Analysis of Global Business Environment

This assignment requires analysis of various resources related to global business, including books, articles, and online materials. The topics covered include sustainable capitalism, green backlash, cross-border M&A, born global firms, and the effectiveness of EU business associations. Students are expected to understand the importance of sustainability in global business and how it relates to international business management.

GLOBAL
BUSINESS
ENVIRONMENT

EXECUTIVE SUMMARY
This report has been based on globalisation and its after effects on overall functionality of
a firm. Globalisation is a quite vast concept that deals with business concerns moving to
international level. This report has been based on effect of globalisation on Marks and Spencer.
For examining this various elements and factors such as factors affecting globalisation along
with Hosftede model and McKinsey's model have been stated here. This report also focusses on
challenges that faced by Marks and Spencer in competitive market. Lastly this report focusses on
various barriers a firm might face while expanding their business operations.

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Understanding key factors that drive globalisation.....................................................................1
TASK 2............................................................................................................................................3
Determination of various key strategic challenges associated with operating in a global
environment.................................................................................................................................3
TASK 3............................................................................................................................................4
Critically evaluation of global market influences by using appropriate theories.......................4
TASK 4............................................................................................................................................8
Influence of globalisation by analysing key barriers in doing business internationally............8
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Business environment refers to a sum total of all internal as well as external factors that
affect functionality of business. It is an important aspect or factor which lays an impact on both
performance as well as long term sustainability of business whereas globalisation is an aspect
that focusses on bringing about a change or new innovations which is mainly used by business
concerns so as to expand their business as well as its overall functionality. It is quite useful in
serving needs and wants of customers thereby making them satisfied (Hamilton and Webster,
2018). Globalisation is a practice that is undertaken by almost all business entities for expanding
their business operations at global level. This report has been framed considering globalisation in
context of Marks and Spencer. It is a British multinational retail business concern with its
headquarters in Westminster, London. It basically deals in retail sector i.e. clothes and other
home accessories. This report throws light on various factors that affect globalisation such as
cost, environmental factors, market strategies etc. Also challenges faced by business concern
while expansion process has been stated as under. Lastly, this report also deals with critical
analysis of barriers which further affect business operations at international level.
TASK 1
Understanding key factors that drive globalisation.
Business growth and expansion is an important concept that enhances growth and
profitability of a business concern. In spite of various positive impacts of globalisation busibess
concerns have to many a times face certain critical situations which business concerns may have
to face. Globalisation affects business and its overall functionality in almost all sectors may it be
cultural, economic, political or social dimensions as well. For example, in respect of cultural
factors it can be seen that due to globalisation culture of various firms faced certain
modifications such as earlier people from all regions could not be employed in businesses but
now individuals from various regions can be hired. In relation to Marks and Spencer it has been
seen that the managers of M&S are assigned certain key duties such as identifying or analysing
impact of various key factors that affect functioning of business. Also they have to then
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formulate strategies that will further lead to achievement of goals and objectives within a
specified time frame. These factors have been specified as under:
Cost factor: Cost is a name given to a monetary factor which plays a quite important role
in overall functioning of a business concern along with aiding in business expansion at global
level (Lewis and et. al., 2017). In present context, Marks and Spencer wishes to expand its
business in different nations hence it will require a huge sum of money for expanding its area of
operations as well as investment. Sometimes it is not available so readily which further creates a
problem for company as it hampers their further productivity due to which expansion process
may further fall apart. Apart from this there are certain benefits that are associated with cost
which is that it will be quite useful for Marks and Spencer so that they can enhance their overall
productivity as well as profitability. Also this will be quite useful in redeeming their overall
market image.
Market Factor: A stable market is quite important as it helps in easy expansion of
business operations at both national as well as global markets (Rowell, 2017). Market is an
important aspect for managers of Marks and Spencer as it aids in examining needs and wants of
customers along with their continually changing lifestyle experiences as well. Any business
concern that wishes to expand their business operations should first carefully assess needs of
their customers. By doing so they will further be able to meet requirements of customers thereby
achieving success and economies of scale. It happens to be a major challenge for Marks and
Spencer as demands of customers are usually different from each other and customising products
as per needs of each and every customer is not practically possible or feasible.
Environmental factor: Environment refers to anything or everything that surrounds a
business entity as a whole. There are a number of factors that need to be carefully assessed while
a business venture wishes to expand. These environmental factors are political, social, legal,
technological and so on. A combination of all these factors is quite essential for developing or
maintaining an understandability of different laws or rules that are present in different nations.
