Black Penny's Global Expansion: Strategic Challenges and Governance

This report analyzes the global business expansion strategy of Black Penny, a UK-based cafe planning international operations. It examines key drivers of globalization, including market, government, cost, and competition, and assesses the strategic challenges faced, such as foreign laws, international accounting, currency fluctuations, and communication barriers. The report further explores the impact of globalization on Black Penny's governance, leadership, and organizational structure, highlighting changes in ethical codes, work culture, and organizational structure. Additionally, it addresses the influences of ethical and sustainable globalization on various organizational functions, including human resource management, financial management, supply chain management, and marketing. Finally, the report discusses different decision-making processes in a global environment, emphasizing the need for robust policies to thrive in a competitive market.

Unit 18

INTRODUCTION
Global business expansion refers to the strategy where business organisations plans to
expand their business operations beyond national boundaries. The motive of expanding business
globally is to enhance productivity and profitability of the organisation (Vance and Paik, 2014).
While doing so, managers and top authorities faced many adversities and complexities. In this
context, this report will focus on analysing key factors of cost, market, environment and
competition that drive global commerce and trade for Black Penny. Black Penny is medium size
cafe operating in United Kingdom, which is planning to expanding its operations in various
countries. The complexities of strategic challenges which faced by the organisation will be assess
in this report. The impact of globalisation on Black Penny's governance and leadership structure
will be assess in this report. The influences of ethical and sustainable globalisation will be
address in this assignment and eventually, articulation of various routes to internationalisation
will be assess in this report.
TASK 1
P1 Key factors which drive globalisation in context to Black Penny.
There are mostly four major sectors of drivers for globalisation such as competition,
government, cost and market. Potential of globalisation in regard to Black Penny is externally
drives the influence the condition for which they are not in controlling. The drivers of
globalisation are represented as follows:
Market- In the market drivers, it contains several types of such as demands, transferable
marketing or customer needs etc. the manufacturing industry like Black Penny getting highly
influenced by the globalisation which is conducted to enter in a new market (Kirton and
Maclaren, 2018). Moreover, Black Penny has to be make changes in their industry operations for
developing goods to fulfil new demands in a global market. To become a successful should be
follow the rules and regulations of the organisation.
Government- The government is manipulator for the globalisation, Black Penny is necessarily to
follow several policies and laws imposed by the government of UK while change of market into
new markets such as Africa and China, the industry needs to select or follow new policies with
respect to the market they are entering into. In the global market, every market or nation has its
own taxation policies, trading policies, etc. which greatly influence the business operations in the
market. Therefore, the rules and regulations of the government should be strictly followed.
1

Cost- In the company Black Penny, to succeed a new economics of measure by marketing their
products at higher prices in new market place. Another term, in the company to gain the profit
and benefit of low cost of production through the import and outsourcing. The most important
and essentially major part is the cost for the organisation or business.
The economic conditions and cost of product in a market place is greatly affected by the business
structure plan of act and purpose.
Competition- In the new market, it has also brought new competitors for a company. In the
competitive market, when the company is entering into a new global market is highly rated and
exposed in the market (Roper, Hopkinson and Hawkins, 2017). There are several companies who
are operating in a similar industry and choosing economic process to spread out or increase their
enterprise and cover a large market section that develops a highly competitive market for Black
Penny. In state to control and keep up in the competitive market, the modification of business is
according to the scheme.. The company should be always in the competition stratifies to gain and
having a knowledge of whatever is going in the market.
TASK 2
P2 Strategic challenges faced by Black Penny when operating in global environment
Conducting business globally is not as easy as it looks. Management faced many
challenges and obstructions while working within global environment. With the rise of
technologies and internet revolution, anyone can obtain all the knowledge and information
regarding aspects of organisation (Story, Luthans and Bovaird, 2014). Every country has
different laws and regulations which are mandatory to be followed in order to sustain in their
market economy. Furthermore, tastes, preferences, culture and perceptions of customers are
varied in different countries. In this context, the strategic challenges faced by the management of
Black Penny while operating in global economy are described as follows:
Foreign Laws and regulations
In order to operate efficiently in foreign country, it is essential for management of Black
Penny to have comprehensive understanding of local laws and legislation which governs its
target market (Charles Jr, Schmidheiny and Watts, 2017). From tax implications through trading
laws, navigating legal requirements is a central function for any successful international
business. This is major strategic challenge faced by Black Penny while operating in global
economy.
2

