Global Business Environment: City College Limited's Expansion Strategy

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GLOBAL BUSINESS ENVIRONMENT
The City College Limited

Table of Contents
INTRODUCTION............................................................................................................................. 3
TASK-1............................................................................................................................................4
LO-1............................................................................................................................................4
P-1/M1 GLOBALISATION AND THE FACTORS DRIVING GLOBALISATION................................4
LO-2............................................................................................................................................8
P-2 STRATEGIC CHALLENGES AND STRATEGIES......................................................................8
M-2 ANALYSIS OF STRATEGIC CHALLENGES WITH ANSOFF MODEL.....................................10
TASK-2..........................................................................................................................................12
LO-3.......................................................................................................................................... 12
P-3/M-3 INFLUENCE OF GLOBALISATION ON ORGANISATION.............................................12
P-4 ETHICAL AND SUSTAINABLE PRACTICES AFFECTING ORGANISATIONAL FUNCTIONS.....16
TASK-3..........................................................................................................................................17
LO-4.......................................................................................................................................... 17
P-5 DECISION MAKING IN GLOBAL CONTEXT.......................................................................17
P-6/M-4 BARRIERS AND THEIR EFFECT IN SELECTION OF ROUTES TO
INTERNATIONALISATION......................................................................................................18
CONCLUSION............................................................................................................................... 23
REFERENCES.................................................................................................................................24
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Figure 1: ANSOFF MODEL............................................................................................................ 10
Figure 2: MCKINSEY’S 7S MODEL.................................................................................................12
Figure 3: HOFSTEDE MODEL........................................................................................................ 14
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INTRODUCTION
Today every business dream to be international and Globalization had helped the businesses in
achieving this dream by successfully making this world a global village. Globalization has been a
success due to advancement in many sectors like communication, transportation, digital media,
etc. (Hopkins, 2011). Globalization has changed the business environment from what it used to
be decades ago. Today multinational companies even have operations in the most remote
areas of the world. Today business environment of not only consist of the local force but also
the international forces which are shaping the industry (Michie, 2011).
In this assignment, the concept of globalization, key factors driving globalization and the impact
of digital media have been discussed. It will also observe the strategic challenges faced by City
College along with the PESTLE and Ansoff matrix model to help in evaluating and dealing with
such challenges. The assignment will also help to understand the effect of globalization on
governance leadership and structure of organizations. This report will also present the ways of
making effective decisions in global context along with the description of various routes of
internationalization available for an organization. The report will also cover the barrier of
international business along with the ways to overcome these barriers.
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TASK-1
LO-1
P-1/M1 GLOBALISATION AND THE FACTORS DRIVING GLOBALISATION
GLOBALIZATION
Globalization can be defined as a revolution which united the world and its markets.
Globalization is responsible for the growth of the international business as it offered additional
markets to the companies (Zoomers, 2010). It had helped to create a global atmosphere where
all the countries are united and are working towards solving a major global issue like pollution,
wars, etc. Today developed countries are helping other developing and under-developed
countries to grow because of Globalization. Globalization had offered the global market to the
firms who had to operate in the closed boundaries despite huge potential.
Technological advancement has been the major factor which helped Globalization to rapidly
spread. Globalization had successfully improved the living standard and life of the people by
presenting great opportunities and services. Today local businesses do not ask for hefty profits
on goods due to the availability of other international vendors who can provide goods at fairer
prices (De Wit, 2011).
Factors driving global commerce and trade
Cost: Today countries have a cost advantage than other countries. Which means it is more
profitable to procure some goods from foreign vendors than producing in the country due to
high costs. Thus globalization is helping to create cost-effectiveness in the world.
Market: Globalization has offered a large international market which is its biggest gift to
commerce and trade. Globalization had presented opportunities to firms for having a global
outlook and exploits the wide market available for trade. Today markets of every country are
connected with others and thus the performance of one affects the others (Potrafke, 2015).
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Environment: Business environment has been a major factor driving the Globalization.
