Analyzing Global Business Environment: A Case Study of Boohoo.com

This report delves into the global business environment, examining the key factors driving global commerce and trade, such as cost, market dynamics, and environmental influences. It analyzes the strategic challenges organizations face, including international business structures, regulatory compliance, currency fluctuations, communication and cultural differences, and political risks. The report also explores the impact of globalization on organizational governance, leadership, and ethical considerations. Furthermore, it articulates different decision-making processes and outlines various routes to internationalization for businesses like Boohoo.com, including strategies to overcome risks and navigate the complexities of operating in a globalized market. The analysis covers market and production globalization and the importance of understanding factors like labor markets, raw materials, and political and economic environments. The report also highlights the importance of technological advancements and digital transformation in the global business landscape.

GLOBAL
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Key factors which drives global commerce and trade......................................................1
TASK 2............................................................................................................................................3
P2 Complexity of strategic challenges faced by organisations..............................................3
TASK 3............................................................................................................................................5
P3 Influences of globalisation on organisational governance and leadership........................5
P4 Influences of ethical and sustainable globalisation...........................................................7
TASK 4............................................................................................................................................8
P5 Different ways of decision making...................................................................................8
P6 Articulate the routes to internationalisation of an organisation.......................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
The term global business environment is associated with environment in various
sovereign countries. Several factors are involved in business environment which influencing the
decision making regrading resources and capabilities of the firm. In order to function effectively
and efficiently, corporate associations focused on operating at international level and they have
to understand the overall social environment of the specific country. In this modern era,
thousands of business units, i.e. small and large are part of global business environment. Beside
this, globalisation is a three dimensional concept: - a phenomenon, a process and a philosophy. It
increases flexibility of business operations and rapid development of local businesses in
emerging markets (Cantwell, Dunning and Lundan, 2010). The present assignment Boohoo.com;
it is a online fashion retailer which was established in 2006. The firm leveraging its extensive
experience by creating budget prices clothes by aiming 16 to 24 years old people. The report will
describe various key factors that assists to driven up the global commerce market. There is
defined several challenges which is faced by businesses while operating in global market.
Readers will also come to know about barriers and routes of internationalisation of a current
business organisation.
TASK 1
P1 Key factors which drives global commerce and trade
The term globalisation entails with worldwide transaction of economic, finance,
communication and trade integration. It implies with implementation of local and domestic
businesses into international market with an aim of broader outlook so as to make free
transaction of capital and products. In context of business organisation, globalisation includes
changes in a company which is associated in a single country and wants to operates in multiple
nations. Along with this, impact of globalisation on core business practices are classified into
two parts, such as- market globalisation and production globalisation. In which, market
globalisation is the reduction of barriers which comes in selling into other countries whereas
production globalisation is a sourcing of raw materials and goods from other nations in order to
gain high cutting edge (Cavusgil and et. al., 2014).
Furthermore, such changes can facilities to earn higher sales and profitability from
international market. Globalisation increases mergers and joint ventures which allows arriving
into larger markets increases
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Below are described several factors which affect global commercialisation and traders: -
Cost – It is a major thing that involves in production, marketing, research activities etc.
Thus, it can be said that cost encompasses with value of money and make effective business
practices. Cost also used in manufacturing goods, carrying out them from one place to another
and something with quality. For example – when a firm wants to expand its business over global
market then management have to determine estimated cost which will occurred. Due top
globalisation, operating costs has reduced whereas several taxes and duties are increased. Digital
technology directly or indirectly impact on business operations and its functions effectively. In
an organisation, they are developing required products and services which are affordable in price
and they can easily attract large number of customers in better manner. Direct cost – It is something what that is definite with a cost occurred in a cost object by
putting little efforts (Colfax, Rivera and Perez, 2010). Here, cost objects are – product or
project. Most of the direct costs are variable, for example – sand, cement, cost of gravel,
wages incurred in production of concrete.
 Indirect cost – It goes beyond to the expenses which are involved in production of a
product by encompassing the pricing policy maintained by the entire association. Several
materials and supplies are required to do day to day business activities are known as
indirect costs.
Market – It is place where people where different transactions are made for exchanging
products and services. Here, some organisations directly sells products to buyers whereas some
items are sold through whole sellers (De Jonge, 2011). Along with this, in global markets costs,
price and value are traded as per the demand and supply of products. Due to globalisation, the
aura of markets has been changed now people are demanding new and innovative products so
that firms are required to meet market trends in the best possible manner. In global market, there
are different internal and external factors which can affect firm's growth and sustainability over
the world. Thus, if management is able to identify the target market and its needs then it will
easily survive. The key factors of markets are - Labour markets – This market is for those people who are looking for employment in a
nation or a region specific. In UK labour market, several jobs are available. It involves
driven up the global commerce market as well as trades of a nation that assists to gain
high competitive edge.
