Analyzing Key Factors in Global Commerce and Trade

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Unit 18 – Global Business Environment
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Contents
Introduction......................................................................................................................................3
LO1..................................................................................................................................................4
P1 Analyse key factors of cost, market, environment and competition that drive global
commerce and trade.....................................................................................................................4
M1 Critically analyse the impact that key factors have upon the global business environment
in terms of benefits and challenges..............................................................................................5
LO2..................................................................................................................................................8
P2 Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples...................................................................8
M2 Critically analyse strategic challenges in context of risk and diversification strategies and
the supply chain flow...................................................................................................................9
D1 Critically evaluate the global business environment, including the opportunities and
challenges faced by organisations.............................................................................................10
LO3................................................................................................................................................11
P3 Evaluate the influences of globalisation on organisational governance and leadership,
structure, culture and functions..................................................................................................11
P4 Evaluate the influences of ethical and sustainable globalisation on organisational functions.
...................................................................................................................................................11
M3 Critically evaluate global market influences in application to appropriate theories and
models relating to organisational structure and culture.............................................................12
LO4................................................................................................................................................14
P5 Evaluate the different ways decision making can work effectively in a global context......14
P6 Determine and articulate the various routes to internationalisation an organisation may
adopt, including key barriers.....................................................................................................15
M4 Critically evaluate the key barriers in doing business internationally and make
recommendations on how they can be overcome......................................................................16
D2 Critique strategies that can be adopted by organisations operating in a global business
environment, making valid and justified recommendations of how they should adapt their
organisational structure and decision-making processes...........................................................16
Conclusion.....................................................................................................................................18
References:....................................................................................................................................19

List of figures
Figure 1: Factors that required for Global market...........................................................................6
Figure 2: Impact of global market...................................................................................................7
Figure 3: The challenges for business...........................................................................................10
Figure 4: Flow of supply................................................................................................................10
Figure 5: Checklist.........................................................................................................................14
Figure 6: Decision making process................................................................................................15

Introduction
The environment of Global business is explained as the environment that varies with the country
to country and different from the parent country. The environment has discussed the changes in
the resources, decision-making, and influence. The Global environment is categorized into the
external and internal environment parts that include the taxes, culture, techniques and political
factors with the legal structure which affected the business of the organization. This report
contains the concept and discussion of Globalization that is affected by the business at the time
of entry in the new market. Pestle Analysis is the process that clearly described the factors that
keep in the mind when moving the business in the new country. As an Advisor of SASOL
limited organization analyzes the factor that affected the business and understands the issues that
are a challenge for the organization. Globalization term refers to the method that removed the
barriers and difficulties among the countries to set their business in the other country.
Globalization and diversity discussed the policies that are required for business organization and
the laws that followed the country. The report contains the factors that affected the global context
and decision making of a business organization. Global environment understanding and
knowledge about the factors of globalization is required for growth of the business.

LO1
P1 Analyse key factors of cost, market, environment and competition that drive global
commerce and trade
As an Advisor of SASOL limited company analyzes the impact of the global factors that affected
the business of the organization in the form of profit or non-profit. The analysis of these factors
identified the factors of cost and marketing strategy is showing a more effective impact on the
business organization.
Global trade and Globalization is separated in the factors of rapid changes, interconnection,
Diversity, and growing complexity. The Globalization defined the movement of products and
techniques that are required for the growth of the organization. The global factors like cost and
market trend of the foreign country influenced the market and service of the organization.
Factors that drive the global market and global trade:
Cost factor: the economic factors and scope have affected the cost of developing products and
goods. Global approach included verity in the production and manufacturing of the goods.
According to market trend and competitive market partnership and including globalization is
needed for the growth of the organization. The factors like labour cost, capital, and land have
affected the production of the organization and increased the investment cost of the business
organization (Huda, et al., 2019).
Market factor: The marketing drive required the factors containing the need of the user with
quality of the products. Marketing approach has affected the business of the organization at the
global level with the implementation of the emerging and innovative approach. The
advertisement of the organization is required to improving the value of the organization in the
new market with standardized productivity.
Environmental and government drivers: the environment and government factors are also
affected by the market of the organization. The different country has new policies and
environment that create barriers and more competition for the organization in the new business
country.
Competition drive: the completion drive is described as the growing trade among the country
with the direct investment that provided support to enhance the interdependence between the
business organization and the other countries. Changes in the technology and growth of modern
market required new technique with the manufacturing and include new ideas with the
productivity that enhanced the quality of the products.
Trade liberalization is the method that regulates the position of economy and policies at the
international level that controls that export and import in the various countries. The policies are

