Global Business Environment

Running Head: GLOBALIZATION AND INTERNATIONAL BUSINESS GLOBALIZATION AND INTERNATIONAL BUSINESS 1 Globalization and International Business The global business environment can be defined as the environment in various sovereign countries which is different from the environment of the home country of the organization and influence the process of decision making on capabilities and the use of resources. The ability of the firm to design and adjust its internal variables for taking the advantage of the opportunities offered by the external environment along with the ability of controlling the threats posed by such environment

Running Head: GLOBALIZATION AND INTERNATIONAL BUSINESS
Globalization and International Business

GLOBALIZATION AND INTERNATIONAL BUSINESS 1
The global business environment can be defined as the environment in various sovereign
countries which is different from the environment of the home country of the organization and
influence the process of decision making on capabilities and the use of resources. For effective
and efficient functioning, there is a requirement for the companies operating internationally to
understand the social environment of the host country (Kasemsap, 2014). These days, a number
of multinational companies operate in different parts of the globe and therefore are required to
acquaint themselves with the culture and language of the country in which it plans to operate.
Due to no control of the firms over their external environment, their success is completely
dependent on their capability of adapting to the external environment. The ability of the firm to
design and adjust its internal variables for taking the advantage of the opportunities offered by
the external environment along with the ability of controlling the threats posed by such
environment determine its success. This essay is focused on how Canadian businesses need to
adjust to and utilize an ever- changing business environment and to excel in this environment.
The present global business environment is highly developed as a result of technological
development. Also the growth of emerging markets is providing a number of business
opportunities to businesses running in different parts of the world. However, the complexity has
significantly increased as a result of globalization. Constant changes are taking place in the rules
and regulations formulated by the government which are creating a great impact on the trade
agreements in the global business environment. The global markets are also disrupted by Brexit
which has further resulted in the fall of British pound to the lowest level in decades. However,
this appears to be an opportunity for the Canadian exporters to fil the void in the European Union
after Britain’s exit. Also, the global business environment is suffering from the dramatic shifts
such a rise and fall in the oil and commodity prices, potential recessions, shifts in the exchange
rates, financial crisis loom and technology and robotics which have taken the place of some
traditional jobs (Peng, 2016). Resource based view can be defined as the way of viewing a firm
as a bundle of resources. These resources and their combination are responsible for making the
firm different from others. In other words, the resource based view looks at the internal resources
and the manner in which it can be used for the purpose of gaining competitive advantage in the
market. On the other hand, institution based view provides that proper knowledge of the host
country is needed before entering a foreign market. The performance of the firm differs due to

GLOBALIZATION AND INTERNATIONAL BUSINESS 2
the influence of the institutional forces and its impact cannot be controlled through the firm’s
competencies and industry factors.
The global business environment is beneficial from the resource based view as there is
extraordinary talent available in the international market which is cheap and can provide benefit
to the Canadian companies in attaining its goals. Moreover, advanced technology can also be
utilized through the expansion of the business in foreign countries which will enhance their
internal operations. However, the dynamic nature of the global business environment does not
appear to be advantageous from the institution based view. This is due to the fact that even after
gain proper knowledge regarding the trends and culture of the host country, a number of industry
factors affect its performance in the international market (Apetrei, Kureshi & Horodnic, 2015).
The global business environment is impacting the Canadian businesses by offering them a
number of opportunities and challenges.
The global business environment offers both opportunities and challenges to the Canadian
businesses. One of the biggest opportunities for the Canadian businesses is the access to the new
customers across the globe. The population of Canada represents only 0.5 % of the total
population of the world (Trading Economics, 2018). The global business environment is
providing a number of opportunities for the market entrants as it represents 99.5 % of the total
population of the world and is appealing and beneficial for the Canadian businesses. Another
opportunity offered by the global business environment is lowered costs through offshoring the
activities of the business. Relocation of the business activities can be planned by the Canadian
businesses in countries like China and India where there is availability of cheap labor. Canadian
businesses can also gain cost advantage through lowering their overall and average costs of
production. The next opportunity offered by the global business environment is the
diversification of business risk. Entering into foreign market reduces the business risk of
operating in one market.
On the other hand, operating in the global business environment can present a number of
challenges for the Canadian businesses. The most important challenge for the Canadian
businesses is the political risk which is the potential for government disturbance to damage a
business entity within a country. The political instability of the international markets becomes a
challenge for the businesses entering into a new market. New regulations and tax regulations are

