Drivers and Challenges of Globalisation and Their Impact on Strategic Directions

This document explores the drivers and challenges of globalisation and their impact on strategic directions. It discusses the influence of global factors on organisational leadership, governance, structure, functions, and culture. It also analyses the impact of ethical and sustainable globalisation on Thermax Limited. Additionally, it explores the decision-making and tactics influenced by global market forces.

Drivers and Challenges of Globalisation and
Their Impact on Strategic Directions
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Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
PART 2..........................................................................................................................................17
Influence of globalization on organizational leadership, governance, structure, functions and
culture...................................................................................................................................17
Evaluate and analyse impact of global factors on varied things relate to chosen brand......19
Influences of ethical & sustainable globalization on Thermax limited functions................19
Critical evaluation based on organization consideration in regard to ethical & sustainable
elements................................................................................................................................20
Decision making and tactic influence by global market forces............................................20
Barriers for entering and managing business in global market............................................20
Different modes decision making can work effectively in international context.................20
Different routes to internationalization an company may adopt, including barriers............20
Recommendation in context of Thermex Limited................................................................21
CONCLUSION..............................................................................................................................21
REFERENCES..............................................................................................................................23
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INTRODUCTION
Globalization is all about speed-up movements and exchange of service and goods at all
over the world. The present study is also helps to understand the drivers and challenges which
direct cause negative impact upon the business. The study is based upon the case study of
Thermax Ltd whose headquarter is in India and is operating in energy, environment and
chemical sector. The study will explain the concept of globalization and determine the key factor
that affect the business in opposite manner. Moreover, study will explain the complexity of
strategic challenge face by the firm while operating in global environment. Report also evaluate
the influence of globalization or governance and leadership, also it determine the different ways
decision making can work effectively in global context and determine routes of
internationalization.
PART 1
Slide 1
Slide 2
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Slide 3
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Slide 4
Notes:
Hence, it is define as a set of process that also contribute to relationship between societies and
individual around a world with rapid spread of technologies.
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Slide 5
Notes:
 Technological change:In the modern era, every company wants tostay ahead in the
competition and for that they use technologies. Hence, a rapid and sustained
technological change reduce the cost of transmitting and communication information. So,
a stage of technology in a particular field also give a rise to import and export of product
and service from one to other country.
 Economies of scale:It increase in the minimum efficient scale which is link with some
industries. Hence, a domestic market is also regarded as too small to satisfy the selling
need of an industries. Thus, this factor creates a positive impact upon the business and
leads a business towards success.
 Difference in tax system:Every country have different tax rate and labor cost which
encourage countries to adjust their tax system in order to attract FDI. Hence, many
countries become engage in tax competition between each other but invest in order to
meet the define aim.
 Cost:While dealing in different countries, transport cost is also involve. Such that
Thermax Ltd is already deal in 75 countries and to sell the product and service to another
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country, freight charges are applied. Thus, increase in the cost may cause negative impact
upon the business and this in turn affect the results as well.
 Market condition: It is the major challenge or factor for the business because market
condition are keep changes and to meet the same, business have to meet the trend and it is
possible when the business have enough knowledge with regards to same to implement
the changes.
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Slide 6
Notes:
Political factor:Change in the political factor affect the business in opposite manner such
that there terrorist attack or terrorism may lead to affect the sale in opposite manner. Hence it is
examine that with the help of effective strategy company always tries to stable the political factor
and leads a business towards positive manner.
Economic factor:It is deal with economy of the country, such that fluctuation in the
economy of a country may lead a business towards adverse manner. For example, due to
recession, most of the customer do not spend the amount and that is why, Thermax Ltd
profitability got affected in negative manner.
Social Factor: The views of people changes as per market trend changes. For the same, it
is necessary for the company to develop policies and strategies that assist to attract customer
towards it. Moreover, it is examine that most of the people are shift towards sustainable product
and for the same, Thermax Ltd is also planning to invest in such field that helps to grab attention
of many customer towards it.
Technological Factor: It is deal with advance technology and implementing new
technique within a business may lead a business towards success direction. Thermax Ltd also
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uses the same in order to improve the business operations. Therefore, it is clearly reflected that
through implementing advance technology at workplace, company improve its financial
performance and take a business at further level of success.
Legal Factor: it is all about laws and regulation that cause direct impact upon the
business operations. In the same way, Thermax Ltd is also comply with range of laws and
regulation i.e. employment law, discrimination law that helps to implement strategy in better
manner. However it is also critically analyzed that if company did not adhere with laws, then
they have to pay penalty and this cause opposite impact as well.
Environment factor:This factor deal with environment safety and protection. For the
same, it is analyzed that quoted firm comply with sustainability act in which it offer the product
and services which do not cause any negative impact upon business. As it is deal in energy,
chemical sector company has to make sure that there is no wastage which cause opposite impact
upon environment. On the other side, comply with law may lead to creates positive impact upon
business as well.
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Slide 7
Reporting requirement: There is a great transparency and investor confidence while
tackling the money. Hence, it is examine that during globalization, company has to commit to
exchange information under different standard which is develop by the firm.
