The Impact of Globalization on Business

This assignment provides a comprehensive overview of the impact of globalization on business. It explores the role of international organizations such as the IMF and World Bank in promoting globalization and limiting protectionism. The assignment also delves into the effects of monopolistic competition and optimum product diversity under firm heterogeneity, as well as the UK's trade and FDI policies post-Brexit. Additionally, it discusses monetary and fiscal policy design at the zero lower bound, the impact of food standards on international trade, and the importance of stakeholder theory in business decision-making.

Understanding
The
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Introduction about Starbucks Corporation.......................................................................................1
TASK ONE......................................................................................................................................3
Importance of stakeholders to organisation and stakeholder theory......................................3
TASK TWO.....................................................................................................................................7
National economic system and its advantages and disadvantages.........................................7
TASK THREE.................................................................................................................................8
Role of IMF and World Bank for promoting globalisation an limiting protectionism..........8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business Environment refers to sum of internal and external elements or factors that leads
to bring influences on the business organisation. In order to conduct the present report Starbucks
Corporation is chosen which is a premier roaster, retailer and marketer of speciality coffee
around the worldwide. It offers wide range of food products and beverages to its customers
including tea, coffee, smoothies, baked food products, sandwiches, low-calorie and sugar free
beverages and many more. The report includes explaination about legal structure and market
structure of company in which it operates. Stakeholder theory is also explained in detail and
power/interest matrix are used for assessing the importance of stakeholders. National economic
systems in which organisation operates is discussed further and also their advantages and
disadvantages. Further in the report investigation of role of IMF and World Bank is done to
identify if they promote globalisation and help for limiting protectionism across the world.
MAIN BODY
Introduction about Starbucks Corporation
Starbucks Corporation is an American company that deals in coffee and operates coffee-
house chain business. The company was founded in the year 1971 in Seattle, Washington. The
founder of the company are Zev Siegal, Jerry Baldwin and Gordon Bowker (Thisse and
Ushchev, 2018). Starbucks operates in retail coffee and snacks industry and it focuses on
marketing its product mix with other brands as well within company's portfolio such as Tazo,
Teavana, Seattle's Best Coffee, Starbucks Refreshers, Starbucks VIA, La Boulange, Evolution
Fresh and Verismo. The various locations of Starbucks offers wide range of products such as hot
and cold drinks, micro-ground instant coffee, cafe latte, espresso, whole-bean coffee, full and
loose-leaf teas, evolution fresh juices, La Boulange pastries, Frappuccino beverages, and also
snacks items such as crackers and chips.
The Starbucks operates approx 30000 locations around the world and provides
employment to approx 291000 employees. The Starbucks company operates their business
operations and activities in four different segments such as Europe Middle East, America,
China/Asia Pacific and Africa. Starbucks also licenses its Intellectual property Rights such as
trademarks through the grocery, food service accounts and licensed stores. Its vision and mission
statement represent about company's focus and emphasis on the leadership within the coffee
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industry and also in coffee house-markets. The mission statement of Starbucks is to nurture and
inspire the human spirit or focuses on the business's philosophical purpose (Starbucks Coffee’s
Mission Statement & Vision Statement (An Analysis), 2019). The vision statement of Starbucks
focuses on being leader in the operating industry.
The legal structure of Starbucks is Public Limited Company that operates as a subsidiary
of Starbucks Coffee Holdings Limited. A public limited company can be owned and traded by
public and it requires seven or more people for the set up whereas, a private limited company
requires two or more people for the formation and set up. The transfer of share and public
subscription for public limited company is free and allowed and it is restricted and not allowed
for a private limited company. Scope of public limited company is very vast as owners are
allowed to raise business capital from general public and needs to abide to legal restrictions as
well. Whereas, in case of private limited company, scope is limited as the company is limited up-
to less number of person but they enjoy low legal restrictions (Shannon, 2018). The primary
advantage and benefits that public limited company gains is it can tap easily into new markets by
offering and selling more shares to the public and its liability is also limited.
Starbucks operates its business activities in the monopolistic market structure. As there
are many other producers and consumers available in the coffee industry who offers almost same
kind of products and services but companies focus on differentiating their products from the
competitors. The features of monopolist market can be described as organisation offering same
product as competitors does but they are not perfect substitute to the same customers. The
company may aim at differentiating themselves on the basis of product differences or marketing
differences or branding differences or through distribution channels. In this kind of market
structure, no business have the full control over the market prices but only some control is
present. Entry and exit barriers in monopolistic markets are very low as there are many business
organisations operating in such structure (Ramey, 2019). Starbucks can make independent
decision regarding the output and price which is generally based on the products, markets and
also on cost of production. The one more feature of monopolistic market structure is that
organisation within such markets needs to effectively engage in the advertising as they are in
fierce and intense competition with the other organisations offering similar products. The
monopolistic competition is considered as a form of imperfect competition.