International Accounting
Tax compliance is the most crucial and legal strategic challenge which is to be considered
while conducting international business. International accounting presents a challenge to
multinational business who may be liable for corporation tax abroad (Luthans and Doh, 2018).
Some countries have rigid and complex accounting and taxation policies which stressed out the
financial managers of the organisation and create obstructions in business operations.
Cost Calculations and global pricing strategies
Setting the price of products and services is considered as major strategic challenge while
doing business overseas. It becomes difficult for management of Black Penny to establish price
for particular products and services in overseas market (Kainzbauer and Hunt, 2016).
Management faced difficulties to set price which suits the target customers and to ensure that
profits are increasing simultaneously.
Currency Rates
While price setting and payment methods are major considerations, currency rate
fluctuation is one of the most challenging international business problems to navigate (Kotabe
and Helsen, 2014). Monitoring currency rates is important as some countries prefer floating
exchange rates while some prefer fixed exchange rate. It becomes challenging task for the
organisation to set price in both the currency exchange rate systems.
Communication difficulties and cultural barriers
Communication and interactions can be difficult in different countries due to different
language. Management and managers need to hire locals who have adequate knowledge about
English and local language (Galliers and Leidner, 2014). It becomes difficult for management to
seek for these personnel and recruit them. Furthermore, cultural differences also affects the
strategic thinkers and decision makers of the organisation. Management in order to sustain in
foreign economy must have adequate knowledge about their culture.
TASK 3
P3 Impact of globalisation on Black Penny's governance leadership and structure
Globalisation refers to integration of markets in the global economy. In present era,
global trade practices has been substantially increased (Laszlo and Cescau, 2017). Globalisation
greatly affects the organisational culture, leadership, governance, structure and functions. In this
3

context, the impact of globalisation on Black Penny's organisational culture and governance is
described below: Impact on Governance: Globalisation improves the governance of the organisation. In
order to sustain in the competitive environment it becomes equally essential and
important for the management of business organisation to construct corporate governance
and ethical codes in effective and efficient manner (Schimel and Keller, 2015). Now,
management of Black Penny, have transformed their ethical codes and governance like
other global organisations in order to stay in competition. Corporate governance is
organisational policies, rules, and practices which is formulated by board of directors and
top management. These are the policies and norms which are strictly to be followed by
employees within the organisation. Impact on organisational culture: Organisation culture includes the values, behaviours
and attitude of employees working in the organisation. Globalisation have greatly
influenced the working culture of Black Penny. In order to survive in global competitive
environment, it is essential and important for the management of the organisation to
transforms work culture so that enhancement of employees' motivation and satisfaction
can be made (Vance and Paik, 2014). Multinational organisations have agile polices and
regulations which enhances motivation and satisfaction of employees. In similar manner
Black Penny, management have transformed their policies and regulations in order to
work abreast with those multinational organisations. Impact on organisation structure: Globalisation have impact on organisational structure
of Black Penny positively. Earlier, where management have hierarchical organisational
structure which highly demotivate employees, now they have converted it to flat
organisational structure like all other multinational organisations have (Kirton and
Maclaren, 2018). This helps in enhancing the motivation and satisfaction of employees
and through this management of the organisation able to sustain in global competitive
environment. Globalisation fosters the growth and development of organisation and also
aid in raising standards of living. Thus, globalisation positively impacts in enhancing the
organisational structure of of Black Penny.
 Impact on organisation function and leadership: There are numerous managerial and
organisational functions in the organisation. Globalisation greatly influence the
4

