Influences of Globalisation on Organisational Functions
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This assignment discusses the influences of globalisation on organisational functions such as human resource management, marketing, and finance. It explores the impact of ethical and sustainable globalisation on these functions and highlights the importance of following laws and regulations in different countries.
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Global Business Environment
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Table of Contents INTRODUCTION...........................................................................................................................1 TASK 1............................................................................................................................................1 P1. Analyse key factors of cost, market, environment and competition that drive global commerce and trade....................................................................................................................1 TASK 2............................................................................................................................................1 P2. Explain the complexity of strategic challenges faced by organisations...............................1 TASK 3............................................................................................................................................1 P3.Influences of globalisation on globalisational governance and leadership, structure, culture and functions...............................................................................................................................1 P4. The influences of ethical and sustainable globalisation on organisational functions...........1 TASK 4............................................................................................................................................3 P5. Evaluate different ways of decision making that can work effectively in a global context.3 P6. Various routes to internationalisation an organisation may adopt including key barriers....4 CONCLUSION...............................................................................................................................5 REFERENCES................................................................................................................................6
INTRODUCTION Global business environment refers to an environment in which companies operate their business actions and operations. It consists politics, technology, culture and economics and at time of business operations, the management of a company include these all factors in its business. When a firm operate its business in global business environment then it should be aware about the changes which are occurred in the business and affect it in favourable and unfavourable manner(Aithal, 2017). This assignment is based on C m Downton Ltd which operates its business in logistic and supply chain management industry. This company was incorporated in 1955 as an independent logistics firm. This written document will discus about key factors that drive globalisation and strategic complexities associated with operating in a global environment. Further, will cover information about influences of globalisation, effect of ethical and sustainable globalisation. Different ways of decision making and various routes of internationalisation will also describe that can adopt by companies. TASK 1 P1. Analysekey factorsof cost,market,environmentandcompetitionthatdrive global commerce and trade The process in which individual, companies or governments of different countries or nations come together to carry on international trade is known as globalisation. Globalisation has an effect on all the functions of business. Major factors that results in globalisation are cost, market, environment and competition. These driving forces are mentioned below- Cost factor- The cost of all goods or services differ from one country to another. Cost drivers also include cost of raw materials, labour etc. All these factors help a firm to be cost competitive in local market as well as inmarket overseas. Global sourcing is finding out low cost raw material from around the world. With help of it businessprofits can be increased through cost reduction and increased revenue in global market.Downton looked into all of these factors carefully before going for globalisation. Market Factor- Demand, supply, equilibrium, prices or products etc. are called as market factors. Due to saturation of domestic market, opportunities in global market have increased(Gaganis, Pasiouras and Voulgari, 2019).Downton is a logistics company and globalisation of any other company indirectly affects it. When companies go global, they will 1
need logistics to export their products. Downton is taking benefit of this market situation while executing plans for expanding its operations to other countries. Environmentfactor-Thesurroundinginwhichabusinessoperatesiscalled environment. Environment consists of major factors which are social, technological, legal and political. Downton took care of all these factors while going global(Wang and Peyvandi, 2018). The rules and laws, social norms and government intervention, all these matters were looked into by Downton in each country it expanded to. Competition- Competitors are the major threat a company might face in a market. Therefore, its becomes very important for a company to analyse their competitors before entering into a foreign market. Wincanton plc, Purolator, CEVA Logistics, XPO Logistics are some of the major competitors of Downton. Company critically looks into working of all its competitors , their strategies and technologies used by them before globalising. There are a number of challenges faced by company going global. Downton being a logistics company have different set of challenges faced by companies dealing in this segment. One of the major difficulty is supplying to high-profile and cultural events. A suitable supply chain has to be made to meet specific demands of these specific customers. These cultural events are unique projects. Failure in delivering these services could negatively affect goodwill of company. Along with these challenges Downton also have a number of opportunities. All multinationals need a partner to carry on their logistics business. Also with globalisation number of technological innovations are being introduced to make job of logistics company hassle free. These innovationsinclude upgraded weighing scales, IT developmentsand technological advancement in warehouses. Downton have utilised all these opportunities of globalisation and continues to have a strong foothold in logistics market globally. TASK 2 P2. Explain the complexity of strategic challenges faced by organisations Globalisation refers to trading or carrying on a business worldwide. Globalisation is a great opportunity for developing countries to modernize, provide job opportunities to its unemployed population and also developinfrastructure of country. Globalisation promotes integration of international, national and regional economies(Rupidara and Darby,2017). The factors which influence globalisation are mentioned below- 2
