Influence of Globalization on Organizational Functions

This report analyzes the influence of globalization on organizational functions and the impact it has on governance, leadership, structure, culture, and functions. It also discusses the key factors driving globalization, strategic challenges, and ways to overcome them. The report focuses on Allan Reeder Ltd., a company in the dairy products industry, and provides recommendations for operating in a global business environment.

Global
Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................................3
....................................................................................................................................................................3
Analysis of key factors.............................................................................................................................3
Analysis of impact key factors have on global business environment.....................................................4
Complexity of strategic challenges..........................................................................................................5
Critical analysis of strategic challenges....................................................................................................6
Critical evaluation of global business environment.................................................................................6
Influence of globalization.........................................................................................................................6
Influence of ethical and sustainable globalization on organizational functions.......................................8
Critical evaluation of global market.........................................................................................................9
Different ways of decision-making in a global context............................................................................9
Routes of internationalization which organizations can adopt including key barriers...........................10
Barriers of doing business internationally and recommendations for overcoming them......................12
Strategies for operating in a global business environment....................................................................12
CONCLUSION.............................................................................................................................................12
REFERENCES..............................................................................................................................................14

INTRODUCTION
Global Business Environment is a combination of factors present in different countries of
the world and can impact the operations of a company which wants to globalize and expand its
operations internationally (Anderson and et.al., 2017). It has a wide scope and reach and thus
offers tremendous opportunities of growth to the companies so that they are able to maximize
their level of profits and obtain a strategic and competitive edge over their various competitors in
the market. Thus this ensures growth for the company in the long-run. Globalization is a process
which refers to integration of different economies in the world for the purpose of creation of a
truly global economy. International economic integration refers to ease of doing business
between countries. Foreign Direct Investment can be made by the investors in countries other
than their home country. Trading refers to doing business of goods and services. For this report,
Allan Reeder Ltd. has been selected. It is a company which supplies dairy products to its various
customers in the market. This project will focus on key factors driving globalization,
determination of strategic complexities of operating in a global environment, evaluation of how
operating in a global market influences an organization’s structure, culture and functions.
Additionally, focus will be made on evaluation of influence of globalization on organizational
decision-making and strategy will be discussed as a part of this project.
Analysis of key factors
There are different types of key factors which drive global commerce and trade. The
analysis of these factors is as follows-
 Cost- It is a very important factor for most of the organizations (Barac and et.al., 2016).
It drives global commerce and trade because the companies which want to globalize their
operations in different countries are required to make sure that they reduce their level of
costs and thus in this way can maximize their profits without issues and problems. For
Allan Reeder it is quite important that it is able to reduce its costs for expanding globally
in different countries which will make sure that it can maximize its profits without issues
and problems and thus obtain a strategic edge over its rivals. Allan Reeder needs to use
the appropriate techniques which are available so that it is able to reduce its costs
effectively in the global markets to earn higher profits.
 Market- Market is quite important for the companies. It drives global commerce and
trade because the companies like to invest in a market where they can earn more profits
without problems and issues. They have to analyze how much ROI they can expect on the
capital invested in such markets. Therefore for Allan Reeder it is quite necessary that it is
able to make sure that it invests in those markets where it can get higher returns on its