Businesses were earlier concerned about the unfavorable business environment of countries
but with efforts like liberalization etc. businesses could easily understand and adapt as per the
new environment and increase the force of Globalization (Zoomers, 2010).
Competition: Role of competition has been very eminent in Globalization. No firm wants to stay
behind and lose a business opportunity thus when one business started exploring the
international market, others also joined it. This ignited the competition of gaining the first
mover advantage among firms and thus gave a boost to Globalization.
Technology: Technology has played a major role in increasing the speed of globalization. It
provided with facilities to connect to the farthest of the world and quickly travel to the edge of
the world. It improved international connectivity and thus supported Globalization (Aghina,
2014).
Impact of digital technology upon globalization and its effects on the delivery of products and
services
Technology had played a major role in the Globalization. The effect of technology is evident
from the fact that today 3.6 billion people, which is nearly half the world population use
internet and a majority of them use a social media and half of them had made a purchase
online (Statista, 2019).
Digital media had increased the pace of Globalization by providing ways to quickly
communicate all over the world, transact money across the world and manage processes of a
location from a distant location by remote access. Managers are able to monitor the activities
of businesses spread across the world with the help of digital media.
Social media also played its part in connecting people across the world along with providing a
platform to promote products. Since the inception of Facebook in 2004 it has been connecting
people across the globe and today it has 2.38 million monthly active users. Social media also
helped to shape the thinking of the society to a different global perspective of interconnection
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and mutual cooperation. Thus helped the people around the people to connect with each other
and boosting Globalization (Hutton, 2011).
PESTLE Analysis of City College Limited
PESTLE analysis helps to understand the business environment of a country and its effect on the
businesses. A PESTLE analysis includes six factors, namely political, economic, social,
technological, legal and environmental.
PESTLE analysis of Bangladesh expansion of The City College Limited is as follows:
POLITICAL FACTORS:
The political stability of Bangladesh is always in questions with the constant power struggle
between the Bangladesh Awami League, BNP, and BJI, which can affect the working of City
College in Bangladesh. The tax rates at Bangladesh are also very high which might affect the
profits if City College in the country. Frequent terrorist attacks also possess safety issue in
Bangladesh (Shaw, 2012).
ECONOMIC FACTORS:
Bangladesh is a developing country with increasing support from trade partners like India and
Aid from institutions like the World Bank. With a huge population, Bangladesh projects great
prospects for City College (De Wit, 2011).
SOCIAL FACTORS:
Bangladesh does not have rigid social or cultural norms and had accepted foreign culture long
ago. In view of cultural integration and welcoming, Bangladesh is a perfect destination for City
College limited (Zoomers, 2010).
TECHNOLOGICAL FACTORS:
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Bangladesh is not a rich and technologically advanced country but with the rising popularity and
increasing rate of literacy students of Bangladesh will be able to adapt the technology brought
by City College (Potrafke, 2015).
LEGAL FACTORS:
Bangladesh does not have much strong legislation and institutions to support legal compliance.
The legislation for the educational institute is not much complex thus it won't be a major
problem for City College.
ENVIRONMENTAL FACTORS
Bangladesh does not have many industries and more greenery thus government don’t have
strong environmental laws. City College won’t have any concerns about the environment and
will also reach a rich and green environment in Bangladesh (Munck, 2010).
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LO-2
P-2 STRATEGIC CHALLENGES AND STRATEGIES
STRATEGIC CHALLENGES
Globalization presents various benefits for the global society but organizations who are a part
of international business are facing many strategic challenges. City College will also face some
strategic challenges in Bangladesh, Sri Lanka and Congo like:
Challenge of Political Instability:
Political instability in a country causes many upheavals and frequent policy changes in a
country. It is a major challenge for City College since the countries it chooses has many political
changes in the past. Congo is devastated by two wars which lead it to extreme poverty and
power struggles in Sri Lanka and Bangladesh are on the surge between political parties.
