CM Downton: Factors in the Global Business Environment Report

This report provides a comprehensive analysis of the global business environment, using CM Downton Limited, a UK-based logistics company, as a case study. It explores the key factors driving global trade, including technological, political, competitive, and market drivers. The report delves into the strategic challenges faced by organizations operating internationally, such as cultural differences, supply chain complexities, and marketing strategies, with a focus on CM Downton's expansion into Hong Kong. It further examines the influence of globalization on governance, leadership, organizational structure, culture, and various business functions, utilizing the McKinsey 7S model to illustrate these impacts. The report also considers the role of ethical and sustainable globalization and discusses effective decision-making processes in a global context. Additionally, it outlines potential routes to internationalization and identifies key barriers that organizations like CM Downton might encounter. The report employs PEST analysis to assess the political, economic, social, and technological factors influencing the company's operations. The report provides valuable insights into the complexities of operating in a globalized business environment.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
P1 Key factors of cost, market, environment and competition that drive global trade..........3
P2 Complexity of strategic challenges faced by organisations at global level.......................4
P3 Influence of globalisation on governance, leadership, structure, culture and functions...7
P4 Influences of ethical and sustainable globalisation on functions......................................9
P5 Different ways decision making can work effectively in a global context.......................9
P6 Routes to internationalisation an organisation may adopt, including key barriers.........10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Global business environment can be defined as the area whereby 2 or more than two
organisations function with a view to enhance their revenues as well as profits in the long run. In
this regard, global business environment encompasses macro as well as micro environmental
factors. Both these categories place a significant influence over the operations of a business as
well as the output delivered by it (Adekola and Sergi, 2016). The present project is based upon
CM Downton Limited which is acknowledged to be one of the leading private owned logistic
companies of United Kingdom. This organisation has been functioning strongly within the
confines of concerned industry and offers customers with unique and effective services, better
than those of rival firms. CM Downton got acquired by a private equity investor of Hong Kong
named EmergeVest in the year 2018. This move was executed with the sole motive of enabling
innovation and constant investment in future course of time. Over the course of time, the
working philosophy of this company has been to deliver what the customer asks for.
The project consists of elements that foster global commerce and trade. Further, it
encompasses complexity of strategic challenges encountered by companies at international level
along with impact of globalisation over structure, culture, functions, governance and leadership.
Besides this, the project constitutes influence of ethical and sustainable globalisation upon
functions of company. Lastly, ways to enable decision making work at international scale and
routes to internationalisation along with their constraints are covered.
P1 Key factors of cost, market, environment and competition that drive global trade
Driving factors of global commerce and trade are defined as the elements which facilitate
an organisation to conduct business activities at international scale. They provide assistance to an
enterprise in offering their products and services beyond the territory of domestic country. In
other words, it can be said that driving factors facilitate free flow of capital and goods (Gaspar
and et. al., 2016). In relation to CM Downton, it has been analysed that there are a number of
factors which drive the organisation to foster global trade and commerce. These are described in
a brief manner as follows:-
Technological Drivers: The advancements which take place within the domain of
technology facilitate the organisations to indulge in free flow of merchandise at international

level. In this regard, it has been analysed that CM Downton can make use of digital technology
with a view to gain access into foreign markets and thereby inflate its profitability.
Political Drivers: Deregulated market as well as liberal trade legislation may result in a
decline in tariff rates (Kasemsap, 2020). Such course of action persuades the organisations like
CM Downton to undergo FDI, thereby facilitating easy entry into foreign market.
Competitive drivers: The modern era can be referred to as the era of cut-throat
competition. This encourages the companies to enhance their scale of operations by seeking
entry into new markets (Doh, McGuire and Ozaki, 2015). This facilitates CM Downton to gain
access into new markets and thereby enhance its presence at global scale.
Market Drivers: The rising market saturation consequently resulted into the creation of
constraints for business growth and development. Opposed to this, globalisation has generated
opportunity for CM Downton to expand into foreign territories and thereby increase its revenues
and customer base.
P2 Complexity of strategic challenges faced by organisations at global level
The strategic challenges are those barriers that are generally occur at the time of
operations and executions of tasks and operations in the business of company. These strategic
challenges affect the workings of the respective enterprises on the national as well as on global
level. These errors take places as an effect from the macro and micro environmental factors.
Such factors are quite impactful in the decision making of the management as these
environmental aspects restricts the operations and certain activities of the business (Nohria,
2017). Thus, as a result from that the chances of getting loss and failure gets increased in the
process of business. The firm's management can evidently check for the solution for problems
and rectify the mistakes of the firm regarding a factor. In this regard, it has been identified that
the strategic challenges for CM Downton while entering international markets can be:-
Unfamiliar cultures and language- It is one of the factors which can generate
challenges for the company to operate internationally. In context of CM Downton, when the
company expand its business operate its business into new market or nation then there are
various issues and challenge related to culture and language will occur. CM Downton is
expanding into Hong Kong while at present it operates in UK. Hong Kong has a population base
of 7 million whereby 95 % out of them are acknowledged to be Chinese. Thus, Cantonese is
recognised to be the most commonly spoken dialect within the nation. When it would operate in

