Analysis of Armani's Global Business Environment and Strategy

This report provides a detailed analysis of the global business environment, focusing on the luxury goods manufacturer Armani. It examines the factors impacting global commerce and trade, including competition, environmental factors, market dynamics, and costs, and how these influence Arm...Read More

Global business
environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. The factors which impact on global commerce and trade ...............................................3
TASK 2............................................................................................................................................4
P2 Challenges faced by firm while globalisation its operation .............................................4
TASK 3............................................................................................................................................5
P3 influence of globalisation on governance and leadership ................................................5
TASK 4............................................................................................................................................8
P5 Evaluate the different ways decision making can work effectively in a global context...8
P6 ways of internationalism for an organisation ...................................................................9
CONCLUTION ............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
Businesses environment is that area of business where organisation operates . It consist
of internal and external factors which are customers, investor, employees and creditors of the
company which help the firm in doing there business. Business have five factor which influence
its working these are legal, political, environmental, technological and social. Firm has to
analyse theses factor closely for achievement of its goals and objectives. If company is operating
in global context than business environment become global business environment. In this report
we will analyse Armani, which is a global brand in manufacturing luxurious goods. Armani was
founded in 1975 by Giorgeo Armani. Company's main products are shoes, watches and cloths. It
have crossed 3 billion mark in revenue collection. This report will focus on global business
environment that how it will impact on business of firm and in which way firm can use it for
there betterment in business.
TASK 1
P1. The factors which impact on global commerce and trade
Globalisation is integration of two or more economy for there mutual benefit by removal
of trade barriers on each other . This can be said as sharing of culture, ideas , goods & services
between two nations for promoting there economy and there business. There are different factor
which arise due to globalisation of economy(Woerkom and Zeijl-Rozema, 2017). These factors
have direct influence on business of firm . The way they impact on business of Armani and how
to deal with that is stated below :
Competition : It refers to that term which is related with competitor of firm who are
selling similar product to firm . This is a uncontrollable thing where firm have no power in there
hand to control it. The major competitor of Armani are Gucci, Kelvin Kelly, Dior and Burberry
and all are large scale competitor. So Armani have to analyse its competitors for gaining
maximum advantage in difficult competitive market.
Environmental factor : These are those factors which have there direct impact on firm
goodwill as well as their profitability. This factor is consist of natural climate, location of
business, etc. Armani is operating in global world where different nation have there different
laws regarding nature for protecting it . Company have to make deep study on these laws to
operate business smoothly by protecting nature.

Market factors : Market is that area where the firm work and sell its products . Market
factors are those factors which are consist of demand, supply, market equilibrium, and product of
firm(Thanetsunthorn and Wuthisatian, 2016). These factor have to closely study by Armani
because study of this will help them in finding what they have to produce and how much. This
will also help them to identify consumer behaviour.
Cost : Cost is that factor which influence the firm product as well as production directly.
In context of Armani, this function work globally as firm have its stores in different nation where
cost of labour and material is different so it have to focus on that market by setting different
price according to need and requirement of customer and these will also help them to control
there cost by using raw material accordingly.
When it is talk about Armani, they have great impact of different factors on there. So firm
have to examine there factors closely by using effective strategy and tools as global business
environment provide different opportunities to this firm and they have to use it accordingly .
Armani is facing a close competition from different firms so it have to make sure that its planing
must be proper which can help firm in counter of competitor move. Armani is dealing in luxury
products which is difficult to sale so firm have to use proper marketing techniques for this by
analysing market factors.
TASK 2
P2 Challenges faced by firm while globalisation its operation
For a company globalisation is opportunities to expand there business in other nation .
But every opportunity is come with some challenges which a firm have to face , these challenges
are same time related to strategic decision of firm where firm have to made some changes in
there strategies ans process of working(Rowell, 2017) . Some of these challenges are discussed
below:
Change in structure: The first issue which a company have to deal is their structure.
These problems includes question like form where will company will operated, where will be
headquarter of company, what will the numberer of company representative, etc. these all
problems related to decision making are arise after globalization of firm. Armani is also passing
from this but for dealing with this they can follow Coco-Cola.

