Global Business Environment

This report analyzes the factors driving global trade and commerce, strategic challenges faced by organizations, impact of globalization on leadership and culture, and effective decision making in global business. It also explores the influence of sustainable and ethical globalization on firm's functions and evaluates various models and theories related to organizational culture and structure. Additionally, it discusses different routes to internationalization and key barriers in international business.

GLOBAL BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................................3
LO1..............................................................................................................................................................3
Factors which drives global trade and commerce....................................................................................3
LO2..............................................................................................................................................................4
Organizations faced strategic challenges while operating in global environment....................................4
LO3..............................................................................................................................................................5
Impact of globalization on leadership, organizational governance, culture and structure........................5
Influence of sustainable and ethical globalization on firm’s functions....................................................6
Models and theories in regards to organizational culture and structure...................................................7
LO4..............................................................................................................................................................8
Various ways for effectively working of decision making in context of globalization............................8
Different routes to internationalization that an organization can adopt....................................................9
Key barriers while doing business on international level and recommendations to overcome such
barriers...................................................................................................................................................10
CONCLUSION.............................................................................................................................................12
REFERENCES..............................................................................................................................................13

INTRODUCTION
Global business environment refers as uncontrollable international and local interactions which
influence firms’ operations. It can be termed as environment of sovereign countries whose exogenous
factors impact the home environment of the firm that further influence decision making on capabilities
and resources. The report is based on Allan Reeder Ltd that is planning to do their business on
international level. It is a sole trader that supplies butter and cream to bakeries. Their customer’s numbers
are increasing day by day and product range is also growing. They are operating from their distribution
centre which is from Heathrow airport and serving many businesses. As a junior global strategy manager,
I will advise company to perform global business operations.
The report will analyze factors such as market, environment, competition and cost that drive a
global business. It will explain the strategic challenges faced by organizations during a global business.
The study will determine the influence of globalization on structure culture, functions, leadership and
organizational governance. It will further evaluate the impact of sustainability and ethical consideration of
globalization on company’s functions. Furthermore, the report will evaluate various ways through which
decision making can do in effective way in context of global business. It will determine various route of
internationalization which an organization may adopt. Lastly, it will evaluate the barriers of international
business and make appropriate recommendations for overcoming these barriers.
LO1
Factors which drives global trade and commerce
Globalization refers as organization develops influence on international level as they started
operating their businesses globally. There are many factors which drive their trades are listed as follows -
Politics - It can be referred as government polices of different countries that are designed to do
international commerce and trade. The international polices is instrumental that channelize capital and
finance flow (Bhagra and Sharma, 2018). The countries are formulating polices on individual level which
is led by international and national institutes. This polices might influence the business of Allan Reeder
Ltd while they do international expansion. International polices ultimately affect the business operations.
These policies include trade laws, taxes, FDI regulations etc.
Economic - Financial liberalization and economic globalization centers the movement of funds and
capital inclusion in which the FDI is a major form. Exchange rates also vary country to country. The

interest rate fluctuations impact the business of global trader. The inflation rate in country's economy has
potential impact on business operations of international firm. Unemployment rate is another economical
factor. If Allan Reeder Ltd will do international expansion of their business then they will take economic
benefits in those countries in which employment rate is low. They can give employment to workers and
people in very low cost. The labor can easily be available.
Technology - It plays crucial role to drive a business on international level. Allan Reeder Ltd should do
technological up-gradation in order to globalize their services and products. They are able to standardized
and reproduce across the globe by fine coordinated with the technology. Technology built connectivity in
supply chain network. The use of cloud computing are helpful in distribution systems (Adekola and Sergi,
2016). There is use of TMS, CRM etc which enables the business to consolidate supply chain all aspects.
These software’s helps to digital organized inventory data, manage and monitor tracking and shipping
information. Also, provide assistance for creating electronic bills of invoices and landing.
Competition - It is one of the reasons why the organization prefers to join global strategy. Organizations
adopt global strategy for maintaining and gaining competitive advantage. One of the reasons Allan
Reeder Ltd wants to operate business at international level is that there is advantage of competition in
international market. The firm can improve the position by opposing the competitors of international
markets. This provides opportunity to firm to recognize as international brand. Allan Reeder Ltd can cope
up with the competitive market by providing consumer benefits in term of lowering the price of products
and services.
LO2
Organizations faced strategic challenges while operating in global environment
Strategic challenges which are faced by organizations while doing global business are as follows -
 International trade laws - Trade laws and tax implications navigate the legal requirements of a
business that runs on international level. Allan Reeder Ltd has to strictly follow the local
regulations and laws which govern their target market globally. There is involvement of legal
costs while entering in international markets. For example, European country has a law to provide
minimum of fourteen weeks for maternity leave.
 International Accounting - Accounting function becomes challenging when there are various
tax systems, compliance requirements and rates take place in global business (Challenges of
Doing Business Internationally, 2019). By adopting accounting strategy the company can