organisational and managerial functions and leadership (Roper, Hopkinson and Hawkins,
2017). Now, management have transformed their leadership styles in order to enhance the
business productivity and profitability. In order to sustain in competitive environment it
becomes necessary for management to implement precise and appropriate leadership
styles. Globalisation indeed transforms the managerial functions and process of Black
Penny and enhance their growth and development.
P4 Influences of ethical and sustainable globalisation on Black Penny's functions
Ethical and sustainable globalisation refers to conducting global business practices in ethical and
sustainable manner so the enhancement of both organisation and societies can be occurred. There
are different types of organisational functions which performed in organisation while operating
in both domestic and international markets (Kandachar and Halme, 2017). Ethical and
sustainable globalisation indeed influences the organisational functions in one and many ways.
In this context, the impact of ethical and sustainable globalisation on different organisational
functions of Black Penny is described below: Human resource management: Human resource management is crucial managerial
functions of the organisation. Globalisation brought complex and challenging issues in
human resource department of Black Penny. In order to sustain in global competitive
environment it is essential for the management of organisation to implement ethical and
sustainable practices within HR department (Kasemsap, 2016). HR management must
develop ethical policies in recruitment, training and development so that organisational
productivity and profitability can be enhanced. Allocation of resources must be done in
sustainable way so that exploitation of resources can be done in effective and efficient
manner. Financial Management: Financial management role is to maintain the budgetary
position and financial position of the organisation so that Black Penny have liquidity in
order to conduct its business activities. Ethical and sustainable globalisation influences
the financial department of the organisation. Financial management of Black Penny needs
to work ethically and systematically so that organisation have enough cash in order to
sustain in competitive environment. From book keeping to devising financial budgets,
financial management of organisation needs to work ethically and efficiently so that
organisation goals and objectives can be accomplished.
5

 Supply chain management: Supply chain management is the management of the flow of
goods and services which involves storage, movement of raw materials. Increase in
pollution level in the environment affects the supply chain management process of the
organisation (Neubauer and Lank, 2016). Now management have implemented green
supply chain management technologies which helps in reducing the emission of carbon
dioxide and other harmful gases in the environment. In this context, Black Penny
management have initiated sustainable supply chain measures in foreign countries in
order to foster their growth and development.
 Marketing Management: Marketing is the process of delivering organisational products
and services information to target customers through various modes such as TV
Commercials, newspapers advertisements, social media promotion, etc (Wood, Lewellyn
and Davenport, 2015.). Ethical and sustainable globalisation impact on the marketing
management of Black Penny. In order to continue their business activities in different
countries, it is essential for marketing management to devise advertisements that does not
harm local communities and public.
TASK 4
P5 Different ways Black Penny's decision making work in global environment
In order to sustain in global competitive environment it is essential for management of
organisation to have robust decision making policies (Story, Luthans and Bovaird, 2014).
Decision making is considered as challenging and complex tasks and management have to make
efficient and effective decisions in order to attain the aim and objectives of the organisation.
Decisions are made on the basis of situations and circumstances. In this context, the different
ways in which decision making influenced for Black Penny in global context is described below:
Governmental Policies: Decisions are greatly influenced by the dynamic governmental policies.
Government formulates different policies which affects the organisational growth and
development. Business managers at Black Penny needs to incorporate with governmental
policies of particular country in order to survive in their market economy. Decisions are made by
top management regarding subtle transformations (Charles Jr, Schmidheiny and Watts, 2017). In
this way, the decisions of Black Penny work in order to enhance business growth and
development.
6

Culture: Culture plays prominent role in formulation and implementation of decisions. Different
countries have different culture and in order to sustain in global competitive environment,
management of Black Penny needs to devise those decisions which fosters their growth and
development in different cultural environment (Luthans and Doh, 2018). Black Penny
management decisions are greatly influenced by different culture in global environment. They
have to provide those products and services to the customers which helps in enhancing their
attraction and retention.
Legal obligations: In order to work efficiently, it is important for the management of business
organisation to follow all legal rules and regulations which are mandates by local government
(Kainzbauer and Hunt, 2016). Legal obligations greatly influences the decision making policies
of Black Penny. They have to formulate those decisions helps them preventing legal
uncertainties in global environment.
P6 Routes to internationalisation including barriers
Various routes of internationalisation are described below:
Licensing: Licensing is considered as an agreement in which one organisation grants permission
to another organisation for manufacturing its products for a specified payments. Licensing can be
considered as an effective and efficient mode of internationalisation.
Franchising: Franchising is the right where organisation utilise its plan of action and brand for a
recommended time frame (Kotabe and Helsen, 2014. It is efficient route for internationalisation
where management can expand its business operations in different countries.
Direct Exporting: Direct exporting is the easiest way of expanding business globally. It is the
process where an organisation exports its products to another country through contacts made in
foreign country.
Collaboration: Collaboration or partnership approach route of internationalisation refers to the
process where one organisation partnered with other foreign organisation in order to enhance
their productivity and profitability.
PESTLE analysis for identify key barriers for internationalisation
Political Factors: In order to expand globally, it is essential for the organisation to assess the
political environment of the country. It includes, government stability, policies, laws and
policies.
7

