Global Business Environment.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................4
Task 1...............................................................................................................................................4
P1 Key factors of cost, environment, market and competition which are driving global trade
and commerce:............................................................................................................................4
TASK 2............................................................................................................................................5
P2 Complex strategic challenges faced while globalisation.......................................................5
TASK 3............................................................................................................................................7
P3 Effects of globalisation on an organisational governance and leadership, its culture ,
structure and its function.............................................................................................................7
P4 Influence of sustainable and ethical globalisation on organisation's functions...................10
TASK 4..........................................................................................................................................12
P5. Evaluation of various ways for decision making that can help in effective working in
global scenario..........................................................................................................................12
P6 Various routes for internationalisation of a organisation by considering several barriers. .12
CONCLUSION.............................................................................................................................14
REFERNCES.................................................................................................................................15

INTRODUCTION
An environment which allow companies to operate their business actions is a business
environment. Business Environment includes politics, culture, legal, technology and economics.
All these factors are considered before making strategies by management of a business (Ferraro
and Briody, ., 2017). If a company is operating in more than one country it then needs to analyse
the global business environment. In the following report CM Downton Ltd., a logistics and
supply chain management company is analysed. It was incorporated as an independent logistics
firm in 1955. This report discusses about those major factors that are responsible for driving
globalisation and all complexities related to it. Effects of sustainable and ethical globalisation,
influences of globalisation, routes to globalisation and decision making in global business
environment is also discussed in this report.
Task 1
P1 Key factors of cost, environment, market and competition which are driving global trade and
commerce:
When individual, companies or governments of two different countries come together to
initiate an international trade is called as globalisation (Rendtorff, 2017). Globalisation has a
effect on all the functions of business such as marketing, operations and distributions. Key
factors responsible for globalisation are cost, market , competition and environment. The ways in
which these factors results in globalisation are mentioned below-
Competition- Competitors are a kind of threat on which company does not have control.
They are one of major threats to a company , this makes it essential for a firm to beware of their
competitors. Xpo logistics, Purolator, Wincanton plc, CEVA Logistics are some of the major
competitors to Downton. Downton needs to study its competitors strategies, processes used by
them etc. before globalising into their market space.
Market Factors- Market factors include demand, supply, prices, equilibrium, products
etc. Saturation of domestic market have led to an increase in opportunities for a business in
global market. When talking in context to Downton, other globalising companies, even those of
different sectors indirectly effect it. Other companies proposing to globalise will need a logistics
company to forward their products and services. This becomes a benefit for Downton generated
from existing market conditions.

Environmental Factors- Environmental factors include the surrounding in which a
business operates. It consists of some major factors such as social, legal, technological and
political factors which have an effect on working of firm (Fabus, 2018). In case Downton
company is majorly effected by social norms, government intervention while globalising.
Downton analysed all these specifically before going global to set up a profitable business.
Cost Factor- Price charged for a good or service varies from country to country. The
reason behind this difference are cost drivers such as cost of raw materials, labour etc. These
factors helps a firm to obtain cost advantage in local market as well a global market. Concept of
global sourcing is used for this by businesses. Global sourcing means finding out from where
will one get raw materials in lowest price. Using this business profits can be increased by cost
reduction and increased revenue. Downton has made its presence in all the countries with low
cost labour so as to provide a competitive cost in market.
In context of Downton, the challenges faced by company were different because it is a
logistics company. There are a number of such challenges faced by Downton. Major challenge
being managing logistics for an event (El-Zayaty, 2018). These are unique projects which need
unique idea and a different supply chain designed specifically for this project. Any complication
arising in such project can negatively hamper image of Downton. On the other hand successfully
completing such jobs are an opportunity for Downton. All businesses which carry on their work
globally need logistics facility. Multinationals makes logistics company as their logistics
partners. Downton has a great opportunity globalising because it provides with a number of
technological advancement such as IT developments, upgraded weighing scales, advancement in
warehouses etc.
TASK 2
P2 Complex strategic challenges faced while globalisation
Trading some product or carrying out a business worldwide is called Globalisation.
Globalisation offers an opportunity for underdeveloped or developing countries to grow. It
modernizes countries, provides job opportunities and also help in improving infrastructure of
company. Globalisation brings integration amongst all different economies such as regional,
national and international. Factors affecting globalisation are-

