HI5013 – Managing Across Borders: Impact of Globalisation on Business

This essay explores the impact of globalization on business, focusing on the telecommunications company Optus. It examines the reasons for globalization, the role of international managers, and the implications of outsourcing. The essay analyzes the benefits and challenges of expanding into new markets, highlighting the importance of understanding cultural differences and managing cross-cultural relationships. It concludes by discussing the key learnings and recommendations for businesses seeking to expand their operations globally.

HI5013 – Managing Across Borders
Impact of Globalisation on Business
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Table of Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Impact of globalisation on business.................................................................................................5
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
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Executive Summary
The businesses are expanding globally and globalization has been impacting the companies in
positive as well as the negative ways. There are many rules that must be known by the
international managers so that they could take the effective steps at the time of expanding to new
markets and expanding their business throughout the new markets. Offshoring is said as a
process of starting the processes and manufacturing of the companies services to new markets
and at overseas. There are challenges with the companies at the time of entering new markets
which can only be resolved by applying decent measures.
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Introduction
The worldwide market is the way to the development of business as well as of the brand.
Extending the business overseas is particularly basic in the present situation as the opposition is
expanding and nations chose for the business are getting higher benefits in their economy and
more brands to browse after the development. The economy gets a considerable measure of
benefits after the development of new firms because of which numerous nations are opening
their entryways for the business exercises. The company selected for the essay is Optus which is
a second largest telecommunication company in Australia. The headquarters of this company is
situated in Sydney and CEO of this company is Allen Lew, there are over more than 8700
employees working with this company (Optus, 2018).
For creating higher benefits the organizations are likewise growing their wings seaward. In the
examination directed beneath the outline of a current organization will be given along surveys of
its Global aggressive procedure. The techniques that are used for creating the business crosswise
over different nations will be furnished alongside the operational, control and the store network
administration of the organization. The manners by which these organizations are taking care of
their human asset administration will likewise be examined and the learning will be produced by
the key issues and openings that the administration can have and certain suggestions will be
given to extending their business capacities overseas. The ways in which Optus could achieve its
objectives of expanding to new markets will be discussed in the task along with the ways in
which they could meet the challenges of the new market and eradicate all the barriers of work.
The task will be consisting of the reasons for globalization and the roles of managers for the
purpose of expanding into new markets.
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Impact of globalisation on business
Globalisation is a process which involves integrating the markets at global resulting in enhanced
interconnectedness among the countries. The concept of open-market has enabled the firms to
increase their presence in the foreign markets and it has also resulted in the movement of people
from one country to another (Garner, 2015). At present, the companies from different sectors
such as financial services, insurance, automobile and other sectors have been able to establish in
the foreign markets which have enabled them to increase their market share.
Reasons for the increase in globalisation
Developments in information and communications technology:
This is one of the important reasons for globalisation since it connects the people from different
geographies and it has enabled to share the knowledge and expertise among people. Knowledge
is an important element for transforming the lives of the local communities as people have equal
opportunities for accessing the information easily (Gerhards, et. al., 2017). The flow of
information from one region to another and the development of telecommunication technology
increases the coordination among the firms. This helps the companies to build effective
communication channels so that important aspects of the business can be shared during the
decision-making process.
Development of transport system:
The advancement in the different modes of transport has resulted in shortening the travel time
and increased connectivity to the developing regions of the world. The air travel enables the
individual to travel all over the world within a short period of time. Also, the airlines provide
freight services which have resulted in the transportation of the required goods and equipment
from one place to another easily and quickly. The development of transport has helped the firms
to procure raw materials such as coal and iron ore from distant locations enabling their overall
growth and development.
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Development of online payment systems:
This has revolutionised the whole banking system as customers and firms are able to transact
online and the payment can be made anywhere across the globe. Hence, the online payment
technology has greatly contributed towards developing the concept of “Global Village”. The
development of online payment system also ensures that the transaction can be viewed both by
the sender and receiver in real-time basis which ensures accuracy and reliability of the financial
transactions (Slade, et. al., 2015). This enables the business to buy and sell the products across
the globe easily and the business activities can be performed easily.
Use of social media platforms for marketing and promotion:
As per Ashley and Tuten (2015), the social media platforms such as Instagram, Twitter,
LinkedIn, etc., enable the firms to address a large group at the same time. This ensures delivering
the message to a huge number of target markets economically as these sites require the user to
register with them and there are no additional charges. These platforms also provide an
opportunity for the users to comment on the information provided which can be used by the
firms as feedback and modify their strategy accordingly. It also enables to approach global
audience as the users from different nationalities are registered which helps to promote the
products in foreign markets.
Increase in the international trade:
The countries across the globe have accepted the fact that the limitations with regard to the
availability of the resources can be resolved by opening the market to the foreign companies.
