Business Organizations in a Global Context: Extended Diploma Report

This report, prepared for a Level 5 Extended Diploma in Business and Management, delves into the multifaceted world of business organizations operating within a global context. It commences by highlighting key differences across various industries, outlining the responsibilities of globally operating organizations, and evaluating their strategic approaches, encompassing areas like capital structure, organizational management, and market structure. The report then examines the impact of national economies on business activities, including the influence of economic systems and macroeconomic policies. Furthermore, it investigates the global business environment, specifically focusing on China, and proposes localization strategies for businesses operating in the region. Finally, the report discusses the broader implications of globalization, including the effects of international trade, the impact of the global economy, and the role of ICT technologies in facilitating globalization, providing a comprehensive overview of the challenges and opportunities faced by businesses in the modern global landscape.

UNIT NAME: Business organisations in a global context
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Level 5 Extended Diploma in Business
and Management

Table of Contents
1. Introduction.................................................................................................................... 3
2. Activity 1.......................................................................................................................... 4
2.1 Key differences between organizations in different industries..........................4
2.2 Responsibilities of organizations operating globally.............................................5
2.3 Evaluation of organizational strategies......................................................................6
3. Activity 2.......................................................................................................................... 7
3.1 The impacts of national economy on the business organizations......................7
3.2 Measures taken by governments to influence business activities......................9
4. Activity 3........................................................................................................................ 11
4.1 Global business environment in China ....................................................................11
4.2 The localization strategy............................................................................................... 12
5. Activity 4........................................................................................................................ 13
5.1 Implications of global integration on business organizations .........................13
5.2 Effect of international trade on domestic products and services.....................14
5.3 Impact of the global economy on businesses..........................................................15
5.4 ICT technologies facilitating globalization..............................................................16
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References List ................................................................................................................ 17
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1. Introduction
With the fast development of global integration, economic globalization has
expanded and strengthened. More and more organizations make investment
on the global to acquire more benefits. When operating globally, organizations
shall make fully aware of the new market, including the opportunities and
issues they may face with. Hence, they can take certain measures to play full
use of their advantages and tackle with the problems. This report will analyse
four main issues that may occur for organizations operating globally. The first
issue concerning on global business operations, including the key differences
between organizations working in different industries, the responsibilities and
strategies of organizations operating globally. The second is external
environment faced with by business organizations when operating globally.
The third is analysing the global environment of China where businesses are
currently operating and proposing strategies to address issues affecting
business activities in China. The fourth is discussing the impact of
globalization on business organizations, including the effect of international
trade, the impact of the economic globalization and the influence of ICT
technologies.
2. Activity 1
2.1 Key differences between organizations in different industries
The first difference is capital structure. For various reasons, there will be
certain, sometimes even large differences in the competitive conditions of
various industries. These differences will inevitably affect the decision-making
of organizations, such as capital structure decisions. In industries that lacking
competition, organizations can easily obtain good economic benefits by virtue
of monopoly status or market power, thus making them less motivated to
takes measures to reduce costs, including capital costs (Herman, 2008).
Therefore, the capital structure decision of organizations in these industries
may be more arbitrary, making the capital structure between organizations
more discrete. In contrast, organizations in those highly competitive industries
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will pay more attention to operational and financial strategies. In order to
prevent competitors from taking strategic actions to bring the organizations
into financial difficulties, capital institution decisions between organizations in
the industry may show certain similarities.
The second difference is organizational management, which is greatly
influenced by different industries and context. For example, management
compensation and stock incentive are a good tool for organizational
management. In general, for organizations in industries with higher growth
opportunities, competitiveness and higher average profit margins, the
implementation of management compensation and stock incentive can
achieve stronger incentive effects.
Legal structure of private organisation Sole traders – Sole traders are defined as one who are able to
manage and handle business operations and functions effectively. The
effect of business whether it is profit or loss has to be incurred by the
owner of the company. The manager or owner of the organisation is
responsible for operating various operations that are related to legal,
financial and operational aspect. Partnership – This is known as the way of running a private
organisation and there is requirement of less fund in this. Basically
there are two or more partners who run business together. The best
example of this type of organisation is John Lewis Partnership. Private limited companies – The private organisations are ones who
are owned by people privately. This company is not allowed to share
it's market share within market. An example of this type of organisation
is Airdri.
 Public limited companies – Under this category all the organisations
will freely sell their shares at the marketplace so that they can gain
huge amount of capital. For example: Tesco and Sainsbury's.