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The monopolistic market structure can effectively influence the behaviour of business
organisation in terms of seeking out competitive advantage. Starbucks can easily enter and take
exit from the foreign or local markets as there are less restriction on the same. Starbucks focus on
effectively differentiating their products from the other competitors of the market and which
helps in gaining competitive advantage. The monopolistic competition requires firms to adopt to
effective advertising and promotional campaigns in order to differentiating the products which
also helps business for gaining competitive advantage (Medin, 2019). Various channels of
communication and distribution are used by Starbucks in order to gain competitive advantage
and gain positive outcomes in form of increasing sales and profitability. The company's
behaviour gets influenced in such market structure as it forces firms for investing in research and
development in order to produce improved and better quality products at lower prices. The
Starbucks thus focuses on bringing innovation and creation in the product mix which helps
company to survive in monopolistic competition and gain competitive advantage.
TASK ONE
Importance of stakeholders to organisation and stakeholder theory
Stakeholders are the member of organisation and without the support of various
stakeholders company would cease to exist.
Stakeholder Theory
This theory was described by Edward Freeman and it looks in detail at the relationship
between the business organisation and others who are in the internal and external environment of
business (Stakeholder Theory, 2019). The theory focus on identifying how such connections
brings influences on the business activities and operations. This theory suggests that business
organisation needs to focus on developing particular stakeholder competencies, such as:
 Monitoring interest of stakeholders (Hommes, Massaro and Salle, 2019).
 Formulating strategies for dealing effectively with stakeholder and related concerns
 Categorising stake-holder's interest into manageable segments
 Ensuring that functions of organisation meets stake-holder's needs.
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Stakeholder theory explains and puts emphasis on that business can gain positive results
and be successful by delivering value to majority of stakeholders. The different types of
stakeholders of Starbucks or any other organisation includes:
 Employees,
 Suppliers,
 Customers,
 Investors,
 Local Community,
 Environment,
 Government and regulatory bodies.
Both the internal and external stakeholders play an important role in the working of
organisation. Internal stakeholders are provided with operational role and responsibility in the
Starbucks. External stakeholders are the ones who are not considered as member of organisation
but can affect the operations and activities of Starbucks business. Connected stakeholders are the
ones who have a contractual and/or connected relationship with the Starbucks. The connected
stakeholders can be generally referred as the external stakeholder who have a direct connection
or link with the organisation. Starbucks aims at implementing stakeholder analysis tool for
prioritizing the stakeholders effectively. The power and interest matrix can be used for analysing
the participation and prioritization of stakeholders. This matrix contains four quadrants such as
high power/high interest, low power/high interest, low power/low interest and high power/low
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Illustration 1: Stakeholder theory
Source: (Stakeholder Theory, 2019.)

interest. These quadrants provides the indication for stakeholder management level which
organisation needs to employ and it may also lead to bring influence on the communication style
(Power Interest Grid, 2019).
Illustration 2: Stakeholder Analysis
Source: (Stakeholder Analysis, 2019)
High Power/High Interest: Stakeholders who fits into this quadrant needs to be focused
on and also engage them fully. Adequate time and attention needs to be provided to stakeholders
of this quadrant. Superior or boss generally fits into this as they have high power and interest in
the organisation, thus, need to be satisfied effectively (Feenstra, 2018). For example, labour
unions, suppliers, creditors and stockholders.
High Power/Low Interest: The stakeholder in this quadrant requires time and attention
form organisation. Starbucks needs to focus on providing enough data or information to such
stakeholders that have high power to influence the business activities. For example, government
and regulatory bodies.
Low Power/High Interest: Starbucks needs to focus on informing stakeholders present
in this quadrant and also involve them in business projects. People having high interest in the
business need not to be ignored. In order to effectively satisfy the interest of stakeholders of this
group, enough information needs to be provided. For example, customers, employees and media.
Low Power/Low Interest: Organisation is least concerned with stakeholders in this
quadrant. But,. Starbucks need not to ignore such stakeholders completely. Monitoring is the best
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approach that Starbucks can implement and engage them whenever required. For example, social
organisations.
Potential areas of conflict in the organisation and ways to resolve
There are various areas in the workplace where conflicts may happen, thus, organisation
needs to focus on effectively dealing with it (Eriksen, 2018). Following are given some of the
potential areas of conflict and ways for resolving them in effective manner.
Interdependence conflicts: Such conflicts happens when person relies on output, input or co-
operation of some other person for getting their job done. For example, within the Starbucks,
sales person inputs the monthly sales figures very late that makes accountant to get late for
completing her reports as well.
