Trends in Global Business Environment

This article discusses the trends in the global business environment and the impact of globalization on business development. It explores the challenges faced by companies in a changing world and provides strategies for competition. The authors analyze the growth of international trade, the decline in foreign direct investment, and the need for companies to prioritize markets based on cultural, political, economic, and geographic distances. The article also highlights the importance of engaging with society and the role of CEOs in navigating competing national interests.

Running Head: TRENDS IN GLOBAL BUSINESS ENVIRONMENT
Trends in global business environment
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Table of Contents
Reference: Ghemawat, P. and Altman, S.A., 2016. Emerging Economies: Differences and
Distances 1. AIB Insights, 16(4), p.7...............................................................................................3
1. Introduction..................................................................................................................................3
2. Discussion....................................................................................................................................3
3. Conclusion...................................................................................................................................8
Reference List..................................................................................................................................9

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Reference: Ghemawat, P. and Altman, S.A., 2016. Emerging Economies: Differences and
Distances 1. AIB Insights, 16(4), p.7.
1. Introduction
Since the Brexit as well as Trump shocks in the year 2016, the article by Ghemawat and
Altman highlights that Globalization has taken the shape of a tussle between economic
fundamentals as well as policy threats. However, the article predicts that globalization might
collapse under the threat of economic nationalism is a prediction that has no further accuracy
compared to the proclamations of the “flat world” which was perceived to be dominating the
world business even 10 years ago. In this context, the perception of Philip Bastian as well as
arguments of the authors in this article can be specified. They are all of the opinion that the year
2017 was the last real year of globalization. Altman observes in the article that with the advent of
the year 2018, new obstacles to globalization emerged. There were impositions of tariff tiffs to
the blocked acquisitions which accounted in the end to the shift in the playing field of
international business heads, rather than the end to the massive competition in global business.
Hence, both the authors raise a query, questioning how the business development executives
would be able to develop their business, amidst such turbulent conditions.
2. Discussion
The basic argument against the question that have been delivered in the article is that
smart decisions that bring about change in business and their outcome depend on the level o
accuracy of the perception with which the executives judge the business environment. That is
why, Ghemawat advises that executives should start their business analysis with a clear
perception of how the globalization measures have been trending.

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In the year 2017, massive growth across major parts of the world, propelled the Global
Index of Connectedness to a massive height. Significant increment was observed in terms of
trade, information, flows of people across the borders as well as capital (Eriksen 2018). Since
2007, it was the year of 2017 that showed such significant growth as far as the growth in these
aspects is considered. The following image exhibits the growth of global connected in the years
2016 and 2017 since the year 2001. The greatest growth, as depicted by the authors in the chosen
article has taken place in terms of flow of business data across territories, among all the aspects
highlighted in the above lines.
Figure 1: Depth of Global Connectedness relative with the stats of the year 2001
(Source: Bozyk 2019)
In the year 2018, the factors like the policy threats, as the authors analyzed, started to
develop from rhetoric in to a reality. The rate of tariff increase initiated from the global incidents

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like disputes of America with the largest of their trading partners. Ghemawat argues that the tit
for tat policy that the major trading partners like China undertook against America, accounted for
the tariff increases at such a high rate. Meanwhile, the major trading countries, as Ghemawat
argued in the article, constricted the procedures of taking over foreign corporate, advanced
policies of data localizations as well as clamped down processes related to immigration
(Ghemawat 2017). However, it is evident that in spite of the unavailability of the complete data
of 2018, the arguments presented in the article proves that recent developments have started to
impact the flow of international business. It is true that growth of international trade did not stop.
Rather new avenues of international trade did emerge, however the pace of establishment of the
channels of business communication slowed down considerably. Ghemawat observed in this
context that the flow of Foreign Direct Investment also declined. The finesse of the development
of the article lies in the fact that the specific statistical analysis like these have been done so
precisely that the establishment of the conclusions seem much straightforward and difficult to
counter.
In relation to the topic discussed in the article by Ghemawat and Altman, Horner et al. (2017),
speaks that with the strong momentum of globalization running up against the most powerful
headwinds, it is very important that the business leaders of the major transnational corporations
recognize the fact that in terms of absoluteness, it is very essential to recognize the fact that
market integration is very much limited. According to the primary research statistic provided by
Ghemawat and Altman in the article, the foreign operations of the transnational organization
account for only nine percent of their global business output. On top of that, the researchers also
indicate that export of goods as well as services account for 29% of whole global business output
(Hannula 2018). However, producing more accurate business statistics, Ghemawat shows that