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 Market for raw materials – Inputs or raw materials is one of the important substance
which is used in production of finished goods. On the other hand, there is wide of raw
materials are trade or sold across the world (Ferraro and Briody, 2017).
Environment – It consists with the environment in which a business operates and
function in better manner. Globalisation has changed the entire business environment and put a
great impact on business practices and operation in direct and indirect manner. Thus, it is
essentials for companies to look forward and determine a right contrast of work in order to
manage all changes effectively. Business environment involves several key aspects which are
stated as under: - Political factors – It is one of the main source of uncertainty in fashion industry. Political
factors entails with government laws, regulations, taxation policy which are levied by the
government bodies. This can hinder the capability of both bottom and top line of
company in term of corporation taxes as well as the ability of spending power of
customers which relates with income tax (Gecevska and et. al., 2010). Economic factors – Economic volatility might effect sales and profitability of any
business organisation. At the time of recession or economic boom, customers are not able
to spend more on purchasing luxurious things. Economic factors are involves
unemployment, disposable income of people, interest rates, exchange rates, inflation rates
etc. Social factors – There are major social changes have been occurred in last past years and
it hinders the demands of fashion products. Social factors comprises with how customers
purchases, make their shopping decisions and which brand or product they will prefer.
Thus, demographic make up of global population bring lot of opportunities and threats to
online fashion industries.
 Technological factors – In 21st century, growth story of any business organisation is
associated with technological advancements. Globalisation makes easier the use of
information technology, increase use of mobile devices in order to improve the shopping
experience of people and increasing sales, marketing as well as consumer choices.
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TASK 2
P2 Complexity of strategic challenges faced by organisations
In this modern era, different challenges and issues are being faced by small business units
that can affect its business functions and working activities. Strategic challenges and barriers also
creates various sources of opportunities in terms of business expansion over the world. Due to
global interactions and pace of changes in corporate associations have resulted in enhancing
complexity. It creates risk management challenges towards firms in order to address future
barriers or obstacles which affects a business organisation (Hamilton and Webster, 2015).
The leading reasons of complexity which become apparent in globalisation: -
 Speed of innovation
 Information management
 Regulations and government oversight
 Variability of complexity.
Following are the main challenges that are being faced by organisations: -
International Structure of business: Foreign operations assists a firm to grow and
diversify in target market. It overseas various growth opportunities and an independent division
which will monitor all international operations of the company. Along with this, it leads with
amalgamation and re-organisation so as to done all tasks and activities in the best possible
manner. There are several departments are involved in international business structure, such as-
human resource, finance, marketing, research and development so as to make a greater focused
on functional expertise (Kasemsap, 2014). All these divisions have an effective control on all
centralised activities. But, it is too tough for management to manage its international business
structure as there some external rivals which can affect the overall performance of every
business organisation.
Laws and regulations: While performing in international market, it is fundamental for
every business unit to keep in mind all laws and legislations which are regulated by government
authorities in order to maintain ethics and standards. These protocols are taken in order to expand
the business areas in other countries. These legislations assists for smoothly functioning of
working tasks and activities; it also look forward to attain strategic goals and objectives of the
firm in a certain time period. Furthermore, tax implications are done to make trading more
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effective and successful in other regions. Although, employment and labour requirements are
different in every countries.
Currency rates: Currency prices and payment is one of most imperative barriers for
business entities because due to fluctuation in currency rates affects sales and profitability of the
firm. It is considered as one of the major problem which Boohoo.com should navigate. In this
relationship, it is essential to monitor exchange and interest which is charged to explore business
in other countries (Laudon and Laudon, 2015). Business organisations are also required to make
strategies and take decisions to protect themselves from fluctuations in currency rates in order to
gain higher benefits from market.
Communication and cultural difference: It is one of the crucial aspect which is
required to expand any business organisation over the world. Effective communication assists to
improve the network area of a corporate entity thus, it can easily reach large number of people in
a certain time period. While developing international market strategy, managers should
concentrate on acquiring free flow of communication between top to bottom level management.
It results everyone will provide suggestion and the best one will be implemented. On the other
hand, cultural differences also affect global trade as the needs and demands of a region is
different with each other. Before expanding business in other areas, Boohoo.com should conduct
a market research and understand the cultural of the country in which it will operate in order to
attain and retain customers for long term period (Effects of Globalisation on Businesses, 2017).