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Technological Change-Technological change have a huge impact on globalisation. With help of latest technologies,communication and transportation costs have reduced. Also for those firms who own patents can independently exploit foreign markets without worrying about their competitors. Economies of Scale-Economies of scale is a cost advantage which arises from increased production of outputs. This is the reason behind production or certain goods in certain areas or countries(CharterandPolonsky,2017).Globalizationalsohelpstoimproveoperational efficiency and increases specialization. Although globalization is very useful in increasing revenues of the company but it also brings along many disadvantages. There occurs a lot of differences amongst employees due to culture and beliefs which creates a negative environment in workplace. Downton faced many such issues while globalising. Some of the challenges faced by Downton are: Existing Monopoly-Monopoly is a situation when a single firm has cost and competitive leadership in marketplace. Monopoly in logistics business is with cargo. Cargo shipment have leadership is many parts of the world. This makes it difficult for Downton to venture in new countries. They need to work on new strategies to gain market share and compete with cargo. Laws and Regulations:The laws and rules through which businesses are governed are different in different parts of world. It is very important to go through all these rules in order to setup business in other country. With reference Downton organisation, it considers various laws which would affect its business in certain countries. Employment laws, labour laws, laws regarding wages and industries are some of the important laws company needs to abide by while expanding business in a new country. Political risks-This includesrules which are established by political party ruling in the country. In reference of Downton, it is affected by many such risks like import or export policies, fiscal policies , economic policies and taxation policies . These policies are directly related to growth and development of that company in different countries. Communication and cultural differences-Process of sharing information or data in verbal or written form is called communication. In order to run an organization successfully smooth flow of communication isessential(Rialp-Criado and Komochkova, 2017). While globalising companies ensure that miscommunication due to cultural differences does not arises. In context of Downton, there is need to recruit local labours wherever they start their business. 3
ExtrameasuresaretakenbyDowntonliketrainingtheiremployeestoeliminateany communication gap which may arise in future. TASK 3 P3.Influences of globalisation on globalisational governance and leadership, structure, culture and functions The set of rules, laws or processes which help in operation, regulation and controlling a business is known as corporate governance. An effective corporate governance helps a firm to attain its business objectives and goals. Structure: In Downton , superior to subordinate structure is followed. The flow of orders happen in downward direction(Vokoun and Daza Aramayo, 2017). Flow of information takes place horizontally that is betweenmanagers working at same level. While flow of ideas or suggestions is upward from lower level employees to top level executives. Culture: Downton follows a soft culture model in which importance to both tangible as well as intangible objectives of company are given equal importance. It is difficult for business to incorporate a newly recruited highly skilled employee from a business of totally different culture. Even then Downton hire skilled employee to increase efficiency of organisation which will gradually increase its profits. Leadership: Leadership style followed by Downton is participative. This helpsleaders to create a sense of support among employees of the company. This is an effective way of leadership which helpsin increasingproductivity of firm through developing viewpoint and opinions of employees. Functions: Downton is a logistics company. They help others to transport their goods goods from one place to another. The main functions company are transporting, loading, unloading and packaging. In context of Downton, after globalisation it is looking for better and low cost methods to complete these functions effectively. Governance: To do better in its business management team of Downton is developing efficient decisions and policies. In effect with globalisation these policies and rules are more concerned with running business in different parts of world(da Silva Lopes, Lubinski and Tworek, 2019). While making these policies they make sure that any conflicting situation due to them does not arise in different countries. 4
Hofstede's Model Geert Hofstede found thismodel accordingto which cultureisbeliefs, practices, ideologies which differentiate organisations from one another. The four major elements of this model are- Masculinity vs. Femininity:This means giving power to females over males.In masculinity vs femininity Downton states that they have started including females in decision- making process because male employees take decision in anger or aggression(Reiche, Bird and Osland, 2017). PowerDistance:Powerdistancemeansdelegatingpowerstoone'simmediate subordinate. In context of Downton they believe in delegating powers to their subordinates so that at the time of emergency decisions can be taken by them. Everyone is given equal powers in order to avoid any differences or conflicts which might arise in future. Individualism vs. collectivism: Individualism refers to letting an individual employee take decision. In Downton each individual is given equal rights and their involvement in decision-makingprocessismademandatory.Exchangeofideasandopinionsamongst employees helps to increase output and innovate something new in the organisation. Uncertainty Avoidance: In this factor in situation of conflicts behaviour of individual is analysed. With reference to Downton, they train their employees so that at times of any conflict or unwanted situation they do not loose their hopes and deal with it confidently. P4. The influences of ethical and sustainable globalisation on organisational functions Ethical globalization indicates to a procedure of sharing different information or data, goodsandservicesinanethicalway.Alongwithit,ethicalglobalizationencourages stakeholders, government, consumer, suppliers and society to work in ethical manner that assist them to attain rivals benefits(Bhagra and Sharma, 2018). In term of output, it will aid the firm in successful way to achieve company's aims which will help in development, increase market share and revenue of firm. Sustainable globalization states make expansion in business operations at international extent in such a way that will assist in maximize its sustainability till long term. Along with it, it is a tool and technique that transfer the way of running business globally as per accepted structure of sustainability. In term of maintaining long term sustainability at global extent, organisationhavetofollowalllegalformalitiesfrotheirsurvivalanddevelopmentin 5