These firms bring-in with them the required capital and technological expertise which helps the
region to grow and develop. This has increased the presence of a company in multiple countries
resulting in an exchange of goods and services. The concept of Free Trade Agreement has also
increased the availability of the products of a company at the global level. This has given rise to
the growth and development of multinational companies and enhanced goodwill and reputation
of global brands.
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Role of International Managers
The concept of globalisation and free-market has enabled the firms to explore new market and
increase their market share. This has resulted in increased competition among the large
companies since they will be able to generate more revenues. The availability of a huge
consumer market helps the management to achieve their overall objectives. Hence, it becomes
the duty of the international managers to devise the strategies which enable the firm to reap
maximum benefits. The roles and responsibilities of the international managers have been given
below:
Ascertain the level of competition: As per Nadiv, et. al. (2017), the managers should study the
similar goods and services offered by the competitors before introducing the products to the
foreign markets. This enables to understand their benefits and drawbacks and develop strategies
for changing the composition of the products or services if required.
Understand the customers’ requirement: It is very well established that the firms have to
understand the requirement of the customers before developing the products in order to succeed
in the competitive market scenario. This enables to identify the target market and to predict the
sales volume which is important for evaluating the success level of the products and services.
The managers should consider obtaining the updated market information by way of surveys,
questionnaires, and feedback for evaluating their expectations towards the firm.
Product Diversification: The managers should develop strategies for introducing new products
and services after ascertaining the requirements of the customers. This helps in product
diversification and the firm will be able to develop region-specific products and services (Nadiv,
et. al., 2017). For example, a clothing firm in Australia will be able to design apparels which are
worn in China. This not only enhances the revenue generation capacity but the firm will be able
to enhance its goodwill and reputation. Additionally, this management strategy will enable the
firm to develop products across all the countries
Partnerships and Collaborations: Partnerships and collaborations are an important part of the
organisation’s strategy which enables to enter the foreign markets. By collaborating with other
companies, firms will be able to share the knowledge and resource, thereby overcoming the issue
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of shortages of resources. The funds contributed by the firms enable to invest in conducting
research which results in developing unique products and services. Collaboration and
partnerships help the firms to exchange the technical-know-how resulting in developing efficient
production and distribution methods and enhance the productivity of the firms (Brouthers, et. al.,
2015). This enhances the competitiveness of the firm and the management will be able to achieve
the overall objectives.
The partnerships and collaborations can be arranged between large and medium-sized firms as
well which provides the platform for the medium-scale industries to enhance their
competitiveness and to gain knowledge regarding international business. The medium-sized firm
can also utilise the expertise of large firms for taking important business decisions and
diversifying the products by performing research and development which results in introducing
unique products and services. The small and medium scale industries are formed by developing
innovation and these can be utilised by the large firms to enhance their productivity.
Developing promotional strategies:
The important function of the managers is to develop effective marketing and promotional
strategies in order to create awareness among the customers regarding the products and services
offered by the firm. The marketing strategy should aim at marketing the products in a cost-
effective manner. This reduces the input costs of the products which helps the firm to sell the
products and services at competitive rates (Mathews, et. al., 2016). This is important when there
are many competing firms in the market and the firm will be able to stand-out among the
competitors. The use of latest technology such as social media marketing enables the firm to
address a large group of people in a cost-effective way since using these sites does not require
huge investments.
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Outsourcing
This is concerned with hiring third-party individuals or firms for performing certain functions of
an organisation. This is done to reduce the cost involved in performing various tasks and to
improve the operational efficiencies. This is one of the concepts which have evolved by way of
globalisation since the improvement in technology enables the firms to outsource their support
functions. The concept of outsourcing is not limited to private firms but the government may also
outsource few activities which can be performed by third-parties. The management decides to
outsource its operations for reducing the costs incurred for maintaining the available resources
and to reduce the input costs. Usually, the outsourcing destinations are those regions where there
is an availability of huge skilled manpower and only those tasks are outsourced which can be
effectively performed by third-parties (Zhang, et. al., 2015). This ensures that the knowledge and
expertise of the skilled labour can be utilised at the optimum level along with reducing the labour
costs as the various operations can be performed at lower rates because of the availability of
cheap labour. This reduces the input costs and the firms will be able to provide the goods and
services at lower rates which enhance the competitiveness of the firm.
Also, the firm will be able to increase its presence in the foreign markets because of outsourcing
and the management will be able to study the market conditions for introducing the products and
services. Hence, outsourcing can be used as a platform for entering new markets and to diversify
the product range since the management will be able to ascertain the needs and aspirations of the
local communities. This opportunity is utilised by the firms to increase their market share as well
as enhancing their brand image. Another benefit of outsourcing is that the service providers are
bound by the agreement made for maintaining the secrecy of the vital information related to
various operations of the firm. This is important since there are various instances when the
insider sources have leaked the confidential information to the rival firms or to the shareholders
losing goodwill and reputation (Zhang, et. al., 2015). Hence, outsourcing ensures that the
information is secured and the third parties will be made responsible in case of any breach of
information.
