Impact of Globalization on Business: A Case Study of Woolworths

This report analyses the impact of globalization on business with a case study of Woolworths. It discusses the key points considered by international managers, outsourcing and offshoring challenges, opportunities, and issues.

Running Head: GLOBALIZATION 0
WOOLWORTHS
Globalization
Managing Across Borders
Student Name:
Student University:
Executive Summary

GLOBALIZATION 1
In this report, there is an illustration about globalization and its impact of globalization on
business. It was found that globalization support the expansion plan of the companies. For
instance, technology which is a driver of globalization helps the companies to operate at
multiple locations efficiently. Globalisation has empowered companies to make sure that they
have a plan for expanding in the cross-cultural environment with the help of strategic
partnerships. It was also analysed that globalisation has impact on the business in terms of the
areas like competition, information transfer and exchange of technology. In this report, there
is illustration about the fact that a global manager needs to deal with changes to be ahead in
the game of globalization by being close to the customer, working in a team, active
leadership and mind-set, and always ready for the future change. There are several types of
challenges related to outsourcing and offshoring faced by the companies like Woolworths
which includes complex infrastructure of networking and different management systems.
Contents

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Introduction................................................................................................................................3
Impact of Globalization on Business.........................................................................................3
Key points considered by International Managers.....................................................................6
Outsourcing and Offshoring with Challenges, Opportunities, and Issues.................................7
Conclusion................................................................................................................................10
Bibliography.............................................................................................................................11

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Introduction
In today’s time world has move towards more inter-connected societies. Due to this there is a
significant impact on the firms that are operational at both national and international levels.
In simple terms, globalization is directing business on a universal basis based on interests and
to attain a competitive advantage in the market (Beck, 2018). It includes the establishment of
free trade contracts, technology innovation, development of third parties, and emerging
markets with improvements in the business. The globalization can have an impact on demand
and production in a transaction (Prashantham, et al., 2018). International managers are the
ones with the responsibility of handling operations such as global sales in charge, social
marketing, manufacturing globally and the company’s overseas business which includes
delivering products, information, technology, and employment worldwide for nurturing
businesses through free trade. It is the duty of an international manager to understand the
needs of the company overseas with cultural, operational, and political challenges in foreign
markets and opportunities availability. They are with the knowledge of finance, looking
towards the market with a global perspective and foreign exchange (Bowen, et al., 2015). In
this report, the aim is to analyse the impact of globalization on business in recent times. This
report will also examine the key points which are necessary to be considered by international
managers while relying on globalization to expand their business operations. Example of
Woolworths will be taken into consideration while identifying the impact of globalization and
role of outsourcing and offshoring in globalization along with an evaluation of its challenges,
issues, and opportunities for the company.
Impact of Globalization on Business
The term international business is where activities are performed at the global level, which
describes all the profit-making transactions, including goods, services, or resources between
countries away from political borders. The funds in economic transactions include skills,
capital, individuals to produce physical products and services like banking, construction,
finance, insurance internationally. The settling away from cross-borders the sales are
analysed to meet the needs of the companies and individuals. It consists of import and export
trading and FDI (foreign direct investment) (Beladi, et al., 2016).
Moreover, the services include advertising, transportation, retail and mass communication,
tourism, and construction. Australian dollar is getting weak with the increase in competitive
pressure in the retail market. Woolworths as a global player continue to enter in the

