Global Business Environment

This report discusses the factors that drive and influence global trade and commerce, the challenges faced during globalizing, and the impact of globalization on organizational governance, leadership, culture, structure, and functions. It focuses on the case of CM Downton Ltd., a logistics and supply chain company, and explores the factors of cost, market, environment, and competition that affect global trade and commerce. It also examines the challenges faced by companies during globalizing and how globalization affects organizational governance, leadership, culture, structure, and functions. The report concludes with a discussion on sustainable and ethical globalization and its impact on decision making.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
Factors of cost, market, environment and competition that effects global trade and commerce:
................................................................................................................................................3
LO 2.................................................................................................................................................4
Challenges faced while globalising.......................................................................................4
LO 3.................................................................................................................................................6
How globalisation effects organisational governance and leadership, organisational culture,
organisational structure and functions of an organisation......................................................6
Sustainable and Ethical globalisation influencing functions in an organisation. .................8
LO 4.................................................................................................................................................9
Various ways of decision making that will help in globalisation..........................................9
Various routes for internationalisation of a organisation by considering several barriers. .10
REFERENCES..............................................................................................................................12

INTRODUCTION
The surrounding in which a business organisation runs its business is said to be business
environment. Environment of business includes politics, cultures, economics and technologies
(World Commission on the Social Dimension of Globalization, 2004). In order to make
strategies for a business all these factors are analysed first. The company needs to know what
kind of global environment is it entering into. In context to following report, CM Downton Ltd.
is analysed. It is a logistics and supply chain company. In 1955 Downton was introduced as an
independent logistics firm. In this report it is discussed about the factors which drive and
influence globalisation. Sustainable and ethical globalisation, and its effect on decision making.
LO 1
Factors of cost, market, environment and competition that effects global trade and commerce:
When entities of different countries join hands to pursue trade and commerce together the
process is called globalisation. Globalisation effects functions like marketing, finance, operations
and distributions. Factors such as cost, market, competition and environment also effect
globalisation. The ways in which these factors can be initiation of globalisation is mentioned
below:
Market Factors: Market factors comprises of demand supply, equilibrium, products, prices etc.
Many a times these factors lead a company to globalise (Hirst, P., Thompson, G. and Bromley,
S., 2015). In context of Downton, market factor that led to its globalisation is exports and
imports or foreign trade. When other companies globalise Downton generates a need to move to
foreign market to. So other companies globalising and expanding their business has worked for
Downton to do so too.
Cost Factor: There is always a difference in price charged foe same good in different countries.
This difference occurs due unavailability of some products in some countries. Due to lack of
supply of such goods prices rise. The reason behind this is global sourcing. This means the
producers find out where to get raw materials for lesser prices and start producing goods there in
order to lower cost of goods. Downton is using cost factor and entering into countries with low
labour costs.
Environmental Factor: All the factors which are included in surrounding where a business
operates include environmental factors. They are a sum total of technological, social, legal and

political factors that affect a society norms or policies of a business. Downton is affected by
political and legal factors. It needs to take care about all rules and laws while venturing into a
country.
Competition factor: Competition is also a key factor why companies globalise. Many
companies find out that their competitors are globalising and decide on globalising too. Seeing
their competitors crossing sea companies find ways to do the same (Hall, S., 2018.Can, Ş., 2019)
(Alalou, A., 2020). In context of Downton Xpo logistics, Purolator, Wincanton plc, CEVA
Logistics are its major competitors.
Downton is now focusing on expanding its business into global market. Digital
revolution is a great opportunity for company to venture into different markets. There are various
opportunities for which company needs to spend in its research and development. By doing so
and investing in new technologies company can easily challenge its competitors in foreign
markets.
Globalisation is a process in which an organisation develops international influence and
starts expanding their businesses in international context. This bring a number of changes for
every business. This also took place with Downton. However, being a logistic firm, the changes
were different from other sectors. The competition immensely increased which resulted in
Downton to lower its prices along with providing good quality of service to stay in competition.
Company had to change its promotional strategy in order to reach bigger population for which it
used social media platforms. It can also use the technological advancements to make its social
media application which will help it to connect with its customer well and also stay up in
competitive market.
Downton have been assigned as third party logistic by a number of firms. It is a privately
owned company and all its shares were purchased by Emerge Vest. Digital revolution has
brought a number of opportunities for business as well. E-commerce have led to rise in logistics
scope which have proved to be beneficial for Downton.
Downton has a different set of problems it faced because it was a logistics firm. They take
many assignments which are unique in nature. This also include some events which require
proper warehouses setup in different regions, generation of a logistic pathway for a short period
of time. When Downton works on such projects its goodwill is on stake. If anything goes wrong
it may hamper the project as well as company's name in market. Also completing task on time

