Forces Shaping Global Business Environment

This report discusses the major forces that have shaped the global business environment and their impact on organizations. It explores the macro environment factors such as political, economic, social, technological, legal, and environmental factors, as well as the micro environment factors like employees, resources, suppliers, and structure. The report also includes a SWOT analysis of Samsung Company to highlight its strengths, weaknesses, opportunities, and threats.

Individual Project
Report

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Major forces which has given the shape to global business environment...................................3
Micro environment impacting the change in an organization......................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
There are various forces which influence a business market. A business especially which
is running at a global level has to consider all these influencing factors. These factors consist of
internal factors and external factors. Internal factors include employees, resources used by the
company, customers, clients, suppliers and etc. Whereas the external environment consists of the
political, social, technological, legal and the like factors. An organization changes its strategies
according to the contemporary business environment. For reference purpose this report has taken
an example of a company, Samsung. Samsung is the multinational company, which has its origin
form south Korea (Barac and et al., 2016). The company is engaged in the business of
manufacturing of mobile phones, electronics appliances, ships, chemicals and much more. The
company was first founded in the year 1938 by Lee Byung-chul.
This report discuss about the macro environment which affects the operational activities of
business and also the micro environment which put the impact upon the company.
TASK
Major forces which has given the shape to global business environment
There are various forces which have provided the shape to this sector or industry. All
these factors are out of control of any business, means the business cannot operate these factors
but these factors can operate such businesses. The major factor which has provided the shape to
global business environment can get ascertain through PESTEL analysis. PESTEL analysis is a
framework through which an organization can get to know about the threats and opportunities
which the company can face in a region. The framework helps the organization in the formation
of their strategies through which they can attain their determined goals or objectives with
minimum threats or risks. The PESTEL analysis of Samsung Company can be as follows:
Political factor: This factor is consists of the rules and regulations which are formed by the
government or the ruling political party. Some of the examples may include foreign trade
policies, taxes and the like. The company Samsung would like to get operated in the nations
where the political party is stable because they know the consequences of the business which is
operating at the region where the political party is unstable (Barr and et al., 2018). The stable
party would lead to the stable rules and policies whereas the places where the political party is
unstable there the changes in the rules and policies are very frequent. The frequent or often
changes in policies creates disturbances in the operational activities of the business only as they
have to make the changes on a frequent basis putting sacrifice upon their major business issues.
Also the company does not prefer to make or establish their manufacturing units at the places
where the cost for raw materials and the resources are high or unstable. The unstable or high
prices cost more to the company leading the high prices for the product. Also it leads to
minimize the profit margins for the company.

Economic factor: Economic factor includes the economic or money condition of the nation. It
may include the disposable income for people, unemployment, nation’s GDP and the like. The
company Samsung is a multinational company which operates in around 58 countries. It has
made a huge investment in its infrastructure in the countries it is operating in. For example, the
company would be building a huge plant in the South Africa which would produce the products
for whole Africa and also there the product will get export. This will generate a huge
employment opportunity for the South Africa country. Here the generation of employment
opportunity means increase in disposable income for the people which directly would increase
the living standard for the same (Benmamoun and et al., 2016). Through the investment, the
company helps the countries in increasing their economic states.
Social factor: Social factor may include the taste, preferences, behavior, attitude, thinking and
the like of the customers. As the company seeks its major focus in innovations and technology, it
has to predict the subconscious need of their customers and has to present the same to them. By
performing so they make the people or customer understands about the need for the product in
their lives. The mobiles phones which are manufactured by the company are made in a view
which satisfies all the current needs for the customers. Their major aim is to provide all kinds of
services or features in a single phone so that the user does not have to rely upon any other
electronic device. For example they have tried to insert the MS office in the phone only, notes,
reminders, and high speed processors and so on. Due to this the user would not have to use other
devices as all his work and information are done and saved in a single device only.
Technological factor: The technological factor may include the technological advancements and
innovation done in technological sector. More advance the techniology in a company or region
more developed that would be (Camillus, 2016). As the company Samsung major business is the
manufacturing of mobile phones which gets under the head of technology and innovation, they
have to put a huge investment upon their research and development department if they want to
survive into the market by bringing the new and innovative products. Due to the right and heavy
investment in the research and development department the company would be able to bring up
the advanced mobile phones which no other company has yet come up with such features. This
has given the company an opportunity to gain the competitive advantage in the market. Also the
competition which is faced by the company is also bringing up new features at the low prices
setting a standard for Samsung. The competition which is prevailing also contributes in shaping
the global business environment in the terms of technology as all of them want to get survive in
the market place and to survive they need to work on their technological sector (Korcsmáros and
Šimova, 2018).
Legal factor: This factor includes the rules and regulations formed by the legislations. These
laws are obligatory for the companies to follow if they want to operate their business in the
market. The company Samsung as it is a multinational company; it has to follow up all the laws
which are prevailing in the region. For example the country like Africa and India where there are
strong labor laws, there the company might faces some problems as they need to get stick with