Economic Factors: Economic stability is crucial for operating in global environment (Galliers
and Leidner, 2014). In order to expand globally, it is essential for the organisation to assess the
economic elements such as interest rates, inflation rates, exchange rates, etc.
Social Factors: Social factors include cultures, behaviour and perceptions of natives living in the
country. In order to expand globally, it is essential for the organisation to assess the social factors
effectively and efficiently.
Technological Factors: Technological growth and development is rising at rapid pace.
Management needs to assess that country have adequate technological development where they
desire to expand to enhance business productivity and profitability.
Legal Factors: legal factors includes the laws, legislations and rules formulated at foregin
country (Laszlo and Cescau, 2017). In order to operate efficiently management needs to
comprehensively understand all the company rules and acts and work accordingly.
Environmental Factors: Environmental factors includes the laws and regulations formulated by
the foreign countries regarding preserve local environment and habitat. Management needs to
study it carefully in order to enhance its reputation.
CONCLUSION
From the above report it can be understood that global business expansion refers to the
strategy where business organisations plans to expand their business operations beyond national
boundaries. The motive of expanding business globally is to enhance productivity and
profitability of the organisation. In this context, the report depicts the strategic challenges and
complexities faced by Black Penny while operating in global environment. Conducting business
globally is not as easy as it looks. Management faced many challenges and obstructions while
working within global environment. Globalisation greatly affects the organisational culture,
leadership, governance, structure and functions. In order to sustain in global competitive
environment it is essential for management of organisation to have robust decision making
policies.
8

REFERENCES
Books and Journals
Story, J.S., Luthans, F. and Bovaird, J.A., 2014. Meeting the challenges of effective international
HRM: Analysis of the antecedents of global mindset. Human Resource
Management, 53(1), pp.131-155.
Charles Jr, O.H., Schmidheiny, S. and Watts, P., 2017. Walking the talk: The business case for
sustainable development. Routledge.
Luthans, F. and Doh, J.P., 2018. International management: Culture, strategy, and behavior.
McGraw-Hill.
Kainzbauer, A. and Hunt, B., 2016. Meeting the challenges of teaching in a different cultural
environment–evidence from graduate management schools in Thailand. Asia Pacific
Journal of Education, 36(sup1), pp.56-68.
Kotabe, M. and Helsen, K., 2014. Global marketing management.
Galliers, R.D. and Leidner, D.E. eds., 2014. Strategic information management: challenges and
strategies in managing information systems. Routledge.
Laszlo, C. and Cescau, P., 2017. Sustainable value: How the world's leading companies are
doing well by doing good. Routledge.
Schimel, D. and Keller, M., 2015. Big questions, big science: meeting the challenges of global
ecology. Oecologia, 177(4), pp.925-934.
Vance, C.M. and Paik, Y., 2014. Managing a global workforce: challenges and opportunities in
international human resource management. Routledge.
Kirton, J.J. and Maclaren, V.W., 2018. Linking trade, environment, and social cohesion: NAFTA
experiences, global challenges. Routledge.
Roper, S., Hopkinson, P., Zils, M. and Hawkins, P., 2017. Managing a Complex Global Circular
Economy Business Model: Opportunities and Challenges. California Management Review.
Kandachar, P. and Halme, M. eds., 2017. Sustainability challenges and solutions at the base of
the pyramid: Business, technology and the poor. Routledge.
Kasemsap, K., 2016. The role of social networking in global business environments. In Social
media and networking: Concepts, methodologies, tools, and applications (pp. 1635-1653).
IGI Global.
9

Neubauer, F. and Lank, A.G., 2016. The family business: Its governance for sustainability.
Springer.
Wood, D.J., Lewellyn, P.G. and Davenport, K.S., 2015. Global Business Citizenship: A
Transformative Framework for Ethics and Sustainable Capitalism: A Transformative
Framework for Ethics and Sustainable Capitalism. Routledge.
10