Global Business Environment

Global Business
Environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
Task 1 ............................................................................................................................................3
1.0. Introduction to concept of globalisation .........................................................................3
1.1 An analysis of key drivers of globalisation .....................................................................4
2.0 An explanation on the complexity of strategic challenges faced by global businesses.. .6
2.1 A critical analysis on the strategic challenges caused by globalization on risk,
diversification strategies and supply chain.............................................................................8
2.2 A critical evaluation of the global business environment ...............................................8
Task 2 ..............................................................................................................................................9
3(a) An evaluation of the influences of globalisation on organisational governance and
leadership................................................................................................................................9
b) An evaluation of the influences of globalisation on organisational structure....................9
c) An evaluation of the influences of globalisation on organisational culture.....................10
d)An evaluation of the influences of globalisation on organisational functions..................10
3.1 a) An evaluation of the influences of ethics on organisational functions ......................10
b) An evaluation of the influences of global sustainability on organisational function ......11
3.2 (a) Application of McKinSey 7S Model on organisational structure in case the of Shell Plc
..............................................................................................................................................11
b)Application of Hofstede's Cultural Dimensions theory in the case of Shell Plc..............13
4.0 (a) An evaluation of different ways decision making can work effectively in a global
context..................................................................................................................................14
(b) Ways (strategies) to enter global markets ......................................................................15
c)A critical evaluation of the key barriers to globalization and recommendations to overcome
them......................................................................................................................................18
(d) A critique of the strategies adopted when entering the global market ...........................18
CONCLUSION .............................................................................................................................19
REFRENCES.................................................................................................................................20

INTRODUCTION
Global business environment is mainly associated with international interactions of an
organisation beyond the boundaries of its domestic country that create influence on its business
operations. The concept of globalisation together with technology advancement and intercultural
effectiveness are the reasons that has foster the level of global business and lead to a high level
of competitive dynamics and increasingly integrated environment (Ali and Khan, 2019).
This report is basically based on a discussion over global business environment and the
selected organisation for this purpose is Royal Dutch Shell Plc commonly known as Shell which
is a well established international energy company having expertise in production, Exploration,
refining and marketing oil and natural gas and also deals with manufacturing and marketing of
chemicals. This assignment includes an analysis of key factors that act as driver of global
commerces and trade and include components like cost, market, competition and environment.
Beside this an explanation about complexity of strategic challenges encountered by an
organisation while operating at global level is also included. Further, influence of globalisation
on organisational governance and leadership, culture, structure and function are also there
together with evaluation of ethical and sustainable globalisation. At last, this report also includes
evaluation of ways of decision making and various routes to internationalisation.
Task 1
1.0. Introduction to concept of globalisation
Globalisation is a process that is mainly associated with the enhanced interaction and
integration among people, organisation, economies and government at a worldwide level that has
facilitated global cultural, economic and political interconnectedness. Globalisation has
facilitated easy spread of technology, products, jobs and information across national borders and
diverse culture that has fostered free trade around the globe that has increased opportunity for
industries having potential to earn huge profit while operating at global level through increased
demand and high tech inventions (Berman and Dalzell-Payne, 2018). The global business
environment basically represent an environment exits in different sovereign countries including
various internal and external factors like suppliers, customers, value chain, competitors, political,
legal and many other factors that are exogenous to home or domestic environment of a company.
This increasing integration among nation and economy has created many opportunities for a

global business organisation through providing assess to a wider market area and more
customers but also lead to many threats and issues related with higher competition level and
other dynamic factors (Andotra and Gupta, 2016)
1.1 An analysis of key drivers of globalisation
Shell is also among such organisation that is having potential and capability of
successfully operating at global level. Shell is a multinational energy company having its
headquarter in Netherlands and incorporated in UK having specialisation in production,
exploration, refining and marketing of oil and natural gas. The Shell organisation is having its
business operations in more than 70 countries of world that includes many regions of Africa,
Asia, Europe, UK, North America and Australia. The main mission and aim of Royal Dutch
Shell is to strength its position at global level through manufacturing and providing oil products
and gas and low carbon energy to become a leading energy company (Colpan and Jones, 2019).
There are various factors in a global market that act as key drivers of global trade and commerce
have impact on business environment of an organisation creating both benefits and challenges.
The key drivers of globalisation and their implication on Shell Plc is provided below:
Cost- This driver of globalisation is associated with souring efficiency with increase in
productivity of organisation. The opportunity to attain the level of global scope economies and
differential cost reflects the cost globalisation driver that motivates company to operate at global
level. As cost of operation vary from country to county that offer an advantage to business firm
to expand in the regions which are offering better economies of scale (Dabelko and Conca,
2019). For instance: the economies of India and China are offering an advantage of relatively
cheap labour force together with assess to efficient technology thus, creates an advantage for
Shell Plc to operate in these countries to have economies of scale and objective of cost efficiency
in production.
Market- Another driver of globalisation that facilitate enhancement in global trade and
commerce is associated with market as it offers a customer base and more opportunity to expand
thus, encourage organisation to operate at global level. Market drivers include the customer
distribution pattern and emphasis on the regular occurrence of customer needs to have a
standardised product which can fulfil the similar needs of customers at global level. Shell Plc is
dealing in oil and gas products that is desired and required by people of all country thus, created
an opportunity for Shell plc to expand its operations at global level to attract larger number of