Coco-Cola is a great example in this situation as they adopted single headquarter with
different parts and different manager under separate representative in different nations. Armani
can also use this as there structure for solving this problem(Montenegro, 2017).
Cost difference : This also act as an barrier in global business environment because cost
of production is different in each nation where the company want to explore. Armani is also
operating in many nation where there is huge difference in cost spatially in Asian nations where
labour cost is cheap, Armani is facing tough situations. For this Armani have done some strategic
changes like they have opened there production unit in these country and using their resources
for production which help it in matching there cost with these nations.
Communication and cultural difficulty : Communication also act an barrier in
globalization of company as every nation have there culture and trend which influence company
decision making. Armani is also facing this in there functioning as they are dealing in variety of
products instance clots , watches etc. the preference of these products is vary in different country
which have to be analyse by it. For example Appple solved this problem by recruiting persons
from respective nation where it is opening its business it will decrease chance of
miscommunication and reduce cultural barriers.
Currency rate : This rates are vary by nation to nation depends on there economy's
financial power. This is one of most impacting factor in global business environment as it have
direct impact on firms business . Armani is a global firm which is dealing in many nation with
different currency so it have to deal with this currency fluctuation but it have separate plan for
this by using currency fluctuation account in there working which act as a backup when there is
huge fluctuation in market.
TASK 3
P3 influence of globalisation on governance and leadership
Corporate governance is that function of management which help it in governing the
organization in effective way by using proper structure and functioning in organization it also
mage the top level management with rules and regulation formed by law(Kasemsap, 2016).
Globalisation has direct impact on governance of organisation which is stated below :
 Structure : Structure can be defined as scope of responsibility and power in organization
for helping in smooth functioning. In context of Armani there is autocratic function in

structure where powers are in hands of top level management and they have full control
over firm in there function. In this ideas are not taken from there employees.
 Culture : Culture is the quality, thinking and behaviour of the people in the organisation
which influence working of firm. In Armani there is cooperative culture in organization
this is because there is no cultural difference in organization because they follow a strict
recruitment process in their organization (Kasemsap, 2016).
 Leadership : Leadership is the process of guiding employee of organisation in the
direction of goals and objectives of the organisation. Armani follow participative
leadership style where every individual have equal right to give there suggestion to the
leader(Kasemsap, 2016). This style will help in motivating the individual in there work
which help in increasing performance of organisation
 Governance : Effective governance is also a part of organisation and in Armani have
also focusing on these process by using good policy and plans in there organization. This
will facilitate them in getting there work done in proper manner with full utilization of
resources(Hamilton and Webster, 2018) .
 Functions : Armani's main function is to manufacture there cloths and global business
environment have direct impact on this as they have to manufacture clothes and other
item according to global trend.
Hofstede's Model
This is the framework which is used to identify the culture across different country for
establishing business and reducing the chance of conflicts in organisation. This method is
develop by Greet Hofstede.
1.Collectivism vs. Individualism : Armani have there main focus on using there
employees as a collective team not as a individual unit. Which help them in maximising
there benefits.
2.Uncertainty Avoidance Index: Armani have made there structure that strong where
they can easily deal with difficult situations and future uncertainty(Ferraro and Briody,
2017).

