Globalization and Business Strategies

This assignment delves into the multifaceted effects of globalization on businesses. It begins by defining globalization as the interconnectedness of cultures, economies, and politics through technological advancements, reduced trade barriers, improved communication, and increased migration. The report highlights the advantages globalization offers businesses, including a larger customer base, global economies of scale, expansion opportunities, and growth potential. However, it also acknowledges the challenges companies encounter on an international stage, emphasizing the need for strategic adaptation to thrive in the global market.

Critical Issues in
Business Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
1) Main drivers of globalisation..................................................................................................1
2) Evaluation of challenges of globalisation for a multinational company................................2
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
Books and Journals.....................................................................................................................7

INTRODUCTION
Globalisation can be defined as the process in which world is getting increasingly
connected because of increase in exchange of culture and trade. Due to globalisation, businesses
are operating on an international scale and develop international impact. It is the integration of
economies, culture, trade, market and ideas worldwide through global network of
communication, transportation and immigration (Thun and Hoenig, 2011). Globalisation has
reduced trade and culture barriers and changed the ways of doing business. The present report
focuses on analysing main drivers of globalisation and evaluation of challenges a MNC faces due
to globalisation.
TASK
1) Main drivers of globalisation
The major drivers of globalisation are technological innovation, advancements in culture,
politics and economics. These can be separated into 5 different groups : Technological innovation : The main foundation of globalisation lies on advancements
and innovation in technology (What are the main factors driving globalisation? 2015).
The emerging technologies have made the world a smaller place and made it easier to
trade across the globe by reducing trade, cultural and other barriers. Technology enables
a company to develop new and innovative products, manage and standardise these
products and services. Worldwide communication with suppliers, employees and
customers has become easy to ensure coordinated global efforts. Social and Political reforms : Various social factors such as enormous population
growth and consumerism in countries such as Japan, India and China have created
opportunities for new customers worldwide (Wheelen and Hunger, 2011). Liberalisation
of trading policies and reduced tariff rates have enabled foreign direct investment on an
international scale and created new markets and business partnerships. Some of the major
examples of developments are World Trade Organisation (WTO), General Agreement on
Tariff and Trade (GATT) and privatization in Eastern Europe. Development of transportation system : One of the major revolution in the industry is
innovation in transportation technology which has enabled people and organisations to
reach different places easily. Development of transportation system allows fast and
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affordable migration of products across the globe such as jet aircrafts, freight trains, ships
etc. Market drivers : With the saturation of domestic market, opportunities for growth
becomes limited, thus, businesses seek for global expansion to overcome this problem.
The major reason for businesses to go global is to widen their customer base and expand
their business which help in increased growth and profitability (Chang, 2016).
Opportunities to use global marketing channels and fulfill common customer needs
induce business to choose internationalisation. Increasing competition : Another major driver of globalisation is ever increasing
competition. Companies face intense competition from its rivalries in the market and to
face this competition and survive in market, they tend to play international. Moreover,
with global market, they have to face global inter-firm competition apart from domestic
competition, hence, the only resort for survival is international business.
 Cost drivers : Global organisations can take advantage of the fact that costs and sourcing
efficiency varies from one country to other. High development costs of products and
opportunities for achieving global economies of scale are the major cost drivers due to
which companies are interested in globalisation (Kerzner, 2013).
Thus, all the above key drivers such as innovation and advancements in technology, reduction in
cultural barriers, various social and political reforms, fierce competition, market and cost drivers
have made it imperative for businesses to become global and conduct their operations on an
international level. This will help them to face intense competition, increase their customer base,
exapnd the business, increase in growth and profitability and to survive in the market.
Globalisation helps in enhancing the brand value of a company worldwide and thus, achieve
organisational goals.
2) Evaluation of challenges of globalisation for a multinational company
Even though, international expansion is a attractive and lucrative business proposition,
yet there are some challenges a multinational company has to face due to globalisation. This
includes more skilled and experienced leaders, change in organisational structure, managing
workforce and formulation of more effective strategies to expand and survive in global market
(Zikmund, Babin and Griffin, 2013).