these (Kuzieva, 2020). But if the company wants to operate into the country they have to follow
up all the rules and laws prevailing in there.
Environmental factor: The environmental factor includes the laws which are related with
environment. The company Samsung has makes sure that the activities they have undertaken for
the manufacturing should be eco friendly and does not give any harm to the environment. They
have adopted the advanced technology which produces the minimum of wastage. The company
also has the advance system for waste management. Samsung not only this, is also focusing upon
sustainability development in which they seek the focus upon the equal development of all the
resources. Not only has this to encourage the sustainability development concept the
organization also run many campaigns and social group to make a big deal to put focus on.
Porter’s five force model
The porter five force model encompasses the five forces or factor which does affect an
industry. The 5 force model for Samsung Company is as follows:
Barriers in entrance: It has been noticed that when the entrance in any industry of high degree
there the level of competition is low because only few organization is capable of getting into
such industry. Example of this may include automobile industry, airplane manufacturing
companies and the so on. All these industry requires the license to operate and they also demand
a high level of investment in it which only few organizations are able to afford. The barriers in
getting the entrance in mobile phone or electronic sector are not high which has resulted into
high level of competition (Lisowska, 2016). Though this particular sector does involve a huge
investment but it is not that much which an organization cannot afford. The barriers in the
industry do play a major role for making the company’s strategies.
Level of competition: The level of competition in electronic industry is very high which has
created the more burdens for the company Samsung. The major competitor for the company may
include apple, MI, Oppo, Honor, Micromax, and the like. All these companies provide the same
features which are offered by Samsung mobile phones that too at low prices. To gain competitive
advantage the company has to bring up new and innovative features in their products so that they
can retain their market position. The Samsung has always taken as the first producer company
which grabs the opportunity very first and the other companies follow the technology which the
company has innovate (Müller and Hoppstadius, 2017). Therefore to maintain the
competitiveness they have to bring up the innovative technology and creation to offer to their
customers.
Bargaining power of suppliers: The suppliers are in large number to provide the materials or
resources to the company; therefore the bargaining power of suppliers is quite low as the
company has number of choices and options for supplying the materials. In this case the
company has the more bargaining power when compared with suppliers. Samsung has given its
supplying dealer ship to the supplier party which provides the materials at the time and charge

low for the services (Newman and et al., 2020). As the option available with the company is
high, they first collect all the alternative or choices which they have and then they compare them
with each other. The company choices the option in which they incur the less cost and timely
delivery of services.
Bargaining power of customers: The bargaining power of customers refers to the level the
customer can bargain for the company products. As the customers have many options to make
the purchase for products. For example if a customer thinks that the mobile phone of Samsung is
very costly to him and the same features of mobile is provided by some other company say MI at
low price then he would prefer to go for MI brand. Here the customer has the high power to
bargain for the product and its price.
Threat for substitute: The Company has the major threat for substitute. As the number of
substitute available with the company is high there the burden upon the company would also get
increase (Nguimkeu, 2016). There are many companies which provide the same products which
Samsung Company has to offer to the customer that too at low prices and same features, this
creates the loss for the company as their competitors are providing the same feature product at
low prices to the customers. To gain competitive advantage in that the company needs to come
up with innovative and advance product very often so that they can maintain their market
position.
Micro environment impacting the change in an organization
The micro environment factors include the factors which are in the control of an
organization. Some examples may include the employees, resources, suppliers, structure, system
and the like. The micro environment change can be analyses through many framework some
these framework includes SWOT analysis. SWOT analysis is a framework which is used in
ascertaining the internal capabilities and strengths along with the limitations and threats of the
company. The SWOT analysis of Samsung Company is as follows:
Strength
 The company is spread around 58
countries throughout the world which
helps in building the strong relation
within the market.
 The company as a very strong customer
base.
 Samsung has done heavy investment in
the research and development
department which has result in
innovative and advanced products
which is satisfying the needs to
customers.
 The brand image is also very high for
the company.
Weakness
 The company prices for the products
are quite low which has resulted in the
loss of value for the product very easily
in the market.
 The speed at which the company
launches their product are so high that
the customer gets confuse among them.
 It also has been notice that the software
quality of Samsung is very poor which
causes the phones to lose its utility
(Prajogo and Oke, 2016).

Opportunities
 The company can expand their market
in the places where they have not yet
put their step in.
 The company needs to educate the
customers like to the people living in
Africa about their products offering
because majority of people there are
uneducated.
Threats
 The competition which is faced by the
company does create the burden upon
the company.
 Any unfavorable change in the rules
and policies formed by the government
or legislation which may affect the
business operations.
 Higher in the prices of raw materials
would works as a threat for the
company as the cost for their
production would get increase resulting
in decrease in their profit margins.
Through the SWOT analysis presented above, it can be noted that the company needs to work
upon their pricing factor and on the software which they insert into their product’s system as
these weakness is harming the company in a big way. Samsung can explore to the opportunity of
expanding itself in the region in which it has not step in yet. The more it will get expand it, more
would be strong networks, growth and profit for the organization. The company on the other
hand also needs to educate the uneducated customers about the products which they have to offer
them (Sharma and Singhal, 2016). Apart from this, Samsung needs to form its policies such that
they minimize the risk which they face from the change in political factor and price factors. At
last they need to bring up new and innovative technology often so they can gain the competitive
advantage in the market as does not lose their position.
CONCLUSION
From the report discuss above, the macro environment which shape the global business
environment has been mentioned through PESTEL and porter’s five force model. Pestel analysis
includes the factor like political, economical, social, technological, and legal and so on. Whereas
the Porter five force models includes the heads like competitors, barrier in entrance, bargaining
power of customers and suppliers, and threats of substitutes. Apart from this the micro
environment has also been analyzed through the SWOT analyses in which the strengths and
limitations of the company has been mentioned along with the opportunities and threats they
face.

REFERENCES
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