Economies of Scale- Economies of scale is a situation of cost advantage for a firm which
is established by producing in bulk quantity. Economies of scale is why certain goods are
produced only in certain area worldwide (Keegan, 2017). China has been following this strategy
to get a leadership in various sectors worldwide.
Technological Change- Changing technology have proven to be a great help in
globalisation. Latest technologies help a firm to reduce costs. In major operations of
communication and transportation technological changes have brought in great revolutions.
Patents of latest technologies also helps firms to exploit foreign markets. Downton has benefited
from a number of such technologies which helped in better transportation and management of its
business.
Globalisation being a boon for businesses have also brought in some disadvantages along
with it. It can be seen that clashes amongst employees occur due to lack of understanding of
values and beliefs of each individual. This results in a negative environment at workplace.
Workplace discrimination also occurs due to it (Fabuš, 2017). If not resolved on time these
challenges could lead to losses in an organisation. Below mentioned is a list of all those
challenges which Downton faced while operating in global market-
Communication and cultural differences- A process in which data is transferred from
one person to another in verbal or written form is communication. It is very essential to have a
smooth flow of communication in order to run a business. While globalising companies need to
make strategies so that miscommunication due to difference in culture does not arise. In context
of Downton it is required by company to make sure that local employees they hire are well
versed with culture of organisation. It is also necessary for organisations to understand values
and beliefs of its workforce for smooth flow of work.
Political risks- Political risks arise from rules which are brought in by ruling political
party in a nation. In reference with Downton political risks include fiscal policies, economic
policies, import and export or custom duty, taxation policies etc. Such policies have an effect on
development of Downton in that country (Gooris, and Peeters, 2016). It is essential for company
to be in good books of ruling political party. There support helps company to settle in foreign
land with ease.
Existing Monopoly- In a situation where both cost and competitive leadership are
enjoyed by a single firm in marketplace is said to be monopoly. With reference to Downton,

being a logistics firm it face monopoly condition with Cargo. Cargo shipments enjoy monopoly
in a number of countries. Due to this Downton faces problem in entering market in some
countries (Trad and Kalpić, 2019). It is required of its management to make effective strategies
to face this situation. While focusing on this problem from beginning itself company might
derive plans to overcome it.
Laws and Regulations- Business governing rules and laws are different in different parts
of world. To setup a new business all these situations must be analysed carefully. In context with
Downton various laws to be considered are Employment laws, compensation laws, labour laws
etc. It is essential for company to abide by these laws for setting up a businesses in new place.
Any violation of these laws may lead to legal actions against the firm, which may dilute
goodwill as well as profits of business.
TASK 3
P3 Effects of globalisation on an organisational governance and leadership, its culture , structure
and its function
Corporate governance is a set of predefined rules or laws which guide a business through
its operation, regulation and controlling of its business. It is the duty of a corporate governance to
enable firms to attain its business motives and objectives. Preparation of corporate governance
also takes into account vision and statement of business.
 Structure- Structure of a firm refers to the flow of power and responsibilities in an
organisation. With reference to Downton structure followed for orders is in downward
direction. Information flow takes place amongst same level of different departments
horizontally. Whereas, suggestions and ideas flow upward from subordinates to
superiors.
 Culture- Soft culture is followed by Downton. Soft culture refers to a practice in which
importance to both tangible as well as intangible objectives are equally provided. This
makes it easy for an organisation to recruit employees from different culture. All that
management needs to worry about while recruiting is skill of labour rather than their
beliefs and values. This practice is best while globalising business.

 Leadership- Downton follows participative leadership. This creates a sense of support
and belongingness amongst management and employees. This leadership practice is
helpful in globalisation for Downton as employees are from various parts of world. It is
necessary that they feel valuable at business and work towards organisational objectives.
 Governance- Downton is creating efficient policies and decisions for globalisation. Due
to globalisation these rules and policies are mostly concerned with setting up businesses
in different countries. They need to make sure that these policies do not result in conflicts
in different countries.
 Functions- The major function of Downton is transporting goods which is produced by
other businesses from one place to another. In terms with globalisation company is
looking for technologically advanced and cost effective ways to transport goods and
services.
Hofstede's Model
This model was developed by Geert Hofstede. According to this organisational culture includes
beliefs, practices and ideologies which distinguish one business from another. The four major
elements included in this model are-
 Masculinity vs. Femininity: This element includes giving responsibilities and powers to
female over males in an organisation. Applying this concept on Downton, company have
now started taking female in decision making process because management believes that
anger and aggression in a male employee hamper their decisions.
 Power Distance: Power distance refers to delegation of powers and responsibility.
Downton follows this practice. This is followed by company in order to save time.
Waiting for a decision to be made wastes a lot of time of employees in an organisation. It
is a great support for globalisation because decision making for different parts of world
will be more time consuming.
 Individualism vs. collectivism: Individualism is letting one employee take decisions in
an organisation. Downton follows a practice in which every individual is provided with
some rights and powers. It is mandatory for them to take a part in decision making
process. Flow of opinions and ideas in employees bring innovation. It also helps in

increasing output. With reference to globalisation new ideas generated through this can
be used when moving globally.
 Uncertainty Avoidance : This factor helps in sorting out conflicts between employees.
This elements says to analyse the behaviour of individual while they are in conflicting
situation with someone. Downton train their employees in such a way that they can avoid
such situations. Also it becomes important in globalisation because people from different
regions tend to have more conflicts due to different values, beliefs, languages etc.

