Report on Challenges and Issues Faced by Modern Business Organizations

This report provides a comprehensive analysis of the challenges faced by business organizations in the current competitive environment, using Walmart as a primary example. The report delves into various internal and external factors that impact business operations, including the effects of globalization, financial resource constraints, and socio-economic issues such as poverty and overpopulation. It examines how customer needs and preferences, government regulations, and cultural barriers further complicate business strategies. The report also explores the impact of taxation policies and the importance of effective communication within multinational organizations. Furthermore, the report suggests strategies to mitigate these challenges, such as providing training and development, assessing future risks, and promoting open communication. The conclusion emphasizes the need for organizations to conduct thorough market research, analyze competitors, and implement proactive strategies to achieve competitive advantages. The report references several academic sources to support its findings.

CHALLENGES OF
AN
ORGANISATION

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
Challenges or issues faced by business organisation .................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
In this competitive era, it is difficult for business organizations to remain for long term
period in market competition. Due to globalisation, there are several companies are being entered
in market and effect the business of other organizations. It can also hamper their working
activities and operations (Nunan, Campbell and Foster, 2012). The present report is based upon
WALMART; its multinational retail cooperation that operates a chain of supermarkets and
grocery stores. Apart from this, the report will be describe different challenges that are being
faced by organisations and how to reduce them.
TASK
Challenges or issues faced by business organisation
There are several issues and challenges are encountered by business organisations
throughout to manage their working activities. These issues can affect the working activities and
practices of a corporate association also hamper its profits and sales revenues. WALMART is
one of the largest retailing sector as it operates 11500 stores and clubs in over 30 countries. It is
also a known leading company by sales revenue, i.e. approximately US$500 billion as well as it
is also known largest private employer over the world, i.e. 2.3 million employees. But due to the
involvement of some internal and external factors there are several issues are being faced by the
company that can affect its sales and profitability over the world. Below describe are the several
challenges that are faced by business units, such are as-
Globalisation – The concept of globalisation is become major issue for running a
business, during the last few decades. The phenomenon also hinder an economy, society,
business life as well as an environment in various ways (Daniell, 2012). Along with this,
globalisation is concern with increasing market competition, changes in technology as well as
data or information transfer. For example- in UK, due to globalisation many companies are
entered in retail industry of the country that can hamper profitability of other organisations also.
If a new company will entered in market then existing companies have to reduce their prices of
its products and services through which it cannot achieve goals and objectives from target
market. Due to higher prices of goods, customers will not attract towards them then it reduces
profitability and sales of the firm in an adverse manner. In addition, strong and developed
economies continuously exploit underdeveloped nations on the name of business sharing. The
number of manufacturing industries is raising day by day, it increases pollution because intensive
1

technologies are based on heavy machines and power. Moreover, production factories are also
polluting the atmosphere. Therefore, if companies are failed to accomplish their corporate social
responsibilities then it cannot achieve high growth and success. Although, the number of
customers will also get reduce. Thus, globalisation is a very big challenge for every multinational
organisation which hamper its overall profitability as well as productivity. In this context,
companies are require to determine different policies so as to reduce the negative of globalisation
(Arayici, Egbu and Coates, 2012). Government also have to decrease foreign direct investment
so that existing firms can easily expand themselves in their home countries.
Raising capital – Poor financial resources can be another major challenges for business
units that can affect their profitability and productivity. Although, due to lack of financial
resources company cannot spend money on improving the quality of its products and services. It
also cannot adopt new and innovative techniques in order to survive at global market. In UK,
financial crises has prompted an evaluation of risk management. Because of this economic crisis,
banks and other investors are not ready to give loan or credit to corporate associations. At this
time, interest rates and bank rates were also increase through which organisations were not
managed their functions effectively (The Challenges Faced By An Organisation, 2017).
Therefore, poor financial management eventually raise the situation of shut down of a business
organisation. In past years, WALMART faced the situation of negative cash flow for a by
extending payment terms to supplies. This was also effected market reputation of the company
because suppliers were not ready to sell products to the company. Thus, the issue of raising
capital should be eliminate as soon as possible by determining various ways of funds.
Social and economic issues – There are different socio-economic issues, like poverty,
unemployment, lack of education, religious and cultural discriminations, corruption,
overpopulation etc. also put a huge impact on growth and development of a business
organisation. In which, poverty is concerned is major socio-economic issue that have an adverse
impact on individuals purchasing power (critiquesAhmad, Hadgkiss and Ruighaver, 2012).
Because, due to poor economic condition, people are not capable to consume luxury products
and services through which sales of WALMART can goes down and firm cannot achieve its
goals and objectives. Apart from this, overpopulation also a biggest issue for companies because
it is too difficult to identify the needs and wants of large group of people and fulfil them in the
2