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Legal structure of public organisation Central government department – These are those companies which
are owned by the government of country. This can be state or central
government.
 Local authorities – These are those organisations which are
operated by the local communities and authorities. These are
dependent on culture, belief and values of the local people.
Legal structure of voluntary organisation Trust- In this kind of trusts, there are particular trustees mainly provide
funds for the welfare and development of the society. Others- Royal charter bodies, community, etc.
 Un-incorporated association- All these are refers as the
management committees mainly assist in performing task and
operations.
4 Market Structure
There are various market structure that are characteristised
within an economy. The four basic type of market structure are
given below -
Perfect Competition – This is described as market structure in
which there are large number of small companies are competing
with each other. The main idea of the perfect competition is buid on
various assumptions like all the companies are able to maximise the
profits. There is free entry and exit to the market. This is an
important aspect of the market structure which is helpful in social
optimal level of the output. The nest example for a perfect
compatition is stock market.
Monopoly Competition – The monopolitic competition is defined
as the market structure in which there are large number of small
companies that are competing against each other. Within the
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monopolistic competition, companies are selling similar products. It
is the important for the companies to develop strategies that will
attract customers to buy products of their company. The exampls
of monopolistic compatition is cereal market. There are different
brands which are selling cereal such as Lucky Charms, Cap n
crunch, Apple Jacks, etc.
Oligopoly - This is a market structure in which small number of
companies are dominated. This results in having limited
competition. These firms can compete within market against each
other and then collaborate. This type of market structure depends
upon the assumption that firms maximise profits and oligopolies are
able to set prices. The oligopolitic competition consists of three or
more dominant firms.
Some other sectors within the business environment are mentioned below - Private sector (manufacturing, service: hospitality, finance) – The
private sector are those organisations which are part of the economy
and they are run by comapnies and individuals. This is defined as the
segment of national economy i.e. Managed, controlled and handled by
private enterprise or individuals. Public sector (healthcare, education) – The public sector of an
economy is helpful in providing a range of government services that
consists of public transporation, helathcare, military services, etc. The
way of working of public sector organisation varies from legislation that
is governed by state owned organisations.
 Not-for-profit sector (conservation, heritage organisations,
campaign groups) – This is defined as those organisation which
provides service within society. The main objective of such
organsaitions is to provide service to needy people. This includes
managing the problems faced by poor people or ill people.
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2.2 Responsibilities of organizations operating globally
The giant global organisations or multinational companies are those which try
to accomplish their roles and responsibilities towards different parties. It is
easier for globalisation in connecting various parties and shortening the gap.
International context – This means managing work in more than one country.
These are multinational corporations that are able to expand their business
and earn more profits and money.
National context – This is known as operating business in domestic country
and earning profits.
Local context – This means small businesses or shops that are operated in
small region.
Responsibilities to shareholders – These are defined as the main source of
money for running any business. When an organisation is expanded globally,
it is duty of the company's management to ensure that shareholders are
satisfied and happy.
Responsibilities to employees – Workers or employees are known as
operators of the business stream. It is important for the organisations for
confirming satisfaction and care for the employees. When employees are not
given positive environment and good culture, they feel annoyed and this
affects performance of employees.
Responsibilities to other stakeholders – For a business, all stakeholders
are essential and they are treated effectively for working effectively at global
level. It is essential for the organisations to analyse the expectations of
different stakeholders like resellers, suppliers, manufacturers, etc.
Responsibilities to customers -The customers are defined as main decider
of the company's profit and success. The products or services offered by an
organisation must be liked by customers. It is important for the organisation to
develop effective service or product that customers like. This is helpful in
increasing market share and profits earned by the company.
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Responsibilities to the environment – The situation of environment within
present business world is threatening day by day. As per these
circumstances, it is one of the most important responsibility of any business to
protect the environment.
Responsibilities to Ethical issues – In context of globalisation, there must
be no scandals or unethical practices that are practised by any company. This
diminishes the company's reputation and image.
2.3 Evaluation of organizational strategies
The development strategies of multinational organization in production and
operation include mass customization, refining based on core competencies
and global scale through global cross-border merge strategies and high
capitalization strategies. What’s more, organizations operating globally also
adopt information and knowledge-based network strategies, a comprehensive
integration strategy based on global resources and market, as well as
localization strategy (Westhead and Wright, 2007). Mass customization can
assist organizations in reducing cost and eliminating the production surplus.