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competitivemarket.Differentorganisationalfunctionswillbeinfluencebyethicaland sustainable globalisation. These organisational functions are as below: Human resource management- It is one of the most essential or valuable function to a company.Becausewiththeassistanceofit,organisationhireskilledandknowledgable employees and accomplish the aims and objectives in an appropriate manner(Chasdi, 2017). In context of C M Downton, the management of this company should follow all laws and legal formalities in ethical way. Laws and legislations of operating nation should consider and follow the company in term of accomplish their aims. Regarding respective company, it can be analysed that administrators of enterprise should accept human activities in term of maintain long term sustain ability in market and provide rights to workforce to maintain high performance which will assist in accomplishing their set aims and objectives. Marketing function- It is most important and crucial function for a business firm because it familiar organization with needs and demands of customer and market so that the management can offer products and services as per need and requirement. Marketing function also assists the company in creating social awareness in community regarding a specific good and service. In context of C M Downton, if the management of the company adopt globalization then it is crucial follow all the rules and legislation of marking,in term of supply and export products and services, that are devices by the specific nation for marketing of products and services. Along with it, to maximize profitability, the respective firm also frame marketing strategies and follow them in ethical manner so that the firm can maintain their sustainability till long term. Finance function- It is an essential function because it is the route of each business. With the help of finance every business company can operate its business in smooth way. In addition to it, the major purpose of enterprise is to effective use of their finance for smooth running of their business activities and operations(Fabuš, 2017). In context of C M Downton, the finance manager of the company is responsible to gather needed monetary value in an ethical way. Along with it, the person use funds in effective way in order to operate its business activities like supply of goods and services. Effective market analysis of market also consume more cost but with the help of it, company aware with market requirement and supply material according to that. It help in smooth and sustainable development and growth of the company and operating business in ethical manner in global business environment. 6
From the above define content, it has been analyzed that there are diverse factors that impact working environment of an organization. Human resource, finance and marketing are functions of an enterprise and will impact the company at the time of global business expansion (Ferraro and Briody,2017). It is crucial for firm or its administrators to execute each action in ethical and sustainable way. Furthermore, there are different phase that can be accepted by respective firm in term of develop effective decision. For example, when an organization operate its business global level then it should consider intellectual rights protection and environmental issues etc. if company set a business in another nation then the process of intellectual property rightists can be differ which influence organizational functions in different manner. The process of registration and the time duration that is provided in form og property rights can be differ in comparison to other nation. For instant, if a company operate its business international level then it should also consider environmental act to provide protection to environment. If a company operate its business in Eastern nation thenit highly focus on environmental act like pollution act and carbon emission in comparison to western nations. If the organizations will not consist environmental protection factor then can create issues for environment and also affect the sustainability and business of thye company in specific business industry. TASK 4 P5. Evaluate different ways of decision making that can work effectively in a global context Decision making of an administrator or leaders is plays an important role in operating and organising business activities and operations in effective and efficient manner. Decision making of an individual is based on the situation from which an organisation is going through. So it is essential to an administrator to develop or make determination as per condition of working environment in which a company running so that it will directs to make maximisation in profit and productivity. To develop determination devising of C M Downton , the management must consist different factors like organise analysis of situation, improve decision that can be modify or update as per the situation and reduce or minimise issue and complexities in appropriate manner. Steps for improving decision making 7