best possible manner. In addition, company also cannot fulfil its CSR responsibilities effectively
and efficiently.
Customers needs and wants – In this modern era, customers have multitude of interest
and choices in market; this can affect their behaviour and purchasing power. Due to higher
disposable income, customers want effective goods and services in an efficient way which gives
them high quality with low prices (Dwivedi, Weerakkody and Janssen, 2012). Therefore,
sometimes it becomes too difficult for manufacturing companies to recognise customers needs and
wants and fulfil them in an effective manner. Along with this, TESCO, ASDA, Sainsburry,
Morrisons etc. are the major competitors of WALMART that also has covered high market share.
Thus, it is too difficult for WALMART to attain and retain customers for long term period. Taxation
policy affects business costs, for instance- enhancement in corporation taxes increases production or
manufacturing costs. The creation national minimum wages and heath and safety acts can hamper
working activities and operations of an organisation.
Government rules and regulations – Political condition of a country can also be another
challenge for a business organisation. If UK government increases tax rate and duties on
importing and exporting of goods in other countries then corporate units cannot sells their
products at global level. For this, they would pay high amount; that thing also effect their sales
and profitability in an effective manner (Kogg and Mont, 2012). UK's regulatory bodies can also
implement different laws and legislations that is must followed by all companies in order to
survive in capital market. Such rules can also affect decision making process of the company in
direct and indirect manner.
Cultural barriers – In multinational business units, there are many cultural people are
working at there. Sometimes, management is also not capable to manage these changes and it
raised conflicts and misunderstandings among employees and managers. WALMART is a
multinational business organisation, where different types of people are working who have
different values, believes and morals. Due to different languages, workers cannot understand
each other's feelings and messages. In addition, cultural barriers also affect public relations of a
firm. For example- in order to raise sales, management have to determine different ways so as to
navigate language barriers. Thus, to diminish the impact of cultural barriers religious boundaries
must be understood to run effective marketing campaigns abroad.
Strategies to overcome from organisational challenges
3

There are several strategies and policies can adopted by WALMART so as to reduce the
impact of environment on its working activities. Management have to find out several ways and
implement effective technologies for competing such challenges (Sharma and Gadenne, 2011).
There is describe difference strategies that helps an organisation to face external environmental
challenges, such are stated as under: -
Provide training and development assistance – It is one of the best way to improve skills
and knowledge of employees; this helps a firm to face all future challenges and issues. Along
with this, if WALMART continuously provide training and development assistance to its staff
members then it would increase its production level; it results employees will be performed in
innovative method. They also use effective and new ideas towards reducing the impact of future
challenges. Therefore, well skilled and qualified employees are the source of gaining high
competitive advantage to a firm and helps it in achieving goals and objectives in a certain time
period.
Analyse future risks – Evaluation of future risks and uncertainties aids management to
prepare effective strategies and policies so as to compete with future challenges and issues. In
addition, risk assessment refers with better use of placement and monitoring; it improves overall
functioning as well as cost savings. WALMART has a team of few experts that helps to analyse
future market situations and forecasting about upcoming sales and profitability; it gives guidance
to employees as they can work accordingly. Future risks can also be related with climate
changes, technological advancements etc. There are three types of risks, such as – price risks that
is uncertainty towards future price of an asset whereas credit risk concerned that party on the
other side of the agreement will abide by the terms of an agreement (Northcott and Ma'amora
Taulapapa, 2012). Apart from this, interest rate risk related with future interest rates an their
impact on future cash flows as well as on the fair value of existing assets and liabilities.
Therefore, all these kind of risks highly effected sales and profitability of a business organisation
in an adverse manner.
Regulate free flow of communication – Implementation of free flow of communication
is really assistive for a business organisation. It helps management to communicate with staff
members and determine various tactics in order to compete with external business environment.
Along with this, effective communication also helps companies to increasing business
4

transaction so as to meet global demands. If managers and employees will be communicate with
each other than its reduces cultural differences as well as misunderstandings among both parties.
CONCLUSION
From the above mentioned report, it has been summarised that there are certain internal
and external challenges of business environment can affect working activities and operations. It
can also harm their market reputation and sales. Along with this, in order to overcome with these
challenges it is essential for WALMART to conduct a market research and determine all issues.
It also helps firm to determine competitors' strategies and policies so as to make effective
decisions in future. In addition, to reduce the impact of these issues, managers are required to
adopt certain strategies and policies so as to gain high competitive advantage in a certain time
period.
5

REFERENCES
Books and Journal
Nunan, F., Campbell, A. and Foster, E., 2012. Environmental mainstreaming: the organisational
challenges of policy integration. Public Administration and Development. 32(3).
pp.262-277.
Daniell, K. A., 2012. Co-engineering and participatory water management: organisational
challenges for water governance. Cambridge University Press.
Arayici, Y., Egbu, C. O. and Coates, S. P., 2012. Building information modelling (BIM)
implementation and remote construction projects: issues, challenges, and
critiques. Journal of Information Technology in Construction. 17. pp.75-92.
Ahmad, A., Hadgkiss, J. and Ruighaver, A. B., 2012. Incident response teams–Challenges in
supporting the organisational security function. Computers & Security. 31(5). pp.643-
652.
Dwivedi, Y. K., Weerakkody, V. and Janssen, M., 2012. Moving towards maturity: challenges to
successful e-government implementation and diffusion. ACM SIGMIS Database. 42(4).
pp.11-22.
Kogg, B. and Mont, O., 2012. Environmental and social responsibility in supply chains: The
practise of choice and inter-organisational management. Ecological Economics. 83.
pp.154-163.
Sharma, B. and Gadenne, D., 2011. Balanced scorecard implementation in a local government
authority: Issues and challenges. Australian Journal of Public Administration. 70(2).
pp.167-184.
Northcott, D. and Ma'amora Taulapapa, T., 2012. Using the balanced scorecard to manage
performance in public sector organizations: Issues and challenges. International Journal
of Public Sector Management. 25(3). pp.166-191.
Online
The Challenges Faced By An Organisation, 2017. [Online]. Available through:
<https://www.ukessays.com/essays/business/the-challenges-faced-by-an-organisation-
business-essay.php>.
6