International Business Environment and SMEs

This assignment provides an in-depth analysis of the international business environment and its effects on small medium enterprises (SMEs). It discusses the importance of market orientation, innovation capability, and business performance in a global context. The assignment also highlights the role of cloud computing adoption in global business and the potential of e-commerce for SMEs. Additionally, it touches upon the social responsibility of international business and sustainable development. Overall, this assignment aims to provide insights into the challenges and opportunities faced by SMEs in a rapidly changing business environment.

GLOBAL BUSINESS
ENVIRONMENT

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Key factors of cost, market, environment and competition...................................................1
P2 Complexity of strategic challenges faced by BMW while operating in global business
environment................................................................................................................................3
TASK 2............................................................................................................................................5
P3 Influence of globalisation on organization and its various factors........................................5
P4 Evaluation of influences of ethical and sustainable globalisation upon organisational
functions......................................................................................................................................6
TASK 3............................................................................................................................................8
P5 Evaluation of different decision making approaches on a global level.................................8
P6 Determination of various routes to internationalisation, inclusion of key barriers..............10
CONCLUSION..............................................................................................................................11

INTRODUCTION
Globalisation is all about exchange of goods or services at international marketplace in
order to attain gain maximum competitive advantage by satisfying needs or desired of customers.
In fact, it has been analysed that most of the multinational companies are emerging at worldwide
sector for increasing the trade level with foreign markets. BMW is one of the most leading
association across the international level which engaged in manufacturing car by having its
maximum branches in various nations (Apăvăloaie, 2014) .
. Along with this, product demand is increasing day by day which helps in establishing the
company image at marketplace. As a result it aids in maximizing the company revenue in
defined time frame.
Therefore, assignment is going to highlight the significance of expansion, need of
globalisation and several other elements which plays a very vital role in trading process.
Moreover, company is encountering a major problem while entering into new marketplace due to
fluctuation in several factors as it may hamper the success of an enterprise in various manner.
Furthermore, it is also throwing lights on major role which is played by governing bodies while
making decision during at international market. Beside this it shows the key barriers that may
influence the development BMW such as; changes in consumer choices or preferences hence
forth. Last but not the least report is focussing on understanding the need of global corporate
environment because it helps an enterprise in several complex issues by offering best
development opportunities.
TASK 1
P1 Key factors of cost, market, environment and competition
Business environment is all about changes which is occurred in macro and micro factors
in order to design organizational policies as per company need or demand (Axelrod and
VanDeveer,2014).
. In fact, it helps an enterprise in various manner such as; aids in enhancing the company
performance in a minimum time frame, reduce chances of losses, mistakes and errors, identify
the need of foreign clients. As a result company get succeeded in generating more or more
revenue which helps an organization while expanding their business at new marketplace. BMW
is a most popular firm in car manufacturing industry due to its standardized products and car
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with advanced features hence forth. Therefore , it is indispensable to study the various factors
which plays a very vital role in BMW while introducing their new product. Some are discussed
as follows:-
Cost :- Monetary terms are seen as a lifeblood for organization because it helps an
association in various manner by providing necessary facilities which is required by an enterprise
while expansion process. For example; resources, land or building , identifying of suitable
marketing strategy and so on. However, expenses are classified into two main parts such as;
direct and indirect cost. It means every expenditure which might incurred by managers of BMW
while expanding their business are different like few are variable and some are fixed which falls
under direct and indirect. Hence, it is essential to pay full attention on understanding costing
factor before entering into anew market for attainment of profit (Belás and et. al., 2014).
Market:- Its all about studying of market rate of specific product like as per given case
study BMW is spending lots of money and time for determining the changes which is incurred in
consumer demand or choice towards cars. In fact it helps marketing manager while designing
promotional strategy because market is all about competitor assessment, close substitutes in
order to manufacture goods better then rivalries. Hence, it is essential to conduct market analysis
for making measure changes in current product of an organization.
Environment :- As per this element surrounding is segregated into two parts that is
micro and macro which is distinct from each other but interlinked in various aspects. Basically,
roles and responsibilities of these two totally differ as per one is faced at internal level and
another at external. BMW needs to understand the current changes which might take place in
business environment for analysing the current trends, emerging competitors, fluctuation in
currency rate which may affect the profit of contract, political policies, employees need hence
forth. All these elements is very useful for BMW because it helps automotive sector in
determining the actual need of modern cars at marketplace (Belás and et. al., 2015).