This will further help in framing effective strategies so as to expand business operations. In this
case there is a main issue that has to be faced by Marks and Spencer is that rules considered in
every nation is different due to which policy formation takes a great amount of skills and time.
Competition: Competition is an important factor which needs to be analysed or examined
by each and every business concern so as to take advantage of expansion or globalisation. It
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further proves to be an important tool which helps in strategy formulation as well as improving
overall quality of goods and services as well (Adekola and Sergi, 2016). In present context,
Marks and Spencer gains a number of benefits or advantages from competition prevailing in
market as it hands an entire spectrum or framework regarding goods and services so as to receive
benefits from customers. Also it will help in attracting a quite higher number of customers
towards its business providing a competitive edge over other rival firms.
International economic integration: Economic integration refers to an arrangement or
interconnection between various regions . This many a times includes reducing or removing any
sort of barriers that may be present while doing trade . Also it involves coordination among
various monetary as well as fiscal policies as well. In context of globalisation it can be said that
by practising economic integration many economies will start operating together and it will raise
high amount of funds thereby promoting growth and profitability.
Foreign direct investment: FDI or foreign direct investment is an important tool which
helps in promoting investment in a business. FDI is an investment tool by which any investor
from some other country. In this investor gains a certain amount of controlling authority over
business purchased. By practising foreign direct investments firms will be able to raise greater
funds and capital for their overall business operations. Only one demerit of this factor is that
controlling authority shifts to the investor.
Impact of digital technology on globalisation:
 Adopting new and advanced technology will be quitew beneficial as it will help in raising
economies of scale for businesses. Also the market size in this context breaks into two
even parts.
 Advancement in technology helps in reducing costs of transportations well as
communication from one nation to another.
TASK 2
Determination of various key strategic challenges associated with operating in a global
environment.
Performing business operations on a global level is a quite important aspect for business
concerns and has a certain amount of advantages as well. The two major advantages of operating
globally are effectiveness in meeting needs of customers along with enhancement in economies
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of scale as well. Other than these benefits there is a drawback as well which is that are a number
of complexities or critical situations that are involved in functioning of a business concern
(Tregear, 2015). The various challenges that have been faced by Marks and Spencer while
globalizing its business operations have been stated as under:
Challenges of globalization:
 The most substantial challenge or issue faced by MNC's during globalizing their business
operations is that they have to adopt ethical business practices in various sectors such as
labour, product safety, environmental practices etc.
 Another key challenge that is faced by businesses is that they have to effectively
incorporate new regions and sectors within their value chain which is a quite critical or
complex process.
Impacts of international trade law: International trade refers to a process which basically
deals in exchange of goods and services in return for money at a global level. It is a usual
situation that almost every company faces some issues or conflicts while its expansion. It can be
present in almost any form whether custom or tariff laws or any other challenges such as while
expanding in different countries business concerns may face issues regarding timely imports and
exports. This further hampers overall functionality of a business at global as well as national
level. In relation to Marks and Spencer managers and owners have to undergo certain complex
and critical situations while they are transferring or supplying their goods and services from one
nation to another. They also need to consider rules or laws that are prevailing in a specific
country.
Economics of globalization: Economics of globalization or economic globalization is a
quite vast aspect which infuses certain important factors such as widespread international
movement of goods and services along with technology as well as information. In this factor
globalization of products, finance, markets etc are included. In present context economic
globalization is very important as it will help in promoting growth and development of business
of a company thereby providing it a stable economic position.
Recommendations to overcome those barriers
Managers of Marks and Spencer need to follow certain recommendations that will help
them in overcoming above stated barriers.
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 To achieve advantage against globalisation of business operations it is necessary that
managers of M&S evaluate culture of country it wishes to expand in. In respect of cost it
is suggested that cost associated within production and other functions should be
identified on prior basis. This will help in resolving any further issues.
 For establishing value chain index it is necessary that managers of Marks and Spencer
examine market and their prevailing trends which will further help in raising overall
value chain index.
.
TASK 3
Critically evaluation of global market influences by using appropriate theories.
Globalisation broadly is a name given to a process where various economies of the world
are integrated or interconnected by a cross border method of trade between various nations. This
usually happens due to ample of reasons such as demands of consumers along with regularly
enhancing competition that is currently present in any country at a given point of time. This has
now become a global trend as business expansion further aids in achieving higher profitability
and productivity by considering needs of customers and effectively fulfilling them as well.