customer from various countries that includes Nigeria, China, Hong Kong, Singapore, India,
Ireland, Nordic countries and other regions of Africa, Australia and North America to have better
productivity and profitability (Debroux, 2017).
Competitive drivers- High level of competitive diversity and firms, industrial revolution
and efficient technology exists at international market that act as competitive globalisation
drivers that has created boost in international trade and commerce through enhancing potential of
organisation. These industrial revolution and better technology also facilitated Shell to operate at
global level to get better position and remain ahead of its competitors at global level.
Beside this there are various forces that exists in global business environment which acts
as main drivers of global trade and commerce are as follows:
Political forces- These factors are mainly an indicator of political stability and polices
governing the operations of business organisation in a nation. A stable political environment with
flexible tariff or zero tariff and other trade barriers always attract an organisation to expand at
global level while a strict polices and unusable political environment hamper global trade. For
instance, the Bureau of custom of Philippines has claimed 7.34 billion pesos unpaid excise tax
from Shell on the basis of some bound tariff charges because of that Shell goes to court over
Philippines Excise tax that has hampered and created a threat for its operations at global level
(Shell Goes to court over Philippine Excise Tax Dispute, 2020).
Technological forces- It is mainly associated with the level of technology and innovation
together with phase of automation exists in a nation which attract an organisation to operate at
global level to get assess to better technology to have efficiency in its operations. For instance,
the markets of China and US has attracted Shell organisation as they are having the potential of
fast growing technology that facilitates many effective way to manufacture and produce oil and
gas product with cleaner and low carbon emission energy (Dubey, 2016). Thus, a nation or
foreign market with well developed technology always create opportunity for global business
environment through providing effective way of communication, manufacturing and other
operations for Shell plc.
Threats lead by these drivers Threat of competition- The increased level of integration among economies has increased
the threat of higher level of competition for Shell as now it needs to enhance its

capabilities and potential level to compete with other big multinational organisation at
global level. Higher administrative cost- The various political polices together with tariff barriers and
lengthy trade procedure has lead to increase in administrative cost of Shell plc to operate
effectively at global level. Beside this threat form various environmental acts and rules is
also creating a challenge for Shell plc at global level.
Opportunity lead by these drivers Better expansion opportunity- The integration and better interaction among cultures and
nation in global business environment facilitates better growth opportunity for Shell to
expand its business operations in various countries of world to have better productivity
and profitability.
 Efficient technology- The global business environment facilitates assess to better and
more innovative technology which lead to optimum use of resources and increase
efficiency of all the operation of Shell plc that facilitates achievement of target of cost
efficiency in operations.
2.0 An explanation on the complexity of strategic challenges faced by global businesses
There are various challenges and problems that are faced by an organisation while operating at
global level. Some of these strategic challenges faced by Shell Plc are as follows:
Tariff barriers- These barriers mainly indicate the controls, duties and taxes implemented by a
nation on its exports and imports (Gawin and Marcinkowski, 2019). Insatiability and random
changes in tariff rates and trade polices together with anti-dumping duties and defensive
strategies creates biggest challenge for Shell Plc while operating at global level. For example: the
Bureau of custom department of Philippines has claimed around 7.34 billion pesos unpaid excise
tax on imports of some gasoline products from Shell plc for which it is petitioning the court of
tax appeals in Philippines that has adversely affected its functioning and operations at global
level (Shell Goes to court over Philippine Excise Tax Dispute, 2020).
Administrative Policies- The bureaucratic rules and administrative polices and procedure of
every country varies from each other that creates huge challenges and problems in global trade
(Hamilton and Webster, 2018). Shell plc is having its operations in more than 70 countries of
world out of which many having too lengthy formalities and administrative procedure that has
make it difficult for Shell to operate effectively at global level. For instance: The import and