Factors, Challenges and Influence: Global Business Environment Report

This report provides an in-depth analysis of the global business environment, using CM Downton Ltd, a logistics firm, as a case study. It begins by identifying and analyzing the key factors driving globalization, such as cost efficiency, market expansion, and increased competition. The report then delves into the strategic complexities faced by organizations operating globally, including challenges related to international trade laws, cultural and linguistic diversity, and supply chain management. Furthermore, the report evaluates the influence of globalization on organizational governance, leadership, structure, culture, and functions, utilizing the McKinsey 7S framework to assess these impacts. The analysis covers how globalization affects strategy, structure, systems, skills, staff, style, and shared values within CM Downton Ltd, providing a comprehensive overview of the challenges and opportunities presented by the global business environment. The report aims to provide a clear understanding of the multifaceted nature of global business operations and the strategic considerations necessary for success.

Global Business
Environment

INTRODUCTION
The global business environment is mainly the representative of an environment exits in
different sovereign countries including various internal and external factors like suppliers,
customers, value chain, competitors, political, legal and many other factors that are exogenous to
home or domestic environment of a company (Adekola and Sergi, 2016). Global business
environment is a result of enhancement in integration among nation and economy that has
facilitated many opportunities for an organisation through providing reach to a wider market area
and more customers. But at the same time many threats and issues associated with higher
competition level and other dynamic factors are also caused by this. This assignment is based on
CM Downton Ltd that is a privately owned logistics firm and has established itself in highly
competitive industry through fulling needs and desires of customers in most effective way. This
report includes a discussion about key factors that drive globalisation together with its strategic
complexities. Further an evaluation about influence of globalisation on organisations structure,
culture and function is also their together with its influence on decision making and strategy.
LO 1
P1) Analysis of key factors that drive global commerce
Concept of globalisation or global commerce
The concept of globalisation is mainly associated with the increase in integration and
interconnection among nations and culture that has facilitated better opportunities for
international business. The global commerce has facilitated wider market and increase in
customer base that is beneficial for an organisation to earn better profits and increase its
productivity (Ali and Khan, 2019). Thus, CM Downton Ltd is also having an opportunity to
improve its customer base and earn higher profits through expanding its business operation at
international level. The main drivers and key factors that encourage CM Downton Ltd to expand
its business operations at global level are as follows:
Cost- It act as a key factor that drive global commerce and trade as operating at
international level makes operations more cost effective through improving the overall
productivity. For instance, when CM Downton Ltd operate at global level it need to order raw
material and other inventory in large quantity that reduce the cost of stock as procured in bulk
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quantity, thus, cost efficiency is one of the key factor that entourage CM Downton Ltd to
operate at global level.
Market- The other factor that encourages an organisation to operate at global level is
enhancement in market share and customer base. For instance, CM Downton Ltd when starts
operating at global level its market share get enhanced as it become able to attract more
customers from different nations and localities thus, improve its productivity and profit margin.
Thus, enhancement in market share is also a key factor that drive global trade and commerce.
Competition- while operating at global level an organization get better opportunity to attract
more investors in form of FDI thus, lead to enhancement in its competitive strength and business
position. CM Downton Ltd can also enhance its competitive power through expanding its
business operations at global level (Berman and Dalzell-Payne, 2018).
Beside these factors, use of PESTEL analysis are also made by CM Downton Ltd before
expanding its business operation at global level as it provide better analysis of external threats
and opportunity that act as drivers of global trade and commerce.
Political- It includes the level of political stability and attitude of political parties towards
business organisation. The nations that have higher level of political stability crate opportunity
for CM Downton Ltd as it facilitates ease in logistic operation and its function.
Economical- It is mainly associated with growth rate, inflation and deflation, GDP,
consumable income, etc. A developing country offer better opportunity for CM Downton Ltd as
it facilitates higher level of purchasing power of customer and facilitates better growth rate for
logistic operations.
