Contemporary Business Issues in a Globalised Environment - UK Analysis

This report explores contemporary business issues within a globalised environment, focusing on the impacts of globalisation, particularly in the UK. It examines the concept of globalisation, its effects on various sectors like employment and trade, and the associated costs, including harm to developing economies and environmental concerns. The report also delves into external environmental factors such as socio-cultural, technological, and political influences, highlighting how these elements affect international businesses, using Tesco as a case study. The analysis covers the challenges and opportunities presented by globalisation, including the need for businesses to adapt to international changes and address issues like cultural loss and tax avoidance, ultimately emphasizing the complex interplay between globalisation and business operations.

Contemporary Business Issues in a Globalized Environment

Table of Contents
Introduction......................................................................................................................................3
Overview of globalisation............................................................................................................4
Impact of globalization in the UK...............................................................................................5
Costs of globalization..................................................................................................................6
External environmental................................................................................................................8
Conclusion.....................................................................................................................................12
References......................................................................................................................................13
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Introduction
As the spotlight of economic shifts to global economics and developing markets in order to find
out the new ways and to manage people, cost, risks and strategies. Managing the global
organization has been considered as the challenge for centuries. The report focuses on
Contemporary Business Issues in a Globalized Environment. In order to understand the concept
of business and the contemporary issues within the globalised environment, the Tesco Company
is chosen to illustrate in a better way. The module is designed in such a way that critically
demonstrates the current issues in both political and economic that affects performance and
management of the organization. It is primarily important to analyse the causes of major
globalization environment and examine the various scenarios and factors that affect it. The areas
that are covered in the module is the declining and growth of economics, the economic effect of
the commodity, financial institution, the role of the government and the external factors that
affect it such as Social-cultural factors, Financial factors, political factors and technological
factors.
Figure: 1
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(Source: Leon, 2012)
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Title: Analysing how globalisation has impacted as an individual and a firm or an
organisation.
Overview of globalisation
Globalisation can be explained as the process of international incorporation which further results
in the continuous interchange of cultural aspects, products, ideas, and other worldviews. In the
present era, the process of globalisation has been caused due to the advancement in technology
such as infrastructure, transport or telecommunication facilities. Due to the invention of the
internet, it leads to massive international integration promotion trade and diverse political
factors. As there is a great development in a global monetary system such as VISA is having
accelerated to the economic integration in several countries. Continuous growth in the economy
provides convenience to the organization to do business in the competitive world. People are
able to assess their business in an easy way by using network or conduct business at the global
level (Davies, 2013).
The process of globalization is having a greater impact on organizations and its operations with
adopting the changes in the entire operation of the organization to maintain relevancy and remain
profitable in the current global markets. It is quite necessary to consider the different
international changes as it has a great impact on the organization in economic and political front.
It is paramount that establishes the responses with regarding changes in the organization. It
bought it bought a various set of opportunities for the different organizations in order to exploit
the challenges such as loss of culture, unemployment, insecurity and many other challenges. It is
necessary to identify the positive and negative impact of globalization on the different sectors.
The issues that are addressed is very broad and therefore it is quite hard to completely solve it.
In short words, it has been analysed that globalization is explained as the process of increased in
cooperation and integration in the different national economies. This may involve national
economics which is increasingly interrelated and integrated. It is a complex and trending issue
that focus on various benefits and the cost which is associated with greater globalization in all
over the world. The globalization may involve greater free trade, increased in capital flows, the
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growth of multinational companies such as Tesco, increased in integration and global trade cycle
(Brightkite, 2018).
Figure: 2
(Source: Pettinger, 2017)
Impact of globalization in the UK
Due to increase in globalization, the different sector in the economy of UK is affected. The main
reasons of arising of globalization in the UK are as follows:
Growth: Globalization in UK growth is increasing because there is stiff competition in the UK
and its aggregate demand also increases through increased in aggregate supply and aggregate
demand which increases the level of investment in both domestic and international markets and
investment. Growth in a shorter period of time has become unstable that is having a greater
impact on global economy and due to Globalization there is increasing in interconnectivity. The
Tesco which is leading retailer company is also affected by the increase in growth of
globalization. Due to interconnectivity, the company would be able to deliver its products and
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services in all over the world. According to the economist, it has been proved that globalization
has enhanced the process of deindustrialization (Richards, 2018).
