P4 Influences of ethical and sustainable globalization on Global Electric Motorcars

Global Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Key factors that drive global commerce and trade of Global Electric Motorcars............1
M1 Impact that key factors have on GEM.............................................................................3
TASK 2............................................................................................................................................3
P2 Strategic challenges faced by Global Electric Motorcars in global environment.............3
M2 Strategic challenges in context of risk and diversification strategies and the supply chain
flow.........................................................................................................................................4
TASK 3............................................................................................................................................5
P3 The Impact of globalization on governance and leadership, structure, culture and functions
................................................................................................................................................5
P4 Influences of ethical and sustainable globalization on Global Electric Motorcars, or GEM
functions.................................................................................................................................6
TASK 4............................................................................................................................................8
P5 Evaluate the different ways of decision making which can work effectively in a global
context....................................................................................................................................8
P6. Various routes of internationalization of GEM including key barriers..........................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Globalization plays an important role in trade and commerce of a country. It can be
defined as the process of integration and interaction among political parties, people and
organizations. There has been tremendous growth and development in technology, transportation
facility and communication. It is an economic process which involves movement of resources
such as land, labor, capital and entrepreneurship. It has been beneficial to developing countries
and there has been a great reduction in import duties and tariff. Concept of globalization has
increased job opportunities in countries where MNCs operates.
This report will help us find out key factors which drive overseas commerce and trade of
Global Electric Motorcars (GEM). This report will also help in finding out strategic complexities
which are associated with global environment. Apart from this, assignment will also cover about
organization structure, culture and function followed in Global Electric Motorcars. This will also
shed light on the influence of ethical and sustainable globalization. Influence of globalization on
decision making is also discussed.
TASK 1
P1. Key factors that drive global commerce and trade of Global Electric Motorcars
Global electric motors is an automobile industry which is concern in manufacturing low
speed vehicles. They are specialist in producing neighbourhood and low speed electric vehicles
since 1998. GEM has sold around 50,000 vehicles with operating with batteries in global market
as per 2015. They have been selling transportation and utility vehicles throughout the world.
There small and unique shaped cars are usually used to travel short distance.
 Cost Whenever a business is planning to expand their business in overseas market they
have to consider several cost factors. Factors which are included in cost are difference in
currencies, taxation rates, fixed cost and variable cost. If a country is labour intensive
then GEM can expand their business in those countries as installation of heavy
machineries will be more costly. They should also keep in mind factors such as purchase
and sales pattern of people in order to expand business in other areas like Africa, North
America and Asia(Reeve and et.al., 2018). Company should plan to expand in those areas
where there is minimum marginal cost linked with every unit. They can achieve
economies of scale if they are able to produce more cars with less input cost. GEM
should also search for logistics which provide discounted cost service so that they can
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save more money for expansion. Globalization facilitates many expansions of business
activities.
 Environment: External environment factors are those which are present outside industry
and are not in control. Globalisation and technology is growing speedily. Imports and
exports have increased from huge percent due to global production in GEM. Growth and
development of global market has helped many auto mobile industries like GEM in
expansion (Barlow and et.al., 2017). They can expand their business in countries where
there are favourable economic conditions. They can focus to expand their business in
Asian countries where population is increasing and there is less intervention of political
parties. They can also bring innovation in their technology when planning to expand in
new countries. Environmental factors include factors like legal, economical, political,
structural and technological. They also face various cultural and social challenges in
various countries.
 Government: They have impact on business environment of many countries and also
regulate technological standards. They have all the powers to control an organization.
Government can impose high taxes on car products due to any political reason. If trade
policies of any country in which GEM is planning to expand are favourable then
globalization of auto-mobile industry will be encouraged (Rama, 2015). Countries like
UK encourage their auto-mobile industries to expand their business in abroad by
introducing new and unique cars.
 Competition: Globalization gives an advantage of increased competition. Competition
relates to cost, target market, response of customers, and capacity of production by
organization etc. To increase competition in market GEM try to keep prices of their cars
low. This strategy help them to reach and attract large number of customers. Customers
have many choices to choose from in automobile sector and they will prefer one which
offers best at affordable price. GEM also tries to meet choice and preference of
customers. Their cars are designed in such a way which differs from all in state of UK.
