
globalisation, the nature of dealing with different barriers gets changed as well. That's why
SASOL Limited has to be prepared for it, and here are some of the recommendations which
this company can consider while dealing with those barriers in the near future.

 As for the legal barriers, SASOL needs to do proper research and consult with its
lawyers and find out the suitability of doing business in a certain country with its legal
barriers (Perkins 2010). Also, it should find out scopes to make a good relationship
with the government of a certain country and negotiate on legal terms for the benefit
of both sides.
 In dealing with the managerial barriers, SASOL Limited can employ the majority of
the people from the local community of a certain country (Boyd 2005). In this way,
those people will help SASOL with the guidelines about organisational structure and
what will be the best way to manage the business operations.
 As for market-based barriers, SASOL Limited can start relationship building with the
local businesses by offering incentives. It can prepare a different marketing campaign
only for those businesses as they will help SASOL capture the market and reach the
customers in the first place. It'll help to create a useful network as well.
 SASOL Limited has to study all the details about a certain country's energy and
chemical industry and how many local and international organisations are there.
Knowing the competitive position of those organisations will help SASOL plan its
moves while entering the market and not getting shocking experiences (Becker 2013).
It should also manage alternatives for acquiring resources if there's any limitation.
 SASOL should study that if the country has the capacity to support the minimal
technical infrastructure that the company will need. The rest can be imported from the
parent country after getting approval from the government. Such initiative will also
work as a marketing move for SASOL and gather both attention and hype in the
industry.

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 Conclusion
It's has become important for every business to plan for adapting to the effects of
globalisation and how to use that for their benefits. Because proper research and strategy
always bring benefits for the decision of internationalisation. That research basically includes
how the business will operate in a different country. Cultural and organisational changes have
to be faced, how globalisation will affect the current strategies, and how to develop new ones
that'll match with globalisation and many more. In this report, these factors have been
discussed and analysed over SASOL Limited, which has already experienced and working in
the globalised environment. This analysis and discussion have helped to gather insights on
various effects of globalisation and how a business can tackle those and become a successful
global company.

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