Social- It is mainly related with the attitude, behaviours of customer together with
cultural and social norms of a nation (Colpan and Jones, 2019). It act as driver of global trade as
organisation like CM Downton Ltd needs to make its business policies and strategies as per the
behaviour and preference of society in which it operates thus, shape and influence its business
operations.
Technological- It is that factor associated with level of technology and advancement that
prevails in nation. It is one of the key factors that motivates CM Downton Ltd to operate at
global level as it facilitates better reach and assess to more effective and latest technology in
order to have improvements in its business operations together with enhancement in productivity
and profitability.
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Environmental- This factor is related with conversation and safety of environment from
hazardous effects of business operations. This factor act as threat for CM Downton Ltd as it lead
pressure on its to make use of cleaner energy and reduce level of carbon emission to operate
effectively at global level.
Legal- This aspect of global trade is associate with various legal acts and trade barriers
that create threat for an organisation to effectively act at international level. In context of CM
Downton Ltd, it need to properly evaluate the various employment act and other trade provisions
before expanding its operation in any nation to avoid the chance of future consequences (Degadt,
Lambrecht and Broekaert, 2019).
Thus, on the basis of above discussion it can be evaluated that there are various key
factors that motivates CM Downton Ltd to operate at global level that includes benefits of cost
efficiency, wider market share, better financial opportunity and assess to latest and more advance
technology that facilitates increase and improvement in overall productivity and profitability of
an organisation. But apart from these advantages and opportunity, some threats are also their
related with political insatiability and legal threats.
LO 2
P2) Complexity of strategic challenges
While operating at global level various challenges and strategic complexities are faced by
an organisation. A description about some of these challenges that can be faced by CM
Downton Ltd while expanding its business operation at global level are listed below:
Complexities of international trade law- The biggest challenge faced by an organisation
while operating at global level is associated with the various control and trade barrier that limit
the expansion and growth of a company. For instance, the random changes and continuous
modifications in tariff rates and structure create various complexities for CM Downton Ltd as it
need to makes similar changes in its strategies and polices to properly align with the international
trade policy that hamper its performance and productivity (Epstein, 2018). To overcome with
this strategic challenge CM Downton Ltd should expand its business operations in the nation that
have stable international trade law and flexible tariff barriers.
Diversified culture and language- Another strategic challenge faced by an organisation
while operating a global business is related with considerable diversities that includes various
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spoken language and diversified culture in which an organisation operate at global level. For
instance, while operating at global level a range of diversified needs, preferences, habits,
consumption pattern, culture, language and norms of customers are faced CM Downton Ltd that
lead to adverse impact on performance and communication of this organisation (Gawin and
Marcinkowski, 2019). It can be evaluated that cultural and language diversity makes it difficult
for CM Downton Ltd to have better understanding of demands and preference of customer and
also lead to a strategic challenge as it become difficult to communicate with customers and its
employees who speaks English as their second language thus, reduce its customer base and
productivity. Proper, language and cultural training can be provided by CM Downton Ltd to its
employees to overcome this challenge before entering global business.
Supply chain complexities- With the increase in geographical area and expansion of
business organisation at global level it become difficult to maintain a smooth and uninterrupted
supply chain due to lack of information about petrographical areas and system of a foreign
nation. The complexities of supply chain and difficulty in maintaining proper coordination
between demand and supply is a strategic challenge that is faced by a global business. For
instance, CM Downton Ltd does not have much information about the supply network of a
foreign market thus, chances of dealing with some illegal or unauthorised supplier has increased
and a risk of theft and miss happening in transit is also increased that lead to a strategic challenge
for CM Downton Ltd (Hamilton and Webster, 2018).To overcome this challenge proper analysis
of its supply network together with establishment of effective channels of communication and
transportation can be adopted by CM Downton Ltd to have better coordination in demand and
supply of logistic at global level.