. As a result they can spend accurate amount of fund while launching a new venture at new
country for gaining maximum advantage.
Competition:- Automotive industry is growing in a fastest way due to consumer demand
as in today’s modern world every member wants to raise their living standard by using luxurious
products. Therefore, BMW is engaged in offering marvellous items which make their goods
totally distinguish from others. In fact, various multinational companies are focussing on
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expanding their business into new markets as well as new entrepreneur are also coming with
fully innovative ideas may create a major competition level at marketplace. For example; Audi,
Jaguar, Mercedes are some major competitors of BMW which always tries to given high level of
competition to selected firm in order to reduce their profit level making creative items. It means
while getting involved in global marketplace company needs to make an outstanding strategy by
considering necessary facts or figures which make their product totally unique and different.
Hence, it has been analysed that as per given scenario BMW is going through various
phases of life such as; introduction, maturity, growth and declining due to fluctuation of several
components which have a major impact on company performance (Carneiro and Brenes, 2014).
It means , it is essential to analyse the above elements because it aids an enterprise in various
manner which resulted in attainment of goals in a given duration by satisfying needs of desired
clients.
P2 Complexity of strategic challenges faced by BMW while operating in global business
environment
As per the above analysis expansion is a very tough job due to high level of complexity
and BMW is encountering numerous of problems while expanding their business in new
marketplace. In fact, in given case study selected firm is improving their organization after
almost 45 years which is a major breakdown in company life. At the same every nation are
having their personal policies which is set by governing bodies with the help of consumer
opinions. Along with this, going through major changes. However, internationalization is all
about interaction between various people which are belong from distinct backgrounds, culture,
language, religion and so on (Cavusgil and Knight, 2015). Therefore, number of problems are
faced by BMW while operating in a global business environment is expressed as follows:-
Culture issue:- First or foremost problem which might raised is that every nation are
different way of living their life and following totally opposite regions which create a
possibilities of clashes between business partners while involving a new business. In fact,
sometime it also create a conflicting situations because in few countries local people cannot
digest any single thing against their culture. As a result company face a major obstacle while
designing a new product at marketplace. For example; members of Pakistan will never sacrifice
with their norms, beliefs and religious terms.
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Language :- It is not easy to learn mother tongue of various customers because in today’s
world there are almost millions of languages are identified at global level and each of them are
having distinct meaning or conditions. Therefore, BMW also faced this problem at the time of
running a business entity (Cohen and Kietzmann, 2014). In fact, communication barrier is one of
the most indispensable element because without interacting no one can proceed a procedure of
expansion because effective relations is essential for establishing a new business at international
marketplace. Along with this, understating of language is useful for organization in various
manner as this component is seen as a major source of crating loyal relations with consumers
which helps in gaining maximum benefits. At the same time attaining of consumer minds is one
of the most difficult task in marketing activities because very human beings are having different
viewpoints towards particular product. Thus, BMW is trying to adopt modern technologies for
obtaining the attention of domestic as well as foreign customers by satisfying their needs in a
much time frame.
Technology :- In this whole world few countries are fully developed, some are still
developing and few are underdeveloped. Thus, usage of technology differ from place to place
which shows that highly educated nation are fully surrounded with digital tools which is useful
for BMW to promote their car at growing marketplace. But it is not easy to understand
complicated features of advanced methods (Crane and Matten, 2016). Along with this it may
create a maximum probabilities of accidents because if staff members are not aware about the
goods then it automatically create a problem for organization while running their business entity.
Political issues:- Trade policies are enacted by governing bodies as they are liable for
enacting various necessary laws or order which is applicable on an organization while exposing
their business at new emerging marketplace. However, political norms or instability is seen as a
major problem for BMW because it may act as a major restricting factor by applying several acts
on specific situations. Thus, strategic department of an association must consider necessary terms
and conditions as well as employees, contract laws etc. For making corrective policies in order to
minimise the exploitative activities. Beside this, norms of government crate a chance of conflict
due to maximum control and interference of advisory bodies (Doh, McGuire and Ozaki, 2015) .
