University Project: Global Business Environment Analysis and Strategy

This project delves into the intricacies of the global business environment, commencing with an introduction to globalization and an analysis of its key drivers, including technological, political, market, cost, and competitive factors. It then explores the complex strategic challenges faced by global businesses, such as foreign regulations, language barriers, environmental conservation, currency fluctuations, and technology licensing. The project further examines the impact of globalization on organizational governance, leadership, structure, culture, and functions, alongside the influences of ethics and global sustainability. A significant portion of the project involves applying the McKinsey 7S model and Hofstede's cultural dimensions theory to Shell Plc, coupled with a discussion on market entry strategies and an evaluation of barriers to globalization. The project concludes with a critique of strategies for entering the global market and provides recommendations for Shell Plc to adapt its organizational structure and decision-making processes.

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Table of Contents
1.1 An analysis of the key drivers of globalization.............................................................................4
2.0 An explanation on the complexity of strategic challenges faced by global businesses..........6
2.1 A critical analysis on the strategic challenges caused by globalization on risk, diversification
strategies and supply chain...............................................................................................................9
2.2 A critical evaluation of the global business environment............................................................9
3.0 (a) An evaluation of the influences of globalisation on organisational governance and
leadership..........................................................................................................................................9
b) An evaluation of the influences of globalisation on organisational structure.............................10
c) An evaluation of the influences of globalisation on organisational culture.................................10
d) An evaluation of the influences of globalisation on organisational functions.............................12
3.1 a) An evaluation of the influences of ethics on organisational functions..................................12
b) An evaluation of the influences of global sustainability on organisational function...................13
3. 2 (a) Application of McKinSey 7S Model on organisational structure in case the of Shell Plc......13
Application of Hofstede's Cultural Dimensions theory in the case of Shell Plc............................14
in a global context...........................................................................................................................14
(b) Ways (strategies) to enter global markets.................................................................................16
(.......................................................................................................................................................16
(c) A critical evaluation of the key barriers to globalization and recommendations to overcome
them................................................................................................................................................17
(d) A critique of the strategies adopted when entering the global market and valid and justified
recommendations of how Shell Plc should adapt its organisational structure and decision-making
processes.........................................................................................................................................18
REFERENCES........................................................................................................................................20
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Task 1
1.0 Introduction to the concept of globalization
Globalization is the process where the people, companies and the different nation
governments tends to have the proper interaction and integrations on the basis of the
international trade and investment on have the further level of effect on the environment,
culture, political systems, economic development and on the human physical well-being in
societies around the world (Beck, 2018). In addition to that’s with effect to the globalization,
the development of the internet media and international business, the world fees to be more
connects ever the before situation.
On the other hand, the globalization is the process in which countries can have the
establishment of the easy level of communications in order to make the sell of the
products attributed to the major changes in the telecommunication and transportation
industries. This tends have made the clear allowing for the goods to be made sold all over
the worlds in perfect manner.
Globalization is not only there have limitation to the trade aspect only but also have the
development of cultural aspects as through it there different culture have the significant level
of meet, know and understand various level of ways of life and their acceptability in perfect
manner. the companies tend to have the establishments on the way to compete customer for
the nationality of different countries which make the firm to have the operation where the
selections of the place as making the production cost low. This can be understood as there
with the help of internet, the US based company can have the hiring o the accountant form
India to perform its taxes (Pieterse, 2019). The increase in the technology is the positive
aspects of the globalization as to have the production of the standardized goods as invariant
to locations as the common property of the whole humanity. The countries have started in
developing there significant policy in order to have the proper level of mitigation of the risks
at the economic levels and seeking the internationals action in the erect manner.
1.1 An analysis of the key drivers of globalization
Globalization have turned out be the way of the living the life in the 21 st century as more
level of development of the transportation , communication and technology have the
significant decreased the distances along with increasing speed of transactions across the
various broad geographical borders. There have been the existences of the types of the
market drivers but to have the common convergence of the global trends in the ecosystems as
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to have the proper understanding regarding landscape and being prepares to have the act in
acting the opportunities for the key to success.