capital invested. Allan Reeder needs to select a market which offers high potential for
achieving growth in the future time period and this will allow it to achieve sustainable
level of success.
 Environment- The global environment is dynamic and ever-changing in nature.
Therefore it can change anytime. Thus it is required from the companies that they should
be able to adjust according to its changing demands in order to be able to sustain in the
market and to earn higher level of profits. In the context of Allan Reeder it becomes quite
important that it is able to analyze the environment before expanding its operations
globally so that it can get a good understanding of the environment where it will operate
in. This will make sure that it is able to achieve the desired goals and objectives. Allan
Reeder should make the necessary adjustments according to the changing environment in
the global scenario.
 Competition- Competition is another important factor for the firms looking to expand
their operations globally (Berman and Dalzell-Payne, 2018). For Allan Reeder, it is quite
important that it is able to analyze the strategies and tactics used by its various types of
competitors in the market and thus makes sure that it analyzes them so that it is able to
achieve the desired returns. This is required in the global markets in particular so that a
strategic and competitive edge is obtained over the competitors without problems and
issues. Thus in this way the companies can make sure that they achieve their desired
goals and objectives and can maximize their profits. Allan Reeder should make sure that
proper analysis of the competition is made and the correct strategies are used by the
management so that they are able to achieve higher profits.
Analysis of impact key factors have on global business environment
If the cost is controlled by the companies it can provide benefit of more profits to it. Also,
this can ensure that it obtains strategic edge over competitors. However it is a challenge to
control the costs and excessive cost-cutting can decrease the quality. The market offers benefits
of wider opportunities and wider scope available to the companies. However it also has
challenges of more competition and the changing dynamics. The environment provides benefits
of earning higher profits through analysis of needs and demands of customers and growth in the
future. However it’s changing dynamics and the needs provide a challenge to the firms.
Competition provides benefits of increase in quality and standards and increase in efficiency.
However it also leads to challenges of dealing with lower profits due to low prices and changing
strategies and tactics according to the competitors. These key factors are critical in the context of
Allan Reeder so that it can make its adjustments according to them for achieving success in the
global scenario. This allows it to be successful in the future time period by considering these
factors.

Complexity of strategic challenges
There are various types of challenges which the organizations face when they operate
globally. These challenges are explained as follows-
 Language and cultural differences- It is a main challenge which is faced by the
organizations when they operate globally (Bhagra and Sharma, 2018). This is so because
the language is different in various countries and there are also strong cultural differences
which the companies face when they operate internationally. For Allan Reeder it is very
important that it is able to sort out these differences because this will make sure that it is
able to achieve the desired goals and objectives. For example- By expanding in a country
where the language is different then the home country and the culture is also different this
issue can be faced by Allan Reeder.
 International compliance and regulatory issues- It is another challenge which is faced
by the business organizations when shifting globally (Brannen, Piekkari and Tietze,
2017). For Allan Reeder they create a challenge because it is required to make sure that it
is able to work according to the rules and regulations of the country where it is operating.
For example- In certain countries there are strict laws regarding diversification made by
other countries. Therefore Allan Reeder can face this issue in these countries.
 Packaging- This is quite important because the packaging standards for goods differ
from country to country. Thus the organizations like Allan Reeder are required to make
sure that they package their products according to the prevailing standards in the country
where they want to expand. For example- In some countries there are strict laws for
packaging. Allan Reeder is required to make sure that it can adopt to them which will
help it a lot in adjusting to the laws of the country.
 Slower pace- The firms which come from developed countries need to adjust themselves
according to the slower pace in the developing countries. Therefore Allan Reeder is
required to make sure that it adjusts itself according to the slower pace of the developing
countries. For example- In some countries the work takes place in a relaxed manner. If
Allan Reeder expands its business in these countries then it will need to make certain
adjustments with the slower pace of the work.
 Local competition- The organizations are required to make sure that they are able to
effectively analyze the level of local competition which is present in a particular country
before they expand their business operations in that country (Bruothová, 2016). For Allan
Reeder it is important that it is able to analyze the level of local competition which is
present in a country where it wishes to expand. For example Allan Reeder needs to make
sure that it is able to judge the competition’s strategies and tactics when expanding