Thus, it can be evaluated that various strategic challenge and complexities are faced by
CM Downton Ltd while operating at global level that are associated with international trade and
dynamic traffic barriers and structure that impact control and restrict growth of an organisation.
Further diversified cultural and language is a big issue that hamper productivity and performance
of CM Downton Ltd at global level. Beside this, complexities in supply chain due to physical
distance and lack of awareness is also a strategic challenge for CM Downton Ltd together with
decision regrading best diversification strategy to operate successfully at global level.
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LO3
P3) Influence of globalisation on organisational governance and leadership, structure, culture and
functions
Globalisation has lead to considerable influence on governance and leadership, structure, culture
and functions of an organisation. Therefore, to evaluate influence of globalisation on its
governance and other internal factors like leadership, structure, culture and functions use of Mc
Kinsey 7s framework is made by CM Downton Ltd a description of which is stated below:
Mc Kinsey 7s framework
Use of this model is made by CM Downton Ltd to analysis its firms organizational design
and structure in order to operate more effectively at global level. Use of McKinsey 7 s model
facilitates a better understanding about influence lead by globalisation on internal factors of CM
Downton Ltd in order to effectively align and allow organisation to achieve its objective at
international level (Kasemsap, 2016). The 7 key elements of this model reflecting the influence
of globalisation on governance, leadership, structure, culture and functions of CM Downton Ltd
is provided below:
Strategy- It represent the plan adopted by an organisation to gain better competitive
advantage and work effectively at global level (McKinsey 7s Model, 2019). Globalisation has
created an influence CM Downton Ltd as it has increased the level of competition thus, it
become crucial and necessary for CM Downton Ltd to come up with some new and more
innovative ideas and strategies to compete effectively at global level.
Structure- It represent the way according to which all the units and division of an
organisation are divided and also represent the scalar chain of responsibility and accountability.
Globalisation has lead to enhancement in administrative complexity and level of operations thus,
lead to significant influence on structure of CM Downton Ltd. Use of functional organisational
structure is adopted by CM Downton Ltd as it facilitates more clarity and transparency in
operation through properly bifurcating task and employees in various function as per their skills
an competences (Lane and Maznevski, 2019).
Systems- This element is a representative of various process, procedures and activities
that are conducted with in an organisation on daily basis. To ensure its effective performance at
global level and to achieve the higher level of organisational performance use of less complex
and most suitable business system and activities are adopted by CM Downton Ltd.
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Skills- it is represent the sum total of capabilities and competences of employees of
organisation. The globalisation has lead to influence over skills on employees through exerting a
pressure to have continuous development and enhancement in their skills and competences in
order to perform effectively at global level. Thus, globalisation has lead to an impact on CM
Downton Ltd through enhancing importance and necessity of timely training and development
programmes.
Staff- It represent the size and type of workforce and employees of an organisation.
Globalisation has exerted an influence CM Downton Ltd as it become necessary for this
organisation to recruit and hire more competent and skilled individuals to operate successfully at
global level together with better motivation and reward polices to retaining best talent in
organisation for longer period in order to work effectively at international level (Mamic, 2017).
Styles- It represent the way in which the top management and top level authority manage
and interacts with other individuals and how they share the symbolic values and beliefs with
employees. Globalisation has lead an influence over style of CM Downton Ltd as to maintain
coordination and proper balance in global business environment a more participative style is
need by a organisation. Thus, to effectively operate at international level use of democratic
leadership style has been made by CM Downton Ltd to enhance its viability and performance in
international market.
Shared values- It is a representative of norms, culture and standards of an organisation.
Thus, shared values are basically the sum total of corporate culture together with individual work
ethic. The globalisation has created a influence on shared values and cultural of CM Downton
Ltd as it lead to adoption of task culture in organisation as it facilitates better division and
bifurcation of work and responsibilities among various teams and task as per their skills and
competences (Mawejje and Sebudde, 2019). Thus, brings more clarity and transparency in CM
Downton Ltd to effectively operate at global level through facilitating a more simple, clear and
positive workplace culture.