To have the discussion on the globalization and the international business have the
discussion on the significant drivers as they can basically have the segmented into the
different group:
Technological drivers
this have the significant level of shaping and setting the foundations for the modern
globalizations as the innovation have revolutionize the industry (Martell, 2016). This have
lead o have the major improvement for the global connectivity, mobility and communications
to make the proper fossilisation in the different sector as the agricultural in production lines
and finances. As the positive impacts of the drivers have enabled the world to be highly
computing and communication’s as the latest technological changes to be created global
business and e commerce.
Political drivers
There has been the proper level of liberalizing the in term of trading rules and deregulated
level of markets which have led to substantial lowering of the tariff and properly allowed the
foreign direct investments in term of the almost all over the world. This tends to have the
rapid advancements in term of technology as culture, economics and politics. As the
company have there have the proper level of expansion with providing the economic motives
which is leading their political solution. There is the advantage of the lower wages to have
the outsourcing the productions by masking the influencing of the politicians to have the
opening up the trade and reduction in the term of the trade barriers in globalization .
Market drivers
Market tends as the domestic markets have turned out to be becoming more level of saturates
as the growth of opportunities have growth which are limited and global expansions to have
the choosing the overcoming the situations. Markets have the providing the opportunity to the
national economy to be became the global economy through the common customers have the
need to make the optimum utilization of the resources as the helps o the global challenges
(Hawkesworth, 2018). The increase in the technology is the positive aspects of the
globalization as to have the production of the standardized goods as invariant to locations as
the common property of the whole humanity.
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Cost drivers
This have the source the efficiency along with cost vary the country to the country to make
the development of the global firms to have the taking the advantage of the significant facts.
There other level of cost drivers to have the globalization in term, of opportunity to be the
building of the global scale’s economies and high products development of the cost is
nowadays. As the negative impacts the low-cost labour doesn’t have their application to the
low skills works and their higher professional’s skill workers in the emerging economy to be
employed their companies one of the developed countries with another developing countries.
Competitive drivers
With the global markets have inter firm competitions have the proper level of the increasing
the organizations which are faced as the international business (Brown, McIlwraith and de
González, 2020). There is the strong dependencies among the different countries having the
high two ways trades the FCI actions by making the support this drivers. This will make the
proper integrations in their business actuals situations by appropriately describing there
today.
2.0 An explanation on the complexity of strategic challenges faced by global businesses
Foreign laws and regulations
This is one of the biggest challenge which is being faced by organizations when they
decide to go in different international markets. Each and every country has its own
regulations as well as laws which the organizations have to comply with in order to perform
their operations efficiently. From the tax implications to the trading laws, organizations face a
great difficulty in understanding these different implications. Along with this, for entering the
foreign markets organizations have to pay a great amount of legal cost to become eligible for
trade within that location. For example- while expanding its business in the international
market of US, Shell plc have to first analyze the legal regulations as well as foreign policies
in that market (Lasserre, 2017).
Language barrier
This is the another most important as well as fundamental challenge which the
organizations faces during its expansion in international markets. Employees have to deal
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with the customers from each and every culture as well as language and when the
organization expands in the international region, then learning their language as well as
culture takes time which poses great impact upon organizations and their customer base. For
example- When shell plc will expand in the foreign markets of say China then it will be
difficult for the organization to become aware about their culture as well as language. They
will incur a high amount of cost on training employees on communication.
Environmental conservation
A large number of countries now have become highly aware as well as takes keen
interest in preserving the environment and reducing effects of the global warming. Therefore,
in this view each and every country develops their own environmental protection rules and
regulations for dealing with issues like pollution. Thus, this is the biggest challenge which
organizations planning to expand faces where they require a thorough and careful planning of
every country and its environmental policies. They have to comply with various
environmental practices which sometimes become difficult for them. For example- Shell plc
would have to invest a huge amount on studying the environmental policies of every country
and will face challenge of adapting to various policies (Yeo and Saboori-Deilami, 2017).