Having political risk: Political risks are being uncertain and unstable. Due to economic
crises and recession, the political stability of UK was highly affected. However, strong political
stability is considered as one of the biggest opportunity and somewhere in other countries it
hinders functional areas of the a business in terms of reducing sales (Louhiala-Salminen and
Kankaanranta, 2011). Due to unstable political condition, companies cannot enter into target
markets. In this relation, they needs to make risk assessment which is linked with political and
economic aspects that are critical in nature.
Strategies to overcome the risks:
There are various strategies which help company in overcoming with major risks which
are described as follows:
 The company require to manage and maintain all the risk factors which create major
issues and problems while making some plan. It is the main duty of firm manager is to
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manage risk that will arise at the time when company develop specific products and
launching of good in the market place.
 Another way to manage risk is that they required to hire such employees who have ability
and skill to deal with major risk factors which arise and create issues in effective way.
TASK 3
P3 Influences of globalisation on organisational governance and leadership
Globalization states with an ideology as well as process that has become the dominant
political, economical and cultural force in today's scenario.. The process or act of globalizing: the
evolution of an increasingly merged global economy pronounced especially by free trade, free
flow of capital, and the tapping of cheaper foreign tabor market. Before recent trends are
increased in globalization, companies are usually considered their customer base and market to
be their country of origin, however with the rapid spread of diversity (Peng, 2016).
Globalisation can influences in adverse and positive manner to a business entity. Thus,
management should develop proper strategies so as to make better decisions in right directions.
Following are the aspects on which globalisation has great influences, such as: -
Leadership – Every corporate association looks forward for its business expansion in
other nations so as to gain attain high market share and growth opportunities. Globalisation has a
huge impact on working condition and styles of a firm in different manner as some it can wind
up the overall organisation. The research indicates that, managers have to take better decisions
and formulate effective strategies by using appropriate data collection tools. Execution of an
efficient leadership can perform all tasks and activities in right direction and helps to deal
adverse situations as well. Along with this, a leader also motivates other employees to do all
tasks in the best possible manner which increases performance and output level of the firm. It
also improves quality of work life by accepting all environmental challenges. Due to changes in
business organisations, leadership should determines the ways to adjust and adapt those changes.
Sometimes, environmental variations are linked with inability to be open minded towards new
ideas, thoughts, beliefs and cultural that prevents individuals to move forward (Simic and
Dimitrijevic, 2012). Enhancement of globalisation and integration of new technologies are forces
managers to rethinking of how to do a business and lead by making regular improvements as
well as reinventing of an association.
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Organisational cultural – It a set of ideologies, attitudes, symbols, opinions and values
which are shared by the organisation. Basically, organisational cultural affects the ways through
which organisation meet its business objectives. Forming the framework in which a firm execute
its policies. Boohoo.com operates across the world and always look ahead to expand itself in
other areas or regions for maximising the profits. The firm produces qualitative clothes as per the
market trends; it results people tend to purchase its products and services in high quantity.
Whenever, a corporate association move in further countries then it requires to maintain an
imperative organisational cultural in which employees can easily interact with top management
(Tarique and Schuler, 2010). Organisational cultural also involves considering values, beliefs,
morales and faith of employees as they get ready to work in other areas also. Thus, to maintain
firm's cultural helps takes it into right direction.
Governance – In past decades, the living standard of individuals has been raised and
improved. All this could be done to governed things in right manner, thus if a firm control or
governed its business activities in systematic manner by providing training and development
assistance to employees. Aside from this, globalisation has a great hindrance on working
conditions of a corporate association in direct and indirect manner.
McKinsey 7S model:
 Strategy – It is the plan which has been developed by firm in order to reach with
sustained competitive advantages and gain success in compete the market. Boohoo.com
required to develop strategies which assist them in gaining high income and revenue
effectively.
 Structure – It is represent the way of business department and unit are arranged which
includes chart of an organisation. The respective company follow proper structure of the
firm which is visible.
 Systems – It is the process and procedure of the firm which reveal their business regular
functions and activities and analyse how to make decisions for the welfare of the firm.
 Skills – It is the abilities which company's employees perform very well and it includes
competencies and capabilities. The respective firm need skilled employees who are
perform functions in gaining high income and profitability.
 Staff – It is concerned with organisation where they required to analyse how many
employees are needed and how they will be recruited, mot8ivated ad trained.
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Boohoo.com need to appoint such staff members who are capable for perform good
work.
 Style – It represents the way where firm can managed and maintain by top authority in
which they need to take action as per the order to management.
 Shared values – It is the core element of this model which includes norms and standards
which guide employee behaviour and company actions.
P4 Influences of ethical and sustainable globalisation
The phenomenon of globalisation leads to integration of regional societies, economies
and various cultural by effective communication, trades and transport. It is related with
integration of domestic economies into foreign economics so as to gain high competitive edge.