Legislative changes:Sudden change in the laws and legislative affect the business
operation such that their intention may also create positive impact upon business. For example,
post Brexit affect the business in opposite manner and this in turn lead to change in the company
structure.
Risk:
 Ethical risk is consider one of the highly influence risk that affect the overall business in
negative manner. Under this, operating in global market lead some business to question
their values and understand the social condition which is vary from one country to
another.
 Language barrier is another risk which is associated with the company while dealing
globally and that is why, there is a need to minimize the same. As every country have
their own religion and language and while dealing at different country, it is not possible
for the business to understand things easily. So it is considered as a challenge.
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 Resistance to change is another barrier that affect the business because due to different
custom and values, it is not possible for the company to operate better manner.
 Opting the best diversification strategy among all is also considered as a challenge that
affect the business in opposite manner. To operate in different country, company has to
opt the best method which assist to lead a business at furtherlevel of success.
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Slide 8
Notes:
 Apart from this, it is alsoanalyzed that company has to provide effective training session
to their employees which in turn improve the results of a business and prepare employees
to accept the changes and take a business at further level of success too. Hence, this will
assist the business to operate at global level.
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Slide 9
Notes:
 Lastly, presentation concluded that there are different strategic challenge face by the firm
in order to implement the business unit at different countries and also recommend the
ways to improve the risk as well.
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Slide 10
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PART 2
Influence of globalization on organizational leadership, governance, structure, functions and
culture
Globalization is one of the factors that directly impact structure of Thermax Limited, its
functions, leadership and culture at workplace as well. This term comprise different types of
factors that also put affect on similar things (Anning-Dorson and et.al., 2017). Detail discussion
in context of this thing is given below:-
Organizational governance-
Global market affects Thermax Limited governance in term of making change in decision
making procedure in context of following new governance rules and regulations that foster
venture growth in effective and productive manner. Globalization can create new business
standards that influence governance of company in term of increasing commitment level of
management towards following overall standards.
Leadership-
Global market or globalization influence leader leadership styles in term of managing
workers performance and practices at workplace within Thermax Limited. It put a lot of pressure
on leaders and impact the way he or she manage employees work. It can put positive impact in
form of improving leadership styles and ways leader lead a team of applicants.
Organizational structure-
Due to globalization structure of companies like Thermax Limited can also influence in
positive manner because it drive management to hire skilled people who can work even better
which in return enlarge number of employees in short firm can wider its structure. Global market
requires a lot of efforts and hard work from organizational sides which drive management
towards maximizing structure of a firm. The overall act could be understood by using McKinsey
7S concept that helps company to analyse organizational structure.
Structure-
The structure of chosen company is hierarchical which could be its main disadvantage or
weakness that leads to communication gap, lack of collaboration and ineffective management.
Strategy-
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Thermax Limited can focus on value service that can outcome into providing several
benefits in term of increasing sales and productivity.
Systems-
It is one of the elements that impact in positive manner upon functions and practices of
chosen brand in term of permitting management to successfully meet with objectives and goals
of company.
Skills-
Workers skills and abilities influence in positive manner in term of increasing
productivity and performance level by working even hard.
Style-
Thermax limited leaders can use democratic leadership style that enhance motivation
level of applicants and allow them employees to contribute in gaining competitive advantages.
Staff-
Human resource management can recruit skilled applicants who are able to work hard
and support in form of achieving goals of Thermax limited firm and make them capable to be
competitive in global market.
Shared values-
Thermax Limited can build its venture on key values that accounts for excellent quality
which in return permit firm to reach at global level.
Culture-
Globalization can influence or impact culture of Thermax Limited in different manner. It
can be defined by utilizing Hofstede’s six dimensions of culture (Yun and et.al., 2020).
Power distance index-
This type of culture put positive impact on success and performance of workers because
according to this dimension decision making power held by only top authority which can make
each practice systematic.
Individualism versus collectivism-
This dimension refers to how individual needs are prioritized in company as compare to
needs of team. In global market, there are many companies accessible who focus on needs of
individual worker instead of group that impact in negative manner in term of decreasing
productivity of other.
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Masculinity versus femininity-
According to this culture, role of male and female applicants is decided, it is intermingled
and establish into new organizational culture.
Uncertainty avoidance index-
It shows capability of manager and leaders to handle varied organizational situations that
provide unpredictable outcomes. This dimension measure conservatism which defines that high
degree can convey great conservatism and resistance to except new activities on the other side
low index define less conflict.
Low versus short term orientation-
The long term orientation as form of culture can allow company to accept change and
develop plan to go internationalization. While short term orientation can leads to minimize
chance of company to reach at global level.
Indulgence versus restraint-
This dimension can exemplify culture openness either by accepting satisfaction of fun
and pleasure at workplace or by regulating it by exacting social principles.
Functions-
Global business or company like Thermax Limited functions are quite different from
local one, which get influenced by globalization in term of developing strategic marketing plan,
increasing and strengthen workforce.