Currency rates
While setting the prices as well as payment methods are one of the important aspect,
fluctuation in currency rate is the biggest challenge which most of the organizations faces in
international market. Monitoring these exchange rates is therefore the central part in
international business. Currency of each and every country tends to fluctuate according to the
changing market and consumer trends which impacts organizations to a great extent. For
example- if Shell plc is paying the production cost to suppliers in dollars but selling within
markets with unpredictable currency then organization can end up with smaller margin.
Besides this, if shell plc pays producers in currency without knowing its actual current value
then this will eventually affect their profit margin.
Licensing of the new technologies
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This is one of the diversification strategy which becomes the greatest barrier for
organizations while entering the international market. When organizations develop the new
products and services for their chosen market then it is highly essential to have a license of
these in order to avoid the stealing of idea. Licensing if the new technologies basically mean
that owner of the technological intellectual property allows license to use or sell it in
exchange of compensation. For example- when Shell plc will enter the new market then it
will be highly essential for the company to license its products as this will help them to rely
upon expertise and skills of licensee for selling the products. Licensing calls for high cost as
well as expertise which become a challenge for company.
Retention of employees
One of the major diversification strategy is merger in which two organizations unites
for running the new company. Organizations when enter the international market through
merger then employee retention becomes greatest challenge. As due to merger, employees
also come together and there occurs the conflict of interest as well as attitudes. For example-
when shell plc will merge with another organization for entering new market then their
employees might due to cultural difference, communication gap leave the organization and
thus will increase its turnover rate. Therefore, employee retention becomes one of the greatest
challenge for the organizations which ultimately affects their overall profitability ratio as well
as penetration within the foreign market (Oyedele, 2016).
Supply chain
For entering the new international market, organizations have to access and bring a
change in its overall supply chain. When organizations tap the new market, then supply chain
also diversifies. One of the greatest challenge and problem which organizations face in their
supply chain is the increased cost of suppliers. Suppliers generally demand a high price from
organizations in order to generate profit. The costs mainly creep up throughout supply chain
channel. These suppliers mainly charge the high commodity prices and increase the cost of
their raw material. Along with this, they charge a high amount of transport ad labor costs
from company. For example- Shell plc might incur this challenge where they might end up
offering high price to suppliers and purchasing raw material at much high cost.
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2.1 A critical analysis on the strategic challenges caused by globalization on risk,
diversification strategies and supply chain
Each and every organization which enters the new foreign market basically comes across the
various challenges as well as barriers as the international market remains a new one for them.
Some of the major challenges which they face are mainly related with three main categories
like diversification, risk challenges and supply chain. For example- shell plc might face the
challenge of licensing of their technologies in merger which is one of the most important
diversification strategy. Various risk challenges are foreign laws, language barrier,
fluctuation within the currency rates etc. company also faces the challenge of supply chain
where suppliers charges a high cost from companies (Puklavec, Oliveira and Popovič, 2018).
2.2 A critical evaluation of the global business environment
The major challenge which is being faced by the organizations when they enter the
international market is fluctuation with the currency rates as well as political instability.
Besides this, the major opportunities which are being available to the organizations in
expanding its business are access to the new distribution network and most importantly
enlarging the customer base for gaining competitive advantage. There are also some
advantages and disadvantages of operating globally (Kasemsap, 2016). The major advantage
of going international is that it enables the organizations to expand and gain economies of
scale. It helps the organizations to bring innovation within their products and services and
increase their profitability ratio. Major disadvantage of performing globally is that
organizations have to face a high level of cultural barriers. Besides this, cost of entering the
international market is also high and requires a well through planning.
