Global Business Environment: Key Factors, Challenges, and Influences

UNIT 18 - GLOBAL
BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
P1 Key factors of cost, market, environment and competition that drive global commerce and
trade..............................................................................................................................................2
P2 The complexity of strategic challenges faced by organizations when operating in a global
environment.................................................................................................................................3
TASK 2............................................................................................................................................4
P3 The influences of globalization on organizational governance and leadership, structure,
culture and functions....................................................................................................................4
P4 The influences of ethical and sustainable globalization on organizational functions............6
P5 The different ways decision - making can work effectively in a global context....................7
P6 The various routes to internationalization an organization may adopt, including key
barriers.........................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
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INTRODUCTION
Global business environment is related to different country's environment along with
exogenous factors in business environment in which they are currently dealing (Chambers, and
Humble, 2017). The report will explain the global business environment in respect of Tesco
group plc. The Tesco is multinational groceries and general mechanize retailer of Britain. It is
the third largest retain company in World in the industry of retail. The report will lay emphasis
on key factors of market, competition and cost which drives global trade and commerce. The
report will also explain about complexity of strategic challenges faced by company while
operating in global environment along with the factors influence of globalization. The report
will also discuss influences of ethical and sustainable globalization. Different ways decision
making will be elaborated in the report along with the various routes to internationalization.
TASK 1
P1 Key factors of cost, market, environment and competition that drive global commerce and
trade.
Globalisation is an interaction process of integration and interaction among companies,
government and people over worldwide (Kandachar, and Halme, eds., 2017). The drivers of
global trade and commerce is used to describe the factors which is associate with growth of a
particular business. The drivers which mainly affects globalization are : Political factors - The competitive driver is defined by competitive firms action to the
extent in which competitors from different countries enter into the market. The Tesco is
attaining success in global market due to analysing activities of competitors along with
political support of that country by following competition regulations. Also, by making
regular innovation in their products Tesco is able to gain competitive advantage and
captures a huge market share. Economic factors - The globalization of needs of customers and opportunities for
standardization and scale brings fundamental economics in many industries. The
economies of scale and scope exploits difference in cost factor for development of
product and sourcing in different parts over the world. Thus, the barriers for Tesco in
such industry is higher. The competitors within retail industry is increasing and it directly
reflects on scope of competition among independent political region, nation and market.
This is the major drive for Tesco in globalization.
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 Socio cultural factors - The market driver of globalization reflects customer purchasing
behaviour and patterns which includes needs of customers, worldwide channel of
distribution, marketing platforms, retail environmental of country, etc (Wach, 2015). For
Tesco, it plays as the biggest driver to enter in global market by analysing market to enter
and also analyse the need of customers within it. Tesco is able to analyse the
consumption pattern of customer and launch the most homogeneous product needed by
them to attain global success.
 Technological factors - The driver of globalization is acting as a key driver for Tesco.
The digital technology plays an effective role in attaining success for the company Tesco
as they get all the information related to change in environment of other country. This
helps the company in executing quick decision - making. The Tesco by the environment
of country it prevails launches their products. The suitable groceries which is matching
with the environmental condition of that country is chosen by Tesco. This helps the
company to manage environmental factors and socio cultural factors according to the
country norms in which it prevails while operating their business in global market.
P2 The complexity of strategic challenges faced by organizations when operating in a global
environment.
The common challenges face by Tesco group plc while operating in global environment are : Foreign laws and regulations - The local laws and regulations and their implications is
different from every country to country. Along with it the labour and employment
requirement is different from developed country to underdeveloped country. Thus, the
laws plays as the biggest challenge for Tesco when operating in global market. Universal payment method - The payment mode of e-commerce website provide ease to
company when selling their goods overseas. Tesco is also operating their business online
and follows online payment method (Chimni, 2017). But the risk of fluctuation in
currency is very high for companies who trade overseas. This barrier enables risk in
trading for the company Tesco. International accounting - The accounting function of multinational organization is very
challenging as the tax rates, treaties between countries vary from one country to another.
For the company Like Tesco who is operated in many other countries need to manage
multiple tax policies, rates and system.
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