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the actual percentage comes down to 20% if the output which is crossing the borders more than
once is adjusted. The researchers indicate that if any reader is surprised to read such statistics,
they should be informed that they work in a good organization. The managers whom the authors
have surveyed across the countries, estimated these statistics for international production and the
trade metrics have been calculated at 37% as well as 41% respectively.
Strategies for competition
Chen (2018), supports the view of the authors of this article, in statement of the fact that
in case if threats to globalization keep on mounting, the companies which has marginal
competitive positions, will particularly stand out to be vulnerable. As stated by Warren Buffet:
“you only learn who has been swimming naked when the tide goes out.”
As the policy environment tends to shift, the companies need to bereave themselves of the
temptation of responding to every short run development. However, Ghemawat and Altman
(2016), states in sharp contrast that the companies should start thinking whether their
organizations do have the proficient long term path to acquire sufficient advantages over their
competitors in order to remain afloat in the game. If it is not so, it is evident that the vulnerable
companies have to suffer a strategic retreat.
Analyzing the specifications of the article, it can be highlighted that the organizations which do
not have considerable competitive edge needs to consider the most feasible strategy that they
need to consider in terms of overcome the time tested international strategies (mainly in terms of
leveraging the scalable assets across the international borders), arbitrage like exploiting the
differences in global workforce or fluctuation in the labor costs as well as adaptation, for
evidence adjusting to the differences. Aggregation as well as arbitrage directly creates value

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across the countries, so at first the companies should think about the approach undertaken against
those 2 strategies. The researchers analyze that based on the current trends, it can be suggested
that many of the companies need to show tendency towards becoming more judicious in relying
on the arbitrage. The researchers argue in the paper that adaptation can help in extending the
geographic reach of the aggregation as well as arbitrage, however that comes at payment of a
price in context of lost scale economies or reduced access to the foreign inputs (Ghemawat
2018). In case of rise in barriers to globalization, a logical response should be boosting
adaptation by means of localization, however there should be clear limits set out for adaptation
via localization. In case if a company needs to localize in such an extent so that the companies no
longer have the significant advantage over the local rivals, then it might re-consider retreating
from some of the less significant markets.
Such market trends highlight that the companies should be keeping on prioritizing the markets as
an outcome of weighing their opportunities in specific countries against the cultural, political,
economic as well as the geographic distances that exist between them. The new changes in this
context are that the administrative or political distances are alternating faster that they might do
usually. However, Altman states that it is impossible for the companies to differentiate their
operations with a shift in the volatile geographical environment. However he further states that it
can be the most suitable time for investment in the nimbler supply chains for reviewing the
contingency planning as well as so on. On one hand, Ghemawat and Jones (2016), informs that
the tensions in trade relations are already crimping the international growth of many of the firms,
there are some companies and at large some countries that can profit highly under these
circumstances. For evidence, the article informs that the IMF has predicted that there would be

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short run gains for Canada, Mexico, the Euro zone as well as Japan the escalation between USA
and China under specific scenarios .
Strategies to engage with the society in a better way
The backlash facing globalization can also be considered as a backlash against the big
businesses. The data provided by analysis over the Edelman Trust Barometer of 2018, shows
that the general public still have more trust on the businesses rather than the government as well
as the majority of the respondents started to feel that CEO should be taking the leading charge
instead of waiting for the governments government for their imposition (Cassese 2016). For the
companies operating across the political divides like the US multinationals in China, it needs a
leader to walk a tightrope between the competing national interests as well as competing interests
within the countries which exacerbate the challenge.
3. Conclusion
The authors could not predict confidently whether the financial years 2018-19 and 2019-
20 will be bringing about higher or lower levels of globalization. However, it is evident in their
discussion that the international flows as well as the constraints which are imposed by borders as
well as distances up on them will tend to matter for the corporations. Hence, the largest winners
regardless of the up-scaling or down-trotting of globalization are most likely to be the
corporations which embraces the complexity of globalization, rather than absolutely localized or
globalised visions of the business environments where they are operating.

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Reference List
Bozyk, P., 2019. Globalization and the transformation of foreign economic policy. Routledge.
Cassese, S., 2016. Governing the world. In Research Handbook on Global Administrative Law.
Edward Elgar Publishing.
Chen, X., 2018. Globalisation redux: can China’s inside-out strategy catalyse economic
development and integration across its Asian borderlands and beyond?. Cambridge Journal of
Regions, Economy and Society, 11(1), pp.35-58.
Eriksen, T.H., 2018. Globalization. In Handbook of Political Anthropology. Edward Elgar
Publishing.
Ghemawat, P. and Altman, S.A., 2016. Emerging Economies: Differences and Distances 1. AIB
Insights, 16(4), p.7.
Ghemawat, P. and Jones, G.G., 2016. Globalization in historical perspective. The laws of
globalization and business applications, pp.56-81.
Ghemawat, P., 2017. 11 Why managers still need to take account of comparative advantage.
Cloth for Wine?, p.87.
Ghemawat, P., 2018. The New Global Road Map: Enduring Strategies for Turbulent Times.
Harvard Business Press.
Hannula, L., 2018. Graduate employment in the era of globalisation: Challenges, opportunities,
and what finnish tertiary education could learn from the UK.

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Horner, R., Schindler, S., Haberly, D. and Aoyama, Y., 2018. Globalisation, uneven
development and the North–South ‘big switch’. Cambridge Journal of Regions, Economy and
Society, 11(1), pp.17-33.