P4 Influence of sustainable and ethical globalisation on organisation's functions
Ethical globalisation is related to overall procedure of different information based on
goods & services in a ethical manner (Perry-Kessaris,., 2016). Ethical globalisation is used for
encouraging various stakeholders such as suppliers, consumers, government and society to work
in a more ethical manner so that overall benefits can be obtained. It is also very useful in
achievement of company objectives to increase overall revenue and market share.
Sustainable globalisation is used in further expansion of business functions at
international level so that there is maximisation of sustainability in long run. It is a technique
that is used for operating a business according to suitability structure. For maintenance of long
run sustainability at global level organisation have to fulfil various legal formalities for overall
development and survival in the Competitive environment. There are various organisational
functions that are influenced by suitable and ethical globalisation. Different organisational
functions are discussed below:
Human resource management: it is one of Valenzuela function in a company as it is
very useful in hiring of skilled & knowledgeable Candidates in a organisation. So that
functioning is taking place properly and as the way it is required. In C M Downton management
has to follow various legal formalities in a ethical manner (Reyes, Roberts and Xu, , 2017).
There are various laws & regulations that have to be considered for accomplishing aims. In every
company administrator must make attempts in accepting various activities for maintaining long
run sustainability and providing a workfare for high level of performance that is useful in
accomplishment of objectives.
Marketing function: It is one of crucial functions for a business organisation according
to demands of their customers in market so that management is able to create products and offer
them according to requirement of their prospective as well as present customers. Marketing
function is very helpful in creation of awareness in society regarding different types of product
and services. In C M Downton, management of a company has to adopt globalisation as process
then it becomes necessary to follow and adopt all different legislations related to marketing. In
case of export and supply of products and services there are certain devices required in
marketing of products & services. There is also a requirement of maximization of profit ratio for
formation of various marketing strategies so that it is followed in ethical manner and helpful for
the firms in maintenance of their sustainability in the long run.

Finance function: It is one of very important function in every business. It is helpful for
providing overall financial assistance for business ion their operations in a smooth manner.
Addition to it main purpose of effective use by the enterprise for providing finance for business
operations. In C M Downton, finance manager of company is responsible for gathering monetary
resource in a more ethical manner (Tallman, Luo, and Buckley, 2018). There must also be use
of available funds in a effective manner in business functions such as supply of goods &
services. There must be effective market analysis of the external market but it results in increased
cost for various business. Companies must make themselves aware of overall requirement of
market and then supply material according to such requirement. It is very helpful in sustainable
development of a company and its operation's in the global business environment.
It can be concluded from above description that there are many different factors which
have an impact on environment in an organisation. The major functions like marketing,
financing, human resource management etc. will be affected at the time of globalising. It
becomes difficult for management to imply these in ethical and sustainable way. There are also
many different faces which can be accepted by firms to develop decisions.
Influences of ethical and sustainable globalisation on organisational functions:
Sustainable and ethical globalisation affect functions of an organisation positively as well as
negatively. It improves objectives and goals of an organisation. Business thinks of wider goals
and huge objectives to attain in international market then. This also results in employees getting
better training and experience while working. However, these often results in a negative aspect
such as human trafficking, forced labour, environmental issues and intellectual rights protection.
Examples of various negative aspects on sustainable and ethical globalisation:
A number of activists, NGOs and government have been trying to tackle the problems of
forced labour in international market. Reasons for this are poverty and globalisation. Child
labour is another factor arising here. Many firms like Nike can be seen using child labour but
provide education as well as food in return. In this way they are benefiting the child labours and
extracting their work from them as well.
Raw materials used in business are extracted from environment. Environmental ethics
are necessary to be followed by all such organisations. In this environment is being exploited up
to optimum limits. All-natural resources are being extracted and businesses only give back

pollutants to environment. Environmental ethics are also necessary here as it is necessary for
organisations to retain stability in environment while extracting natural resources.
Thus, it becomes necessary for business to sustain in international market. Also, it is
required by them to behave ethically and benefit environment from their business. These ethical
factors effect business’ reputation and its goodwill in market.it is necessary for companies to
follow this so that they do not have to face any legal proceedings.