Hong Kong then it would adopt another culture and hire local employees to run the business who
will use their local language (Cantonese). This can create complexities for the business because
the company as well as its employees both take time to learn cultural differences and adjust into
the culture of Hong Kong. Thus, it is important for CM Downton to provide cultural training to
employees while gaining entry into foreign markets so that the course of action associated with
expansion do not result into adversities for the concerned firm in upcoming time (Lee, 2017).
Supply chain complexity- When the company comes to sourcing commodities and
services from overseas, administrating providers and supply chains tend to be hard activities. The
length and complexness of supply chains increase the option of dealing with providers who have
immoral business concern activities. Thus, it is important for CM Downton to ensure contact
with only those dealers who are ethical and legal.
Company Structure- This implies that an organisation needs to adapt itself to the
foreign market for which it is important to execute transition within the company structure while
moving at a global level (Kasemsap, 2020). Within the confines of UK, CM Downton is
following hierarchical organisational structure. When the company moves to Hong Kong, it can
make use of functional structure as this will allow the division of work responsibilities within
different organisational functions such as IT, marketing, sales and many more.
Marketing Strategy: This is yet another strategic challenge which is faced by companies
while moving from domestic to international market. CM Downton is moving to Hong Kong for
which it needs to make use of effective marketing strategies which can assist the enterprise in
appealing to the audience of this country. At present, the company makes use of social media for
marketing purposes within UK. Google My Business and Email marketing are 2 strategies that
prove to be effective for companies to gain the attention of large base of audience (Top 7
Marketing Tips for Your Hong Kong Business in 2019, 2020). CM Downton can use any of these
2 strategies to succeed within the confines of Hong Kong.
PEST Analysis
Apart from the above factors, certain other external factors are also considered by the
company. Through the evaluation of these external environment factors, the concerned
organisation can efficiently perform all its tasks. This evaluation is executed by carrying out the
study of PEST analysis. Hereby, this analysis will be performed in relation to CM Downton.

The analysis will provide crucial information regarding the political, economic, social and
technological factors as follows:-
Political: The CM Downtown is performing its logistic operations in more than 100
countries where it faces different political environments in different countries. There are multiple
regulations and various policies of political parties in different nations (Tregear, 2015). The
instability of political background in most of the nations arises a critical situation of
misinterpretation and certain other restrictions regarding the global logistics trade union. Thus,
all these negative impacts of political aspects in other countries restrict the free trade of the
company. The effective knowledge of each and every trade and logistical law is also necessary
for the hassle-free working process in other countries.
Economical: The economic factor of a nation is affected by the financial and
infrastructural qualities of the nation (Kyurova and Kiryakova-Dineva, T., 2019). The most
developed countries give an excellent environment of commencing the business and logistical
trade within their boundaries. While the under privileged countries and less financially sound
nations puts a negative and less profitable influence on the companies trading and its
profitability. The BREXIT policy of UK and Europe also act as a barrier for the effective
economic relations between both the countries.
Social: the social factor that is comprised of all the elements of emerging trends in the
market, change in consumer's tastes and preferences. All the certain social needs of the
respective market share of CM Downton helps the business to understand and analyze the market
conditions and identifies the opportunities to implement its working standards according to them
(Saleem, 2015). The use of social media marketing and other social tools help the strategic
planner to understand the concepts of market more deeply as well as it will facilitate the
organization to interact with its customer on an effective level.
Technological: The nature of working location of CM Downton is global, and the
technological advancements that are taking place in every country can act in bot the ways to the
respective company. The beneficial side of these factor is that the technology development of a
particular nation can be adapted by the organization for its growth and enhancement in quality
standards (Kasemsap, 2020). Thus, on the other hand the outdated techniques which are currently
being used by the company can act as a barrier to work in the confines of most technologically
developed nations. It will do nothing rather than dissolving the trade cycles of CM Downton in