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a. Leadership : To succeed in present global market which is massively volatile and dynamic,
the leaders of a multinational company are required to be more skilled and knowledgeable. They
have to face a complex and globalised environment where they need to comply with
requirements of government, manage intense competition and fulfil the expectations of
stakeholders. To deal with these issues, leaders are required to possess following skills : Overseas experience : To become a successful leader of international business, leaders
are required to possess know – how about how business are operates in different regions
and should learn to transcend own culture perspectives (Seddon, Calvert and Yang,
2010). Sensitivity to cultural diversity : Every country has its own cultures, beliefs and practices,
thus, it becomes imperative for a leader to have keen interest in understanding lives and
cultures of others and adjust according to their culture. Global strategic thinking : A leader should possess global perspective to think
strategically for managing the business. It is essential to understand the operations of
different businesses on a global scale in order to enable him for making strategic
decisions for the company.
 Good negotiator : Strong negotiating skills are needed for doing business across regional,
national and ethnic boundaries.
In addition to this a global leader is required to possess skills for developing managerial
effectiveness, deep self awareness, humility, effective communication skills and a pleasant
personality. If the leaders of multinational company do not have these skills, it can be quite
challenging and company have to face many problems (Pedler, 2011). A good leader can
motivate and inspire others to work on global scale and adjust according to different cultures.
b. Organisational structure : Organisational structure can be determined as formal structure,
system of controls, culture of organisation and coordination. It is the formal hierarchy and
arrangement that defines roles, responsibilities and relationships within an organisation. An
effective organisational structure plays a cardinal role in success of an organisation specially for
a multinational company which is required to adapt different cultures. Due to lack of proper
structure, company has to face following challenges :
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 If the roles and responsibilities are not clearly defined, there will be no effective
communication which will result in poor decision making and hence, company would not
be able to survive in global market.
 If the organisational structure of the company is very rigid, it would not be able to adapt
to cultures that vary from country to country (Martínez-López, Gázquez-Abad, and
Sousa, 2013). Flexible structure is required to deal with and manage such cultural
changes.
 Effective communication is essential across the organisation so that all the employees can
be informed about major decisions and they can be motivated to work in different
environment while adjusting according to diversified cultures. This also avoids any kind
of confusion and ambiguity in the minds of employees.
 It is important for the company to periodically review and revise its organisational
architecture to match changes in competitive and strategic environment.
 Global organisations are struggling to adapt and no single model of organisational
structure can be beneficial for all companies, keeping in mind rapid growth in emerging
markets and global communications. A multinational company should review and modify
its structure according to the market in which it serves to ensure that it can survive and
grow in global market.
c. The workforce : Workforce refers to the individuals who are employed by the company and
works for the company to achieve organisational goals. Employees are the most important assets
of an organisation and are responsible for its success.
 It is very difficult for companies to motivate employees to work on international scale as
people are reluctant to changes (Stokes, Wilson and Wilson, 2010). Therefore, it is
essential that effective plans are implemented to inspire and prepare employees for
working in global market.
 To convince employees to adapt to changes and accept different cultures is a tedious job
as people are emotionally connected to their cultures, beliefs and customs, so, company
should ensure a proper balance between cultures.
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 It is imperative for multinational companies to provide structured training and
development programs to its employees to enhance their knowledge base and skills so
that they are able to deal with different situations that may arise in global market.
 Employees have a fear of losing job due to globalisation, company should respond
appropriately to their concerns and ensure that globalisation is for the benefit of all
(Elliot, 2011).
 Multinational companies are required to adapt hiring and retention strategies to recruit
and select such employees who possess requisite qualifications and skills that are needed
to survive in global market.
 Analytics can be expanded and other diversity metrics can be used to avoid skill
shortages and understand the make up of recruits and providing matching incentives.
 Flexible and committed employees ensures that business is operating effectively and
efficiently. They are the foundation of a successful business.