TASK 4
P5. Evaluation of various ways for decision making that can help in effective working in global
scenario
Decision making is very important for leaders in organisation of various business
operations and functions in a more efficient manner. Decision making is according to a situation
that is prevailing inside and ousted a organisation. It is very important for administrator to
develop a working environment in which company is functions for maximization of productivity
and profits. In C M Downtown, management has to consider various factors such as analysis of
situation, improvement of decision making that can be modified and updated according to
situation and minimise various issues & complexities in a more appropriate manner
(Soundararajan, , 2018). For determination of decisioning in C M Downton management has to
take into consideration certain factors such as analysing a situation, improvement of decision
making can be modified according to situations and reduce complexities in a better manner.
Steps for decision making:
There are certain phases that can be adopted by companies for making improvement on
decision making. In the first step, management has to make objectives and aims on which
various decision are based, as if goals will be clear then decision making will be more effective.
In second phase, management will be evaluating various decision to solve the problems &
solving complexities. It is very important for administration to consider such phases for carrying
on of work in a more effective manner. If such steps will be followed then decisions can be made
according to appropriate conditions.
Different ways that can help in making decision making more effectively in the global scenario:
Strategic capability: strategic capability is related to ability of a business to handle all
their capabilities, skills and resources so that they are able to get a competitive advantage . In
Downton, strategic capabilities of their staff member's will further help them in surviving for
long term and also increasing the value of organisation with time.
Leadership: Leadership capabilities are related with how various leaders are undertaking
different task in a organisation. In present scenario, leaders in Downton must use various
leadership styles such as participate, democratic so that the whole process of decision making
involves participation of subordinates also. It will lead to employees feeling that they are also

having a participation in the process of decision making which will result into maximum
contribution made towards achievement of laid objectives.
Reduction of risk: Before implementation of any new decision it become very necessary
for the authorities of Downton to make sure that all the anticipated risk have been addressed in
advance so that in case they occur in future mitigation measures are taken in advance.
Above discussed are some of the ways that can be considered by Downton while making
decisions related to implementation of some changes in a organisation.
P6 Various routes for internationalisation of a organisation by considering several barriers
In the present scenario, Companies are willing to expand business at global level for
enhancement of growth and development of business form in improvement of customer base.
Organisation can expand their business globally if there are several routes that can be adopted by
firms (Lasserre, 2017). In C M Downton, there is description of various routes that are part of
globalisation as discussed below:
Licensing: This is a method where organisation is offering its license to other firs so that
organisation is able to operate their business by use of a particular enterprise. In C M Downton
there is a fee charged as royalty by this organisation fpore use ODF technology and brand in
their company. If company is adopting this internationalisation then there are two parties such as
licensor & licensee. Licensor is the party that is offering their license to other parties and
licensee is one who is adopting licences for operation of business. It is beneficial for company
for providing growth opportunities & maximisation of profits (Bedianashvili, 2016).
Additionally, assistance of route will help in development of various job opportunities for
nations and individuals. Some limitation such as license enterprise is dependent on licensor that
is enhancing overall competition in market. Licensee has to pay a required amount of funds for
getting a license without possessing any information related to succession rate.
Exporting: It indicates activities in a organisation related to supply of goods & services
in other parts of country. In case of C M Downton, company is adopting this strategy for
globalisation so that they are bale to export their product to various other locations in global
market and gain various advantages. It is also very helpful in increasing overall profitability and
sales so that further competitive advantages can be gained. It has some disadvantage such as ur

may lead to presence of very high competition in the external market. Another obstacle can be in
form of various export related legislations that are present in different countries as and because
of such factors forms to have to formulate various actions plans and make tactics accordingly.
Joint Venture: It is also a method of globalisation in which two or more than two
Companies are willing to enter with a specific objective and business actions. In both of the
organisation thereis some form of ownership based on shared interest. In context of C M
Downton, this is a method that cam be adopted by companies in operating at global level . If firm
is able to accept such changes in enterprises that are joined than it will help in accomplishment
of several project aims and objectives for sharing of various profits & losses (Kasemsap, 2018).
This is a tool that is very beneficial for any company in sharing of market risks and threats with
their venture partner. There are various other barriers also that can be generated by adoption of
this particular route of globalisation such as different culture, management styles that result in
poor integration. Another major drawback that can be faced is unrealistic objectives can be set by
both the partner enterprises.
From the above information it is suggested that C M Downton van adopt license methods
for operating their business across globe. It is also very helpful for the respective company to
operate their business with a adequate supply chain procedure and logistic management for
expansion of various business operations and functions.
CONCLUSION
It has been summarised from above discussed points that business environment plays a
role in achievement of overall business objectives. There are various components that are part of
external environment can be favourable or unfavourable ion adoption of various expansion
strategies by business environment. Companies must make attempts to make a plan of cation that
can be helpful in gaining profits from overall market according to changing market needs.
Managers of organisation must adopt different structures, norms and policies for improving
effectiveness of overall workforce. It is very important for organisations in maintenance of
overall benefit while operating in host and home country.

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