that type of nations. Thus it is essential for the management to understand the environment and
work accordingly to get efficient results even in the highly lush competition.
P3 Influence of globalisation on governance, leadership, structure, culture and functions
Globalisation places a significant influence over the leadership, culture, structure,
functions and governance of a company. It is identified that CM Downton is seeking to gain
entry into a new market. Thus, it becomes important for the firm to identify the impact of
globalisation over its functions, leadership and other crucial aspects. In this regard, to understand
this in an effective manner, CM Downton has made use of McKinsey 7S model. The elements of
this model in context of the company are explained as underneath: -
Hard:
Strategy (Governance): The mangers and leaders of CM Downton makes use of strict
and rigid rules and regulation to have better expansion a global level through ensuring effective
control and governance over performance and other aspects of employees.
Structure: In order to have better execution of functions and clarity among its activities
and various operation, use of functional organizational structure has been made by CM
Downton (Wood and et. al., 2015). This facilitates proper bifurcation of work among employees
according to their skills and competencies thus, ensures better effectiveness for expansion at
global level.
System: Use of a less complex and efficient system should be used by CM Downton to
better flow of operation to operate successfully at global level.
Soft:
Shared values (Culture): Most ethical and positive shared values are adopted by CM
Downton to have effective practices and reduce chances of wrong activity in organization (Fatehi
and Choi, 2019).
Skills: Timely training is provided by CM Downton to its employees to improve their
skills and competencies so that it can effectively operate at global level.
Staff: The HR department of CM Downton makes all possible efforts to select a more
competent and killed employees to work effectively at global level.
Style: Use of democratic leadership style is made by CM Downton to allows proper
participation of all employee so that more effective decision can be made to operate successfully
at global level.

The impact of globalization on culture is identified with the help of Hofstede’s cultural
framework. This is a model of analyzing the culture by taking into account 6 factors and
applying them in context of a company. In this regard, CM Downton is applying this framework
as follows:-
Power Distance Index: This element is concerned with inequality underlying within
society in different locations (Tie Suk Kee and et. al., 2020). With respect to CM Downton, it has
been analysed that the host country (UK) of this organization has higher PDI than foreign
country (Hong Kong). This implies the emphasis of the entity to be upon centralized operations.
Individualism and collectivism: This implies the manner and way of working of
individuals within the confines of an organization, individualistic or collaborative. With
reference to CM Downton, it can be seen that the host country (UK) gives preferences to
individualistic working pattern. On the other hand, it is determined that the foreign country
(Hong Kong) works in a collaborative manner. Thus, globalization would facilitate a shift from
individualistic to collaborative working in the premises of CM Downton.
Masculinity: This defines the extent to which the population of a country gives
concentration upon competition and achievement. In this regard, it has been analysed that the
host as well as foreign country for CM Downton follow masculine working pattern and conduct.
UAI: This element is concerned with people making efforts to sustain their life in a way
such that it supports them in avoiding uncertainties in future course of time (Brătianu, 2019).
Globalization would facilitate CM Downton to carry out their living in a manner whereby they
are ready to undertake risks so as to achieve success or to learn lessons in business context.
Long term orientation: This element demonstrates the link of past with the present and
futuristic business challenges. In this regard, it has been analysed that UK has lower LTI than
Hong Kong which implies that the latter pays lesser attention to traditions. Thus, globalization
will make CM Downton to work in an environment whereby the focus is just upon current and
future working rather than concentrating upon past also (Kiseľáková and et. al., 2019).
Indulgence: The primary emphasis of this factor is upon the analysis of extent to which
personnel can facilitate control over their expectations as well as desires. In relation to CM
Downton, it has been analysed that Hong Kong is a highly indulgent country which would
require the employees to operate in the manner aligned with national culture.

