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The Global Business Environment Assignment (Solved)

Added on - 30 Nov 2020

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IntroductionThe global business environment comprises companies from various countries andinfluencing factors in their home countries in the decision-making process to use their ownexpertise and capabilities. This assignment includes evaluation of global market influences onorganization’s structure, culture and functions by applying McKinsey 7S model and Porter’sfive forces.Evaluation of global market influences on organization by applying McKinsey 7S modelA global market is made up of globally standardized products that advanced functions andreliability while being sold at relatively low prices. New innovations such as the Internet arenow officially difficult to access regions. This contributed to the harmonization of tastes andexpectations, allowing businesses to standardize products and sell them on a global market.This has made it possible for businesses like McDonald's to reach economies of scale whenproducing their products to the global consumer market.This assumes that global businessesare equally capable of manufacturing, distributing and selling their products globally.Theglobal market can also be considered homogenized.This is why the best price, quality,reliability and delivery combinations for products that are globally identical in their design,operation and even fashion are the most successful businesses (Levitt, 1983, p.5).This globalproduct standardization for the global market has ramifications for the structure of theorganization and other McKinsey 7S elements as discussed in the following paragraph.The McKinsey 7S model is a strategic planning framework used to evaluate the internalenvironment of a business by taking into account the harmonization of interconnected andinterdependent 7S elements:structure; strategy; systems; style; staff; skills; and shared valuesHard ElementsStructureThis demonstrates how the organization is structured, for example, by divisions and strategicbusiness units (SBUs), which show the flow of information, control time and command chainin the organization.It indicates who controls who, who reports to whom, who is responsiblefor the decisions and acts of a particular group, etc.This is indicated in organizationdocuments by an organizational chart.The structure of the organization is defined by its ageand dimension, its operating technology, the organizational culture, its environment's
volatility and dynamism, its employees' skills and the external control faced by theorganization.A business serving a global market, for example, has a high level of structuralspecialization as it needs to implement systematic and complicated methods across the valuechain.That is the reason why most businesses have a structure for a division in which acertain geographic area is responsible.Such areas may include: Europe, Africa, NorthernAmerica, Middle East, etc. However others use a mixture of division structure and matrixstructure to serve the high demands of consumers as the environment changes.That meansthat the organization may strive to flatten its structure or take on a horizontal structure so asnot to have a highly bureaucratic and rigid hierarchical arrangement.Then an organizationneeds small teams of employees within a divisional structure, who can respond flexibly tochange customer requirements on the local market.The fact is that the structure and systemsof an organization may be either a source of competitive advantage or a competitivedisadvantage. The organization cannot benefit competitively from the structure alone. Thethree hard elements must be aligned with soft elements and must be adequate systems andstrategySystemsThis refers to the processes and methods used in generating value for customers byemployees of an organization. This means that systems transform the inputs of anorganization into outputs.This includes making daily decisions and choices in order toachieve goals in accordance with the plan of the organization which includes executingstrategy. This requires division of work into multiple tasks for a business which operates on aglobal market: division of employment enables people to work best.Likewise, a globalmarket forces the business to reach a certain level of decentralization in which customers inthe local markets are made closest decisions and choices.In order to retain some level ofcontrol, some departments, for example, have to remain in the headquarters to directdecisions on all functional and organizational levels.That is why global businesses havestructured hierarchical networks of communication to ensure that the Corporate Centermonitors decentralized standards and costs.StrategyThis applies to the organization's overall direction and action plan aiming to gain long-termcompetitive advantage.This is focused on vision, mission and long-term objectives of theorganization in order to effectively compete on the global market.By extending the market
for existing products using similar marketing activities, a business can decide to raise its salesby a certain target percentage.This is the strategy that must be followed by operational unitsto improve sales.Another business will seek to increase sales through the selling ofestablished products to a wider market but using local customized marketing activities.Thestructure and the systems of a specific business depends on these two different strategies.Soft ElementsStyleThis refers to the leadership style of the top management of the organization. This involveshow managers decide and make choices (their behavior) in their workplace.A global marketcan involve a balance between participatory and authoritarian leadership, as both providingemployees with an opportunity to innovate and maintain control of the organization'sstrategic direction are required.Therefore global businesses tend to emphasize well-definedpriorities that originate from the overarching vision and mission (strategically) and arecommunicated downwards to direct the execution on functional and operational levels.Thisincludes specific formal guidance for consistent strategy execution from the managementhierarchy.StaffThis is about how many employees are hired by an organization and how they are trained,rewarded, etc.A global business requires employees who know and target the diversity of itsglobal market.For example, this diversity dictates that the organization should utilize adecentralized divisional structure in an appropriate structure.The adopted structure definesthe number of employees needed to support the global market.For example, the number ofemployees in corporate center can be decreased whereas customers in local markets can becompletely satisfied and served in divisions.The corporate center can continue to work withstrategists and customer service while decentralizing other functions such as financing andoperation.SkillsThis describes what the employees in the organization will do the competences of theorganization.In order to satisfy the diverse customer needs, tastes, desires and cultures, aglobal market would need employees with diverse competencies.Although culturalconvergence continues to take place standardizing products and processes cannot be
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