There are several phases that can b adopt by a company to make development and improvement in their decision making. In first step, the management of respective company can find out clear aims and objectives on which decisions are based. Because if the goals are clear and understandable then decision can be take in effective manner as per the situation(Hamilton and Webster, 2018). In next phase, the administrator can take decision to get over problems and organise process in adequate and appropriate manner. After it, in next phase, the management will evaluate decision to analyse that they are effective to resolve complexities or not. It is crucial for administrator and leader to consider these phases so that they can work effectively when they operate their business in global context. If they follow these steps then they can take decision as per situation and develop them according to condition. When a company operate its business global level the better decision making help in effective running of the company in indifferent nations. For example, if the firm operate local level with the help of less number of employees and fund. But when it operate international level then the decision will be change and it will require number of workforce and capital so that the business can be run in proper manner and company can sustain till long term. Apart from it, the management of the firm will make change in its decision making in context of selecting marketing channels to create awareness about products at global level and find out the needs of the customers. To make global expansion in effective manner, the company also frame different strategies in term of localised business. So that, the company can survive in competitive market at international level. P6. Various routes to internationalisation an organisation may adopt including key barriers In current era companies want to expand their business at global level in context making more development and growth in the business in term of gaining profit improve customer base (Kasemsap, 2018). But when an organisation make expansion in its business globally then there are various routes and ways that can be adopt by firm. In context of C M Downton, the description of different routes of globalisation are as below: Licensing- It is a method in which an organisation offer its license to other firm through which that organisation operate its business by using the name of respective enterprise. In context of C M Downton, they can charge fro fee and royalty to usage brand and technology of their company. If the company adopt this way of internationalisation then there are basically two parties which are licensor and licensee. Licensor is one who offer licence to other firm and 8
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licensee is that enterprise who take licence to operate business. It advantageous fro company as well as play negative role for C M Dwonton. It is effective for the company because it help in providing various growth opportunity and maximising profit of the firm. In addition to it, with the assistance of this route, the firm can develop job opportunities for individual of both nations. Their are some limitation of this tool like license enterprise is totally got dependent on licensor which enhance competition in market. Apart from it licensee has to pay more fund to get licence without having information about succession rate. Exporting- It indicates to an activity within an organisation supply its goods and services to other place of nation. In context of C M Downton, if the company adopt this way of globalisation then, they can export their products and services to another locations and global market and gain different advantages(Lewis and et. al., 2017). With the help of it, respective organisation can increase its sales, increase profitability and gain competitive benefits. There are some drawback of this tool like when respective organisation make expansion in its business by adopting this tool then it may face high level of competition in market. Another barrier which can be face by them related to export legislation of different countries and cause of them the firm have to formulate plans of nation and devise tactics accordingly. Joint venture- It is an another route of globalisation in which two or more than two companies are entered with the motive of specific project and other business action. In this both organisations have some proprietary or ownership basis for in the shared interest. In reference to C M Downton, this method can be adopt by the company to operate its business global level (Pikhart, 2017). If the firm accept it then both enterprises which are joined to accomplish specific aim and project responsible to share their profits and losses. This tool can be beneficial for the company because it offers companies with the options to gain new capacity and expertise. It will also crucial because it shares risks or threats with a venture partner. There are different barriers that can be generate by adopting this route of globalisation like different culture and management styles provides poor integration and co operation. Another drawback can be face regarding unclear and unrealistic objectives that may be set up by both partners enterprises. From the preceding explain information, it can be suggested to C M Downton that the management can adopt licence method to operate its business globally(Reyes, Roberts and Xu, 2017).Becauserespectivecompanyoperateitsbusinessinlogisticandsupplychain management so it is for them to expand business functions and operations. 9
It can be evaluated form the above information that to operate the business of the firm globallevel,themanagementshouldconsiderdifferentfactorslikestrategiccapability, leadership and decision making. With the help of strategic capability, the management can take effective decision that help in minimising the risk of international operation that are occurred due to competition and policies or plans of different nations. By considering decision making factor, the firm can efficaciously select the effective way of global business expansion through which it can effectively operate its business in domestic market. CONCLUSION It has been summarised from preceding explain information that business environment plays an important role to achieve business aims and objectives in appropriate manner. Different environmental components effect the firm in favourable as well as negative way at the time of making business expansion in global business environment. Companies should adopt and frame different plan of action in order to accomplish or gain market profit and growth opportunities while expanding business in international market. Apart from this, it is also essential to administrators of the firm to analyse and monitor current growth options and future risks so that they can frame and design plans and plan of actions as per changing environment. The managers of organisation implement different norms, structure and policies to their workforce in order to improve execution and effectiveness. As an outcome, it will also aids organisation in maintaining rivals benefits while operating in home and host country. 10
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Wang,J.andPeyvandi,A.,2018.OBJECTIVISMVERSUSCONSTRUCTIVISMIN GLOBAL BUSINESS EDUCATION: AN EMPIRICAL STUDY.International Journal of Education Research,13(1). Online 8StrategiestoEnteraNewForeignMarket.2020.[Online].AvailableThrough: <https://www.bubblestranslation.com/8-strategies-to-enter-a-new-foreign-market/>. 12