Operating in the global business environment is not an easy task as the company needs to focus on different factors while going global. There are different organisational factors which are being changed while doing global research. Along with this the company also needs to make changes in the organisational culture and structure for operating effectively in the global market (Beck, 2018). In this report the researcher would be focusing on explaining the different factors which would be affecting the case company SASOL in the new market. SASOL needs to focus on making effective strategic decisions that can help them in being effective. Along with this the report will also highlight the different modes of entry that can be used by the company for entering into the new market would also be discussed. The report will discuss the influence of the ethical and sustainable globalisation on organisational functions.
INFLUENCE OF GLOBALISATION ON ORGANISATIONAL GOVERNANCE AND LEADERSHIP, STRUCTURE, CULTURE AND FUNCTIONS
While working in the new market the company undergoes major changes in the way they operate and manage their organisation. The company structure is the most common thing which undergoes major changes while entering into the new market. Different aspects which would undergoes through the changes are explained below such as:
Leadership refers to the way in which the leader motivates their employees. For the success of the organisation it is important to have an effective leader with effective leadership skills and leadership style (Mansaray, 2019). SASOL needs to focus on having an effective leader who can motivate the employees to accept all the changes made in the company while entering into the new market. This would help them in motivating the employees to deliver high quality work in the firm which can work them in establishing themselves effectively in the new market.
The governance of the company are the set of systems and procedures which are being followed by the company as per their company objectives. From this perspective it can be said that SASOL needs to focus on their company objectives and should make different decisions related to rules, standard and practice of the company as per the objective (Psimmenos, 2018).
The organisation structure is the way in which the company manages its business operation. Due to globalisation SASOL would go through different changes such as changes in the number of employees, activities and more complex business operations. For managing all this it is important for the company to have effective structure. The case company should focus on having hierarchical structure which would help them in managing the complex business operations in an systematic manner.
Organisational culture is having a major impact on the way employees work and behave in the organisation. In general terms organisational culture is the set of beliefs, values, attitude and norms of the employees while working in the firm. When the company operates at an international level then the employees belonging to different cultures work together then it creates issues for the company in managing them (Kumar and Sharma, 2018). SASOL needs to focus on creating a positive organisation culture that supports all the cultures and is based on cross cultures. The company should hold better values and ethics in their organisational culture through which all the employees should respect the cultural values of their coworkers. This would help SASOL in reducing the issues related to cross cultures in the organisation. Along with this positive organisation culture would help SASOL in developing better trust, respect and cooperation among all the employees which would have a positive impact on their performance and productivity.
The different activities done within the organisation are being referred to as the organisation functions. While going global the business functions are being changed to a greater extent. With changes in the function the case company also needs to make changes in their job roles of their employees and their responsibility as well. Also the company should focus on having highly trained and skilled employees that can manage the multiple complex business activities related to the global business operations management in an effective manner (Triandafyllidou, 2018).
EVALUATE THE INFLUENCE OF GLOBALISATION IN APPLICATION TO THEORIES AND MODELS
It is important for the company to understand how the company structure and the culture would be changed while entering into new markets. There are different theories and models that can be used by the company for understanding the influence of these factors on the company. Two effective models are being explained below such as:
McKinsey 7’s Model
McKinsey 7's model is an effective model used by the businesses while undergoing changes. This change management model would help SASOL in bringing changes in all the important sectors during market expansion (Liu, 2020). The 7’s of McKinsey model are explained below such as:
Strategy: it is the plan of actions made by the company. SASOL needs to develop effective strategies while entering into the new market.
Structure: this is referred to as the organisational structure which would be changed for the case company as it is entering into the new market.
Systems: this is referred to as the way in which the company manages the day to day business operations.
Shared values: this factor reflects the objectives and goals of the company which are required to reflect well in the organisational culture and decision making.
Style: this is referred to as the leadership style of the company. SASOL needs to have an effective leader which can reflect the company culture and values. Also the leader should motivate the employees for delivering high quality work in the company.
Staff: this is about the general staff of the company. For this it can be the case that a company needs to focus on having highly talented employees.
Skills: here skills refers to the effective skills of the employees which are required by them for working effectively in the new market. For this SASOL should focus on offering better training to their employees for developing their skills and knowledge.