Economy of a nation;- Currency rate, inflation , deflation and gross domestic product is
fluctuating in regular basis due to changes in various micro or macro factors as they are having a
major impact on company performance. In fact, price of product is based on these elements
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because all the components are interlinked with each other. However, every company wants to
launch their goods in a fully developed economy with maximum currency rate because it
supports in gaining maximum revenue in a minimum time period. Therefore , analysis of
economy is also seen as most indispensable factor which must be considered while conducting a
new business.
At the end it has been concluded that company is facing a major issue at global
marketplace because number of changes in occurring which may create problem for organization
while introducing a new venture at worldwide sector. Along with this it may increase the
competition level at high level and automotive industry are facing a great competition due to
maximization in consumer demand (De Jonge, 2011) .
TASK 2
P3 Influence of globalisation on organization and its various factors
BMW is going through a major changes and complex stages due to high level of
competition at global marketplace for attaining more or more revenue. In fact everyone wants to
establish their goodwill by gaining trust or loyalty of domestic as well as foreign clients which is
very helpful for an organization at several phase. By considering all these relevant data it is
understood that organizational functions are fully influence by these complexities and changes
which might occurred at international level. Therefore, due to high level of complexity in global
environment various components of BMW are fully get affected that is expressed as follows:-
 Leadership:- Managerial decision are totally based on company performance, current
trends, fluctuating elements and so on. Basically, main objective of leaders is to assist
employees towards their personal and professional objectives. Along with this liable to
accomplish distinct roles or responsibilities such as; grab opportunities, reduce threats
and challenges to run a business entity in very smooth manner (Epifanova and et. al.,
2015). Whereas, concept of global leader is a more modern when it is compared with
domestic leaders.
 Hierarchical structure: Organizational structure decides way in which division of
workforce in an association is going to performed their assigned job. While working at a
worldwide level it is fundamental to shape a structure that backings them in building an
item which matches request of individuals. The association working worldwide level
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need to either rethink its structure or shape an expansion. The decentralization of
organizational composition will help in framing a neighbourhood group which thinks
about requests of individuals and shape choice as needs be.
 Functions : There is a move in way in which association accomplish its capacities.
However, major functions of BMW will now have a substantial dependence upon
mechanical advancement and effective interaction process. The reason being while
working on a worldwide level business has a tendency to stress on way through which
merchandise could be created at bring down rates and accomplishing unrivalled business
position in the market. The accessibility of low evaluated workforce and inventories will
guarantee that globalization is working towards favourable position of an association.
 Culture: It can be said that globalization conveys a huge effect upon the organizational
culture as well as its environment. The globalization helps in encouraging a superior
comprehension of culture of each other. Thus, upliftment of innovation in this
contemporary time guarantees that correct correspondence is encouraged between
different people and at the same time enhancing human associations (Epifanova and et.
al., 2015). The comprehension of culture of each other guarantees that they are being
regarded and treated with respect. The impact on culture reflects upon the way in which
hierarchical exercises are conveyed. It is basic to embrace to neighbourhood culture with
the goal that nearby representatives and prospects are welcome to be a piece of the
association.
Hence , it has been understood that BMW is focussing on creating a proper collaboration
with organizational functions while expanding their business at global marketplace in order to
attain set objectives or goals in a defined time. In fact , it aids in various manner by reducing the
probabilities of mistakes and losses.
P4 Evaluation of influences of ethical and sustainable globalisation upon organisational
functions
Sustainable globalization is a very important term in business environment. It can be
considered as an approach which defines the manner or procedure in which business activities
can be expanded. The main attention of sustainable globalization is on the complete ecosystem
which consist of human beings , places, societies , national resources etc so that a good future
can be prepared by them on the other hand ethical globalization is having their concentration on
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the rules and policies associated with humans so that the efforts put by the people can become
successful (Ferraro and Briody, 2017). So, leading a global market is not a simple task as here
combination of economies, societies, languages are being taken place which helps the company
in doing their work in an effective manner.
As per the case study the main purpose of BMW is to increase sustainability and develop
their activities with foreign direct investment through globalization. Although they are successful
in every company they have launched their operations into. This is because they are following a
good neighbour philosophy which means to develop effective relations with people in another
country. They value their culture as well. There are various measure of sustainability that can be
adopted by BMW and they are having major impact on the functions of organization as well.