3.Femininity vs. Masculinity : Armani is using more female in there company this is
because it is the social responsibility of the firm and help in maintain positive
environment in there organisation(Bhagra and Sharma, 2018).
4.Short-Term vs. Long-Term Orientation : Armani have there focus on making both
long as well as short term teams in which they achieve there future and present goals
effectively.
5.Restraint vs. Indulgence : This stage of model is is relate to obligation of business to
society. Armani is fulfilling this by providing help to different help Seeking gropes in
Europe.
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions.
Ethical globalisation is that branch globalisation which includes business ethics in its
practice this facilitate sustainable developmental and help in managing organisation ethically.
There are various organisation function which a it have to perform in there working. Some are
stated below: Sales and Marketing : Sales & marketing is one of the essential management function
which is directly connected with the marketing of products. Marketing involves various
promotional factor such as advertising, publicity, events and sponsorship in order to boost
the product of the business organisation. Armani is one of the largest luxurious Italian
company which emphasised on marketing of different products such as clothes, watches
and shoes(Berman, and Dalzell-Payne, 2018). The management team of Armani focuses
on selling products in order to satisfy the need and wants of consumer. This company sale
and distribute their product and services at global level. Administration : The administration function providing computer services, deal with
complaints and also handling mail. In discourse to Armani, the management team focuses
on managing its administration function in an suitable manner. The main purpose of this
company is to satisfy their customer in order to sustain for a long period of time. The
manager of this company manage the business activities and functions in an appropriate
manner for future success and growth of the business organisation.
 Research and Development : It is the function of management in which R&D
department conduct the research and assess the product of competitor. This is very
essential for business organisation to conduct a research towards the competition

prevailing the marketplace. In context of Armani, the R&D Department focuses on
building an effective strategies, plan and policies for achieving competitive advantage
over rival firms. The company providing superior quality products to its customer for
increasing profitability of the company. In assistance of this, the manager focuses on
offering product for retaining customer for a long period of time. Design & production : This function is directly connected with the manufacturing of
product. It involves various factors such as capital, material, labour and energy which is
necessary for the designing and production(Akhtar and Sushil, 2018). Factor of
production may vary from firm to fire. In context of Armani, production factors
including clothing, fabrics and many more. The management team of this company
focuses on providing effective production factor and better design to its customer. Finance functions : The finance function is described as a process related to the need of
fund for operating the business activities and functions. This can be done through issuing
shares and debentures. In addition to this, the requirement of capital is the basic need to
run the particular business. In context of Armani, the management team invest their
money in implementation of latest technology for providing unique and specific products
and services to its customer. This company provides superior quality product to its
customer for increasing profitability of the business organisation.
 Human resources functions : These function is considered as a process in which the
manager of organisation fulfilling the human resource requirement of the company.
Human resource plays a very important role in every organisation for recruiting the
talented employees for future success and development of the company. There is a need
of HR manager in the Armani company. The management team focuses on hiring the best
personnel for the future success and development of the business organisation.
TASK 4
P5 Evaluate the different ways decision making can work effectively in a global context
decision making is the process of taking decision of firm which are related to success of
organisation theses decision are related to every department of the organization this can help firm

in making polices for using there resources in organisation. In this report it will be identify thatv
what are the impact of decision making in global established firm . Form observing this we will
identify how can firm make decision for using its resources . This will facilitate organization in
achieving its objectives effectively and timely which is profitable for the firm.
Identify clear objectives and goal: the first step in sound decision making is to
identify the goals and objective of organisation clearly. Armani is using this function easy as
they have clear goals and objectives of what they are doing and there employee also know
this.
Dynamic Process: It is dynamic process as some tine there may be arise of situation
in where manger have to decide what he have to do in order to increase productivity and
facilitate more productivity in organisation. Armani is using this function in there decision
making process as all decision related to employee or growth are taken by the top level
management which have qualified personality and long experience of organisation.
Fulfilling needs of employees : In this step management is needed to include the
employees of the organisation in decision making process by helping in fulfilling there needs
and responsibility towards organisation as well as for them self. Armani always take decision
in accordance with there employees and help them in coordinator with there needs with
company plans and policy in long run.
Market Trends: Armani maintain this function in there organization by following
market trend.
P6 ways of internationalism for an organisation
Every business wants to grow at both national and international level. Expanding business is
time consuming and needs proper decision making . To access firm business globally there are
different modes of entry which assist enterprises to wider their market area internationally.
Different types of path to internationalisation are :
Franchising- Franchising is the procedure through which firm allows and sell its
products to franchisee to use for specified period of time. This path leads to brand awareness, a
positive relationship and more business opportunities. Franchising assist firm to grow faster and
to gain more market.

