Managing Global Business Challenges

This assignment delves into the complexities of managing businesses in a rapidly evolving global landscape. It explores how technological advancements and globalization reshape the market, demanding adaptable strategies from managers. Key themes include analyzing the dynamic business environment, understanding informal institutions, addressing cross-cultural communication challenges, and employing risk management and scenario planning techniques for success.

RUNNING HEAD: Global Business
Global Business

Global Business 1
Contents
Introduction......................................................................................................................................2
Globalization and Internationalization............................................................................................2
Global Business Environment.........................................................................................................2
Institutional based view...............................................................................................................2
Formal Institution.....................................................................................................................3
Informal Institution...................................................................................................................3
Resources based view..................................................................................................................3
Skills.........................................................................................................................................3
Capabilities...............................................................................................................................3
Challenges faced by Managers........................................................................................................3
Conclusion.......................................................................................................................................4
References........................................................................................................................................5

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Introduction
Globalization of market is concerned about meeting the preferences of the buyers in the markets
all over the world. This helps the organizations in reducing the marketing costs involved along
with creating new market opportunities.
Technology is the most influential force that pushes the world towards converging commonality.
It is used by the consumers to gather information and making purchases from different parts of
the world and used by the companies to obtain raw materials and products from different places
and to sell the finished products abroad (Pearson, 2017).
This report focuses on the fact that the success and failure of the firms is enabled or constrained
by the institutions (formal and informal) which can often be referred to as the rules of the game.
Also, this report focuses on the ways which will enable the managers to solve the problems faced
by them.
Globalization and Internationalization
Globalization is a process with the help of which the cross border economic, socio-culture and
political relations are established and maintained and the geographic distance becomes the matter
of least importance. The term internationalization appears to be identical with globalization but
there is difference between the two. Internationalization relates to increasing importance of
international relations, trade, treaties and alliances, etc.
Technology has contributed to a lot of extent in today’s era to support the process of
globalization by providing ease by the way of e-commerce, promoting cultural globalization
through television and telephone and facilitating 24/7 trading by supporting the financial sector.
Globalization has resulted into the integration of internationalization of markets and businesses
and has altogether changed the manner in which the modern organization perform their business
activities. The goods, services and technology are shared across the boundaries which not only
benefit the organizations but also the countries by enabling them to establish international
relations with different countries.

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Global Business Environment
Global business environment is the environment in different autonomous nations outside the
home environment of the organization which influences the decision making process of such
organization in relation to the use of resources (Hamilton & Webster, 2015).
Institutional based view
Firms achieves success or faces the failure as the result of opportunities and threats present in the
business environment. It is often referred to as the rules of the game which means that the
success and failure are enabled or constrained by the institutions i.e. formal and informal.
Formal Institution
Formal institution can be defined as the institution represented by laws, regulations and rules
enforced by the home and host country (Garrido, Gomez, Maicas, et. al., 2014. In simple words,
formal institution consists of the entire political system governing the nation which can be either
democracy or totalitarianism also known as dictatorship. Various practices are covered under the
applicable laws such as common law, civil law, theocratic law, etc. which govern their
functioning under the legal system.
Informal Institution
Informal institution can be defined the institution represented by ethics, cultures and norms
(Peng, Wang & Jiang, 2008). It involves the way of doing things and the choice between what is
right and what is wrong among the alternatives available. It also involves the values and beliefs
that guide the behavior of individual and firms.
Resources based view
The success of a firm is also dependent upon its own strengths and capabilities to deal with the
external environment. A resource-based view basically focuses on the internal resources and
capabilities of the firm. It is an approach used to achieve competitive advantage by developing
their internal factors to deal with the external environment. It has a strong relationship with the
performance of the firm in terms of achieving the competitive advantage.