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Australian market for expansion of their stores while facing challenges and competition
increment in all the areas. The company kept on innovating, improving in process and
making connection with the consumer for maintaining its competitive advantage. The MNCs
are companies with substantial resources and business activities as international business
activities are performed by a network of outlets at different locations with individual business
strategies considering various market features. The companies working in a single country
but the business activities are performed in multiple states are multinational companies.
These companies work globally for their operational needs such as providing equipment,
materials, technology and excess production discharge and strategic needs such as to make
sure the safety in external environment for future changes, better profitability, and stable
growth by maintenance of growth structure, saturation causing stagnation avoidance, business
volume and growth rate increment (Guillotin & Mangematin, 2015).
In Australia, the competition in the retail sector is increasing as retailers are responding to the
technology influence and entering and expanding of them to which Woolworths support.
Woolworths wanted to achieve the opportunities globally by nurturing competition in the
market, innovation benefits delivery and low prices for consumers by releasing trade hour
limitations, generating public interest for the existing parameter and applicability in future to
measure the competitive impact. The company need to remove all lasting similar import
limitations. The globalization of markets requires the development of worldwide business
activities. It means integrated economic growth and growth of world-wide countries' inter-
dependency. The companies’ internationalization meant to be the tendency of increase in
international scope of business activities systematically whereas globalization said to be the
intensive economic relations in the market between the countries worldwide (Katerina &
Aneta, 2014). The companies are encouraged by globalization to internationalize, and volume
and types increment substantially of cross-border transactions in capital, goods, and services.
It also leads to rapid distribution and broadcasting of knowledge, products, and technology
globally irrespective of the basis. It is a natural process of globalization which results in the
process acceleration and growth by generalized character and production process. The
expansion of markets for goods and the development of technology lead to the
internationalization of financial and economic positioning and development universally
(Bretos & Marcuello, 2017). Therefore, the globalization process leads to an excellent
economic amalgamation of national economies; the world economy and the international
economy breaking up a process where the process of globalization opens national economies

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removing financial and economic borders of the same and transforms them into a global
industrial and commercial market (Bishev & Boskov, 2016).
Globalization benefitted Woolworths by making the competition extreme in Australia where
retailers started to benefit customers by lowering prices, innovation rapidity and providing
accessibility with the impact of technology and expansion. Globalization is a trend world-
wide where the companies connect to each other, losing the borders of economies in the
world where the companies can perform their activities globally without any restrictions. In
the global market, some of the companies are present with the procurement of their raw
produce or conducted research and development worldwide. There is a faster growth of
companies than domestic production of goods and services due to global trade and trade
barriers fall. Hence, companies assume the success of the local market-leading long-term
profitability where they cannot afford the luxury (Schworm, et al., 2017). Across the national
borders, there is a free flow of money, and better financing rates companies and investors
looked for globally with more of favourable RoI (return on investment). Globalization in
business is affected by the changes to increase competition, technology rapidity, and
transferring information (Adekola & Sergi, 2016). The issue of climate change affects the
fresh food production faced by Woolworths where company tried to reduce the contribution
in global warming.
Competition
Globalization leads to an increase in competition related to goods and services price and cost,
adapting technology, target market, quick response, and production by companies. The output
with cheap selling and less cost of the company increases the market share. The large variety
of choices in the market needed for customers and their behaviours. Woolworths increased its
competition with online retailers locally and globally by creating physical hurdles in retailing.
The company was forced to do private label offering to make sure the competition with new
entrants and to meet new customers demand to follow the global trend. It is important to
consider the global sourcing of Woolworths (Woolworths Group, 2015). Companies quickly
acquire goods and services in an efficient way for customers expecting low prices and high
quality. The company is responsible for the need expectations, or else the sales will decline
and move to a loss in profit and market share. The global requirements for the company are
about price, goods and services, and customer preferences (Okoro, et al., 2017).

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Exchange of Technology
The use of new technologies is considered in the globalization in international and
entrepreneurial focused companies for further business opportunities utilization. SMEs look
for widening the involvement in new global markets with potential through internet and e-
commerce procedures. It is the tool of quality goods and services, and competition;
technology also demands a cost for the company. The company needs to use the latest
technology to increase its sales and product quality. Globalization tends to increase the speed
of transferring technology and its improvement where customers’ expectations direct the
markets (Hu & Haddud, 2017). Most of the companies in the capital demanding markets
indulge risks and need fast change concerning customer expectations. It is crucial for
companies to have resourceful R&D and technology management. Woolworths uses cheap
imports in the supermarkets for their in-house brands instead of using Australian products.
The company entering into the supermarket industry need to get controlled for implementing
new market strategies consisting home brand goods increment to supplied from overseas
instead of Australian supplier.
Information transfer
In the present environment, information is the major production factor which is valuable and
expensive. It can be easily exchanged and transferred anywhere across the globe; the chance
of using data and knowledge to the companies helps them to adapt to global change. Further,
the difference in technology transfer is an issue in global markets as a fast change in the
market requires the transfer and use of knowledge resourcefully at the same speed (Narwal &
Jindal, 2015). Woolworths started to grow by driving competition a cutting red tape by doing
a global economic activity for the security of benefits under the competition policy.
Key points considered by International Managers
International managers need to pursue strategy at the time of the decision-making process in
companies. Globalization and advancement of technology contributed in the increasing level
of choice and availability of products in the Australian market of Woolworths. The
establishment of policies and practices for global purchase has been conducted through
sourcing decisions. It is complex and vital because of culture distance between countries in
business. In international trade, to manage decision making is complicated to make sure the
need for implementing it globally with consistency (Deresky, 2017). The performance of the