maximize the revenue. In various locations in which business is established or registered can
impact the firm's liability of tax. Thus, mitigate this risks is crucial for an organization to trade
abroad.
 Global pricing strategy and cost calculation - Setting the price of services and products is the
major challenge faced by international companies. The cost must be consider by the firms for
remain competitive and to ensure higher profitability. For example, IKEA Company is known
for its low cost value in Europe. The firm has struggled in china from its local competitors in
terms of labor and cost of production, it is a way cheaper than IKEA. Thus, the company has
adopted the strategy by relocating the production at local level and then they are able to cut off
the prices successfully.
 Currency Rates - It is the major problem of international business (Hamilton and Webster,
2018). To protect against exchange rate fluctuations the Allan Reeder Ltd can pay production
costs and supplies in same currency in which they are selling. They can also set up a forward
contract by agree on a fix price in advance for doing their future sales.
 Complexity of Supply Chain - To manage supply chain in global market can be a trickier
process. According to a research also many businesses agreed that there is existence of modern
slavery in their supply chains. Thus, Allan Reeder also has to set up their distribution network
effectively if they plan for international expansion.
 Risk of diversification - As the firm do international business they pursue opportunities in
emerging markets but it is hard to track the unfamiliar risks while doing expansion in emerging
countries (Fabus, 2018). Risk management process need to be adopted by Allan Reeder Ltd if
they want to deal with these risks.
LO3
Impact of globalization on leadership, organizational governance, culture and structure
Organizational governance - Sovereign nations are interconnected through capital flows, trade and
harmonization rules of economy. It impacts every business aspects. Technology and communication
makes it more efficient for blending the cultures and business landscape. Organizational governance is
related to meeting the legal and financial contractual obligations. Thus, the firm has to promote efficient
use of resources in the global business.

Leadership - The leadership also changes in era of globalization. It is crucial to find new communication
strategies by the leaders of the company as the language, culture, customs varies in countries. The
leadership style should be choosing situational by the Allan Reeder Ltd if they want to run their business
effectively at global level. The leadership styles changes as per the situations (Brenner, 2018). It is
essential to make employees feel comfortable. Thus, it is important for the firm to hire global leaders who
are able to govern their business internationally.
Structure - It is crucial to define the structure of company internationally. For gaining competitive edge
Allan Reeder should localize their team in various international locations in such a way so that all
business functions are handling smoothly. Business structure matters when it comes to control the
business consistently and centrally around the globe. For example, Coco Cola has well organized business
structure. The firm has organized in continental groups in which each is seen by president. Further the
central presidents manage smaller presidents in various countries and then sub regional division.
Culture - It effectively shapes the globalization. It is lots to done with intermingling and translation of
culture. Culture is interpreted as articulation and social construction (Mendenhall, Osland and Stahl, G.K.
2017). These are the materials, art things and communication that have in-common in the culture of
various countries. Hence, Allan Reeder Ltd has to consider the culture and society backgrounds while
operating business globally. It includes cultivation of minds, learning and civilization of society. The
customer choices and preferences vary from country to country. This is totally dependent upon income
and cultural variables. Thus, culture drives global trade and commerce.
Influence of sustainable and ethical globalization on firm’s functions
Ethical globalization - Business ethics while doing business globally influence the employees,
stakeholders, suppliers, customers, government, civil society and competitors. These are the guidelines
for managers of business to take ethical decisions which put positive influence on environment and
society. In globalization trading has been increased so it is responsibility of firm to regulate fair practices
(Ferraro and Briody, 2017). Allan Reeder Ltd should focuses on technical issues that are faced by
different functional department such as human resource, marketing, finance, production and ICT. It is
related to marketing practices, moral dilemmas of labor standards, human rights and corruption.
Sustainable globalization - Sustainability is considered at top priority agendas of different countries.
The world is taking keen interest on conserving the environment and also to reverse effects related to
global warming (Kouatli, 2016). The countries rules vary in terms of energy consumption, green
packaging and recycling of waste products. The businesses are now considering their production methods
that impact the locality through pollution and wastage. Thus, Allan Reeder Ltd has to consider these