Effective ethical organisation and sustainable globalEffects of Globalisation on Businesses,
2017isation will aids to a company to grab market opportunities, improves its financial strength
and consumer satisfaction level (Trompenaars and Hampden-Turner, 2011). In fact, acquisition
of ethical or legislative approach improves business standards and quality of work life whereas
certain marketing practices carries out certain risks or issues. Boohoo.com is a global
organisation by having vast range of products, it operates worldwide. Thus, it is too difficult to
manage and provide ethical aspects as well as sustainability of a business.
For instance – if a nation modify its trading activities it allows free flow of capital and
makes easier the process of migration. Sustainable globalisation also retains the possibility of
fruitful economical and technological progress. The wealth of a company is depends on the
nature of sustainable development and increases engagement of foreign monetary by observing
the value of ecological ethics.
Following are the areas which are affected by ethics and sustainable globalisation: -
Consumer confidence – Boohoo.com is a developing online fashion retailer which has
put mark on customers' mind worldwide by acquisition of ethical organisational cultural at
workplace; it results improvements in quality of products and services. Thus, it is fundamental
for business organisations to manage their market value and service quality so as to gain higher
competitive edge. As a small business organisation, Boohoo.com is has many competitors in
international market, such as- Zara, H&M, Shein, Lime-road etc. all these have capture high
market share. In this relation, mentioned business entity requires to organise attractive marketing
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campaigns for improving brand value of the company. Thus, to get maximum customer
satisfaction level firms should tries to improve the quality of their clothing items.
Reduction of financial liabilities- While operating across worldwide, Boohoo.com
needs to reduces its financial liabilities and concentrate on increasing assets. Raising liabilities
leads towards unethical practices and diminish the market image of the company (Werther Jr and
Chandler, 2010).
Effect on recruitment and selection process – Business organisations are required to
implement certain legal practices at the time of recruiting individuals who have good skills to
perform all working activities. Management should strictly follows all the terms, conditions,
laws and guidelines that are pinned by British government, like- labour law and labour practice.
Aside from this, Boohoo.com has formulated a team who is responsible for defining all legal
aspects of recruitment and selection and training and development. The organisation also follows
laws regrading child labour.
Health and care – This includes several ethical aspects and barriers; business
organisations are required to implement proper measures which maintains healthy and positive
working environment (Wild, Wild and Han, 2014). For instance – in production factory of
Boohoo.com there is largely use of a chemical which invites several health issues. For this, the
firm requires to make effective strict actions in order to reduce the consumption of unhealthy
chemicals.
By using these elements, any business unit can easily maintain its legality and improves
market standards. Such rules and laws assists an organisation to accomplish its strategic goals
and objectives in a certain time period.
TASK 4
P5 Different ways of decision making
When a business organisation, like – Boohoo.com enhances business at global context; it
always conducts a better market research in order to gather necessary information about target
market which assists an unit to generate a better marketing strategies and take appropriate
decisions. It will contribute to improves the capabilities of an organisation as it will easily
perform in different situations (Cantwell, Dunning and Lundan, 2010). Both guides management
to choose best working plan which aims to raise the market share of the company.
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There is defined several ways of decision making that makes work more imperative that are
stated as under: - Pinpoint the issues – In order to take imperative business decisions, firstly managers
have to pinpoint or highlight all the issues which occurs while expanding a firm over the
world. Thus, it will provides better guidance to a company and manage efficient working
criteria. The market environment is also changed as per the time and by doing wide
research companies will come to know different factors that can hinder business practices
too. Determine solution – Companies will work hard in order to know the problem arises in
future and then identify the better solution for the same. Decisions or actions which have
been taken do not affect the firm working conditions as well as sales and profitability.
This step helps a form to accomplish its goals and objectives in better manner. Implement solution – When a firm looks forward and thinks for business expansion ; it
needs to be execute appropriate solutions that are supportive to face all market challenges
and reduces obstacles. Therefore, implement solution in a systematic way helps
Boohoo.com to sustain high competitive edge.
 Evaluate the effectiveness - At last, companies who looks ahead needs to measure the
effectiveness and potency of its all decisions. It is also depend on analysing the actual
problem and the reason behind this; it must be solved by measuring the effectiveness of
actions.
On the basis of above description, decision making is influence business operations and
its functions effectively. If company managers and their staff members are develop accurate
decisions so that they can easily perform work without any confusion. In the context
globalisation, company can make decision for expand business operations and functions in order
to gain maximum income and profitability.
There are various ways for expanding business at international level which are described as
under:
 Franchising – It is that method of business where owner of the product, services and
method obtain distribution with the help of different dealers. This method of expanding
business operations and its functions is helpful for an organisation. Respective company
can use this method for easily enter in the global market place.
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