 Companies should continuously monitor and control the activities of its workforce to
ensure that they understand their responsibilities and are able to cope with the changes of
global market.
Thus, employees plays a cardinal role in global business and it is essential that they are
motivated to adapt to changes in international market. Multinational companies should provide
training to employees to enable them to deal with different markets situations. They should be
offered various incentives so they feel motivated and content (Hewett, 2010). There should be
effective communication in the organisation regarding advantages of globalisation and how it
would be beneficial for all. If the employees are reluctant to change and do not cooperate, then,
company will fail in the global market as without skilled and flexible employees, a company
cannot survive.
d. Strategy development : When the company decides to operate on international scale, it
is must to modify its current strategies and developing new strategies that will enable it to
operate smoothly in global market. From the business point of view, there are two major
characteristics of globalisation – leads to increased interdependency between countries
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and is multi – faceted with various aspects of business. An organisation is required to
develop global or international strategy but it is a very challenging task.
 Proper strategies are required to be formulated that clearly defines mission, vision and
goals of the organisation. It should be clear roadmap that provides how the company will
perform its operations in the global markets.
 Moreover, effective strategies are required to be developed that motivate employees to
adapt to cultural changes and monitor and control their performance continuously. All
such plans and strategies should be communicated to employees so they are inspired and
understand benefits of globalisation.
 Strategy development is required to change the existing organisational structures, in order
to ensure that the architecture of the company is flexible enough to adapt to the changes
of the international market and a proper hierarchy of roles and responsibilities is
established in the company.
 If there the strategies are not effective, all the employees and departments of the
organisation will lack coordination. This will result in mismanagement of all the
functions and hence, company would not be competent to survive in global market.
 As the company has to face fierce competition from the global firms, it is crucial to
develop effective strategy to face this competition and gain competitive advantage. If the
company fails to formulate and execute effective strategies, it may be thrown out of the
market.
CONCLUSION
It can be concluded from this report that globalisation is integration of different cultures,
economics and politics across the globe through advancement in technology, reduction in trade
barriers, communication and immigration. Globalisation has proved to be beneficial for the
businesses as it helps to expand customer base, achieve global economies of scale, exapnsion and
growth of business. But, the companies operating on international scale has to face various
challenges and form strategies to survive in global market.
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REFERENCES
Books and Journals
Thun, J. H. and Hoenig, D., 2011. An empirical analysis of supply chain risk management in the
German automotive industry. International Journal of Production Economics. 131(1).
pp.242-249.
Wheelen, T. L. and Hunger, J. D., 2011. Concepts in strategic management and business policy.
Pearson Education India.
Chang, J. F., 2016. Business process management systems: strategy and implementation. CRC
Press.
Kerzner, H., 2013. Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Zikmund, W. G., Babin, B. J., and Griffin, M., 2013. Business research methods. Cengage
Learning.
Seddon, P. B., Calvert, C. and Yang, S., 2010. A multi-project model of key factors affecting
organizational benefits from enterprise systems. MIS quarterly. 34(2). pp.305-328.
Pedler, M., 2011. Action learning in practice. Gower Publishing, Ltd..
Martínez-López, F. J., Gázquez-Abad, J. C. and Sousa, C. M., 2013. Structural equation
modelling in marketing and business research: Critical issues and practical
recommendations. European Journal of Marketing. 47(1/2). pp.115-152.
Stokes, D., Wilson, N. and Wilson, N., 2010. Small business management and entrepreneurship.
Cengage Learning EMEA.
Elliot, S., 2011. Transdisciplinary perspectives on environmental sustainability: a resource base
and framework for IT-enabled business transformation. Mis quarterly. 35(1). pp.197-236.
Hewett, A., 2010. Product lifecycle management (PLM): Critical issues and challenges in
implementation. In Information Technology and Product Development. (pp. 81-105).
Springer US.
Online
What are the main factors driving globalisation? 2015. [Online]. Available through:
<https://www.tutor2u.net/business/blog/qa-what-are-the-main-factors-driving-
globalisation>. [Accessed on 24th February 2017].
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