There are two theories which can be applied in this scenario. These theories have further been
stated as under:
Mckinsey's 7s model regarding culture of an organisations: It is an essential tool or
technique which is considered by managers of Marks and Spencer for examining organisational
design along with understandability regarding various elements such as structure, strategy,
systems, shared values, styles, skills, staff etc. This model proves useful for Marks and Spencer
in case they wish to analyse influence of global market further leading an enhancement in its
overall performance as well (McKinsey’s 7S Model. 2016). This is done by designing as well as
implementing effective strategies as well. Also there happens to be a global influence on
organisational structure as well as any company will have to frame strategies as per requirements
of market. This further helps Marks and Spencer's in achieving long term growth and sustainable
market position as well. This model comprises of a number of factors which can further be
classified into two categories namely hard elements and soft elements.
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Hard elements: Elements or factors that can be easily determined and defined fall under
name of hard elements. Various factors infused in hard elements are organisational strategies,
systems and structure of company as well.
Soft elements: Elements or factors that are intangible in nature and are complex to define
come under this category. These elements tend to be influenced or affected by culture of an
organisation such as skills, styles, values etc (Caiazza, Shimizu and Yoshikawa, 2017).
McKinsey model has further been stated as under:
Hard Elements:
Strategy: Strategies of a business refers to plans or guidelines that are generally
constructed so as to maintain or build a competitive edge. Strategy implementation is a process
and should be done in a formal way as per market conditions of a country. This further helps in
effective performance of a business concern at a global level. Also there happens to be a quite
higher market influence hence they need to be constructed as per environmental problems and
customer's demands (Cavusgil and Knight, 2015). Marks and Spencer operates with an
innovative approach in its strategies which further help in reducing its overall market influence.
illustration 1: MC Kinsey 7s model, 2016
Structure: In context of this element, organisational structure of Marks and Spencer is
such that company functions and revolves around their production units. Marks and Spencer in
present context operates in a number of countries while their headquarters are situated in
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London. Hence production of each unit is different as per requirements of customers. Also
employees of M&S are meant to follow a certain code of conduct while performing business
operations.
Systems: Systems is an important term that explains a process or a procedure which
personnels or managers of a business follow. In relation to Marks and Spencer, managers have
developed a unique and innovative system for production of goods and services (Uhl and
Gollenia, 2016). Systems also have a global influence over market due to various processes and
procedures that need to undertaken as per environmental conditions in a specific target market.
Soft Elements(Culture):
Shared Values: Shared values refers to a framework which deals with various rules or
policies that are basically undertaken by a business concern and further affect behaviour of
workforce as well as management. In present context of Marks and Spencer, it is seen that
employees follow similar values and beliefs so that they can further perform business operations
in an ethical manner.
Skills: Skills refers to special features or talent of individuals which help employees of a
business concern for performing business operations in an effective manner. As Marks and
Spencer is operating on a global hence it will need employees who have well developed area of
expertise along with enhance skills so as to perform and function as per changing needs and
demands of customers as well.
Style: Style comprises of two elements namely leadership as well as management style.
Both these styles can differ from each other based on company to company. Managers of Marks
and Spencer consider democratic leadership style where they provide rights to each and every
employee about choosing activities based on their personal preferences and choices. Also it is
suggested that leaders should always timely delegate tasks and authorities to employees so that
they can achieve long term growth as well as sustainability (Kasemsap, 2018).
Staff: In present scenario, Marks and Spencer employs a number of employees estimated
more than 450,000. Managers of M&S recruit and select employees as per their vacancies. Also
they conduct an overall skill test of employees that are hired by them. It greatly helps in timely
completion of assigned tasks and activities.
For operating efficiently in global markets managers of Marks and Spencer have decided
about adopting ethical business practices in their overall business plan. Also they provide
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specialised training to their labour force so that their overall efficiency as well as effectiveness
can enhance.
Another important theory that is being studied in this aspect is Hofstede's culture theory
which has been explained as under:
Hofstede's culture dimensions:
Hofstede's dimensions explain the cultural differences of distinct countries, how a
company deal with the other country's culture. Different countries have their different norms and
when they enter in globalization to extend a business, then company faces many challenges,
according to the different cultures which a country follows (Kirton and Trebilcock, 2017).
Marks & Spencer is also diversifying its business in different countries because of which
the company is facing many challenges which is as follows:
 Power Distance Index: When Marks & Spencer talks about the power then countries
have different delegation of authority according to their culture as high post deserves the
authority to give orders and the lower has the responsibility to follow it. In many other
countries equality is more preferable which create a difference in between company's rule
and the culture which a company follow, it also effect the motivation amongst the
employees.