Starbucks can resolve such conflicts by ensuring that employees have good with
delegation skills and also well trained for effectively have the challenging conversations.
Employees who are late with their input such as sales person can have bonus reduction.
Difference in styles: Conflicts may occur when persons have different preferances for managing
and doing things. For example, one of the leader of Starbucks is task-oriented and focus on
quickly doing the things and whereas, other leader is people-oriented and is concerned about
employees have a say for how to get the work done.
Starbucks can effectively resolve such type of conflicts by providing training to people
for understanding and successfully navigating the way of managing and things done.
Gender/ background differences: One of the area of conflict arises because employees of the
organisations have differences in background, education, age, gender, personal experiences,
political preferences and ethnic heritage.
Such conflicts can be resolved by guiding and educating employees about valuing gender
diversity and avoiding discrimination (Dhingra and et.al., 2018). Starbucks also needs to
implement various discrimination laws and regulations within the workplace.
Leadership style differences: People have different ways for leading and managing their team
members. For example, one of the leader have inclusive and open style whilst other focus on
being more directive.
Starbucks can effectively resolve such conflicts by putting together a set of values and
principles which needs to be used by leaders for providing consistency in how decisions can be
made and how to engage people in business.
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Personality clashes: This is considered as the biggest cause of workplace conflict. Such
conflicts are often ignited by perception and emotion about someone else's character and
motives. For example, team leader jumps on employee for being late as he views team member
as being lazy and also disrespectful.
Starbucks can effectively resolve such personality clashes and conflicts by encouraging
co-operative communication and guiding people to respect the differences and controlling the
emotions.
TASK TWO
National economic system and its advantages and disadvantages
The way through which various scarce resources are distributed within the nation or
economy helps in determining the type of economic system (Dhingra and Morrow, 2019).
Market economy, traditional economy, command economy and mixed economy are four types of
economic system. UK have an advanced capitalist economy which is very open. UK is
considered as the western style democratic country that operates under free market economic
system. Under this economic system, organisations can act in self-interest for determining how
resources can get allocated and what products can be produced. In the free market economy,
government does not put much intervention. Government just focuses on regulating fair trade
policies, government programs, honest business, monopolies, etc. There is separation of markets
and government in such kind of economy systems. And this separation helps in preventing
government to become too powerful and keeping their interest aligned with the markets.
Advantages of free market economic system:
 There are lots of incentives available for entrepreneurs and businesses focus on producing
profitable products and services.
 For example, factors of production can be used in most effective and efficient way as
intense competitive businesses are present.
 Organisations generally invest much in research and development programs. Constant
innovative companies gets incentive as they compete for providing better and quality
products to customers (Campolmi, Fadinger and Forlati, 2018).
Disadvantages of free market economic system:
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 For example, fierce competition is present in the free market economic system in which
organisations does not care about disable or elders and it leads to higher income
inequality.
 Free market economic system us driven by self-interest solely, thus, economic needs are
prioritized over human and social needs. Such as providing health and care services for
the poor. Monopolies can also exploit the customers.
Macroeconomic Objectives by the Government:
Macroeconomic policies are sued for appraising the economies performance level. The
objectives of macroeconomic implemented by government includes: full employment, economic
growth, price stability,income equality, equilibrium in balance of payment, supply side policy,
changes in interest rates and taxation. These macroeconomic objectives can lead to bring great
impacts on the Starbucks on its micro level.
For example, fiscal policy implemented by government aims at effectively managing the
economy as it has the ability for affecting Gross Domestic Product or total amount of output
produced. Free market economic system such as UK' Fiscal policy involves bringing changes in
the taxation level or influencing the economic growth rate (Macroeconomic Factors that Move
the Markets, 2019). Fiscal expansion leads to bring impact on the micro level of Starbucks in
form of raised demand for product and services. Thus, greater demand for products and services
leads to increase the output and prices as well. The fiscal policy such as lowering tax will lead to
increase the business investment spending as well.
TASK THREE
Role of IMF and World Bank for promoting globalisation an limiting protectionism
According to Beck (2018) World Bank and IMF plays an essential role for making the
globalisation term work better and it were created for restoring and sustaining the benefits of
global integration. This aims at promoting economic and international co-operation. IMF focuses
on seeing the stability of monetary system of world. And World Bank aims at reducing the
poverty through providing assistance to low-income and middle-income nations.
Medin (2019) describes that Protectionism refers to the economic policy that restricts
imports from other nations through various methods such as import quotas, tariffs on imported
products and through various other regulations. Globalisation refers to a process that increases
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international labour division and also accompanying the integration of various national
economies through trading goods and services, financial flows and cross-border
business/corporate investments. Limiting protectionism and promoting globalisation involves
free exchange of ideas and thoughts, easy trade for products and services, high mobility of
people, cross-border investments, international flow of money, etc.