The design and structure is between a golf cart and lorry but with more comfort and
safety features and more economical. The structure of cars have increased competition in
market.
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 Market: If any organization is planning to expand their business globally then there are
many market factors which they have to face. Marketing factors which affects GEM are
policies framed by government, cultural barriers, competition in market, availability of
many options to switch to another company, currency exchange rates, and technical
knowledge of customers and awareness of product by customers.
M1 Impact that key factors have on GEM
Factors such as cost, government and market factors had a great impact on production
and operation of GEM. Company is planning to expand their business in various parts of the
world. There are many favorable and unfavorable factors which have impacted the company.
They face many cultural barriers, problems of currency exchange, external environment factors.
Company should do market research before planning to expand globally.
TASK 2
P2 Strategic challenges faced by Global Electric Motorcars in global environment
In the context of global business operations, GEM will face several challenges such as:
 Diversity management- Managers should use technology to diversify in various parts of
the world. GEM should appoint local people to work in their companies and train them so
that they do not have to face any communication problem. They should also focus on
adopting lifestyle and preference of various people to run successfully.
 Common goals- This is another type of strategic challenge which is faced by many
organizations. Administration may apply strategies which might work in some countries
but fails in other parts of the world. As consumers and markets of countries differ, GEM
can face challenge and will have to make different strategies of every country in which
they are planning to expand. Leaders of company will have to use different approaches
and methods to achieve marketing goals.
 Global collaboration- Many companies fail to organize people into international or
regional projects. That's why they fail in developing strategic direction for organization.
GEM should do global collaborations by breaking down global boundaries. Managers
should share their views and ideas for expansion and handling different challenges in
market.
 Business strategy- They should employee experts who can survive in competitive
environment. Company must develop strategies which work in all the countries and reach
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large number of customers. GEM faces challenge in formation of business practices
which will help them to produce products at profits and maintain competitive advantage.
 Core competencies- Companies should develop competencies which help them to use
resources effectively and efficiently. By adopting various core competencies firms can be
differentiated from others. GEM tries to keep secrets about their production and
operation process. They safeguard their process and keeps them hidden so that
competitors does not copy them.
M2 Strategic challenges in context of risk and diversification strategies and the supply chain
flow.
GEM faces various challenges when planning to globalize their business. Supply chain
helps in easy operations of a firm. In order to reduce risk firms must be strategic in choosing who
there suppliers will be and who are there customers. They should make proper plans and train
employees to face challenges from changing environment. Company should frame rules and
guidelines to be followed to reduce risk. They should focus on expanding by studying micro and
macro factors of various countries.
D1
The global business environment is defined as the environment in which many countries
combine to do explore common business activities. Global business environment deals with wide
range of operations simultaneously so it has to face various challenges in order to achieve the
organizational objective. Opportunities are as follows:
 Expansion of business activities.
 Larger economy.
 Large variety of production.
 Importing and exporting the products.
Challenges are the situations where company face some uncertain conditions. There are
several conditions faced by global business environment, which are as follows:
 Sustainability in this wider entrepreneurial world.
 It can cause cultural and language differences.
 Communication and technology plays a wider role as it needs proper knowledge and skill
for the utilization.
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TASK 3
P3 The Impact of globalization on governance and leadership, structure, culture and functions
Globalization is referred influence of business internationally and expansion of business
activities at other places. Its impact on governance works through the Chanel of incentives and
also affects the governance. Global ideas and strategies are affected with the change in culture,
function and structure of Global Electric Motorcars (Hamilton and Webster, 2015). It has
emerged as development ideas which are shared across several countries. This interdependency
has created various challenges for the government. Global Electric Motorcars is now planning to
expand the business in china. This country has different government policies. Environment gets
affected and results in the functional changes. Policies and functional business activities get
disturbed widely with the emergence of globalization in the world. It has not only created a
negative impression on the minds of government and people but it has also improved the trade
and marketing in order to satisfy the customers. Globalization, governance and culture mutually
can affect the various aspects of market in the world (Smith, 2016).