and with perfection will help it to raise its goodwill and market share. A number of
multinationals use logistics company as their personal logistics partners, who then act as their
logistics partners. Downton provides its customer with a number of technological advancements
such as IT Developments, Upgraded Weighing machines, warehouses which are high-tech etc.
LO 2
Challenges faced while globalising
Buying and selling of goods and services in international market is called globalisation.
Globalisation helps underdeveloped and developing country to boost up their economic
performances. It helps a nation in improving its infrastructure, raises economic growth, increases
standard of leaving, provides employment etc. Globalisation helps in bringing together
international, national and regional economy. There are a number of factors that affect
globalisation. Some of those factors are mentioned below:
Technological Change- Due to rapid change in technology in today's era there have been
a lot of increase in globalising countries. Technologies help a firm to save a lot of cost, time and
energy (Schlosser, L. A., 2019). Technological changes have proven to bring a lot of change in
major functions such as communication and transportation. Downton is seen to be benefited by a
number of such new technologies.
Economies of Scale- When a firm gains advantage of cost over its competitors by
producing goods in bulk quantity it is called as economies of scale. The reason why some of
certain goods are only produced in certain regions is economies of scale. China is a developed
country today due to the strategy of economies of scale.
Globalisation have brought in some disadvantages along with all other advantages too.
There is always a negative part to anything good. Such is the case with globalisation too.
Managing a difference from one place and executing those plans in different part of world can be
totally different. There are a number of challenges that can be faced by firms globalising. Some
of those challenges faced by Downton are mentioned below:
Political risk: This includes the risk which a company faces due to the party or
government which is ruling in a certain country. In Context of Downton political risks include
taxation policy, fiscal policy, monitory policies, custom duty etc. These policies tend to effect

growth of Downton in various countries in which it globalises. It becomes essential for company
to be good to political parties so that they do not object work of Downton.
Existing Monopoly: When a single firm holds the major market share in a market it is a
condition of monopoly (Huang, J. L., Ran, S. and Liu, M., 2019). In monopoly a single firm in
market have cost as well as differential leadership. Downton is facing such situation with Cargo.
It needs to be aware of strengths and weaknesses of Cargo before entering into its working area.
Communication and Cultural Differences: Communication is a process of sharing data
amongst person in form of words or in written form. In order to run a business smoothly it is
very essential to make communication flow smooth too. In order to effectively globalise a
company needs to make sure that there are no communication barriers present between various
locations in which it is working. In consideration with Downton, it needs to be aware of fact that
employees it recruits in various companies will have different language and culture.
Communication of management with labours will be quiet difficult. Solutions for this problem
must be thought of earlier.
Laws and Regulations: Rules which govern a business are different in different parts of
the world. In order to setup business in a new nation knowledge about that nation’s laws are very
important. There are a number of laws which effect a firm in foreign land some of important
laws include compensation laws, labour law, laws regarding employment etc. It becomes
important for a company to follow all these laws when globalising. Any laws out of these if
violated leads to strict actions against firms. Violation of such laws may also lead to dilution of
goodwill and profits of business.
It becomes important for a company to follow various rules and regulations. It is a part of
external environment for various companies which might negatively affect working and
operations in an organisation. There are a number of trade laws which vary from country to
country. International trade law provides CM Downton with a set standard of rules it needs to
follow. International trade law has been proved to be beneficial for company as hassle of
following different rules in different nations is no more. Company have to face a number of
complexities while in managing international supply chain. Some of those complexities are
customer accommodation, dynamic trends and pressure in supply chain, trending omni-channel
deliveries etc.