Hofstede’s Dimensions of Culture
This is an effective model which is being used by the businesses for understanding the differences in the two diverse cultures. This model would help SASOL in understanding the difference between the cultures of two nations. According to this model there are six dimensions that can define the culture (Holmes, 2017). The different dimensions are:
Power Distance Index: this factor focuses on the inequalities and power of tolerance. The companies need to make their organisational structure on the basis of this factor.
Collectivism vs. Individualism: this helps in identifying the customer preferences that they focus more on personal goals or they are focused on the well-being of the entire group.
Uncertainty Avoidance Index: this factor helps the companies in understanding that at which level the uncertainty and the ambiguity are being tolerable by the customers belonging to a particular culture.
Femininity vs. Masculinity: this helps the companies in understanding the attitude of the society towards gender equality.
Short term vs. Long term Orientation: this helps the company in understanding how the society focuses on the time horizon.
Restraint vs. Indulgence: this helps in evaluating to which extent the company is focusing on fulfilling their desires.
INFLUENCE OF ETHICAL AND SUSTAINABLE GLOBALISATION ON ORGANISATIONAL FUNCTIONS
In the recent decades the concern for environmental protection has gained a lot of importance for the businesses. When the organisation is operating in local or in the international market it is significant for them to work for environmental safety. Due to this sustainability had become a major issue for the businesses (Holmberg and Sandbrook, 2019). When the case company would be operating in the new market then they have to follow all the rules and regulations related to environmental safety and sustainability. Along with this the company has to invest better capital in the social issues for adding value to their sustainability. SASOL has to focus on working on different issues related to social and environmental protection (Burlacu et. al. 2018). It can be said that the case company should focus on identifying all the different rules and regulations that are being required for them to follow while working in the new market. Also the company should focus on developing tie-ups with the NGOs and other non-profit organisations which would help them in gaining better local support and will help them in effective marketing as well.
Business ethics have a major role to play in the management of the company. It is important for the company to hold better ethics and values in their organisational culture that helps them in operating in an effective manner. When SASOL would be entering into a new market then it is important for them to focus on having better ethics. When the employees belonging to different socioeconomic backgrounds are work together then the chances of conflicts among the employee increases. Due to this the company needs to have effective work ethics that would help them in operating in a more appropriate manner and reducing the changes of conflicts among the employees (Thacker et. al. 2019). Along with this if the company would have better ethics then it would help all the employees with honesty and trust which would have a positive impact on organization performance.
INFLUENCE OF GLOBALISATION ON ORGANISATIONAL DECISION MAKING AND STRATEGY
When the company operates in the global business environment the company needs to make different decisions. When the management of SASOL would make different decisions then it is important for them to ensure that their decisions need to be based on different analysis. For instance the decisions related to the marketing strategies need to be based on the market trends. With the growing technological advancement online marketing has gained a lot of importance. So the company should use both online and offline marketing strategies.
Apart from this leadership is also an important factor which needs to be considered. The leader should focus on applying appropriate leadership and make decisions on the basis of it only. At the time of market expansion the leader should focus on using transformational leadership style. This leadership would help them in making better decisions related to the changes through which the company undergoes. Along with this the company also needs to take decisions related to pricing strategy and the product line which would be offered to the company. In this situation SASOL needs to focus on the economic condition of the nation and the pricing strategy needs to be based on this only. Also the company needs to make the changes in their products line as per the market demand then only they would be able to survive in the new market.
DIFFERENT ROUTES TO INTERNATIONALISATION
While entering into the new market it is essential for the company to select an appropriate mode of entry. There are different factors which are having an impact on the type of entry mode that can be used by the company for entering into new markets and going global (Blackburne and Buckley, 2019). There are different types of modes of entry which can be used by the company. SASOL can use different types of entry modes which are explained below such as:
Foreign Direct investment: it is one of the most common types of entry mode in which the company directly invests in the foreign market. But if the company uses this entry mode then the overall cost of entering into the new market is high.
Exporting: in exporting the company focuses on exporting the goods and services directly to the other nation. In this mode of entry the company does not need to face much political issues while entering into the new market.
Licensing: in this method the company focuses on giving license to another local company for doing trade in the new market. In this type of mode of entry both the companies agree on certain terms and conditions. If the company focuses on using this type of international expansion strategy then it makes it easier for the company to enter into new markets.