 Individualism vs. Collectivism: This feature directly affects the company's goal as in
many countries their focus is to fulfil the personal goal instead of focusing on the
objective which the company need to achieve collectively. Dealing with this feature
Marks & Spencer works on collectivism, but entering in globalization may affect this as
some culture follow individualism and gives more importance to it.
 Uncertainty Avoidance Index: Marks & Spencer faces the biggest challenge as the
company is focusing on diversifying its product, high uncertainty put the company in
dilemma of high risk-taking because of moulding rules and regulation by different
country may occur a big loss in the future. Low uncertainty may help the company to
move forward as the country accepts openly with no barriers (Charter, 2017).
 Masculinity v/s Femininity: Masculinity is a term that underlines preference of society
for assertiveness as well as heroism whereas femininity refers to a condition which
represents both cooperation as well as modesty. Both these factors should focus on both
key factors so that cultural differences can be avoided and company can also earn profit.
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 Long-term orientation vs. short-term orientation = Marks & Spencer focusing on
extending business globally, extending it with long-term basis is much more preferable
because of the high investment by the company. Planning is needed when a company
enters in different country and adjust its product and policy according to it is the toughest
task. Short-term orientation is a big drawback in globalization as it may occur a big loss
for the company to invest (Greenwood, 2016).
 Indulgence vs Restraint = Marks & Spencer has no such relation to this dimension if the
country allows to extend its business as it talks about the indulgence with the society,
how the society gratify the product and welcome a new brand by giving a good profit to
it. Sometimes restraint by the customer's need or their pocket may give big loss to the
company.
In context of Marks and Spencer it is seen that leaders follow transformational leadership
approach while undertaking business operations at global level. In this approach behaviour and
decision making of leaders tends to change quite frequently as per situations. This greatly affects
their overall decision making and strategies as decisions or strategies for every situation may be
different from another. This may even lead to a change in their overall task structure as well.
Ethical and sustainable factors and their influence over business operations: There are
a number of ethical and sustainable issues that influence overall business operations such as
behaviour of individuals,loyalty, promise keeping etc.
Loyalty: Loyalty or being loyal is an exceptional quality of leaders and managers which
attracts customers towards a business concern. When managers and leaders of Marks and
Spencer work on this this approach their employees will also learn to be fair in their approach
while practicing business operations. Also it will enhance overall customer base of M&S thereby
enhancing its overall brand image.
Behavior of individuals: Behavior of individuals is a quite broad concept which deals
with overall reactions of an individual. Individual behavior is an important key term that is a
combination of responses or reactions to internal as well as external stimuli. In context of Marks
and Spencer it has been observed that employees are always motivated and full of positivity.
This helps in raising productivity and customer base for Marks and Spencer thereby providing
them a stable position in global markets.
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TASK 4
Influence of globalisation by analysing key barriers in doing business internationally.
Globalisation is a major aspect that affects growth and productivity of a business concern.
Whenever a business concern undertakes any decision for expanding at global level there happen
to be a number of challenges or factors that hamper its performance (Liébana-Cabanillas,
Muñoz-Leiva and Sánchez-Fernández, 2018). There can be a number of factors which hamper
performance such as cultural, technological as well as financial aspects. Hence to perform
effectively a company needs to design and frame strategies so that a positive working
environment can be maintained. Marks and Spencer further needs to evaluate these barriers and
work towards them so as to receive benefits. Various key barriers in present context have been
stated as under:
Cultural and Financial barriers: Whenever any business concern wishes to expand at
global level they need to consider various factors such as diversity in workforce based on culture
and national backgrounds. This may even lead to linguistic barriers which further lead to
conflicts between people. Hence managers of Marks and Spencer will have to analyse culture of
country it wishes to expand in. A careful study will help in avoiding such barriers and leading to
growth.
Technological barriers: Technology plays a quite significant role in today's scenario
(Cumming and Zahra, 2016). Hence it is important that managers of Marks and Spencer to get
knowledge regarding advancements in technology. This will further help in gaining a strategic
edge over rival firms.
Both these barriers greatly affect economy and decision making processes in an
organisation as decisions of managers change as per requirements of customers along with
changing market trends.