Refining based on core competencies can improve the core competencies of
the organization and the global competencies. Global scale through global
cross-border merge strategies and high capitalization strategies can realize
global scale and then keep leading advantages in the global competition.
Through the implementation of information and knowledge-based network
strategies can greatly reduce the transaction cost and greatly improve the
business efficiency. The localization strategy can assist the organization in
quickly taking up global new emerging market. In terms of technological
strategy, organizations operating globally strive to upgrade their technological
innovation capability, attach importance to research and development
capabilities and shift from technological monopoly to intellectual monopoly.
The localization strategy of R&D brings multinational organizations closer to
markets, human resources and technology resources.
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The learner has discussed organization can implement 3 strategies,
Mass customization, Core Competencies through cross border
location shestrategies, High Capitalization Strategies, information
and knowledge based network strategies,
she needs to quote an example of each for justification rather than
giving a lot of assumption.
3. Activity 2
3.1 The impacts of national economy on the business organizations
The national economy contains many aspects, such as economic structure,
economic development level, economic system, macroeconomic policies and
current economic development. These factors will have a direct impact on the
business organizations.
Firstly, the economic system will affect the relationship and proportion
between organizations, between organizations and countries, between
organizations and other forms of economic entities. Hence, the scope of
business activities and the methods of business activities will be affected and
controlled by the national economy. The economy has negative and positive
impact on the business activities of the company. This is obvious that all the
companies have to analyse the economic condition of the company before
staring business. Basically all companies are ensuring that they can invest
more in economically stable countries.
Secondly, the national macroeconomic policies will become the baton of
organizational activities. The national macroeconomic policy is the industrial
policy, income distribution policy, price policy and material circulation policy,
which a country adapts to in order to achieve the strategic goal of economic
development. The adjustment of national macroeconomic policies will directly
affect the direction of business investment, cost control and talent
management. It is essential for the companies to analyse all the policies
related to the pricing, material, goods or services. This is helpful in attaining
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goals of the company in specified time frame. A country can economically
grow if there is proper management of costing, pricing and management.
Thirdly, the state of economic development of a country will affect the
direction of current organizational development. The economic development
level of a country will show different trends due to the influence of various
internal and external environments. Therefore, the current economic
development will affect the organizations in their countries to adopt different
development directions under the current economic development and
implement different development strategy. There must be economic growth of
the country for having a successful organisation. This is seen in case of all
multinational companies that they can sustain in market which are possessing
growth in economy.
Fourthly, the level of economic development directly affects the survival and
development of the organizations. The level of economic development refers
to the scale of economic development, the speed of development and the
height of the country in which the organizations are located. As the main body
of products and services for the society, the survival and development of the
organizations are naturally affected by the level of the economic development.
Industrial policy -
Income distribution policy
Material circulation policy
So, please analze the impact of national economy from following
perspectives:
 Size – population, labour market, education/training levels
 Growth/wealth - gross national product (GNP), balance of
payments, inflation rates, government borrowing, trade
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balance, public finances, taxation, national debt, availability of
credit
 Business confidence – investing, cost of borrowing, consumer
buying/confidence, government policies
3.2 Measures taken by governments to influence business activities
In general, there are three main measures that governments usually use to
influence the organizational business activities.
The first is economic means, which refers to the governments’ macro-control
of the national economy on the basis of consciously relying on and applying
the law of value by means of the adjustment of economic leverage (Allsopp,
1995). Economic leverage is a value form and value tool for macroeconomic
regulation and control of social and economic activities, including price,
taxation, credit, wages etc. Through media propaganda, these economic
means can directly influence the benefits of organizations, which will regulate
the organizations to adjust their development strategy and business activities.
The second is legal means, which refers to a means by which the government
relies on the power of the legal system to regulate economic relations and
economic activities through economic legislation and justice. The government
can use economic regulations to achieve macroeconomic regulation and
control objectives. Legal means can effectively protect public property and
personal property, safeguard the legitimate rights and interests of various
ownership economies and various economic organizations. What’s more,
legal means can adjust the horizontal and vertical relationships between
various economic organizations to ensure the normal order of economic
operations. The legal means include economic justice and economic
legislation. Economic legislation is mainly for the legislative organs to
formulate various economic laws and regulations to protect the rights and
interests of market entities. In contrast, economic justice is mainly for the
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