polices of sustainability while they plan to operate globally. This requires careful planning for
constructing and designing the environmental friendly offices and establishing plants in different
countries in global business. The company has to undertake sustainability measures while doing global
business.
Models and theories in regards to organizational culture and structure
McKinsey 7-S Model
McKinsey 7-S framework can use in various situations. It is useful for examine the various parts
of organization that works together. It helps to improve the performance of organization. It determines the
way through which a proposed strategy can be implemented (McKinsey 7-S Framework, 2019). While
doing expansion of business at international level this model is being used to align the process and
department during acquisition and merger. This model is helpful for define the business structure during
international trade. This model defines how teams and departments need to be structured.
Figure 1 Mc Kinsey 7-S Model (Source: McKinsey 7-S Framework, 2019)
Hofstede cultural dimensions
This theory is being used to understand cultural differences. Hofstede has studied different
people's who are working in international business management in more than fifty countries (Hofstede’s

Cultural dimensions theory, 2016). By this research he is able to identified dimensions that can help to
distinguish various cultures. The culture can be categorized in six categories which are power distance
index, uncertainty avoidance, collectivism vs. Individualism, masculinity vs. feminity, indulgence vs.
restraint and long and short term orientation.
Figure 2 Hofstede Cultural theory (Source: Hofstede’s Cultural dimensions theory, 2016)
LO4
Various ways for effectively working of decision making in context of globalization
Decision making is essential for organization to maintain synchronization with strategic alliances
and business plans. Decision making is helpful for running managerial operations and to undertake
routine operations successfully. In decision making process the firm make choices and do compromise for
achieving the business objectives. Decision making is crucial to gain competitive advantage in global
business (Lasserre, 2017).
The companies are nowadays taken opportunities which are presented by globalization and
development of systems to transform their accounting and finance functions. This opportunity enable the
Allan Reeder to become more efficient and these also support the decision making process in the firm.
The role of business accountant was to provide management information that supports the decision
making. Thus, role of management accountant is said to be relevant while doing decision making.
Management accountant are able to contribute to each stage of decision making process. Decision making
in global business of Allan Reeder can be improved through various ways -

 Decision making should be done by considering the culture, ethics and social dimensions of the
countries in which company is doing international trading (Vlados and Chatzinikolaou, 2019).
 Issue should be framed in front of stakeholders so that their interests are taken into consideration
while taking decision in regards to global business.
 The organization should assemble insightful information in terms of competitive position and
current financial. This information is gathering for business proposal like value of customers. The
assessment of risks needs to be done in decision making process.
 Selection of alternatives is also involved in decision making process. Alternative option must be
selected on the basis of analysis and evidence rather than following opinions.
 Repeating past mistakes is not allowed. Decisions should be taken by considering the past errors
and experiments of business. It is crucial to take feedback so that past fraudulent methods and
procedures doesn't get repeated.
Different routes to internationalization that an organization can adopt
Internationalization refers as a strategy which is followed by the companies which aim is to do
expansion in international markets. There are various modes through which Allan Reeder can do
internationalization of their business are explained as follows -
Licensing - This is related with granting an official license for doing international business. It refers as a
market route of entry in international business (Kasemsap, 2018). In this the organization charged royalty
or fee for the technological use or brand name. The franchiser provides concepts, branding and expertise
which are needed for operating in overseas markets. Management is controlled by franchiser.
Strategic Alliances - It is an agreement that is done between the two or many parties which are agreed on
mutual consideration and objectives while remains as an independent organizations. It is fall short for
partnership entity, corporate affiliation and agency. The companies come together by combing the
capabilities, core competency and resources for generating mutual interests in manufacturing, designing
and distribution of services and goods on international level.
Joint Venture - It refers as business arrangement between two parties or more who agreed for creating a
pool of resources in order to accomplish a specific project or task. It is a separate entity from its
participants. It is done for a specific time period once the purpose gets fulfilled the ventures gets
separated. It is done for doing business expansion, developing a new product or moving in the new
markets internationally.