globally in a particular country. For example- There may be high competition which can
prevail in the markets of some countries. Allan Reeder is required to frame out certain
strategies to deal with this competition effectively and efficiently.
Critical analysis of strategic challenges
The strategic challenges of expanding into global markets have to be critically analyzed
by the organizations in terms of risk and diversification strategies and the supply chain flow.
These challenges have to be accepted by the organizations if they wish to conduct their business
operations globally. Therefore Allan Reeder is required to make sure that it makes effective
strategies so that it is able to take on these challenges without problems and issues and thus in
this way it can make sure that it can achieve its short-term and long-term goals and objectives
and is also able to maximize its level of profits which will ensure efficiency as well as
effectiveness. Thus the management has to take the right decisions.
Critical evaluation of global business environment
The global business environment is quite dynamic in nature and thus this is required to
make sure that it can adjust to its requirements. Firms like Allan Reeder are required to make
sure that they can quickly adjust to changing global business environment’s needs and
requirements so that a strategic edge is obtained over the competitors. In this scenario, it is a
requirement to take the right decisions for the benefit of the company so that it can earn higher
level of profits in the future time period in different countries and can ensure sustainable growth
in the future time period.
Influence of globalization
There is an influence of globalization on the following elements in an organization. These
are explained as follows-
 Organizational governance and leadership- Globalization leads to an impact on the
organizational governance and leadership (Doh, Luthans and Slocum, 2016). In certain
cases there may be a change in it so that the company can have more efficiency and
effectiveness in its global operations. Therefore in this way Allan Reeder can make sure
that it can earn more profits. For example- In Australia the companies need to make the
adjustments in this regard for ensuring that they are able to achieve the goals and
objectives.
 Organizational structure- Globalization can lead to creation of an impact on the
organizational structure (El-Zayaty, 2018). This is so because there may be a requirement
of bringing the required changes in it so that more productivity can be derived without
problems and issues. Therefore Allan Reeder has to make sure that it makes the required

changes in its organizational structure so that the change can be influenced efficiently and
effectively without problems and issues. For example- The necessary changes in the
organizational structure can be made by the companies which ensures that they are able
to deal with the business situations in Australia.
 Organizational culture and functions-
For the analysis of impact of globalization on the organizational culture and functions
Hofstede’s model can be used. The five dimensions according to this model are as
follows-
Individualism and Collectivism- It refer to the relationship an individual in an
organization has with others. This can help the individuals in developing good
relationships in the company with others making sure that the organization is able to
progress and grow. In the context of Allan Reeder it is important because it ensures that
goals and objectives can be achieved with cooperation and coordination.
Power Distance- It means the extent to which certain individuals in an organization
believe that the power is divided unequally in the company. For Allan Reeder it is quite
important because it will make sure that power is spread equally in the organization to
make a good organizational culture.
Masculinity and Feminity- Masculinity refers to the extent society believes in the
superiority of males over females in various aspects. Feminity refers to the extent to
which society believes that females are equal to males in different fields. For Allan
Reeder, it is important to make sure that there is no differential treatment on the basis of
gender in the organization.
Uncertainty Avoidance- This means avoiding the uncertainty about the future and in
work relationships. This is necessary for Allan Reeder which needs to make sure that it
can avoid the creation of uncertainty in the organizational culture.
Long-Term and Short-Term Orientation- Long-Term orientation means that an
organization focuses more on its achievement of long-term goals as well as targets. While
Short-Term Orientation refers to more focus on short-term goals and targets. Therefore
Allan Reeder’s managers have to make sure that they select the right orientation for their
organizational culture.

The emphasis from this model is that the correct organizational culture is a requirement
for entering into the global markets. The companies should make sure that they apply the
elements of this model effectively and efficiently so that they are able to achieve the
outcomes without issues and problems and take their global business to a new level.
Influence of ethical and sustainable globalization on organizational functions
There is an influence of ethical and sustainable globalization on the organizational
functions. This can be understood with the help of analysis of Mckinsey’s 7S framework. It is a
framework for organizational effectiveness which identifies seven internal factors required by
the organizations to become successful (Mckinsey 7S Model, 2019). These elements are
explained as follows-
 Strategy- It means the plans which an organization makes for the future time period
(Kasemsap, 2018). Therefore this helps a lot in generating competitive advantage over
the competitors. In the context of Allan Reeder globalization can influence its strategy
because it ensures that the strategy of the firm has to be changed.
 Structure- It refers to the way a company is organized. For Allan Reeder, this is
necessary because this will make sure that globalization can create an impact on its
structure because right structure has to be selected in the companies for globalization.
 Systems- It means the daily activities and procedures which are used by the staff to get
the job done. In the context of Allan Reeder globalization can influence it because it
brings an overall change in the systems.
 Shared values- It means the core values which are present in a company. For Allan
Reeder these are quite important because there is an impact which globalization can
create on them.
 Style- It refers to the style of leadership which is adopted within an organization
(Kouatli, 2016). For Allan Reeder, this becomes very necessary because globalization can
influence a change in it.
 Staff- It refers to the employees of the organization and their general capabilities
(Montenegro, 2017). In the context of Allan Reeder, globalization can impact the staff of
the company and the way they perform their duties.
 Skills- It means the actual skills and competencies of the employees of an organization
(Oyedele, 2016). For Allan Reeder, globalization can create an impact on the skills of the
workers because they may be required to enhance skills effectively and efficiently.
The emphasis from this model is that all these elements within the organization can put
an influence on its global strategies as well as tactics. Therefore companies like Allan

