Business environment refers to all of the internal as well as external factors which influences all of major operational activities of the organisation. It can be said that with the changing time organisations are now expanding their business at international level (Alqahtani and Saba, 2013). Global business environment includes trading between two or more companies who performs business activities together in order to generate more profit. This report is based on SASOL Limited, the company deals with chemical and energy product. The overall assignment discusses about how operations in global market influences organisational culture, structure and function. And at last, it describes the influence of globalisation on company's decision making and strategy.
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 (Black, Morrison and Gregersen, 2013). 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 the 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 (Cavusgil and et. al., 2014). 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 (Ferraro and Briody, 2013). 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 (Kasemsap, 2014). There are various dimensions of culture on the basis of which functioning of the SASOL will be influenced. Most important among these dimensions is described as below:
Power distance Index: This index defines degree of inequality among people with power or without the power. According to this index people usually understand their own place in the system. In relation to the SASOL Limited, it has been observed that employees of this company has scored low in PDI as they do not support unequality at workplace. It can be said that it is mandatory for organisation to deal with new employee with equality while expanding another country. As they can influence trust of these employees by treating them equal only.
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 (Laudon and Laudon, 2015). 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. Global Business Strategy assignments always helps companies to understand how to make their global business environment.
Legislations: Business organisations that are doing business at international level faces ample number of antithetic legislations made by different nation's government (Lee, Olson and Trimi, 2012). 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 (Ramamurti, 2012). 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 (Savrul, Incekara and Sener, 2014). 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.
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.
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