GLOBALIZATION AND INTERNATIONAL BUSINESS 3
also creating challenges for the Canadian businesses entering into the global business
environment. Another challenge faced by the Canadian companies is the economic risk which
refers to the potential of the economic policies and conditions, currency exchange rates and
property rights to unfavorably impact the operations of the firm. This unpredictability of the
economies of the global business environment is a challenge for the Canadian businesses. The
next challenge is the cultural risk which can be defined as the potential of the operations of the
organization to struggle as a result of the differences in the languages, norms, customs and
customer preferences. This further becomes a challenge for the Canadian companies to survive in
the global business environment (Tallman, Luo & Buckley, 2018).
The Canadian businesses have positively reacted to the dynamic global business environment
and have taken their business overseas. Barrick Gold is a Canadian gold mining company which
has expanded its business internationally. The company decided to explore the international
market opportunities and entered into the foreign market by selecting partnership as the mode of
entry. The company enjoys the benefits of operating internationally by way of getting access to
the new customers which, in turn, allows it to increase its profits along with enhancing the sales
volume, expansion of the programs and diversifying the risks (López ‐Duarte, Vidal‐ Suárez &
González‐ Díaz, 2016). Furthermore, their success is supported by the global business
environment as it has used perfect strategies with full dedication and understanding of the idea of
maintenance and development of partnerships and trust with host governments, local
communities, NGOs, indigenous people. The response of the company was appropriate for
meeting the requirements of the present global business environment. The company understood
the culture of the country where it was planning its expansion which slowly assisted it in
becoming the largest gold mining corporation of the world (Jaksic, Jovanovic & Petkovic, 2015).
Loblaw Companies Limited is another Canadian company engaged in the business of food and
pharmacy has also turned the uncertainties and challenges in the global business environment as
an opportunity for itself. This company explored the international market which assisted it in
attaining product flexibility, protection from the national events and trends, increase in
productivity and learning from the trends of the international market. In other words, their
strategic responses for responding towards the dynamic global business environment include
proper evaluation of the international moves, maintenance of performance and adoption of

GLOBALIZATION AND INTERNATIONAL BUSINESS 4
proper strategies for the satisfaction of the customers. It further took the needed steps for the
maintenance of the accountability, excellence and commitment of the employees towards its
customers (Caiazza, Shimizu & Yoshikawa, 2017).
McDonald’s is one of the successful businesses operating in different parts of the globe and can
be used as an example by the Canadian businesses for their global entry or expansion.
McDonald’s makes direct investment while entering into a new national market. Moreover, it
also expands its operations through the franchising route. The strategic focus of the company is
on delivering highly standardized and uniform products and services in its restaurants across the
globe (Teichert, Effertz, Tsoi & Shchekoldin, 2015). This purpose is served by the global market
entry strategy of the company. Furthermore, the company employs transnational strategy for
global integration and local responsiveness. Another example is that of Starbucks which mostly
adopts joint venture and licensing as its market entry strategy. The expansion strategy of
Starbucks was dependent on the various licensing agreements in the areas where it did not have
the ability to open its own outlets (Ang, Benischke & Doh, 2015).
After taking into consideration these two successful business cases, the Canadian businesses
should also recognize the requirements of the overseas market with a high degree of local
responsiveness. The businesses should construct their value chain by considering the local
culture along with the economic and local- political environment in mind (Tallman, Luo &
Buckley, 2018). The Canadian businesses can undertake market entry strategies such as
licensing, franchising, joint venture and direct investment for entering into the global business
environment. Therefore, the Canadian businesses must consider catering to the needs of the
country where it is establishing its business. Under the licensing agreement, the product will be
provided to the licensee (foreign firm) by the Canadian businesses (licensor) by way of granting
the firm the right of using the manufacturing process of the licensor along with the patents, brand
name or sales knowledge in return for payment. This way can be adopted by the Canadian
businesses as it will allow them to market internationally by easily dealing with the difficulties
like import restrictions, scarce capital and government restrictions (Laufs & Schwens, 2014).
Franchising also follows the same concept. The other global entry strategy which can be adopted
by the Canadian businesses is joint ventures which take place between a foreign and domestic
firm. However, this mode of entry will be riskier and less flexible for the Canadian businesses