Reeder should make sure that they bring the necessary improvements here helping them
in succeeding in the long-term without issues and problems.
Thus it can be said that for Allan Reeder it is important to make sure that globalization
can put a positive influence on its various types of organizational functions. By doing this
the company’s managers can make sure to achieve the desired goals and objectives in the
future time period without problems and issues and thus they will be able to maximize
the level of profits earned in the future time period. This will help them in obtaining a
strategic edge over the competitors and to achieve the sustainable level of success in the
market ensuring high growth.
Critical evaluation of global market
There is an influence which the global market can put on an organization’s operations. If
the organization is able to use the opportunities offered in the global market then this will make
sure that it is able to achieve a strategic and competitive edge over its various competitors in the
market. Thus in this way it can make sure that it is able to maximize its profits in the long-run. In
the context of Allan Reeder, it is quite necessary that it is able to achieve the desirable level of
success in the future time period to achieve the desired outcomes.
Different ways of decision-making in a global context
It can work effectively in a global context as the managers can ensure taking of right
decisions for the benefit of the organization. The ways in which it can work for Allan Reeder are
as follows-
 Policy-making- Taking of right decisions in a global context can help the managers by
making sure that the policies are framed correctly (Pikhart, 2017). In this way, the firms
can face the international markets and can earn profits there. In the context of Allan
Reeder, it is important because the right policies will help it in expanding its footprint in
the international markets.
 Facing competition- Decisions have to be taken effectively by the managers in a global
context to face the level of competition which is existent in the market (Prajogo, 2016)
(Shageeva and et.al., 2017). Thus the firms can ensure that they are able to frame the
right strategies for getting ahead of their various competitors in the market. This is also
required on the part of managers of Allan Reeder to ensure that they are able to face the
competition by taking the correct decisions.

 Framing of strategies- The strategies are to be framed in the right manner by the
organizations so that they are able to use the wide opportunities which are available in the
global markets effectively and efficiently (Tallman, Luo and Buckley, 2018). For Allan
Reeder, it is necessary that its managers are able to frame the right strategies which can
help the company to increase its level of profits in the process and thus ensuring that it
earns sustainable level of profits without problems and issues.
 Availing opportunities- There are different opportunities which are available in the
international markets for the firms. If the managers are able to take correct decisions then
these opportunities can be availed and higher level of profits can be earned. In the context
of Allan Reeder, these opportunities are required to be availed so that the company can
ensure the achievement of higher level of efficiency and effectiveness and can maximize
its profits in the long-run.
 Innovation- Decision-making in global context can help in facilitating innovation. For a
company like Allan Reeder, it is now essential that it takes an innovative approach to get
ahead of its competitors in the international market. This will make sure that it is able to
achieve the desired short-term and long-term goals and objectives in the future time
period.
Routes of internationalization which organizations can adopt including key barriers
For entering into international markets, there are various types of routes which the
organizations can adopt. These routes are as follows-
 Exporting- In this route, the goods can be provided by the organization from one country
to another without necessarily shifting there (Trad, 2019). In it the companies are not
necessarily required to shift to other country for their operations. This can take place
from the home country itself saving a lot of costs and allowing the earning of higher level
of profits. Allan Reeder can adopt this method which will help it in providing goods to
another country without shifting there.
 Joint Venture- In it, an organization can tie-up with another organization and can make
sure that it is able to effectively capture the market due to the power of combined
resources and strength (Uchihira, Ishimatsu and Inoue, 2016). These can be used by the
firms so that combined resources can help them a lot to capture the international markets
easily. Thus in this way they will be able to target the right global markets. Allan Reeder
can use this method and therefore can capture a larger market share without problems and
issues.
 Outsourcing- In this route, the companies can practice cost-cutting by transferring some
of their processes to other companies. Charges for availing services are required to be
paid. Thus in this way the companies can get their work done in the other countries by
using the manpower available there. By using it in the correct manner the companies can

