Global Business Environment: Factors, Complexities, and Zara Example

This report provides a comprehensive overview of the global business environment, focusing on the factors that drive globalization, including cost, market, environment, and competition. It uses Zara as a case study to illustrate these factors. The report then delves into the strategic complexities associated with operating in a global environment, such as international company structure, foreign laws and regulations, currency rate fluctuations, and challenges in supply chain management, customer preferences, market growth, and quality compliance. The report emphasizes the importance of understanding these complexities for businesses aiming to succeed globally. The report also provides a list of references including books and journals.

GLOBAL BUSINESS ENVIRONMENT

TABLE OF CONTENT
 Introduction
 Factors that drive globalisation
 Strategic complexities
associated with operating in a
global environment
 Conclusion
 References

INTRODUCTION
 Globalization is basically a process in which any business or an organization starts
operating on global scale. In this document we will explain all the four major
factors which drive globalization i.e. cost, market, environment and competition
with an example of Zara Company in the first part of this document.
 Report will also explain strategic complexities associated with operating in a
global environment like international company structure, foreign laws and
regulations, cost calculation and global pricing strategy.

FACTORS WHICH DRIVE GLOBALISATION
Globalization is driven by four major factors. All the factors will be explained with an example of Zara Company:
Cost:
 The main motivation for any global company is to maximise their investment. One nation market may be insufficient to provide country
subsidiaries of a company all economies of scope and scale, specially with the change in marketplace.
 Whereas promoting and advertising a product can bleed across borders so companies should make their product available each and
everywhere where it can be heard-ofes.
Market:
 Nowadays consumers are becoming more similar in terms of education, lifestyle, income, aspiration and also in use of their leisure time.

CONT..
 Environment: There are few factors that are accelerating demands for global services and products
are across border information transfer, increasing mobility and wealth of customers, publicity of
globalization benefits and technology revolution.
 Newly emerging business or organization or market are benefiting from advance communication by
leaping all the stages of economic development that others went through in years. Because of
increasing trending region, newer technology new groups of global players are taking advantage of all
these factors.

CONT..
Competition:
 To remain in the competition all the global rivals need to intensify
their marketing in each and every region where they need to
survive to sustain advantages, and if weekend it can affect their
market share worldwide.
 Nowadays all the competitive companies introduce new products,
upgrade new products and deliver them faster than ever before.

STRATEGIC COMPLEXITIES ASSOCIATED WITH
OPERATING IN A GLOBAL ENVIRONMENT
Strategic challenges in context of supply chain management
 Current supply chain is developing complexity due to many factors
and customers nowadays are demanding new products at correct
time and at nominal price.
 Because of this supply chain is facing some difficulties as
developing reasonable and cost effective supply chain is really
challenging. Few of the main supply chain challenges are:

CONT..
Globalisation:
 Biggest challenge faced by companies nowadays is to reduce cost of
their supply chain. To satisfy customer's price expectation
organizations have chosen low cost countries for manufacture so that
there is tax reduction and reduction of direct and indirect cost.
 But having global suppliers increases complexity which comes from
extended delivery time

CONT..
Customer preferences:
 As already stated above global supply chain are very complex. Not to forget constantly changing
product features is increasing the challenge even more.
Market Growth:
 Activities and need of new customers is another challenge for the companies. Cost of product
development to its introduction need to be considered. So, therefore companies are trying to expand in
terms of distribution for revenue growth and increased market share.

CONT..
Quality and compliance:
 Nowadays product reviews, feedback, comments have a huge effect on customer's shopping aside
from quality and price. Product reviews have not only influence their shopping behaviour but also
increased the chances of product return.
 So companies are under high pressure of creating increased quality products and create them
constantly. They can do it by checking quality of product at every level of supply chain such as raw
material, manufacturing, quality etc.

STRATEGIC COMPLEXITIES ASSOCIATED WITH
OPERATING IN A GLOBAL ENVIRONMENT ARE
International company structure:
 If a company aim is to be globally known then they should have a team for this challenge. If they do
not have a proper structure of a company and proper location of their teams they will face challenges
internationally.
Foreign laws and regulations:
 Gaining knowledge of local laws and regulation, tax implementation and trading laws is important for
any business to run globally.

CONT..
Currency rates:
One of the major challenge is fluctuation in currency rate it has always
been a problem for global business, So monitoring exchange rates must
be the central part of the strategy.
One way to protect yourself form from this fluctuating currency is to
pay supplier and production in the same currency as in the one you are
selling..