Evaluate and analyse impact of global factors on varied things relate to chosen brand
As discussed above structure of Thermax limited, its functions, culture and leadership has
affected by forces of globalization in positive manner, in term of increasing ability to manage
venture at global level by hiring new and skilled workers. Furthermore, on the other hand it can
put negative impact on each element, for example, when policies relate to global business can
change it put a lot of pressure on venture to handle everything according to policy.
Influences of ethical & sustainable globalization on Thermax limited functions
Sustainable and ethical elements put positive influence of business functions of chosen
company. It drives management towards adopting and conducting sustainable venture practices
which a lot of advantages for firm in term of building positive brand image in market. Thermax
limited with adoption of both concepts can set goal for excellent creative diversity on different
levels, where ethical diversity can boost higher productivity level of firm. Furthermore,
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globalization can foster currency areas within global markets for creative venture metrics and
effective market position services, where chosen organization with ethical and sustainable
business activities can aim for wide technical diversity. Ethical and sustainable globalization
drive organization and its marketers towards better horizons for gaining competitive edge and
progress in sector.
Critical evaluation based on organization consideration in regard to ethical & sustainable
elements
From above analysis, it has been critical analysed that by considering sustainable and
ethical factors firm has sustained within global market for longer period of time. It bring several
benefits for Thermex limited in term of increasing its consumers base and profits margin more
than rivals who has operated in similar industry.
Decision making and tactic influence by global market forces
Strategy development and decision making procedure of Thermex Ltd, can influence and
shape by global market forces such as ethical globalization, culture and sustainable globalization
in positive manner. As it foster productivity by taking right decision to conduct ethical practices
and follow standards of global market.
Barriers for entering and managing business in global market
While entering into and managing venture at international market Thermex Ltd can face
several challenges or barriers such as change in tax rate and trade policy (Thorleifsson, 2020).
Furthermore, it can be analysed that intense competition in market where company wants to inter
also consider as barrier which make firm unable to enter into profitable region where success and
growth opportunities may be higher than current one.
Different modes decision making can work effectively in international context
Decision making procedure of company can work successfully in different manner in
regard to global (Niittymies, 2020). For example, when management conduct group meeting they
can find out appropriate methods and approaches which make them able to globalize its venture
in ethical manner. It can work effectively in term of gaining competitive edge, increasing
profitability, productivity, performance level and success of business by expanding at global
level.
Different routes to internationalization an company may adopt, including barriers
Joint venture-
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It is one of the most common routes that Thermex Ltd can use to globalize its venture in
effective manner (Nunes and Steinbruch, 2019). According to this route company can make
agreement with a firm that has already operated its business in sector or global market where
chosen company wants to enter.
Business acquisition-
According to this method, chosen organization can acquire new business in profitable
market which has build up its presence at global level, as it help to make firm able to go at
international level.
Franchise-
It is very common route that company can utilize to become an international brand or
reach at global level. It connects two different partners together and allows each of them to gain
profit after selling products of franchisor.
Challenges-
 When Thermex Ltd, consider first route they can face the biggest challenge for example
change in needs and demands of consumers.
 When firm chose second route and that is Joint Venture it bring challenge for its business
in form of failure in context of considering trustable partners.
 With Franchise Option Company can face challenge in form of understanding needs of
buyers.
Recommendation in context of Thermex Limited
 Organization should adapt hierarchy structure because it helps to boost productivity and
profitability. It also influences decision making in positive manner in term of getting
innovative ideas from wide number of applicants.
 By considering above suggestions, company will go globally and operate its business
functions at global market by overcome challenges and grab accessible opportunities.
CONCLUSION
By summing up above analysis, it has been summarized that Thermax Limited by
developing effective strategic plan and using strategic strategies has successfully managed it’s its
business and success, while operated venture functions into 75 nations. There are ranges of
factors has been determined like labour, raw material and sales volume that effectively drive
international trade and commerce. Furthermore, from above discussion it has been concluded
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that Hofstede’s dimensions of culture and McKinsey’s 7S has define varied types of factors that
influence organizational structure, functions and culture as well. Moreover, it has been identified
that while operating businesses at global level, companies has faced several challenges that
impact decision making and operational efficiency. By conducting ethical and sustainable
business practices, Thermax Limited company has grow even better than other companies which
operated in similar sector from longer period of time. Furthermore, by considering joint venture
and business acquisition approaches, organization has become an international brand.
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REFERENCES
Book and Journals
Anning-Dorson, T and et.al., 2017. Innovation and organizational development: the role of
organizational leadership. African Journal of Economic and Management Studies.
Niittymies, A., 2020. Heuristic decision-making in firm internationalization: The influence of
context-specific experience. International Business Review. 29(6). p.101752.
Nunes, M.P. and Steinbruch, F.K., 2019. Internationalization and the Need of Business Model
Innovation-A Theoretical Approach. BBR. Brazilian Business Review. 16(3). pp.207-221.
Thorleifsson, T., 2020. Barriers for private sector companies operating in waste management
and recycling in Sub-Saharan Africa: a qualitative exploration (Master's thesis).
Yun, J.J and et.al., 2020. The culture for open innovation dynamics.
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