Routes of internationalisation: There are a number of routes that help business concern
in going in international markets. These routes have been mentioned as under:
Joint venture: Joint venture refers to a process where two or more business companies
join their resources and business so as to enter global markets. While adopting this method there
can be number of risks associated with joint ventures such as there may be certain cultural and
technological barriers. Also two partner firms may both have different objectives or goals that
they wish to achieve. A significant example of joint venture is General motors has initiated a
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joint venture with local companies of China so that they can receive labour and raw materials at
cheaper rates.
Franchising: It is an important factor which considers marketing strategies that are
basically undertaken by companies for expanding their business operations (Chiu, 2018). A
franchiser licenses its knowhow, procedures, intellectual property etc. while business expansion.
In context of franchising there a number of risks that may be faced by business concerns such as
market conditions, competition from rival firms, environmental factors etc.
Recommendations to overcome those barriers
Managers of Marks and Spencer need to follow certain recommendations that will help
them in overcoming above stated barriers.
 To achieve advantage against cultural and financial barriers it is necessary that managers
of M&S evaluate culture of country it wishes to expand in. In respect of cost it is
suggested that cost associated within production and other functions should be identified
on prior basis. This will help in resolving any further issues.
 For removing technological barriers, it is important that company uses latest innovative
tools and techniques.
Change in Leadership style: In context of Marks and Spencer it has been stated that
leaders followed autocratic leadership style earlier where all policies and decision making was
centralised in the hands of leaders and managers. Later while globalising their business or
entering into global markets leadership style of M&S was modified to democratic leadership
approach. After democratic leadership style came into existence decision making became easier
and employees were also made a part of decision making. This create a positive working
environment in Marks and Spencer and raised morale level of employees. This further lead to
better and effective decision making in global contexts.
CONCLUSION
From the above mentioned report it has been concluded that globalisation is a quite
important process that aims at integrating people, economies, business operations etc. Also as per
this report it has been evaluated that by achieving knowledge regarding globalisation business
concerns will be able to enter new markets further leading to growth and expansion. Apart from
this two important models i.e. McKinsey and Hofstede's has also been stated here. Lastly,
recommendations regarding barriers in globalisation have been mentioned in this report.
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REFERENCES
Books and Journals
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Lewis, H., and et. al., 2017. Design+ environment: a global guide to designing greener goods.
Routledge.
Rowell, A., 2017. Green backlash: Global subversion of the environment movement. Routledge.
Adekola, A. and Sergi, B. S., 2016. Global business management: A cross-cultural perspective.
Routledge.
Tregear, R., 2015. Business process standardization. In Handbook on Business Process
Management 2. (pp. 421-441). Springer, Berlin, Heidelberg.
Doh, J., McGuire, S. and Ozaki, T., 2015. The Journal of World Business Special Issue: Global
governance and international nonmarket strategies: Introduction to the special issue. Journal of
World Business. 50(2). pp.256-261.
Wood, D. J. and et. al., 2015. Global Business Citizenship: A Transformative Framework for
Ethics and Sustainable Capitalism: A Transformative Framework for Ethics and Sustainable
Capitalism. Routledge.
Caiazza, R., Shimizu, K. and Yoshikawa, T., 2017. Cross‐border M&A: Challenges and
opportunities in global business environment. Thunderbird International Business Review. 59(2).
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Cavusgil, S. T. and Knight, G., 2015. The born global firm: An entrepreneurial and capabilities
perspective on early and rapid internationalization. Journal of International Business
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Uhl, A. and Gollenia, L. A. eds., 2016. Business transformation management methodology.
Routledge.
Kasemsap, K., 2018. Mastering business process management and business intelligence in global
business. In Global Business Expansion: Concepts, Methodologies, Tools, and Applications. (pp.
76-96). IGI Global.
Kirton, J. J. and Trebilcock, M. J., 2017. Hard choices, soft law: Voluntary standards in global
trade, environment and social governance. Routledge.
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Greenwood, J. ed., 2016. The effectiveness of EU business associations. Springer.
Liébana-Cabanillas, F., Muñoz-Leiva, F. and Sánchez-Fernández, J., 2018. A global approach to
the analysis of user behavior in mobile payment systems in the new electronic
environment. Service Business. 12(1). pp.25-64.
Cumming, D. J. and Zahra, S. A., 2016. International business and entrepreneurship implications
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Chiu, S. W. K., 2018. City states in the global economy: Industrial restructuring in Hong Kong
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ONLINE:
McKinsey’s 7S Model. 2016. Available through<https://www.educational-business-
articles.com/7s-model/>
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