Evaluation of 7 McKinney's Model
On the basis of above discussion about various elements of McKinney's model it can be
observed that globalisation has created significant influence leadership, structure, cultures and
functions of CM Downton. A shift from in seen in leadership style of CM Downton towards a
more participative style like democratic to ensure better motivation among employees at global
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level. A change in structure is also lead by globalisation in CM Downton as it need to adopt
functional structure to ensure proper coordination and bifurcation of work at international level.
Further change in culture is also seen as task culture are more suitable for CM Downton to
operate more effectively at global level. The modification lead in functions of CM Downton
includes its operations at higher level thus, efforts are needed to make clarity and transparency at
its operation to operate more efficiently and successfully at global level.
P4) Influences of ethical and sustainable globalisation on organisation functions
Globalisation is a concept that has enhanced level of integration and connection among
nations and culture that lead to better expansion opportunities for organisation together with
better assess to technology. But globalisation has also lead to some ethical and social issues like
smuggling, increase in cyber crimes with advancement in technology and other illegal activities.
Thus, the concept of ethical and sustainable globalisation has emerged in order to resolve or
eliminate theses social and ethical issues. Sustainable globalisation is mainly associated with
meeting and fulfilling expectations of all stakeholders that includes its customers, suppliers,
employees, directors, mangers, overall society, etc. while operating at global level. Thus,
sustainable globalisation lead to a better performance and competences at global level (Ozturk
and Cavusgil, 2019). Sustainable globalisation has created an influences on CM Downton Ltd
through emphasising its focus towards expectations and desires of all stakeholders at global level
that includes better strategies and policy to meet and achieve mutual goals and targets together
with conserving environment through making use of efficient machinery and business operations
in order to meet and respect needs and preferences of all stakeholders and associated parties.
On the other hand ethical globalisation is related with those business practises that aim at
reducing illegal and inappropriate business practices while working at global level. It creates an
influence over CM Downton Ltd as make it necessary for this organisation to properly evaluate
its supply chain network to eliminate the chances of illegal activities, smuggling and other
unethical activities. Further, effective data protection and other security measures are also
become essential to maintain confidentiality of data about its customers and employees to
safeguard them from risk of hacking or other issues.
The other impacts lead by sustainable and ethical globalisation on functions of CM
Downton Ltd are as follows:
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Fair treatment for employees - This influence is lead by ethical globalisation as while
operating at global level it is necessary for CM Downton Ltd to have an equitable workplace
environment where all the employees are fairly treated without any discrimination (Prajogo,
2016). Thus, it lead to influence over CM Downton Ltd as it become necessary to have fair HR
strategies and other polices.
Effective business relationship- In order to maintain sustainable development and
effectively operate in global environment for a longer period of time, it become essential for CM
Downton Ltd to develop impressive relation and better collaboration with its business partners
and other associated parties. It lead to a positive influence on CM Downton Ltd as sustainable
globalisation ensure smooth functioning at international level through better collaboration and
relationship with associated parties.
LO 4
P5) Evaluation of different ways in which decision-making works effectively in a global context
Operating at global level is a quite difficult and require many effective strategies and
plans. The international environment is highly dynamic and keeps on changing thus, an
organisation can operate or compete in global environment only with the help of effective
decision making. A discussion about different ways in which decision making works effectively
in global context with respect of CM Downton Ltd is provided below: Flexible decision making strategy as per current needs- The one of the most effective
ways in which decision making works well in global context is having a flexible decision
making approach on the basis of current or prevailing situation. This way of decision
making is effective in meeting and overcoming the effects of dynamic factors of global
business environment (Rofiq and Pramono, 2019). Proper analysis of internarial as well
external environment is made by mangers and leaders of CM Downton Ltd so that an
effective decision can be made in order to grab prevailing opportunity and overcome
possible threats. Thus, it can be evaluated that flexible decision making on the basis of
current scenarios is an effective way of decision making in global context.