GLOBALIZATION AND INTERNATIONAL BUSINESS 5
but will provide them with expertise about the new market, networks, business connections and
access to real estate and regulatory compliance (Tjemkes, Vos & Burgers, 2017). Moreover,
direct investment can also be adopted as a global entry mode for competing more aggressively
abroad. However, this strategy is considered to be risky because it requires larger investment and
demands a proper understanding of the customs and business conditions in a foreign country.
The global business environment will keep on changing from time to time and therefore, the
businesses have to make adjustment for the purpose of maintaining their competitive edge in the
international market (Yan & Luo, 2016). The Canadian businesses are required to utilize this
dynamic nature for attaining excellence in the global business environment.
Functional excellence is attaining excellence in the management of internal value- chain and the
ability of the employees to play an effective strategic role in the organization’s overall value
chain. The Canadian businesses are recommended to achieve functional excellence on a global
basis by recruiting the employees and managers of the concerned market (Perey, Benn, Agarwal
& Edwards, 2018). These employees and managers can suggest ideas regarding the local
consumer preferences, tastes and interests which will play a great role in gaining such knowledge
and utilizing it for the success of the business. The Canadian businesses can best operate on the
global basis if they pick a global expansion partner for market success. Such partner will play a
useful role in providing adequate knowledge regarding the laws and regulations of the country
(Chetty, Ojala & Leppäaho, 2015). Understanding the market where the business is going to be
expanded is also a crucial task and should be give importance by the Canadian businesses.
Furthermore, it is recommended that the Canadian businesses should search for a solid global
expansion strategy along with making investment in the market research for the purpose of
getting a better idea of the business environment. It further needs to consider that the major
issues will be faced by the companies in respect of compliance with law, along with certain
political problems, supervisory oversight and language and cultural barriers (Brannen, Piekkari,
& Tietze, 2017). Solution for all these problems should be searched for in advance through the
selection of correct market entry mode and strategy (Hamilton & Webster, 2018). The Canadian
businesses should also take the advantage of the available funding which is provided by
international governments for the purpose of booting their economies. In this way, some
governments offer incentives to the companies planning to expand their businesses into their
regions (Surdu & Mellahi, 2016). This available funding will assist in attaining the functional

GLOBALIZATION AND INTERNATIONAL BUSINESS 6
excellence as well. Furthermore, due care should be taken while making decision regarding the
market entry mode. These recommendations will assist the Canadian businesses in evaluating the
ever- changing global business environment along with excelling in it (Botha, Kourie & Snyman,
2014).
Therefore, it can be concluded that the global business environment is the environment in
various sovereign countries which is different from the environment of the home country of the
organization and influence the process of decision making on capabilities and the use of
resources. These days it has become the basic requirement of every company to expand its
business globally for increasing its sales and profits. However, this is not an easy task and
requires a proper understanding of the culture and language of the country in which the business
plans to operate. The technological developments that have taken place in the recent years have
made the present global business environment highly developed. This essay analyzed the present
global business environment from both institution- based view and resource- based view and
highlighted the opportunities and challenges offered by such environment.
Moreover, this essay provided the examples of Barrick Gold and Loblaw Companies Limited
who have dealt with this global business environment and have attained success as well. Also,
this essay highlighted the successful cases of McDonald’s and Starbucks who have planned their
global market expansion and are operating successfully from years. At the end of this essay,
some recommendations have been made which should be taken into consideration for the smooth
operations in the global business environment. The businesses should properly plan their market
expansion strategy as it will assist the business in resolving a number of challenges faced by the
businesses in the global environment.

GLOBALIZATION AND INTERNATIONAL BUSINESS 7
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