BUMGT 5920: Global Business Environment Essay Analysis

This essay delves into the challenges and opportunities that managers face within the dynamic global business environment. It highlights the complexities of international trade, cultural diversity, communication barriers, ethical considerations, and regulatory differences. The essay underscores the strategic importance of adapting to varying cultural norms and legal frameworks to ensure successful international operations. The essay provides an in-depth analysis of Woolworths' expansion into South Africa, illustrating real-world challenges, such as political instability, market competition, and the acquisition of skilled talent. The essay also examines the company's strategic adjustments and offers recommendations for effective global management, including emphasizing cultural understanding, local partnerships, and proactive environmental analysis. Finally, the essay concludes with a reflection on how these challenges can be addressed through improved strategic planning and adaptation to local markets, ensuring sustained business growth and competitive advantage in the global arena.

RUNNING HEAD: GLOBAL BUSINESS ENVIRONMENT
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Management in Global Business Environment
Essay
Student Name
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Introduction
Managing a global business is difficult in today’s competitive environment. There are
many factors or pressures that are unpredictable and challenging for the growth of the company
in the Australian economy. The managers that are operating in a global environment have to face
many challenges related to the economic, social and political aspects. Companies go for
expansion to boost up their profits and to increase their market share at the global level this leads
to many challenges and sometimes greater opportunities for the companies. This essay based on
the challenges and opportunities faced by the manager in a global environment, this is explained
with the help of an Australian organization that is Woolworths and the challenges faced by the
company at the time of expansion in South Africa. Further, a personal reflection is given on the
challenges or problems that are faced by the managers and how this can be solved by using a
more effective process.
Challenges and Opportunities in the Global Business Environment
In this modern era, all the businesses are part of the international platform. As in this
case, more and more companies are becoming multinational companies. It is argued that due to
the continuous evolution of the international market many challenges are faced by managers
(Picciotto & Mayne, 2016). Further, managerial development and economic development lead to
various opportunities for managers to operate in this global arena. International business includes
the trade of services, goods, capital and technology at the global level and it is also defined as the
process of internationalization of multinational companies. All the organizations that are going
global have one aim that is to increase their economic value by engaging in international trade
(Doh, Luthans, & Slocum, 2016).
Some of the challenges that managers face in the global environment are cultural
diversity, language barrier, currency issues, laws and regulations and difference in corporate
culture. One of the most difficult challenges for a manager to operate in the global environment
is to understand cultural differences and how to adapt that culture in the organization for smooth
operations. Ferraro & Briody (2017) described the future challenges that are faced managers in
cultural context or to managing the workforce in this diverse culture. Overall cultural differences

are the main challenge that manger face in order to operate in the global platform (Tuselmann,
Buzdugan, Cao, Freund, & Golesorkhi, 2016).
Another challenge is related to communication, managers who operate in international
platform mainly face problem in conveying a message between two parties who are from
different areas or culture (Deresky, 2017). The problem of miscommunication creates lots of
problems for managers or the management and it can affect the bottom line of the company. In
order to be successful in international businesses a manager should implement change in an
effective way otherwise this problem leads to ineffective operations at global level. Dlabay &
Scott (2008) states that “global environment demands a communication system that allows all
segments of the business to interact with each other”. Therefore, success in the international
platform depends on the accurate and rapid flow of information to customers, suppliers and
stakeholders.
One of the main challenges that are faced by a manager can be ethical issues or lack of
information about laws and regulation of foreign countries as each country has their own
standard and laws and in order to succeed at the global level managers need to aware about all
the ethical issues. According to Ajami & Goddard (2017) “in this changing global environment,
business ethics becomes a cornerstone of the organizational success”. In order to be successful
in the international market companies started to behave unethically at the global level. Due to
that another challenge that is faced by the managers operating at international level is how to
manage and solve issues related to laws and regulations or business ethics. Managers have to
deal with ethical problems that may arise because of conflict of interest, customer relation and
laws related to human resource department and maintaining diverse workforce.
After looking to the challenges that managers face by operating in an international
environment let’s look at the opportunities that they can create by operating at global level.
Global companies get many benefits by expanding their business in developing countries that
includes availability of labor at lower cost, unsaturated market demand, less expensive natural
resources, and advantage of technological development helps the companies to get competitive
advantage in domestic market also (Luthans & Doh, 2014). Multinational companies get to
benefit from global level by selling their services and products to multiple countries. Managers
get opportunities to tap the market that has greater demand of their products through that they get

