Unit 18 : Global Business Environment

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2018[Unit 18: Global Business Environment]
Introduction-The globalization can be associated with several challenges like access to superior technologies,increase in competition etc and can threaten any company to have their continuous dominance.With an ever growth sophistication among the competitor, it pose a global threat to any companyacross the world. There are several strategic management approach that can counterfeit thecurrent challenges through public sensitization and awareness among customers to markdifference between the fake and genuine products, making collaboration with the governmentetc. However, there have been several significant opportunities provided by the introduction ofglobalization as well (Donze, 2014, p 171). The market is ever expanding and making a globaleconomy i.e. more stable and lower risk associated with the political interference of any countrythe company is dealing with. The potential of generating profits is always high and the onlything the company need to do is to implement strategies to manage both the threat andopportunities as swiftly as they can. Siemens is one of the multinational giant that operates inalmost 190 countries across the globe. The scope of the company is to deal with electronicproducts and services. The company is highly reputed and considered to have one of the largestamong the tally of employee i.e. 400,000 people. There are six major divisions where thecompany operates i.e. Energy, Equity, Healthcare, Industry, IT solutions and Investment. Thecompany made approximate profit of aboutof€5.67 Billion. It can be considered as one of theoutstanding achievement in this growing competition in the market with some major player stillcompeting. The headquarters of the company is in Germany (Donze, 2015, p 161). The companythese days is dealing with certain strategic issues associated with globalization and threatsassociated with the market existence in the future.The scope of this report is to highlight the
impact of globalization and the key factors association with it impacting the market of Siemens.It will also show the strategic complexities associated with global market presence. Finally, itwill discuss the impact on organization structure, function and decision making strategies ofcompany based on globalization.Key Factors of Globalization driving Siemens market-The globalization can be defined as the market system development where without anyhindrance, the services/products can be taken across the national boundaries. Further, it can alsobe called as the movement of capital, information and associated factors that allow a company tofreely trade across the globe. The globalization concept has been accepted since a long time andit has been an inevitable reality as acknowledged by the people. There hasn’t been any restrictionon the foreign investment and it has increased through formation of legislation and policies thatencourages the flow of money. The product prices are brought down for a reason because thegoods from across the world are supplied to the market that is compensating the demands andsupply ratio. The product and services availability at a low price is improving the quality of lifeand hence dealing the current issue of poverty of several under developing countries. Theglobalization impact in the business environment can be described with the help of PESTELmodel that determines several factors that played a role in the business of Siemens.Political Factor-The most common political factor that is quite relevant with the strategic management of theorganization and their policies towards government regulations on cross border transaction andfree market enterprises. The political systems are moving ahead towards the marketing economyconcept where the business across the globe would be allowed to operate without any unwanted
interference of the government. The countries such as China were having the tight control overthe economy is now making their market liberal for others. The similar move has been taken bythe countries to ensure that their market must remain attractive for the foreign investors. Themost common threat within the political factors is the nationalization risk and the threats politicalbodies feel when the importance of foreign investment is not realized.Economic Factors-The world economy integration has been so influenced that even if a crisis happen in onecountry, the whole world will start feeling the effect. It can be declared as one of the negativeaspect of globalization. One of the best example that can be cited is the recent economy crisis inUSA that ended up in paralyzing the entire world economy. The globalization has alsointroduced the concept of increased competition across the world as most of the business nowlooks for invading the foreign market and challenging the existing best. Siemens has alwaysdominated the market of mobile phones in Germany and several other European countries asthey were able to market their product without involving much hindrance. When there was aneruption of globalization, the cheaper phones with equivalent quality was introduced in themarket by India and China and it got a big hit among the public who really don’t mind buyingcheaper product with same features. In response, the strategy taken by Siemens was to form analliance in order to deal with the current competition (Berend, 2016). The alliance was quitesuccessful hence helped in achieving the success in the current market. For example, there wasan alliance between Siemens and Nokia that won the bid for providing broadband service to theTaiwanese high speed trains. Another alliance between Nokia and Siemens was to win the bid tosupply optical network to the Chinese company Unicom Ltd. The raw material accessibility andthe cost associated with it was another economic impact of globalization. In order to deal with
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