Acquisition: it is also a common mode of entry which is being used by different global firms for entering into the new market for doing business effectively.
Strategic alliance: in this type of mode of entry the company focuses on forming strategic alliances with the local company which is already operating in the market. This is one of the most effective strategies as it helps the company in establishing themselves easily and efficiently in the new market. Along with this it also helps the company in understanding the market trends and customer preferences in an appropriate manner (Schwens et. al. 2018). One of the other benefits of using this strategy is that it helps the company in entering into the new market with lesser influence of external business environment.
KEY BARRIERS IN DOING BUSINESS INTERNATIONALLY
On the basis of the above mentioned different factors it can be said that there are different factors which can create issues for the companies while going global. The different factors of the external business environment are having a higher potential to affect the businesses while operating in the global environment. The cultural differences among the nation's is an important factor that can affect the company. For an instance with SASOL would not be able to understand the cultural differences then it would create issues for them in managing both the customers and employees at the global level. The different political and economic factors of the new market can create issues for the case company while selecting the most appropriate mode of entry for entering into the new market (Costea, 2017). The legal rules and regulations which are being made by the government for the foreign firms can create barriers for the company. For this it can be said that SASOL needs to focus on analysing the external business environment in an effective manner so that they can select the best mode of entry accordingly. For this the case company can use PESTLE analysis for identifying the expected influence on the external forces of the business environment.
Competition can also become an important barrier for the company which can affect them in doing business properly in the new market. For this it is important for the company to focus on analysing the influence of all the different factors related to it. SASOL should focus on using analysis such as the Porter five forces model which would help them in identifying the influence on the different competitive forces in the new market. On the basis of it the company should make effective marketing strategies and promotional techniques that can help them in operating efficiently (Abd Aziz et. al. 2020). Along with this there are different types of trade barriers such as tariffs, tax rates and several others which can create issues for SASOL during internationalisation. To avoid such issues the company needs to select the most appropriate mode of entry which can help them in reducing the influence of all these trade barriers.
STRATEGIES THAT CAN BE USED FOR OPERATING EFFECTIVELY IN GLOBAL BUSINESS ENVIRONMENT
On the basis of the above mentioned analysis it can be said that the company needs to focus on using an effective mode of entry. For SASOL the report recommends that strategic alliance would be one of the most effective strategies for entering into the new market and doing business. This entry mode will help them in sharing the risk with their partner company. Along with this it would also help the company in understanding the market trends and demands effectively which would help them in deciding different strategies and making appropriate decisions (Galli, 2018).
There are different factors which are required to be taken into consideration by SASOL for remaining competitive in the new market. The marketing strategy of the company is one of the major factors which is affecting the success of the company. In the new market SASOL should focus on using effective leadership style. The transformational leadership would be the best one in this situation. This leadership style would help the company in motivating all the employees to accept the organisational changes and work in the new market (Al-Ali et. al. 2017). Different businesses use different pricing strategies in diverse markets. Similarly the case company also needs to focus on using different pricing strategies. For example the company can use cost leadership style or the competition pricing strategy in the new market. These strategies can help them in creating an effective client base which is important for the survival of the company in the new market. Product differentiation is also a widely used strategy while going global. SASOL can use this strategy by offering different high quality chemicals as per the market demands which would help them in attracting the customers effectively. From this it can be said that the company needs to focus on multiple strategies for entering into new markets and doing business effectively.
In the above mentioned report the researcher had focused on explaining how the different factors are required to be taken in concern while going global. SASOL needs to focus on using different strategies and making effective decisions in the context of leadership and making changes in the organisational culture. Along with this the company also needs to focus on operating in an ethical and sustainable manner then only they would be able to manage their business operations effectively at the global level. SASOL needs to focus on identifying the market trends, cultural values and buying preferences of the customers of the new market. On the basis of all these factors the company needs to offer the product range and use effective marketing strategy for attracting the customers.
Also the company needs to focus on selecting the best mode of entry and using better strategies as well. From the above report it can be said that SASOL needs to focus on all the different factors while selecting the mode of entry and all the different strategies related to internationalisation. It can be recommended that effective planning and better implementation of the strategies can help the company in surviving in the new market and leading the company towards success and development.