 Globalization has caused several transformations in policies and therefore company needs
to adopt these changes.
 Economic regulatory commands of government influence the functions of business.
 Increment of budgetary system has provided the unstable economy of country.
 This has also forced the Global Electric Motorcars to shift their expenditure and income
generation.
Company are globally established with a perception to adopt certain changes in the working
procedures (Peng, 2016). Leadership is largely affected as one have to follow different culture of
another country and have to be adopted by the leaders. Globalization of the company leads to
change in the leadership style. Leaders are also needed to train the employees according to their
understandings. A good leader have to adopt and adjust the globalized changes. Such challenges
which are been accepted by leaders are as follows:New communication strategies need to be
recognized.
 Establishing a healthy relationship with the employees and making them feel
comfortable.
 Perusing the new culture and leading the employees with an appropriate guideline.
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 Leaders of Global Electric Motorcars have to take situational decisions in order to
function the business activities properly (Kljucnikov and et.al., 2016).
Every country follows different organization culture. In this globalized world every culture has
its different feature, so it required to be adopted according to the environment. Adoption of
several changes improve the performance of the business and thus provides desired effective
output of the company (Shenkar, Luo and Chi, 2014). So cultural changes have to be learned
properly to regulate the business functions. Leader of Global Electric Motorcars also needs to
learn new approaches and principles in order to sustain in country for the longer duration. These
challenges include the redesign of structure of work assignment and technological changes.
Managers and leaders have to introduce new working strategies to get work done effectively by
the workers. It determines the modification of organizational behavior and techniques to control
and adopt new system and its challenges. Sales and manufacturing department balance supply
and department of the product (Foss and Saebi, 2017). So globalization is responsible for change
in culture and this result in performance the business functions. These activities need to be
performed on the basis of demands of customer. Production and management of commodity have
to be again upgraded with the cultural changes in business. Company have to adopt new
organization structure in order to full fill the new marketing demands.
P4 Influences of ethical and sustainable globalization on Global Electric Motorcars, or GEM
functions
Every business organization needs improvement in their working strategies every day.
Globalization has provided very large platform to adopt and try new different structure and
ethical changes. Ethical values of the Global Electric Motorcars are defined as a set of principles
which are applied in the business to achieve stated objectives. These values are based on the
beliefs of the company (Shenkar, Luo and Chi, 2014). It has also contributed towards
diversifying and global changes of management and leader in the direction of growth and
development of the company. Ethical changes in Global Electric Motorcars are applied to all
aspects of business conduct. It can also determine some values such as integrity, social
responsibility, customer welfare, employee welfare etc. social responsibilities are referred as
those practices of the business do not affect the environment and people. It is regarded as quality
concerns of the social group. Working procedure of the organization get affected due to the
globalization. Production and marketing practices required to be done keeping all the customer
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welfare values aside. Customer welfare includes quality of product with nominal prices.
Employee welfare is concerned with the working environment and their satisfying behavior.
Effects of ethics:
 Decision making is widely manipulated (Boshyk, 2016).
 Values and ethics provide organizational behavior. Employee’s behavior can be helpful
in providing effective productivity and ultimately these ethics can affect the profit
generation of Global Electric Motorcars.
 It is also a fact that law cannot protect a society but establishment of ethics contribute
towards welfare of society.
These challenges of adopting ethics and values effects the sustainability and growth of the
business. It might be responsible for the worst performance of the Global Electric Motorcars. It
can sometimes lead to economic and financial imbalance of the corporation. Expansion of the
business is considered as exploration of ideas and thoughts. These ideas need a careful
functioning and proper organizing. It is also required by the managers of the Global Electric
Motor cars that these views gives an extracted way to improve the growth of the organization.
Imbalance and inequality can also lead to improper functioning of business activities. Proper
functioning helps in sustainable growth and development of the globalized market. Growth and
sustainability of the firm is dependent on the culture ethics and ethics of global market.