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In order to study the impact of outsourcing, the case study of Optus, which is Australia’s second
largest telecommunication groups, has been considered. The firm is the fully-owned subsidiary
of Singtel since 2001 and employs more than 9000 employees (Optus, 2018). The firm has
decided to outsource its key functions such as HR and finance for enhancing the efficiencies of
the operations. The firm has been able to increase its market share since it provides an effective
customer service which enhances the satisfaction level of the customers. However, the firm
decided to outsource its important functions such as field maintenance, operations, and mobile
network infrastructure which will help the management to achieve automation and
standardisation of the processes. The company decided to outsource its operations because of
following benefits:
Reduced costs: As per Vining and Globerman (2017), the firm will be able to reduce the costs of
maintaining and updating the current infrastructure. The management has to continuously
upgrade its operations because of growing competition. Hence, the management can focus on
enhancing the business and develop strategies for increasing the current market share.
Standardisation of the processes: The management will be able to enhance the operational
efficiencies since the tasks are performed by professionals in the field. For instance, Optus has
outsourced its operations to Nokia, which is renowned for its diversity of products and maintains
huge operations across the globe. Hence, Optus will be able to utilise the expertise of Nokia for
standardising the operations and to reduce the input costs.
Reduced cost of labour: The operations can be performed by reducing the labour costs since the
emerging economies have a huge amount of skilled labour (Vining and Globerman 2017). This
helps the management to perform the activities at reduced costs and the firm will be able to
provide the services at lower rates. This is important because of the presence of a large number
of competitors.
Maintaining the confidentiality: The firm will be able to secure its vital information from being
misused since the service providers are bound by the agreement which is made while finalising
the terms and conditions of outsourcing the activities. Hence, the firm can rely on Nokia for
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preventing the important data being leaked which is very important since competitors always try
to ascertain the policies formulated by rivals for enhancing their competitiveness.
Developing new products: Optus will be able to concentrate on increasing its market share and
hence, the management will be able to raise the funds which can be utilised for research and
development (Iacona, et. al., 2016). By developing new products and services, the firm will be
able to attract new customers and increase the loyal customer base. This is very important for
sustaining and growing in the competitive market scenario.
Hence, the decision to outsource will enable the firm to enhance its market share and the
management will be able to increase its presence. However, there are few demerits of
outsourcing the operations, which are:
Reduction in the jobs: The decision to outsource the operations results in the local communities
losing their jobs and affects the employment rates in the region. For instance, the decision of
Optus for outsourcing the operations to Nokia resulted in more than 1000 employees to lose their
jobs in Australia. This affects the confidence level of employees towards the management (Foye,
2018).
Maintenance of legal compliance: Another major concern with outsourcing is that Optus will
have to maintain additional compliances related to outsourcing its operations.
Risk of losing confidential information: Although a legal agreement is drawn, still there is a
possibility that the information can be leaked. This may affect the overall performance of the
business as the competitors may utilise this opportunity for increasing their market share.
Losing technical knowledge of the process: Even though outsourcing provides an opportunity
for the firms to reduce the costs, it also results in losing the expertise in performing operations.
The management may not concentrate on providing operational training to the staff and
employees and hence, Optus may be forced to rely on Nokia for performing vital tasks. This
reduces the operational abilities of the firm and may lose the competitive advantage in the long-
run.
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Complex Cross-cultural relationship: As per Gurung and Prater (2017), Outsourcing involves
dealing with the firms of other cultures and hence, the managers may face difficulties in
maintaining the cross-cultural relationships. Maintaining healthy relationship is important for
smooth functioning of the operations, hence, if the relationship is not maintained, the firm may
lose the competitive advantage and the purpose of outsourcing the operations will not be
fulfilled.
Hence, although there are advantages of outsourcing, there are numerous disadvantages as well
and the management has to analyse the merits and demerits before outsourcing the operations to
the third-parties.
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Conclusion
With the task completed above, it can be concluded that expanding business to new territories
can assist the business organisation in expanding their image and their processes to new levels.
The task explains the reasons that companies are adopting new policies to expand their business
to new markets. The strategies that are applied by the business owners are discussed in the task
which could lead to an expansion of business to a newer level. The ways in which these business
organisations could lead to an expansion of their business are explained along with the
necessities of globalization. The basic reasons such as market competition, diversity, more profit
lead to motivate the companies to expand their business to new level. The terms of outsourcing
were discussed in the task along with the processes of developing new products and reducing the
cost of transportation. The challenges and opportunities that Optus faced at the time of
expanding to new markets are determined in the task. The learning’s about the process of
globalization have been discussed in the task. The profits that this company can get and the ways
in which it can eradicate the development barriers have been discussed in the task.
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