Licensing- Another form of path is licensing in which firm allows other entity use its
brand logo,name to do the business. Licensing is used by business to expand at rapid level.
Licensing assist the business to access globally at higher level. Adopting of this procedure will
lead to a strong network connection between market and organisation. Time can be saved by firm
while going with licensing by firm and other core activities can be focused in business.
Joint venture-barriers mode of international business Joint venture term is used when
two or more than two party come together to form a mutual agreement with motive of growing
business internationally. This is the most safest path of accessing business globally because
profit, risk and losses are shared by both the parties. Mostly joint venture is formed for specified
or short period of time. Accessing globally become easy and effective while going with joint
venture.
Acquisition- Path is not only one there are many ways to expand business . So,
acquisition is one of them in which firm acquire the business in another country. Acquisition is
costly process to access internationally. This path is effective when firm is financially stable and
is ready for expansion at international level. Acquisition may leads to conflicts, increase in
rivalry etc.
When accessing business at global level, there are some barriers also which stop firm to
go internationally which are discussed below-
Natural barriers- Natural barriers are those which comprises of taste, language, religion
etc. These factors and variable are important to considered because accessing business
internationally is not enough. For successful business it is crucial for entities to identify the target
market and customers as well as their needs. A decision may affect the business productivity at
deep level.
Tariff and non tariff barriers- These are the barriers which act as block-chain in
process of import and export. Tariff barriers are applied as custom levy/tax on goods and
products under the law of government.
CONCLUTION
Form above mentioned report it can be concluded that global business environment has
various impact on firm in achieving there goals and objectives . There are different type of
business strategy which can help organisation in establishing profitably. Global business enable

opportunities to business in long run to take there advantage. It is the responsibility of a manger
to help in analyse the working condition and act accordingly. Global business environment help
the firm in exploring new economy and utilizing their resources in effective way. In the end it is
important for a firm to find out the different opportunities in business environment and use there
capital as well as human resources effectively for maximizing profits and achievement of their
goals.
REFERENCES
Books & generals
Books & generals
Akhtar, M. and Sushil, S., 2018. Strategic performance management system in uncertain
business environment. Business Process Management Journal.
Berman, S. and Dalzell-Payne, P., 2018. The interaction of strategy and technology in an era of
business re-invention. Strategy & Leadership.
Bhagra, A. and Sharma, D. K., 2018. Changing paradigm of employability skills in the global
business world: A review. IUP Journal of Soft Skills. 12(2). pp.7-24.
Ferraro, G. P. and Briody, E. K., 2017. The cultural dimension of global business. Routledge.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Kasemsap, K., 2016. Advocating entrepreneurship education and knowledge management in
global business. In Handbook of research on entrepreneurship in the contemporary
knowledge-based global economy (pp. 313-339). IGI Global.
Kasemsap, K., 2016. Analyzing the roles of human capital and competency in global business.
In Project Management: Concepts, Methodologies, Tools, and Applications (pp. 2190-
2218). IGI Global.
Kasemsap, K., 2016. Promoting service quality and customer satisfaction in global business.
In Handbook of research on promotional strategies and consumer influence in the
service sector (pp. 247-276). IGI Global.
Montenegro, Y. A., 2017. Colombia and the international business environment. Latin American
Business Review. 18(3-4). pp.295-316.
Rowell, A., 2017. Green backlash: Global subversion of the environment movement. Routledge.
Thanetsunthorn, N. and Wuthisatian, R., 2016. Current state of corporate governance: global
business and cultural analysis. Management Research Review.
Woerkom, P.M.V. and Zeijl-Rozema, A. V., 2017. Improving local implementation of an
MNC's global CSR strategy: the importance of stakeholders. International Journal of
Business Environment. 9(3), pp.247-265.