M3 Evaluate global market influences in application to appropriate theories and models
relating to organizational structure and culture
Global market needs strong policies and procedures. Manager and leaders needs proper
guidelines and instructions to manage the activities of employees. Management of the Global
Electric Motorcars adopts some theories and methods for coordination and controlling such
organizational practices. These methods determine the working procedures and motivating ideas
through which organizational objectives can be achieved (Crane and Matten, 2016). There are
following concepts which are established to improve the global marketing conditions.
Organizational culture aids values and behaviors which in turn contribute in achieving the goals.
Structure referred as working procedure of the company and it is also concerned as assignment
of authorities and duties. These principles and methods inspire the strategies and working
procedure of company's leaders and managers. Several global market influences includes
following aspects such as:
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Regional Values: People adopt regional values and cultures of the particular country, they are
leaving. Globalization of an enterprise need to adopt various changes according to the taste and
perception of the customers. Product manufacturing strategies needs to be planned according to
the needs and demands of the consumer (Hair Jr and et.al., 2015).
Consumer habits: A proper survey needs to be conducted from a globalized company. Global
Electric Motorcars have to set their plans according to their consuming habits and perceptions.
Every country has different sensations so they choose their products according to their habits.
Government polices: Company policies and procedures relay on the government and legal
aspects as taxes imposed by the government is different in every countries. So Global Electric
Motorcars have to adopt these changes according their commercial expanding country
(Greenwood, 2016).
TASK 4
P5 Evaluate the different ways of decision making which can work effectively in a global
context
Globalization of business needs careful analysis and planning. Situational decisions need
to be taken by the management of the business. These decisions effect the company in various
aspects. These aspects include profit generation, customer satisfaction, employee relations etc.
Leaders and managers required to take several decisions which prove to be beneficial for the
company. Management of Global electric Motorcars have to decide various operational and
management decisions of the company (Buckley, 2014). There are several ways of dealing with
multiple activities in organization. Communicating the entire policies and working procedure
properly sometimes helps to grow the business globally. Situational decisions can be helpful in
effective performance of Global electric Motors and it may lead to the successful development in
the global context. This includes decisions regarding the formulation of working strategies and
plans. It also includes the motivational and managing techniques. Management and leaders need
to take measures to achieve the sustainable expansion of the company. Wrong decisions might be
responsible for the failure in the growth and development of the business globally.
M4
There are many barriers that face by small business in order to enter into the other
country successfully. Government laws of each country are different thus, company has to make
changes in their operations according to these laws. This creates difficulty for the business to
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enter into the new market. Financial barriers are another issue that is faced by the manufacturing
firm. GEM is small car manufacturer and has poor funds thus, if it plans to enter into foreign
market then it might create issue for the firm. Company will have to spend money for getting
license to work in the China thus, these barriers can create problem for organization to do
business internationally. Global Electric Motorcars can choose from a variety of routes to
internationalization. This will help ensure that their business will grow and expand successfully.
Given below are methods through which they can start operations in various countries across the
world (Hitt, Li and Xu, 2016).
Even though there are various ways through which internationalization can be achieved,
there are some key barriers that may not allow Global Electric Motorcars to expand
internationally. These include economic, political, legal, government, currency and socio culture
barriers. The economy of various countries may not be favourable for the set up of an SME due
to unfamiliarity of industrial growth, tariffs, rate of GDP and inflation (Heisig and et.al., 2016).
There may be unfavorable rules and regulations in the export and import of their products.
Society is different in every country, which makes it a barrier for Global Electric Motorcars as
people have variations in culture, values, customs and behavior while purchasing. Automotive
already has stiff competition around the world, which can create an obstacle for company to
grow in other countries. Currency rates keep fluctuating, which causes difficulties in
determination of earned revenue and profits from international sales. Distribution and logistics is
another barrier that can affect internationalization as it is difficult to obtain permission from all
nations and can lower the productivity of manufacturing due to delay of supplies.
In order to overcome these situations' entity should conduct market research first and
have start communicating with consumers through social networking sites. This will help in
increasing sales revenues and recovering the cost soon (Acs, Szerb and Lloyd, 2017).