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managers making decisions provides the company the specific competitive advantage with
the capability of implementing a strategy where the risks are always associated in business at
global markets. It is the duty of the manager to make decisions with the need for alertness for
development in the worldwide marketplace (Harvey, et al., 2009). The international managers
need to face challenges regarding fast changes in the environment and think to support
customers’ expectations to adjust, the difference in the companies is essential for success.
They deal with changes to be ahead in the game of globalization by being close to the
customer, working in a team, active leadership and mind-set, and always ready for the future
change (Zander, et al., 2015).
Close to the customer
A manager makes a dynamic and varied team of employees reflecting the type of customers
dealt by the company. It is essential to develop the knowledge, ability, skills, and mindset for
providing services to the customers and making a learning environment for supporting
flexible working. For instance, founder of Zara retail clothing Amancio Ortega says that “you
need five fingers to touch and five touching the customer” based on an active working
environment and decision-making decentralization, and employees empowerment for
responding to the needs of the customers rapidly (Blieck, 2016).
Work as One
It is essential to keep the team stick to each other globally to make sure to connect people,
groups, and customers for delivery to customers anytime, anyhow, and anywhere. The
transportation to the customers is a complex issue where differentiation is not about price or
location but solutions and service. The difference is making a relationship across geographies
with no room for storage tower. The company makes sure to respect different cultures and
create awareness and accountability for extreme power. For instance, Google is a digital
company with common goals and visions to be shared in the company represents a diverse
team reflecting its global customers (Blieck, 2016).
Inclusive Leadership
It is essential for international managers to need to move with a change or forward for
expecting trends, delivering innovative strategies, and providing a clear vision and purpose.
They make an open learning environment challenge the feeling of empowerment and
circumstances. For instance, the ex-head of GE Jack Welch said that “when you were made a

GLOBALIZATION 8
leader you weren't given a crown, you were given the responsibility to bring out the best in
others” (Blieck, 2016). It is the duty of managers to set the culture in the company for
managing economic cycles, feel comfortable with uncertainty and lead teams in an unstable
and unreliable world.
Agile Mindset
Managers need to communicate change for making everyone understand the right mindset by
being global and act local to make sure that everyone voice has been heard. It is essential to
convince individuals and conduct to support the same. Sometimes, the employees overcome
the significant challenges faced by the companies. In the companies, managers need to
prepare employees for dealing with the change and rather than feeling like a target; they try to
be learners (Narula & Verbeke, 2015). To build up belief by making and learning
continuously for being adaptive and responsible is the duty of managers, but it is not easy to
develop new skills and to stick to good habits be a tough challenge.
Future Ready
No matter what, change is permanent. The reason of unsettlement and disturbance is change
but generates positive opportunities as well. It is vital for companies to be aware of trends
and asking for regular feedback from customers for staying ahead. The companies are
focused on the process of looking outward and learn for reaching a competitive advantage
(Young, et al., 2017). Therefore, it is necessary to lead the change in the environment and
delivers to be the companies’ responsibility and opportunity.
Outsourcing and Offshoring with Challenges, Opportunities, and
Issues
In globalization, outsourcing helps in the way of increasing profits and productivity, and a
decrease in costs in the business with growing movement of goods and services, and capital
across border by advancement in information technology in the company. Offshoring is for
providing employment and job transfer all over the globe. Hence, relocation is getting work
in multiple countries, and outsourcing is being in a single country, activities related to the
business are done in other countries globally (Willcocks, et al., 2017). Outsourcing is
supportive in globalization but not a reliable strategy; the opportunities through outsourcing
can be:

GLOBALIZATION 9
 Cost reduction and risk sharing in companies globally. Being a useful tool, it
diminishes the burden of high costs. The objective of cost reduction can be achieved
by converting fixed costs into variable costs, cut back the non-vital structure, and
more (Hansen, et al., 2016). Hence, outsourcing can be helpful to companies in
sharing business risks with the external service provider.
 The companies can think about the right and wrong decisions with providing
outsourcing; it shows the companies’ core competencies. In recent times,
globalization pushes businesses with cut-throat competition for better performance
and quality of goods and services (Ishizaka, et al., 2019). It also gives various
opportunities after performing non-critical activities for the third-parties to understand
the innovation mechanism.
 Outsourcing gives access to companies for high-level technologies and experts
specialization in business process specifically to service providers where the third-
party retailers manage the business process with supreme knowledge of the company
like Woolworths effortlessly. Therefore, it will take speed in execution and introduce
resourcefulness in the process.
 In the companies, outsourcing increases the flexibility for determining demand
unpredictability regarding business to stay for long period. Moreover, customer
preferences keep on changing with the propensity of time. It makes the companies
extensively responsible for addressing the issues and maintains competitive advantage
for the long-term (Solli-Sæther & Gottschalk, 2015).
Woolworths is an Australian company contributing in globalization to focus on its core
business and network management skills through an outsourcing agreement with Dimension
Data which is a networking company to operate, manage and support the Woolworths
network that is an aspect of technology change. Another outsourcing of Woolworths is its
customer technology to the Microsoft cloud like Azure for focusing on the online shopping
experience and not to spend energy to keep the infrastructure running that allows customers
to focus on the shopping experience and make them believe that their data is safe (Yoo,
2017). Woolworths keep on outsourcing by confirming 64 in-house technical workforce jobs
affecting a broad range of IT infrastructure agreement with the Indian IT services company
Wipro. The company also outsourced the truck driver jobs of the company Linfox to bring
transport services into line with other Australian stores which affected the drivers due to

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unemployment offer made by Woolworths (Lucas, 2013). Even many companies try to
outsource with Australian companies from which one of them is Woolworths.
The challenges faced by Woolworths were its complex infrastructure of networking where
the multiple gateways were managed and maintained with the requirement of skills correctly.
The complexity was because of different management systems which were impossible to
integrate, and the company was also dependent on various vendors with no consistent
approach of maintaining service levels. The opportunities they gained were workforce
retention which is the responsibility of Dimension Data as Woolworths has a single point of
contact for network problem management and escalation. The main objective of the company
is to address the critical issues beyond functionality like enhancing the service levels and
operating cost control for the users applicable. Woolworths working in partnership look to
extend the functional arrangement of the company to be focused on ‘strategic intent’ and
essential part of revenue-generating stream of Woolworths. The other opportunities
Woolworths got the chance of going to Wipro and others will get redistributed where roles
become jobless and impact on individuals making efforts for finding the alternate parts within
Woolworths. The challenges were impact on workforce, poor timings (LeMay, 2013). The
opportunity was for truck drivers of getting employment in the business in Victoria, which is
the only state where Woolworths operated and owned transport taskforce (Validakis, 2013).
Outsourcing experience is done with the legit business arrangement in highly competitive
markets for low-skilled work as said by FWO (Fair Work Ombudsman) taking legal action
towards four cleaners at the Woolworths supermarket in Tasmania for breaking workplace
laws are the major issues (Retail World, 2019).
The issues in outsourcing can be the expectations in work to move smoothly after improving
the functional arrangements to make it happen in the right way. The problem of influencing
the organizational culture after outsourcing can generate conflicts between the service
provider’s company culture and the Woolworths. The process while adjustments of
companies to work together and if not can lead to the wrong way of initiating where the
objectives are not met which implies new methods, workflows, and people to reduce
accumulated time. To take the right decisions and power is the issue of the company where
employees think that they have the ability and the decisions made are right where the
business functions can get affected.

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Conclusion
To conclude, with today’s time of doing business, globalization has been the vast impact for
the companies. The changes occur with the time, environment and preferences of the
customers. It is the responsibility of the companies to face the challenges at a global
perspective and maintains the edge of the company as well. In the companies, it is the duty of
international managers to consider the activities with the positive impact of globalization for
working environment and new emerging market. It is vital to take care of stakeholders and
make a business global with the power of enhancing productivity and performance of the
company with its core competencies. Outsourcing and offshoring is an essential tool for the
expansion of business and providing job opportunities worldwide. It has its issues and
opportunities with challenges to fight for and maintain the pace at first in the marketplace. In
companies like Woolworths being an outsourcing company, they have to be extra careful
while signing with third-party companies for providing services with precautions when
dealing with the challenges for the outcome and profitability.
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