LO 3
How globalisation effects organisational governance and leadership, organisational culture,
organisational structure and functions of an organisation.
Organisational governance consists of some predefined laws and rules which govern how
all the functions in a business are to be performed. Corporate governance is responsible for
making firms to reach their objectives and goals. Vision and mission statement of business is
also considered while preparing corporate governance.
Structure- Structure in a firm refers to flow of responsibilities, roles and power in an
organisation. When taking context of Downton Structure is different for direction, ideas and
information (Froese, F.J. ed., 2019). Directions flow from top to bottom, information flow takes
horizontally between managers at level of different departments and suggestions flow in upward
direction which is from subordinates to their superiors.
Culture- Culture refers to beliefs an d value in an organisation. Downton follows soft
culture. A practice in which importance to both tangible as well as non-tangible goals are given
equal importance is said soft culture. Soft culture in Downton makes it easy for employees from
any other organisation to settle in Downton. Management only needs to take care of experience
and skills while recruiting an employee.
Leadership- Downton follows participative leadership. Participative leadership practice
helps to bring a sense of belongingness amongst employees. It is helpful in globalisation for
company as working with people of different nation conflicts are meant to happen. It is necessary
that employee know their importance for firm and work without any biases.
Governance- Downton has taken some major steps while going for globalisation. It is
making its procedure and policies in such a way that it may be applicable in all countries it is
venturing into. It is necessary to make sure that policies of organisation do not hamper its
working in different countries.
Functions- The only function Downton focuses on is logistics. Its only job is to transport
goods and services that are produced by other companies. Effects of globalisation on function is
that Downton is creating such which are technologically compatible with its competitors.
Hofstede's Model
Geert Hofstede developed a model called Hofstede model. This model states that an
organisational culture consists of practices, beliefs and ideologies of a company which are

different from each other. There are four different models included in this model (Kasemsap, K.,
2020).
 Masculinity vs. Femininity- In this element of Hofstede model powers and
responsibilities are given to females over males. In context to Downton, company is now
availing more power and responsibility to its female employees all over globe. The
reason behind this is that they have a thought which states male employees take
decisions in anger and frustration.
 Uncertainty Avoidance- In this element of Hofstede model behaviour of an employee is
analysed closely. In Downton employees are trained well. Their behaviour while in
conflict is studied closely. And then they are trained accordingly. This makes it easy for
them to avoid such situations. It is more essential for companies following globalisation
because people come from different values and culture due to which conflicts will be
more.
 Individualism vs. collectivism- Individualism refers to giving powers in hand of single
individual. Downton follows this strategy and with the help of this strategy they reduce
the time taken in decision making (Grubb, M.and et. al., 2019) . When rights and powers
are with a single individual decisions and actions are taken quickly. It is beneficial in
globalisation as waiting for decisions to be taken from head office may take a lot of time.
 Power Distance- This element of Hofstede model talks about delegation of power and
duties to more than one person even to subordinates in an organisation . Downton Ltd.
follows this element of model. In this every employee is trained well to take small
decision on their own. This saves a lot of time and increase productivity of employees.
Employees also feel powerful which motivates them to do better. In this way through
using this element company gains maximum benefits, productivity and quality of work
through an employee.
McKinsey 7s model-
This model explains design of a firm which includes a number of factors and how these
should be aligned in order to achieve its objectives. These 7 s includes strategy, systems, skills,
staff, style, shared values and structure. Downton uses this model in order to decide on their