These factors are:-
Higher cost: This fact cannot be ignored that by doing their operations into another
country, company will have to manage the costs that will be barred by the company while doing
this process. There are so many kinds of activities that will be conducted under this process by
BMW in which they will keep the prices as per the market but they can’t keep low prices as well
as the BMW cars are being made by high quality material and effective technology and
machinery as well.
Workplace environment – This can be very well said that the expansion is having deep
impact on the activities performed by employees in the company (Huhtala and et. al., 2014).
BMW is having their main aim to place themselves in the new country so as to develop
themselves and achieve new heights in the market. The managers present there are trying their
best to create a good working environment inside the company so that the employees can
perform well and contribute to the company in an effective manner. They are providing training
to their employees in an effective manner so that they can become skilled and capable of doing
any kind of activity in the company.
Harnessing latest technology: BMW is using various production techniques to do their
operations in an effective manner and new methods and technologies are being continuously
introduced as well. So by expanding their operations into another country and to deliver products
effectively, the organization will have to implement various methods of advanced supply chain
so that sustainability can be achieved (Kasemsap, 2015). By using various typed of technologies,
BMW is making their impact on the activities of the company in an effective manner. So, BMW
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should introduced new technologies in their organization as through this they will be able to
attract more number of customers.
Low requirement of marketing methods: BMW is having a good brand image in the
market as they have successfully created this image by performing sustainable activities in the
market in an effective manner. They are not producing their most of the parts like 60 % value of
products are being bought from a network of independent suppliers, who are being located in
small geographical areas.
Reduce the liabilities of finance: It is considered as one of the major factor which is
having their influence in the international market. With reference to BMW, they are famous for
manufacturing various kinds of cars and then selling it in the market at the best possible rates.
They can also make use of strategy named as Just In Time (JIT). Through this, they will be able
to manage their financial liabilities in an effective manner by keeping correct cost.
Health and care facilitates: It is one of the important factor which is required top be
followed by every company because if the employees will not be safe then they will not be able
to do their operations in an effective manner. So, BMW is taking care of this factor very well as
all of their cars are luxurious and they are made with good quality machines as well through
which air pollution is caused in minimum level.
TASK 3
P5 Evaluation of different decision making approaches on a global level
There are various kinds of approaches which are required to be implemented in an
organization; one of them is decision making approach (Kolk, 2016). This is an approach in
which best option is chosen from the available ones. It is one of the most important approaches
that are required to be applied by the managers of the company in an effective manner. All the
alternate choices which are available are required to be identified and analyzed properly and then
the best one should be selected and later on applied on the problem which the company is facing
correctly (Peng, 2016). BMW is carrying out there operations in various countries so they must
be facing various challenges while doing their operations as taking decisions as well. But, since
BMW is importing most of the mechanical parts through suppliers so they are not facing issues
related to raw material but they must focus on the customer present in the market.
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BMW which is multinational auto-mobiles organization and are driving worldwide market is
expected to consider better choices with respect to business achievement and gain market
through appropriate strategies as well.
The major approaches to decision making are mentioned briefly down below:
UNILATERAL DECISION MAKING: It is considered as one of the mostly used in the
decision making process where focus is being put from top down approach. They are very strict
in their approach which they adopt while doing their functions in the company. They also believe
that each and every detail is not required to be explained to their employees and some decisions
can be taken by self as well. The major benefit of this process is that decisions are being taken in
quick manner and problems are being solved in short period of time. Companies are also able to
face any kind of challenges in the market and taking difficult decisions as well. BMW is also
following this policy as they are also doing their operations in most of the countries and thus
they also require employees who are having high amount of knowledge and experience so that
they can do their operation in an effective manner.
ADMINISTRATIVE DECISIONS: These kinds of decisions are being taken after doing
long research and also the suggestions which are being given by the employees are also not
considered. This is a kind of process which is being implemented within an organisation itself
(Savrul, Incekara and Sener, 2014). There are various kinds of benefits which can be derived out
of this kind of approach like here research is being conducted in detailed manner so large amount
of knowledge is also gained by the researcher can be used at the time of conducting their
activities in future. But, in this approach, the employees are not giving any clear inputs and
stakeholders may also take improper decisions many times. So, companies like BMW will not
choose these kinds of approaches.