Employment: The structural employment may be lead to widen the income gap between eth
different countries as in long-term jobs are destroyed due to the manufacturing sector and service
sector. There is a great impact on employment that depends upon the working condition of
labour in labour market that totally depends upon flexibility and mobility. The labour
productivity can be improved by closing the productivity gap. The Tesco Company contributes
its major role in reducing the productivity gap as it provides various employment opportunities to
the community of UK.
Prices: Due to increase in competition the price level starts declining for traded manufacturers.
The UK is rich in trade manufacturers from all around the world which helps down that lead to a
decline in domestic and export prices. Tesco is the leading retailer and Manufacturer Company is
facing lots of issues due to the cut down in price. The company export its product and services in
all over the world but due to declining of export and domestic prices, the company would not
able to earn high revenue.
Trade: The volume of exports and imports increases that represents the increasing structure of
GDP. This is having a great impact on the balance of payments that depends upon relative
growth rates, increase in competition, exchange rates and inflation. Tesco exports its products
and services in all over the world that contributes to increasing the proportion of GDP.
Costs of globalization
Due to increase in globalization, the economy has to pay the higher amount. The costs of
globalization are as follows:
Free trade can harm developing economies: A developing country such as India needs to
struggle more to compete with developed countries such as the UK with the context of free trade
benefits that need to be developed countries more. The industries within the developing countries
need more protection in order to develop as they are harmed by the tariff protection (Ikerd,
2018).
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Figure: 3
(YouTube, 2016)
Environmental costs: The major issue that has been raised by the globalization is that it
enlarged the utilization of more non-renewable sources. Due to increase in competition the
organizations use more of non-renewable sources which contribute to global warming and
pollution. An organization such as Tesco can outsource the production in which there is less
restriction on environmental standards this leads to failure of satisfactory environmental
standards (Tutor2u, 2018).
Labour drain: The globalization makes the democratic country that allows labours to move
freely in another country. Therefore, it becomes quite hard to choose the skilled and
knowledgeful workers which are concerned by higher wages. This issue mostly arises in
developing countries because the labours move to developed countries to earn more.
Less cultural diversity: Increase in the competition will result in enhancing of cultural
hegemony and economic. Due to this, there is less cultural diversity that leads to more choices to
the community.
Tax competition and tax avoidance: Multi-national companies such as Tesco can be able to set
its office in any country with the low down rates of corporation tax and profit margin through the
subsidiaries. Due to increase in taxes such as VAT sets the unfair competition for a domestic
organization such as TESCO to use the same tax avoidance measures (Economics online, 2018).
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The greater mobility encourages the inward asset through contribution the lowest corporation tax
such as the UK provides very low tax rates. This encouraged cutting down the corporation tax
that results in higher forms of other tax.
External environmental
For the international business, the environmental factors are comprised of the external relations
faces the global issues. This includes the political, legal and economic environments that are
having a great impact on business and economic environment. The central issues for making the
decision to go international are concerned with minimizing the risk. Such as, Tesco considering
the environment needs to deal with the risk while entering the market. Another example may
involve the ability to reach the competitive edge with new investments such as the use of natural
resources and new technologies that the international companies need to bring.
External environmental factors are as follows:
Socio-cultural: The social-cultural structure of the external environment is having a great impact
on the various industries. It comprises with the basic values of locality. The issues that are raised
by social-cultural are that the relation between the collective, individual, family life and religion
needs to perform a significant role in term of dealing with the new population.