functions in foreign market. Shared values and staff are the part which needs attention so that
cultural difference amongst employees could be overcome.
Sustainable and Ethical globalisation influencing functions in an organisation.
Overall procedure of a lot of information which is based on goods and services in an
ethical manner is said to be ethical globalisation. This globalisation is many a times used in order
to encourage all stakeholders which includes suppliers, employees, customers, government and
society at large to work in a more ethical manner. From which benefits can be achieved. It also
helps the firm to generate goodwill, increase revenue which increases profits and then increases
market share of firm.
Sustainable globalisation helps in order to expand business. It is for developing at an
international level in long run. In this technique operations in business and management of
business is done according to a suitable structure (Khan, M. A. and Ebner, N. eds., 2019). To run
in market for a long period of time with profits it is important for a business to fulfil all legal
formalities for development as well as survival of company in this highly competitive market.
There are a number of organisational functions which have an influence over sustainable and
ethical globalisation. These organisational functions are discussed below.
Marketing function: It is a very important function in a business. All the work is done in
marketing based on demand and needs in market. The demand and needs in market keep on
changing so it becomes important for firms to regularly keep on checking these dynamic needs.
It is also helpful in creating awareness and spreading information in society. When Downton
adopted globalisation, it became necessary to follow all the laws related to marketing. While
dealing globally it is required to market products and services in a certain way. Marketing
strategies are made so that our product reaches more and more customers and the revenues of
firm can increase. With increase in revenue profit margin of firm also increases. This is very
helpful for firm in long run.
Human resource management: Human resource is also very important function when it comes
to globalisation. No organisation can work without employees. In terms of Downton the
company is going global, this company needs to appoint staff in different nation. It is important
job of human resource team to find employees who meet roles and responsibilities of their
particular jobs (Rao, I., 2019). Also, it is necessary to train them because all of them come from
different culture and beliefs. Due to this there can be conflicts amongst employees. The

employees require to be clear about their roles in organisation and also about organisational
goals. Human resound team requires to train them so that no conflicts are faced in future and
individual objectives can be matched with objectives of business.
Finance Function: Finance function is another important function of a business. Every
other function in business requires financial assistance (Ali, S., Islam, R. and Rahman, F., 2019).
This function makes sure that there is no short of cash or funds for any other function. In context
of Downton it is duty of finance manager to arrange for funds. There are a number of ways in
which funds can be managed the manager of finance needs to choose from amongst them all.
The cost of each finance is to be kept in mind before choosing anyone. Downton is globalising
then the company will need more current assets or liquid assets. Finance manager needs to be
aware of all these facts and then decisions must be taken by him accordingly.
LO 4
Various ways of decision making that will help in globalisation
Decision making is a very important function to be performed by a leader in an
organisation (Ponte, S., 2019). Advantages a disadvantage from every decision taken is
necessary to know this is because a cause and effect analysis of decision is necessary to be made
by manager or leader. In Downton there are a number of factors to be considered which include
situation analysis, so that there can be an improvement in decision made. The main motive
behind decision making is to minimise issues and complexities in an effective manner.
Steps in decision making: There are basic seven steps which a manager needs to follow before
making a decision. These steps followed in Downton are mentioned below:
1. Identifying decision- Managers in Downton first identify the problem and then come to
decide what is the question that is really needed to be answered.
2. Gathering relevant information- It is job of Downton leaders to then gather all the
information regarding the problem that is arising. Employees of organisation help
manager in gathering information.
3. Identifying all the alternatives- It is duty of leaders to find out all the alternatives
through which problem can be solved. In Downton company give chances to all the
employees to come up with alternative plans.