According to Shannon (2018) The protectionism are focused on increasing the tariff
barriers and have economy wide consequences on customers, business organisations, trade flows,
investment and government. International Monetary Fund (IMF) works for ensuring about the
stability of financial system and international monetary system. The mandate's of IMF involves
facilitation of expansion and balanced growth of the international trades, it also promotes
exchange stability and focus on providing opportunities for the correction in nation's balance of
payments related problems. IMF and World bank plays a great and huge role in globalisation as
when developing nations fails to repay the loans, rich nations with the help of IMF purchases
industries from that country. This way, globalisation and national trade happens because of IMF
and WTO. World Bank work towards economic and social development of developing nations. It
aims at providing funds, technical help for education, infrastructure, health and irrigation
projects.
Eriksen (2018) describes that World Bank and IMF states policies and procedures that
helps in reducing trade barriers and promotes globalisation. The stated policies are very effective
and helps in limiting protectionism and also promotes global trades and globalisation. IMF and
World Bank aims at collaborating regularly at many levels so that they can effectively assist
member nations to work together on several projects or initiatives. The various policies and
procedures developed and implemented by World Bank and IMF leads to bring affects and
influences on the organisation of member nations as well. Starbucks gets influenced because of
such procedures and policies in form it can get easy access to enter into new markets as trade
barriers are reduced, it can also increase the cross-border investment and increase the market
share.
CONCLUSION
Business aims at effectively identifying various influencing factors in order to effectively
maintain the business operations and activities. As from this discussion done above, it can be
concluded that there are many elements and aspects that distinguish between private and public
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limited company. The bushiness within monopolistic market focuses on differentiating their
products which helps in creating choice, diversity and utility for customers. Stakeholders have
the potential to affect the organisation's actions, policies and objectives. Stakeholder theory holds
the core idea that business organisations focusing on managing effective relationship with
various stakeholders can survive longer and they can also perform better as compared with the
organisation that don't. Organisations makes use of the interest power matrix for finding out the
importance of stakeholders and ways to dealing with them. There are different types of economic
systems under which country operates and its brings both advantages and disadvantages.
Macroeconomic objectives of government leads to brings much influences on the working of
business. IMF and World Bank plays important role in the promotion of globalisation and
limiting the protectionism.
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REFERENCES
Books and Journals
Beck, U., 2018. What is globalization?. John Wiley & Sons.
Campolmi, A., Fadinger, H. and Forlati, C., 2018. Trade and domestic policies in models with
monopolistic competition.
Dhingra, S. and Morrow, J., 2019. Monopolistic competition and optimum product diversity
under firm heterogeneity. Journal of Political Economy. 127(1). pp.196-232.
Dhingra, S. and et.al., 2018. UK trade and FDI: A post‐Brexit perspective. Papers in Regional
Science. 97(1). pp.9-24.
Eriksen, T.H., 2018. Globalization. In Handbook of Political Anthropology. Edward Elgar
Publishing.
Feenstra, R.C., 2018. Alternative sources of the gains from international trade: variety, creative
destruction, and markups. Journal of Economic Perspectives. 32(2). pp.25-46.
Hommes, C., Massaro, D. and Salle, I., 2019. Monetary and Fiscal Policy Design at the Zero
Lower Bound: Evidence from the Lab. Economic Inquiry. 57(2). pp.1120-1140.
Medin, H., 2019. Trade barriers or trade facilitators? The heterogeneous impact of food
standards in international trade. The World Economy. 42(4). pp.1057-1076.
Ramey, V., 2019. Fiscal Policy: Tax and Spending Multipliers in the United States. Evolution or
Revolution?: Rethinking Macroeconomic Policy after the Great Recession. p.121.
Shannon, T.R., 2018. An introduction to the world-system perspective. Routledge.
Thisse, J.F. and Ushchev, P., 2018. Monopolistic competition without apology. Handbook of
Game Theory and Industrial Organization, Volume I. 1. p.93.
Online
Macroeconomic Factors that Move the Markets. 2019. [Online]. Available through:
<https://www.easymarkets.com/int/learn-centre/understanding-analysis/macroeconomic-
factors-that-move-the-markets/>
Power Interest Grid. 2019. [Online]. Available through: <http://www.free-management-
ebooks.com/news/power-interest-grid/>
Stakeholder Theory. 2019. [Online]. Available through:
<https://www.stakeholdermap.com/stakeholder-theory.html?
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utm_source=link&utm_medium=share&utm_campaign=The_Stakeholder_Theory_view
_of_the_Firm.png#firm>
Starbucks Coffee’s Mission Statement & Vision Statement (An Analysis). 2019. [Online].
Available through: <http://panmore.com/starbucks-coffee-vision-statement-mission-
statement>
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