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Skills
The existing resources are used in a new way to exploit the external opportunities by acquiring
new skills for each different opportunity (Jurevicius, 2013). Moreover, skills also involve the
talent, knowledge and experience possessed by employees, managers and other members of the
organization which cannot be replicated by other organizations in the global business
environment (Enriquez-De-La-O, 2015). Management skills possessed by the top management
which is responsible for controlling the entire organization acts as a key to success if done with
full expertise.
Capabilities
The resources possessed by an organization consists the part of its distinctive capabilities which
provides the ability and strength to compete with other organizations in the marketplace
(Management Study Guide, 2017). The internal resources and capabilities provides the ability to
meet the preferences of the customers with latest technology, flourishing ideas to maintain
competitive advantage over others and to deal with the unstable environment by adopting secure
bases for formulating strategy.(MBA Tutorials, 2017). Capabilities also involves the ability to
adapt and change the internal and external resources of the organization in accordance with the
changing global business environment.
Challenges faced by Managers
Entering the global market involves a high amount of risk which must be identified and assessed
on time by the managers in order to prepare themselves against the impact of high-risk and
unfortunate events. Ethnocentrism is one of the important challenge faced by the managers
during the course of communication to different cultures which could even lead to heavy
financial losses in the long run (Parker Buzz, 2017).
Another challenge involves the inflexibility and inability to adopt the practices of different
culture in order to meet the preferences and expectations of the consumers of foreign countries.
The managers are challenged with the various constraints led down by the formal and informal
institutions and therefore are required to arrive at a proper decision based on such formal and
informal institutions and then come out with a strategy in order to deal with the situation
(Globerman, 2017). It requires proper research to be made by them with the view to gather

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knowledge and intelligence regarding the trade and investment barriers in the cross border
country such that the nature of government intervention can be identified. Therefore, when a
situation arises where the behavior of the form is governed by both formal and informal
institutions and the formal constraints appear to be unclear then the managers must take help of
the informal constraints in order to reduce the uncertainties and provide a level of constancy in
operations. Also, the managers and the chief executives must take proper steps to undertake
continuous monitoring of the business environment relating to culture, taste, preferences and
technological variations such that appropriate changes can be made in the products on time and
adverse conditions can be prevented.
Conclusion
Rapid globalization of markets along with technological revolution has changed the entire
scenario of the market. Technology has helped the organization to eliminate the inefficiencies
out of their international operations by making the use of innovative production and distribution
techniques in order to boost the competitiveness in the global business environment. The
challenges faced by the managers must addressed with the in-depth business environment
analysis such that variations required to be made can be easily interpreted in advance and does
not cause any discrepancies in the future. It may adopt risk management and scenario planning to
deal with the various risks which may arise in the course of business.

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References
Enriquez-De-La-O, J. F. 2015. Resource-Based View and Dynamic Capabilities Resource-Based
View and Dynamic Capabilities. Retrieved November 25, 2017 from http://unipub.lib.uni-
corvinus.hu/2171/1/VT_2015n11p50.pdf
Garrido, E., Gomez, J., Maicas, J. P. and Orcos, R. 2014. BRQ Business Research Quarterly.
Retrieved November 25, 2017 from
http://www.sciencedirect.com/science/article/pii/S2340943614000024
Globerman, S. 2017. ASSESSING THE GLOBAL BUSINESS ENVIRONMENT. Retrieved
November 25, 2017 from https://cbe.wwu.edu/files/assessingglobalbussenviro.pdf
Hamilton, L. and Webster, P. 2015. The International Business Environment. Oxford University
Press.
Jurevicius, O. 2013. Resource Based View. Retrieved November 25, 2017 from
https://www.strategicmanagementinsight.com/topics/resource-based-view.html
Management Study Guide. 2017. Resource Based View - The VRIN Characteristics. Retrieved
November 25, 2017 from http://www.managementstudyguide.com/resource-based-view.htm
MBA Tutorials. 2017. RBV – RESOURCE BASED VIEW. Retrieved November 25, 2017 from
http://www.mba-tutorials.com/strategy/1174-rbv-resource-based-view.html
Parker Buzz. 2017. CHALLENGES FACED BY MANAGERS DURING CROSS CULTURAL
COMMUNICATION. Retrieved November 25, 2017 from
http://www.parkarbuzz.com/challenges-faced-managers-cross-cultural-communication/
Pearson. 2017. Globalization. Retrieved November 25, 2017 from
http://catalogue.pearsoned.co.uk/assets/hip/gb/hip_gb_pearsonhighered/samplechapter/
0273752634.pdf
Peng, M. W., Wang, D. Y. and Jiang, Y. 2008. An institution-based view of
internationalbusiness strategy: a focus on emerging economies. Journal of International Business
Studies. pp. 1-17.