P4 Influences of ethical and sustainable globalisation on functions
Globalisation is defined as the interface taking place between people, companies and
governments across the globe. In this regard, it is important for the company to become a part of
ethical and sustainable globalisation only as unethical and illegal practices lead to dampened
global image of the company (Salvatore, 2015). Usage of ethical practices at international scale
allow companies such as CM Downton to gain the attention of large number of customers in the
new markets. Furthermore, it is able to ensure collaborative efforts on the part of organisational
functions in achievement of goals and objectives of the corporation. Ethical and sustainable
globalisation promotes the facilitation of moral practices by the functions within CM Downton
such as IT, operations, sales, marketing and so on. In this relation, it is important for the
company to provide ethical training to employees so that they indulge in ethical and legal
business practices only. Also, the marketing strategy or advertising done by the firm should
adhere to the ethical standards. This will ensure that the global operations of the entity do not
cause any harm to the goodwill and market positioning of CM Downton. It will also ensure that
the entity appeals to a large base of customers, thereby inflating its revenue figures as well as
profitability by a significant margin.
P5 Different ways decision making can work effectively in a global context
CM Downton is considering to execute expansion of the business operations at global
level with a view to facilitate increment in revenues as well as profits. In this relation, several
crucial decisions have to be undertaken by the firm so as to ensure that the entity does not face
any adversity within the confines of foreign market. It is identified that there are a number of
ways with the help of which the top management of CM Downton would ensure stipulation of
effective decisions in global context whereby globalisation has an impact over them. Such ways
are described in a brief manner as follows:-
Influence on decisions relating to leadership changes:
Globalisation implies the requirement of change to be facilitated within leadership so as to adapt
to the new market situations. The new market consists of certain complexities and challenges
that need to be taken into account by the business in order to ensure smooth functioning in new
environment. in this regard, it has been identified that as CM Downton is facilitating expansion
into Hong Kong, transformational leadership would be the most suitable for company as it would

provide aid in gaining support on the part of employees in executing changes while moving from
domestic to international market (Correa, Cusolito and Pena, 2019).
Influence on decisions relating to expand into international markets:
Globalisation has encouraged companies across the globe to expand into foreign markets with a
view to enhance its positioning as well as stake in market place. In this regard, the decision has
to be taken regarding the market in which entry should be gained to facilitate increment in
revenues as well as profits. In this regard, it has been analysed that CM Downton is expanding
within the confines of Hong Kong looking upon its excellent infrastructural facilities.
Influence on decisions relating to risk and diversification:
Diversification can be referred to as the strategy of introducing new products within new
markets. This involves excessive risk as the probability of failure herein is quite high.
Globalisation has facilitated firms to execute diversification with a view to facilitate increment in
revenues as well as profits (Huang, Ran and Liu, 2019). Looking upon this, CM Downton is
gaining entry into Hong Kong by pursuing diversification.
P6 Routes to internationalisation an organisation may adopt, including key barriers.
CM Downton Limited is considering to carry out expansion at global scale. In this relation,
it is important for the firm to ascertain an effective market entry strategy through which it can
gain access into new market. With this, the firm would be able to ensure smooth flow of
operations within the confines of new marketplace. Thus, some of the most important routes
through which CM Downton can facilitate expansion at global scale are discussed as
underneath:-
Exporting:
This route to internationalisation is acknowledged to be a process through which
businesses make sales and transport their products in international marketplace. Exports take
place when companies generate revenue from foreign consumers by providing them with
organisational offerings. Through exports, companies set their foot in international waters and
make additional profits along with their domestic market. CM Downton can leverage this market
entry method to facilitate internationalisation in a rapid manner. Some of the barriers associated
with this route are costs (transportation and cross border tax) and risks (legal constraints)
combined with it.
Franchising:

This is regarded as one of the most prominently used methods for facilitating expansion
into a new market. Hereby, the companies basically look for an individual or group of persons
having extensive knowledge of the new market and the people belonging there. The organisation
enters into contract with potential franchisees who carry out the business activities of the firm as
per the mutual decision of both the parties involved (Salvatore, 2015). In this contract, franchisee
becomes the semi-independent owner of the brand in their respective region. The barriers linked
to this market entry route are lose of identity of original company, disloyalty of the franchisee,
illegal use of name of company and many more. These need to be taken into due consideration
by CM Downton if the entity seeks to adopt this route.
Joint Venture:
This is yet another widely used route to gain entry into new market. Hereby, two
businesses bind themselves in a contract having same aims and objectives along with sharing
same levels of risks or rewards. Part rights are with all the parties involved in contract by which
they perform business activities in their assigned areas. Some of the potential barriers linked to
this route to internationalisation are clash of corporate cultures and mismanagement of
resources as well as capital.
On the basis of above analysis, it can be said that licensing is the most suitable route for
CM Downton to facilitate internationalisation. This route is effective as it provides company
with knowledge of the market in which it intends to gain entry, via the licensee.
CONCLUSION
In accordance with the information furnished above, it can be clearly stated that global
business environment is important to be analysed by a company as it consists of macro and micro
environmental factors which affect the functioning of business. Further, it is acknowledged that a
company seeking entry into international marketplace needs to make use of an appropriate route
to avoid restrictions or barriers linked to internationalisation. There are a number of drivers
which facilitate a firm to execute global commerce and trade, such as politics, competition,
market and technology. In addition to this, it is determined that globalisation places a substantial
influence upon aspects such as culture, governance, leadership, structure and functions of
company.

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