D2
Technological development is the strategy that can help GEM in conducting operations in
the foreign market and running business successfully. By this way entity will be able to produce
high quality products n satisfy needs of consumers. Continuous and comprehensive management
technique is another best way to operate firm in global environment. Higher authorities should
involve employees in decision making process and try to find out their needs (Kasemsap, 2016).
This will help in taking right decision and implementing strategies successfully.
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P6. Various routes of internationalization of GEM including key barriers
Internationalization of a business make a company more competitive as they expand their
business activities (Heasman and Lang, 2015). Some firms start their business in other countries
because production cost in such countries are reduced. GEM can expand their business by
expanding the structure of company and their vision.
 Licensing agreement- A company can enter into contract with another country which is
also known as host country. A company can do agreement with particular organization in
another country which sell and produce products same as that of GEM under a license
granted by charging same fees or royalty amount.
 International sales- They can also expand their business by either selling products in
international market directly to customers, retailers, wholesalers or distributors. GEM can
reach directly to customers by using various promotional tools such as catalogs, websites,
emails and accepting payment from third party.
 Contract of Management- GEM can provide technical assistance, talented management,
and expertise staff to other companies which are new to another country.
 Joint venture- GEM can also do collaboration with government and local partners of
other foreign country in which they are planning to expand (Morse, 2013). With joint
venture company, will have to share their management, their capabilities and production
process with other joint company. This will lower down risk of introducing new product
in the markets of new country.
 Direct foreign investment- Small business can enter into foreign market by combining
on business with firm who are already operating in foreign market. GEM can enter into
FDI by opening a subsidiary or associate in foreign country, by merger, joint venture or
having interest in foreign firms.
Barriers associated with joint venture, merger and acquisition
When company is operating internationally then it attempts to find various options to
strengthen the business in order to achieve the stated goals of organization.
 Merger is defined as combining two companies together to get quality of product. In
simple words ownership of other business entities are united with other entities.
 Acquisition is referred as purchase of one organization by another enterprise. It
determines the situation where one company buys most of the shares of another company
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in order to get control all the activities of that business entity. There are several barriers
associated with joint venture, merger and acquisition.
Barriers
Staff retention: It might be possible that both the entities are using different policies and
technology so employees cannot retain in the changing environment. It will be great barrier for
the enterprise after merger or acquisition. Employees often react nagatively to work with this
changing situations.
International relations: due to the wide global activities of business both the entities may have
difference in culture and languages so it will be a great problem for the staff members to adjust
in this situations.
Organizations planning to enter global market faces various challenges. GEM faces
various challenges such as boycotts, monetary barriers, anti-dumping penalties, entry and exit
barriers, blocked currency etc. Some of them are discussed below.
 Market competition- When there is monopoly in any sector then entry and exit becomes
difficult. Situation of monopoly blocks the entry of competitors by using various
intellectual rights such as patent, copyright. In automobile sector, organizations forms
cartels which put restriction on easy entry and exit of any firm. GEM also faced
challenges from various firms when they entered this sector.
 Cultural and social barriers- This is another barrier faced by many motor vehicle
sector. GEM motors should try to do branding of their cars, and engage themselves in
making people aware about features of their cars. They must also focus on buying pattern
of customers, norms and culture of society before establishing their business in any
country. Uninformed use of the product might also be responsible for the decrease in sale.
 Legal obstacles- There are various legal faced by firms while incoming into new
market. Violence from political parties may change perception of people to purchase
from foreign firms. GEM is making efforts to focus on political hindrance and obstacles
while looking for expansion of their business. GEM puts various tools and technologies
into their planning process in order to capture global market.
 Tariff and trade restrictions- This includes duties and taxes levied on products which
are brought from another country. It can also be used by competitors which restrict entry
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of various firms. Some countries can also use embargoes which means that there is a total
ban on import and exports in that country.
CONCLUSION
From the above report it can be concluded that it is very important for the companies to
understand culture, market of new country before entering into the foreign market. This supports
in making necessary changes in operations and running business successfully. Globalization
impacts on leadership, culture and functioning of entire organization. In order to sustain in the
market for longer duration companies are required to implements the latest technologies and
conduct market research so that it can make sound decision and can offer satisfactory products t
consumers.
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