Task 2
3.0 (a) An evaluation of the influences of globalisation on organisational governance and
leadership
Organizational governance and leadership
The globalization has a great influence over the organizational governance as well as
leadership. Globalization has basically affected the management as well as leadership through
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the customer base. This globalization has resulted in transfer of employees to the
international locations and this has increased need for greater communication. Thus, this calls
for leaders having great understanding of management. Besides this, due to the increase in
globalization scale there has been an enhancement of communication within organizations
and thus greater communication has eventually impacted the hierarchical structure within the
firm. For example- due to globalization, there has been a blend of culture within Shell plc
thus this has resulted in change within organizational structure for greater communication
(Kozubikova and et.al.,2019).
b) An evaluation of the influences of globalisation on organisational structure
Organizational structure
Globalization is one of the determining factor for success as well as failure of the
organization. Globalization basically means tapping the new markets and accessing the new
and different suppliers as well as establishing relation with new partners. Thus, when
organization takes its products and services overseas then they requires new strategy as well
as resources for coping with the new customers and markets. This eventually calls for the
new organizational structure and a change in the overall aspect of the business results in
formation of new structure. For example- when Shell plc will take its products and services to
the international market then they would have to develop new strategy as well as would
require additional resources like human capital. This will ultimately influence planning and a
shift in organizational structure (Amponsah and Ahmed, 2017).
c) An evaluation of the influences of globalisation on organisational culture
Organizational culture
Globalization tends to result in the inflow of various culture as well as values. When
an organization enters the international market, then they recruit employees from that
particular location. This gives rise to blend of employees from different cultural background
and different perception. Thus, this impacts the organizational culture to great extent. For
example- when Shell Plc will recruit the employees from different locations then they will
have to adapt their organizational culture accordingly in order to reduce conflict among
employees (Schwertner, 2017).
Mckinsey 7s model
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This is basically the framework which is being used by organizations for analyzing
their key elements for achieving organizational goals.
Strategy
This is basically plan developed by organizations for achieving sustained competitive
advantage within the international market. For example- strategy of Shell plc is to target the
new customer segment in international market with new product.
Structure
Ways in which business divisions are mainly organized is known as the structure.
When organizations enter the international market, their whole business units and structure
changes. For example- Shell plc for knowing new customers in international market will
develop teams like market research, sales team etc (Brenkert, 2019).
Systems
These are the processes as well as procedures of company which includes their daily
activities. These influences organizational culture to great extent s these contain information
system which mainly supports the business.
Staff
This element is majorly concerned with the number of employees that word be
required for the international market. For example- Shell plc will recruit highly experienced
and technical staff for its new branch in the international market. This will eventually have a
impact on organizational culture.
Skills
These consist of abilities of the employees for performing their job effectively. For
the international expansion, employees should have the great skill set and should be highly
experienced to deal with customers. For example- Shell plc will require employees who have
better experience within international market and have great abilities.
Style
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It is the way in which company is basically managed and way in which they interact.
For example- leaders in shell plc should allow input from employees for the idea generation
and should encourage their participation (Miftari, 2018).
Shared values
These are norms as well as standards which guide the behaviour of employees and
thus impact the organizational culture to high extent. For example- shell plc should instil
effective communication and cultural awareness among employees for entering international
market.
d) An evaluation of the influences of globalisation on organisational functions
Organizational functions
Globalization also influences and affects the organizational functions to a great extent.
When organizations enter the new international market then they have to change their
organizational functions according to that market. For example- when shell will enter
international market then there will be a change in major aspects like people in that market,
competitors, currency rates etc. Thus in this sense their organizational functions like
recruitment, finance will eventually change and thus will be according to the new market.
3.1 a) An evaluation of the influences of ethics on organisational functions
Ethics
The ethics forms the core strength as well as fundamental aspect of each and every
organization and is one of the determining factor in success of the organization. In this sense,
globalization plays an imperative role. It means that when organization conducts their
business in the international market then they have to take care of the values and beliefs of
the people of that country. The ethics have a great impact on the organizational function in
the global sense as when company will follow the ethical way as well as will remain
transparent to their employees then the employees will perform their functions effectively
like customer service, marketing etc. This will eventually influence the organizational
functions like HR, finance in positive way. For example- when Shell plc will expand its
business in international market or will conduct their activities in foreign market then their
ethics will be of utmost importance (Aguilera and Crespi-Cladera, 2016). If company will
remain transparent to their employees regarding financial position of company in that country
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