Direct Exporting - In this the goods and services of company are produced and manufactured and then
directly sale to international markets (Bedianashvili, 2016). In this whole responsibility is taken only by
exporter no middle man is required. In this the full control of services and products are in hand of
company. It helps to gather better insights and knowledge of market. Short channel is required for
distribution of goods and services. Greater production might lead to economics of scale at large level and
also help to earn higher profit margins.
Key barriers while doing business on international level and recommendations to overcome such barriers
Various barriers in doing business internationally are explained as follows -
 Language Barrier - Languages which people speaks varies in countries and regions. Thus, while
doing business at international level the problem of language is faced by businesses (Biggest
Challenges of International Business, 2017). It is hard to convey messages to employees who are
located globally.
 Cultural Barrier - The customs, traditions and culture differs in various countries. So the people
choices and preferences regarding the services and products also differ. Thus, it makes difficult
for businesses to produce the goods which are suitable for all type of cultures.
 Time Zones - The time also gets changed from country to country. Thus, managing work on
timely basis becomes harder. To achieve the targets of the business it is crucial to get updated
with each country time zones. The company needs to think the central storage location for
maintaining the files and data which can avail to all the branches that are located globally.
 Multinational laws - There are differences related to laws of various countries (Kokodey,
Gnezdova and Lomachenko, 2018). Thus, the Allan Reeder Ltd has to strictly follow all the rules
and laws of various countries while doing business globally.
 Multiple currencies - While doing business at global level the company has to deal in various
currencies. Sometimes the currency rates changes which create barrier for the firm to remain
updated with these fluctuations and it also affects the costs of business in that particular country
in which the currency rate gets fluctuated rapidly.

Recommendations for overcoming these international barriers
 The company needs to hire local expertise while doing business globally. Market expertise gives
local knowledge and customers insights by which the firm is able to produce services and goods
as per their preferences. Thus, this strategy will be helpful for overcoming the cultural barrier.
 Allan Reeder can also cultivate the partnerships in local region to build a good business
reputation at international level. Hence, this strategy is helpful for cutting the international
competition.
 The company can also hire language expertise that helps in language translation and
communicating with the local employees who are located globally (Bereznoy, 2017). Therefore,
it will benefit for overcoming the language barrier.
 Navigating the new legislation can be helpful to overcome barrier of international laws. Allan
Reeder Ltd should understand the regulations and laws of varies countries and need to learn how
they applied in business practice in order to do business at international level.

CONCLUSION
It can be summarized that global business environment includes technology, economics, culture
and politics factors that influence a firm during international business. It has been determined that Allan
Reeder has to maintain the compliance with regulations, expectations and laws of countries in which they
will operate. There are strategic challenges that are faced while running business globally which are
international laws, accounting systems, exchange rates and supply chain complexity. It has been
evaluated that during decision making process the outcome of past decisions needs to be considered for
ensuring that mistake and ineffective business practices should be learned. It has been concluded that
there is potential influence of culture, leadership and organizational structure to operate a business
internationally. Sustainability and ethical globalization is now becoming trends of global business. It has
been evaluated that various routes are available to Allan Reeder in order to do international expansion.
There are various barriers involved in global markets such as cultural, language, time zone, multinational
laws and currency rate fluctuations.

REFERENCES
Books and Journal
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world: A review. IUP Journal of Soft Skills. 12(2).pp.7-24.
Brenner, B., 2018. Transformative sustainable business models in the light of the digital imperative—A
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Fabus, M., 2018. BUSINESS ENVIRONMENT ANALYSIS BASED ON THE GLOBAL
COMPETITIVENESS INDEX (GCI) AND DOING BUSINESS (DB): CASE STUDY
SLOVAKIA. Journal of Security & Sustainability Issues. 7(4).
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Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University Press.
Kasemsap, K., 2018. Mastering business process management and business intelligence in global
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Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.

Mendenhall, M.E., Osland, J. and Stahl, G.K. eds., 2017. Global leadership: Research, practice, and
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Vlados, C. and Chatzinikolaou, D., 2019. Methodological redirections for an evolutionary approach of the
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