make sure that they are able to use the services of talented people outside their country
which helps in bringing the required productivity in their processes. This is not useful for
Allan Reeder as it does not provide services which can be outsourced.
 Franchising- A franchise is a type of license that franchisee acquires which allows them
to have access to franchisor’s proprietary knowledge, processes and trademarks which
allows them to sell a product or service under the business’s name. In this system, the
company which makes use of brand name of another company pays charges to it for
selling product under its brand name and for using its goodwill in the market. This system
is very helpful so that the companies can put their focus on using the goodwill of an
already established player within the market. This method can be used by Allan Reeder
so that it can enter into international markets.
Barriers for entry into international markets-
 Higher cost- There is a high cost which has to be incurred by the companies for entering
into international markets. This is a barrier which can be faced by Allan Reeder in the
global markets because the cost of investments is on the higher side.
 More competition- There is a high-level of competition which is present in the
international markets. In the context of Allan Reeder, this is a barrier because more
competition can hurt its profits in the international markets.
 Stringent entry requirements- There are stringent entry requirements for entering
international markets. For Allan Reeder this is a barrier as due to these requirements there
is a lot of formalities involved before taking entry into the international markets.
 Higher tax rates- The tax rates in some countries are very high and thus this is
something which creates problems for the companies. In the context of Allan Reeder, this
can create issues as it will lead to lower profits in the international markets.
Overcoming of these barriers-
 Controlling of costs- If the companies like Allan Reeder can control their costs then this
will ensure that they are able to easily enter into these markets and earn profits. This
helps in overcoming barrier of higher cost.
 Framing strategy- For the competition the companies like Allan Reeder are required to
frame a specific strategy so that they are able to make sure that they can get ahead of
them. This helps in overcoming barrier of more competition.
 Fulfillment of formalities- If Allan Reeder fulfills all its formalities on time then this
will ensure that the barrier of stringent entry requirements is overcomed.

 Increasing revenues- By increasing the level of revenues Allan Reeder can make sure
that it is able to earn profits despite higher tax rates. In this way the revenues will help
companies like Allan Reeder to enhance profits.
Thus it can be said that there are various routes for entering into international markets.
However the companies have to face certain barriers as well.
Barriers of doing business internationally and recommendations for overcoming
them
The barriers for doing business internationally are higher cost, more competition,
stringent entry requirements and higher tax rates. The companies can adopt specific measures for
overcoming these barriers. For overcoming higher cost the firms can reduce their overall costs,
For overcoming more competition efficiency can be brought in the production of goods, For
overcoming stringent entry requirements the firms can make sure that they meet all requirements,
For overcoming higher tax rates the organizations can enter into countries having lower tax rates.
Strategies for operating in a global business environment
Organizations can make use of different strategies for operating in a global business
environment. They can make use of the right approach and can use the right tactics for obtaining
sustainable success in these markets. If the companies are able to provide right quality of
products to the customers and clients then it will ensure that they obtain a strategic edge in the
market. This will lead to achievement of short-term and long-term goals as well as objectives.
Therefore, in this manner the companies will be able to maximize the profits.
CONCLUSION
From the above report, it can be concluded that global business environment can affect
the operations of firms willing to expand globally. Thus in this way the companies are required
to make sure that the operations are carried on smoothly by adjusting to its dynamic needs and
requirements and ensuring that they comply with the rules and regulations. There are various
factors which drive global commerce and trade. There are different strategic challenges which
companies face in international markets. There is an influence of globalization on organizational
governance and leadership, structure, culture and functions. Globalization can also impact the
functions in a firm. Decision-making by the managers can work in a global context. There are
different routes which can be adopted for the purpose of internationalization and there are certain
barriers of entering into global markets which the firms may have to face. An effective strategy
is needed to overcome these barriers.

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