4. Weighing all the evidences- In Downton when each of employee come with different
ideas, they are also asked to bring evidences with them. These evidences include
essential information about how are the plans they suggest best for this problem.
5. Choosing from alternatives- After manager in Downton have studied all alternatives as
well as all evidences provided by employees manager comes to a conclusion and chooses
one of them (Aremu, A. Y., Shahzad, A. and Hassan, S., 2019).
6. Taking action- It is duty of leaders in Downton to come up with execution of plan. After
decision is taken it is implemented by managers.
7. Reviewing decision- Last step is reviewing of decision. It is most important part of
decision-making process. It is important for leaders in Downton to see that weather
decision applied by them are coming in use or not.
It is important for a management to follow all these steps in order to take a decision. Following
all of these steps properly will help managers to solve the problem and take an effective decision.
There are a number of styles for leadership change, Downton follows “lead with culture”
It is best suited for Downton as its business is widespread and a number of cultural aspects can
have major effects on it. It is important for leaders of Downton to understand various needs and
all the aspects required for development of their work and establishment of a healthy
environment at it working places where leader helps employees in their growth and development.
Various routes for internationalisation of an organisation by considering several barriers
There are various ways in which organisation can internationalise itself and take
advantage of global market. Internationalism is the process of taking organisation to global
market and managing resource according to global market. It includes varies steps and process
for entering in a global market which are stated below. These methods can adopt C M Downton.
Licensing: Licensing is the process in which one origination give permission in form of
licence to other firm for doing business similar to it under its brand name and using its company
for particular period of time (Bhawani, S., Mathews, D. and Ghura, A. S., 2019). C M Downton
can also use this as a means for internationalization of their organisation. If they use this as mean
in internationalization then they will become licensee (a firm which get licence of other firm for
doing a its business by using others name) the company which give licence to C M Downton will
called as licensor. For this process there must be mutual understanding between both the agreed
companies. There are several benefits of this to company like they have no need to make large

capital investment on new market, they will also get benefit of identifying market without
incurring personal resources or can say using others resources.
Exporting: It is that method of internationalism in which firm internationalise itself by
exporting its products to different market of other nations. Exporting is safest and cheapest
methods if internationalization of firm which also helps the firm in increasing its profit. This
method can help C M Downton in increasing their profit of organisation and reduce the chance
of future exploration of firm in global market. This method has various disadvantage also that
firm have no market share in this function and trade policy of other government can also affect
market of company. But for gaining competitive advantage without risk and low-cost investment
this method is very effective and will also help in identifying external market.
Joint Venture: Joint venture is the common method of internationalization of firm. This
method is widely used in making firm's global existence (Zhao, K., 2019). In this method two
firms combined themselves to form a new firm in market. They will use their resource in joint
methods and also produce with combined techniques. The sharing of resources, methods and
techniques are made on contract basis which is for a given time which mentioned in contract of
joint venture. These have various befits like using technology of well-established firm,
improvement in market research, knowledge of consumer behaviour. There are various
difficulties also because of change in organization structure of firm.
From above mentioned information it can be concluded that C M Downton should use
licensing as method of internationalisation as it is perfect for firm’s product. Licensing will help
firm in getting advantage of new market without implementing huge cost. It will also facilitate
firm to identify market and lunch their product in new market in future. It will also facilitate firm
in managing their organisational structure according to environment.
However, there are some barriers to international trade which effect decision making and
strategies formulation in a business. Downton is also affected by such barriers. Voluntary Export
Restraints, Regulatory Barriers, Anti-Dumping Duties, Subsidies, Tariffs, Quotas etc. are some
of the major barriers which negatively affect business of Downton.
Observing all the given barriers effectively for CM Downton organisation it can be
analysed that joint venture is the best way for firm to enter international market. In this way
company can effectively handle relations with customers in another nation. The company they
are venturing with will help them understand the working in international market.

CONCLUSION
Business environment have a very important role in running a business and achieving its
objectives. A number of factors are prevailing in external environment which are favourable as
well as unfavourable for business. A company need to make attempts to keep distance fro all
those unfavourable factors. The governance also needs to make sure profits, revenue and its
market share is not hampered due to changing market scenario. Managers in a business needs to
formulate such norms, policies and structures that do not have an effect on overall working in
organisation. This will be helpful for business to maintain a firm in home country as well as one
in host country.

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