The social factors are based on demographic and cultural aspects of the environment that involve
the mutual consumer vision and performance. For example, Tesco Company provides various
products and services that may affect the increase in health consciousness that may be affected
by the food industries guide to obesity and other health issues. With the deep accepting, the
business can be benefited by the social factors in long-term basis (Johnson, 2017).
The factors may involve age profile, population growth rate; health of the population, social
mobility, population employment patterns, attitude toward the work, job market freedom, choice
of lifestyle or attitudes and so on is having a great impact on the whole economy.
The country’s social factors affect the functions of Tesco while determining the value society of
economy. The social and cultural factors are having a great impact on the functioning of business
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that establishes a culture of work, workgroups and business operations. The factors of the social
and cultural environment may include customs, conventions, cultural heritage, cost structure,
views of people towards income and wealth and different scientific methods, the mobility of
labours and seniority respects. These factors are having a great impact on business such as
demand of people will determine the product that is needed to be a sale. The Tesco Company
determined social-cultural environment and follow all the codes of conduct.
This lead to new fashion trend which affects business in the different parts of the economy. For
example, the fashion-based trend may affect the social based forces and have a great impact on
business. The demand of people is measured through portraying the line level. If the demand is
higher than it is portrayed by three lines demand and if it is lower than it is portrayed in two lines
which are lower than the level of returns attained (Brooks, et. al., 2017).
Technological factors: The technological factor is one of the most important in the post of
millenniums with the context of database, communication and sharing of online resources.
Technological factors affect the business that concerns technological application, technological
investment, and its effect on international markets. Therefore if there is the introduction of new
technology in the market is directly affect the business of the country. The Tesco Company
employed the technology on behalf of its functioning, quality of plant and equipment, and its
impact on productivity. The company extends its web search so that it can deliver its products
and services in the worldwide. With the increase in technology, the Tesco would be able to
deliver its product at the international level that will lead to stiff competition.
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Figure: 4
(Source: Davies, 2013)
Political: Political factors affect the companies that are having a greater impact on organization
due to change in government and the policies that occurs. Change in the public spending may
open or close the major businesses that are relying hugely on UK’s international relations with
the other countries. For example, the market of UK can bring up the new opportunities that are
having a similar impact on Globalization market. Legal change is intimately connected to
political changes such as laws which are frequent changes with the wide range of areas. Legal
and political factors that are having a great impact on environmental business are involved
Deregulation and regulation trends, social and employment regulations, government type and
stability, tax policies and trade and tariff controls and so on (Richards, 2018).
The political environment of any nation is having great influence on the commerce with the
larger degree. The political environment is influenced by government ideology, philosophy,
nature and degree of the system of government and the country’s strength and so on. This factor
affects the system and operations of Tesco and directly influencing the operations of the business
which is having a direct impact on the globalized environment. It is the government policies that
influence the industry. Tesco was able to set up its services and product in London and its first
shipment to Japan due to the government’s globalization policy.
Economic factors: The economic factors also manipulate the company as collective of the
nature of the monetary system, its business cycle, economic policies, nature of factors of
production and social economic communications. The successful organization such as Tesco
delivers its product and services at the international market. It anticipates the prospective markets
and to minimize cost by maximizes the profits. When Tesco noticed the high demand for the
products and services in the market it utilized the opportunities increasing its production in the
market. Change in demand is having a great impact on determining the success and its business
performance. The change in demand is the great factor that determines the business performance
and success. The trends are having a great impact on business performance and Tesco
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experienced the business. The trends in the performance of Tesco are expected as the flow of
returns that confirms the trend (Ikerd, 2018).
In the economic situation, there are low rates of interest encourages the Federal government and
borrowings that improves Federal fund rates. It will lead to perform the business in a better way
and to perform in an economic situation. The demand for lowering of the interest varies that
continues to rise. By enhancing exports the deficit elicited foreign borrowings to cushion. The
Trend shows the economic situation that affects the economy and general spending which
directly affect the performance of the business within the economy.
Figure: 5
(Source: Paypervids, 2016)
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