Suppose City College starts a college in Bangladesh and an anti-foreign government form in the
country which is strictly against letting foreign firms work in the country. Some Anglophobe
could influence the masses and City College might have to lose its business (Robertson, 2017).
Economic challenges:
Not every country is rich enough to afford expensive education and especially when a country
has a history of poverty. The economic situation in countries like Bangladesh, Sri Lanka, and
Congo are not great. A high number of people are poor and the government needs aid and
foreign support frequently. Congo is among the poorest countries of the world and any setback
might destroy the economy. Suppose City College start a college in Bangladesh and an
economic setback leads more people to poverty, in this case, it will be hard for City College to
find students who can pay fees which is necessary to keep the operations running (Villaverde
and Maza, 2011).
Social challenges:
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Social and cultural norms in every country are different, a company has to understand the
culture of a place before starting its business and City College will also have to understand the
social norms of all the three countries. Suppose City College starts a college in a place where
people are less inclined to education and have to work at a young age to support their family.
Here full-time courses of the college won't work whereas part-time courses will only work when
the fees in kept lower (Vagadia, 2012).
Legal challenges:
Legislations of different places are different every company has to adhere to all of them to
smoothly conduct its business. City College might face a challenge here since unclear guidelines
and laws might make it difficult to understand the laws and more complex laws are hard to
follow. Suppose a country has laws which oblige Colleges to provide life insurance to the
students and the cost of the premium is high then City College might have to form a new
strategy to deal with the expenses (Dumont et al., 2011).
Recommendations
To overcome the challenges City College should primarily have an in-depth analysis of all the
challenges and complexities involved in them. After that, a team of country-specific experts
should be hired to formulate and select strategies to overcome all these challenges. To
overcome the political challenge the most suitable strategies could be to have an amicable
relationship with either sides or selection of country which has political stability.
City College has to make sure that it does not face economic and social challenges with the help
of proper research and analysis. Another strategy to deal with them is a proper understanding
and forecasting of events to be prepared for upcoming situations. Legal issues can be handled
by hiring expert's lawyers to advice on the compliance of laws and experts team to strategically
handle the situation (Robertson, 2017).
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M-2 ANALYSIS OF STRATEGIC CHALLENGES WITH ANSOFF MODEL
ANSOFF MODEL
Figure 1: ANSOFF MODEL
(Source: Moussetis, 2011)
As per Ansoff’s model, there are 4 strategies for a business to consider for expansion in the
business and companies can also use different strategies on different markets. The selection of
a strategy for a market is done based on the analysis of the business environment of a country
and challenges which the company might face (Fritsch, 2011). While approaching the foreign
market, Ansoff model provide 2 strategies, Market development, and Diversification.
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In the case of City College too, there are two strategies and the effect of challenges on these
strategies are as follows:
Market development:
Market development refers to entering a new market with existing products. The products of
City College include its courses. Here political challenges won’t affect the decision much but
other factors will shape the selection. Strength of Economic and social challenges is that they
will decide the cost of the products since City College won’t be able to sell courses with high
fees to poor economies along with the type of courses preferred by the society. Strength of the
legal challenges is their complexity and the City College can get into trouble if the existing
courses don’t fit in the education standard of countries (Munck, 2010).
Diversification:
Diversification refers to entering a new market with a new product. Since City College wants to
enter into the countries which are far different from the UK and business environment in these
countries is also different than the environment in which City College was operating. Strength
of Economic challenges is their direct relationship with consumers spending habits thus it will
guide City College to understand the affordability of course in a country and design its structure
keeping the cost in mind. The weakness of social factors is that society sometimes rejects and
sometimes accepts a change thus City College has to gain a deeper understanding of the
societal response. Political challenges won't play a bigger role in the diversification strategy of
City College whereas Legal challenges will help to design the content of courses based on the
legal norms (Petschow et al., 2017).
Thus it can be concluded that Diversification strategy is best suited for the current plans of City
College due to variation in the environment in the current and projected countries.
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