the opportunity of mass production that helps in attaining economies of scale or manager may
look for horizontal expansion strategies to tap the new market (Meyer & Peng, 2016). Both of
these opportunities benefit the company and leads to growth of business, stronger margin and
larger revenues.
International business provides benefits and opportunities to companies in various ways
that include growth of companies, increasing sales and profit, diversification, hiring of talented
workforce across the globe, and higher innovation and creativity level (Carpar, Devinney, &
Kirkman, 2015). By operating in international environment manager get access to large customer
base and due to that company can enjoy larger revenue as this cannot be done if domestic market
attains the saturation point. The main advantage of global environment is access to the greater
pool of employees or talented people. Furthermore, exposure to foreign investment helps
managers get more investment opportunities that lead to efficient utilization of financial
resources. The main advantage that managers get by operating in international business
environment is building reputation of the company at global platform (Ruel, 2017).
International business environment includes various factors and further these factors are
divided into the macro environment and micro environment. In a nutshell the challenges and
opportunities that a manager face while operating in the global business environment are mainly
access to new customers, increase in market share of the company, access to cheaper resources,
trade benefits and attaining economies of scale. Some challenges are high competition, cultural
diversity, cross boarder laws and regulation, instability in political and legal environment of the
countries across globe and lack of effective communication between organization and employees
due to cultural diversity (Doh, Luthans, & Slocum, 2016).
The concept of international business environment can be understood with a case study of
an Australian company that is Woolworths. Further sections focus on the challenges that this
company face in order to expand its business in the international market. Woolworths is an
Australian company that deals in home, beauty and clothing products. The company decided to
expand its business in South Africa and at that time faced many challenges at the global level
(Hall & Cousins, 2018). The main challenge was political instability as the international business
environment is highly affected by the political and legal aspect same goes in case of expansion in
South Africa. Due to political instability Woolworth fails to capture the market in South Africa.

Fast changing environment and a large number of competitors decreases the profit margin of the
company in South Africa and furthermore declining retail market in Africa leads to slow growth
of the retail segment and companies operating in this segment (Woolworths, 2019).
The strategy that Woolworths followed to expand its business in South Africa includes
adoption of new business model that was replacing the franchisee model with the joint venture
partnership. Further company improved its supply chain to operate in all the regions of Africa;
this step leads to expansion and various opportunities for the company. On other side
Woolworths also changed its target market from high income class people to models income
class people (Luiz, 2016). All the challenges that Woolworths faced in the international business
environment resultant in change in the strategies that the company adopted initially to expand its
business in Africa. These changing strategies are the key to be successful in the international
market as strategies are made by analyzing the macro and micro environment of the business and
that help in sustaining in the market or long term planning.
Some other challenges that Woolworths faced in Africa include, acquiring right the talent
for continuing its operation in the country as in Africa, the main problem was availability of
skilled workers ad right talent and to find right talent increases the cost of hiring candidates in
the country. Further, life of African people is difficult and challenging that leads to different
customer taste and preferences understanding this company needs to take market research before
entering into this region that proves to be challenging for Woolworths to change all its business
strategies as per African market. To compete in international environment is considered to be
difficult as there is player that already knows the market and in order to succeed in international
environment companies need to cope up the challenges that they face. Main competitors for
Woolworths were Shoprite, Spar and Pick n Pay. This also become a challenge for the company
to compete with these leaders in the retail segment in international environment (Campbell,
2016).
From the above analysis of company and international business environment, I
understand that operating at global level is challenging for a manager. There are many challenges
that include political instability, cultural differences, different laws and regulation, fluctuating
currency rates, and effective communication. I also identified from the case of Woolworth’s
expansion in South Africa that big players also faced many challenges while expanding its

business at international platform. By understanding all these challenges I would like to
recommend that companies should hire a person who knows the local culture and language in
order to overcome the challenge of language barrier that helps in knowing the market and people
preferences and taste properly. Woolworths should hire employees from African region further
to compete with local competitors company should tie up with few businesses in local region to
understand the growth and market of the country. Further challenge that a company faces during
expansion is legal and political instability it is suggested that to overcome that proper
environmental analysis should be done before expansion and accordingly necessary resources
should be equipped. In order to overcome the challenge of supply chain that faced by
Woolworths in South Africa, the company should plan its logistics management, import and
exports for the country. At last, I recommended that Woolworths should consider the impact of
new ideas on both the sides that is in domestic as well as in international market because it is
analyzed that due to increasing operation in Africa, the company Australian business was
affected to the greater extent.
Conclusion
Global environment creates challenges as well as opportunities to managers operating at
international level. The challenges that companies face in international environment are related
to political, legal, economic and technological environment as well as related to cultural
background of the country. With these challenges there are many opportunities that managers get
while operating in the global platform that are growth of the business, expansion options, new
customer base, availability of resources and increased revenues and profit margin. It is concluded
bug players like Woolworths also faced many challenges while expanding its business in South
Africa. It is advised that managers should appropriately do environment analysis before plan to
expand their business at global level as this help in gaining the knowledge about all the
challenges that they will go to face and accordingly companies can prepare in advance to
overcome all these challenges.

References
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New York: Routledge.
Campbell, M. (2016). South African supermarket expansion in sub-Saharan Africa. Third World
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Carpar, D. V., Devinney, T. M., & Kirkman, B. L. (2015). Conceptualizing and measuring
culture in international business and management: From challenges to potential solutions.
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Deresky, H. (2017). Internatioanl Management: Managing across borders and cultures. Pearson
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Ruel, H. (2017). International business diplomacy: how can multinational corporations deal
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Woolworths. (2019, August 12). South Africa Expansion. Retrieved from
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