 Empirical decision making- This way of decision making is associated with having more
specialised and excellent decision making in order to operate effectively at global level.
Use of empirical decision making has facilitated a high level of modifications and
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specialisation in CM Downton Ltd that ensure attracting larger number of customers at
global level. Empirical decision making also facilitates better marketing and promotion
strategy with the help of specialisation and modification in decision making that
facilitates better outcomes and positive results while operating at global level (Suder,
2019).
Further, it has can be observed that decentralisation of decision making works well at
global level as it facilitates a faster process to encounter or meet a risk at global for CM Downton
while operating in international market. Beside this use of democratic leadership style is also
effective to handle risk and consequences at global level in more effective way through
facilitating better participation and involvement of all employees. This enhance the viability and
efficiency of CM Downton at global level through offering more effective strategies and
approaches to meet threats exists at global level thus decentralised decision making and
democratic approach work well at global level.
Beside this, to encounter the strategic challenge of compliance with international trade
law, the leaders and manager of CM Downton should make decision after proper analysis and
evaluation of all trade laws and tariffs to ensure proper implication of these laws. In order to
resolve the challenge of diversified culture and language, a strategy of providing proper cultural
training and education should be made by CM Downton. Further, use of empirical decision
making could be made by CM Downton to encounter and address the issue of supply chain
complexities as it facilities better solution and modified way to ensure effective supply and
distribution of products and services at global level.
P6) Determination of various routes of internationalization
Internationalisation is basically a subset of globalisation that includes development of a
service or product in such a manner that it is acceptable and desired by larger number of
customers across various countries at global level. Thus, internationalization includes various
strategies an steps that are adopted by business organisation to acquire or reach a market beyond
its domestic country. The various ways of internationalisation that can be adopted by CM
Downton Ltd to enter a new market or expand its business operations at global level are as
follows:
Exporting- It is one of the most commonly used method or way for internationalization
that includes direct or indirect transportation of products across various countries. Under direct
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exporting the organisation have the complete responsibility of exporting and transporting goods
and serves in foreign country together with its selling and distribution in foreign market
(Tallman, Luo and Buckley, 2018). On contrasty there are some intermediaries who help and
support exporter in distributing and selling its product.
Key barrier- The only barrier associated with exporting method of Internationalisation is extra
cost of packaging and transportation that makes it a costly process. Beside this, no help or
support from any expert or third party is also not their that enhance the level of risk.
Franchising- It is basically an agreement between a franchisor who grants licence or
permission to some other individuals i.e. franchisee to make use of its rights and authorises in
order to procure and sell its product in some foreign market. It provide a faster and cost effective
way to reach or garb a foreign market through providing rights to use its trademarks and brand
name of an organisation.
Key barrier- The challenge or barrier associated with franchising method is risk of theft or
misuses of trademark and copyright that is quite risky for an organisation and can hamper its
brand image and performance in foreign market (Woerkom and Zeijl-Rozema, 2017).
Joint venture- It basically represent a partnership agreement between two organisation in
order to get benefits of operating at higher level and mainly have a mutual focus or same product
line. The biggest advantage lead by joint venture is that it provides better insight and more
expertise in business operation through support and help of some expert business partners.
Further, joint venture also yield sharing in risk which makes it easy to smoothly operate at global
level.
Key barrier- the challenge related with joint venture includes confusion and lack of proper co-
ordination among business partners that hamper the performance at global level. Beside this, it
also restrict the flexibility of business operations through high level of interference from third
parties (Adekola and Sergi, 2016).
Out of these ways to enter new market, the most justifiable strategy that can be
recommended for CM Downton Ltd is joint venture as it facilitates support and help from a
expert party and also facilitates sharing in risk while operating at global level or entering a new
market. In order to cope with the key barrier associated with joint venture, it is recommended for
CM Downton Ltd to have a more clear and transparent written agreement with other parties in
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