AD-HOC DECISIONS: it is one of the mostly used approach as here the employees are
being engaged in the decision making process. There is high amount of employee’s involment in
this. The leaders who are working in the company are having authority of changing their teams,
taking decisions, formulating actions etc. here, the stakeholders are not being involved much in
the decision making process and only employees and leader’s suggestions are being counted
(Wild, Wild and Han, 2014). This kind of approach is not being preferred by most of the
companies as they are not including stakeholders in the decision making process.
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MUTUAL DECISION MAKING: it is considered as one of the most important decision
making approach which is being used by companies to take corrective decisions. This kind of
approach also takes large amount of inputs from the stakeholders of the company and they are
being involved at high level decision making process as well. The manager is required to analyze
the roles of stakeholders, employees, other factors and information is collected from the same. It
is the lengthy process because if companies want to choose correct measures than right amount
of analysis is required to be done. So, if BMW is select this approach than they will be able to
take correct decisions at global level as well.
P6 Determination of various routes to internationalisation, inclusion of key barriers
In this revolutionary time-period, it has turned out to be an essential task for company to
extend at global level so that company can gain competitive advantage in market and also
encouraging infrastructural change and commercialisation of interest of item. There are various
courses through which a business can wander into worldwide market, for example:
Exporting: It can be defined as a method in which the operation of a company is being
extended to international level. This is a very effective process as here the goods and services are
being sold in different country without being virtually present there. The production activities of
BMW will be carried out in the same manner and they will be successfully manufacturing more
variety of cars as per the demand of customers. They can export their products and services by
making use of direct or indirect measures. The direct approach is being used by company when
they have to maintain its control over their business and indirect approach takes help of
middleman for selling their products and services (Cantwell, Dunning and Lundan, 2010).
Repositioning: This is the other approach which can be used by BMW to develop their
operations at international level. Basically, in this approach a part of business is being shifted to
another country where sales percentages are high and they can effectively gain profits as well.
Since BMW is a big brand so before launching its products in another country, company will do
proper research and then only start their business there.
Strategic alliances: Strategic alliance is known to be an approach under which association
consent to share assets and resources in providing best quality cars to their clients. BMW can
shape relations with association working under same sector so that skill could be shared and
better items can be advertised. It is an approach through which opportunity in the market could
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be benefited in a quick way and there are relatively lower barriers to make an entry in the market
(Cavusgil and et. al., 2014).
Technological advancements: If BMW wants to expand themselves in different country then
they can take help of technology as well. So, their management is required to have a strong
knowledge of technology that can be used by them in the cars they are manufacturing. Once this
is done then they can do expansion in any country learn about their technology and implement it
in their products as well. This will eventually help them in developing their profits margin only.
BMW will also have to face various kinds of challenges while entering into international market.
Some of them are summarised as under:-
 They will face difficulty in learning the language and culture of different country as each
and every country is having different cultures. So, this can act like a barrier.
 In order to launch them at international level, they will require huge amount of money as
lots of activities will be conducted which will consume more money (Colfax, Rivera and
Perez, 2010.
 There are numerous taxes which are to be paid for actually initiating operation in a
nation. So, international tax issues can become one of the main reasons for barrier.
Hence, supervisors of a company like BMW are required to look at all issues which may happen
in the midst of work at global market. Recognizing such issues will help them in defining
techniques as well as implementation the same into work-procedure.
CONCLUSION
From the above report, it can be concluded that business environment is a very important
part for every organization. Companies have to make sure that they are well aware of the
external factors in the environment. Also, if they want to expand themselves at global level then
these factors will only help them to gain competitive advantage. Through this they can gain cost
efficiency as well. There are various kinds of challenges which a company requires to face when
they are expanding their operations in a global manner. Some of them are like cultural issues,
language; technology etc. companies are required to face all these challenges in an effective
manner so that they do not face any issues while doing their operations. They should try that they
do business in different country in an ethical manner so that they form a good image in that
country and gain customer base as well. The other ways through which a company can enter into
international market are like exporting, licensing, franchising, partnership etc.
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How SMEs Can Internationalize. 2015. [Online]. Available through:
<https://www.forbes.com/sites/iese/2015/04/20/how-smes-can-internationalize/
#458e76f11eb8>.
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