restricted and allow the export and tariffs for the products. The main function of global trade is
liberalized barriers for service and goods. The trade liberalization is depending on the
development stage and factors of policies that regulate business in the country. The policies of
the country are established that decreased trade barrio for the organization. the factors of the
global market are disturbed by the external business environment and competition for small
business organizations.
Figure 1: Factors that required for Global market
Source (Brache, & Felzensztein, 2019)
The above figure contains the factor that is playing a wide role in the development and growth of
the organization. GDP ratios and capital of a foreign country are the factors that provided a
barrier for the global market of the organization (Brache, & Felzensztein, 2019).
M1 Critically analyze the impact that key factors have upon the global business
environment in terms of benefits and challenges.
The analysis of the above factors the impact on the global business is identified in the term of
advantages or benefits and issues or challenges on the business. The factors increased the
policies that enhanced the growth of the business organization and also created barriers for the
business.

Figure 2: Impact of the global market
Source (Jorgenson et al., 2019)
Benefits of the factors:
 The above features are provided with a larger range of services, knowledge, technologies,
and information that grow the customer experience and increased the number of users.
Global trade includes the improved rate of growth and increased empowerment with
more sources of knowledge.
 The globalization includes the economic scale that provided cheaper labour costs and
enhanced the productivity and quality of the manufacturing.
 Global market has the potential that included a wide range of specialization and ability to
increase the level of economy. It implemented the innovative and fastest growing
technique with the business that enhanced the quality of the goods.

The factors are reduced the competitive pressure and promote labour protection with the
improved government policy (Jorgenson et al., 2019).
Challenges of the global factors on the business organization:
 Ethical practices are faced by the organization like safety of products, labour, corruption
and environment stewardship that affect the failure and success of the organization in the
global market.
 Inequality is the challenges with the global market that included challenges like wealth
and income evidence.
 The factors are provided with challenges in the economy and create issues like
unemployment and imbalance in the trade.

LO2
P2 Explain the complexity of strategic challenges faced by organisations when operating in
a global environment supported by specific examples.
The issues and challenges faced by the organization when the organization expands its business
with the overseas market are described below:
Regularity policies and laws: the laws and policies are the factors that introduced challenges for
the organization. For an example of Airbnb company faced the issue of rental properties in 2014
and falling in the tourism regulations. The company forces to submitted fine for rental issues to
the local company according to the tourism law of Barcelona. The issues of labour requirement
are also faced by the organization and also faced the investigation to prove the organization as
invaluable.
Currency ratio: currency is ration and change in the capital is the challenging issued with the
international business market. The company Airbnb faced the issue of exchange rate of the
country. The currency issue is the cause that fluctuates the market and profit of the organization
and the labour cost. The organization provided the labour charges and production costs as per the
policy of the country governance.
International structure: the global competitive policies and service are always a challenge for
the organization with the global range. The structure and location of the organization are
considered for the growth of the organization within the global business. For an example of
Coca-Cola organization that provided effective business design for improving their business with
the multination organization. The organization divided their office in the other country and used
individual president and manager for the organization. The thought of the organization has
increased the value of the organization and included more productivity (Steinbacher, &
Röhrkasten, 2019).
Accounting: the factor accounting is the approach that maximizes the revenue of the
organization and the location of business organization affected the tax liability. The Organization
Coco-cola setup their office in a different country and appoint the local president for the office to
register the organization as local. The thought of the organization impacted as the tax benefit and
maximize the revenue of the organization.

Figure 3: The challenges for business
Source (Steinbacher, & Röhrkasten, 2019)
Cost calculation and payment methods of global market are the factors that provided an impact
on the business organization. The impact of the products of the organization has increased the
value of the organization among the users that provided a more effective position for the
organization. The factors of global market are the challenges for the organization that maximizes
as well as minimize the productivity of the organization. Globalization factors and policies are
required to follow for improved business in the global market and for getting success with
effective strategy Binford, 2019).
M2 Critically analyze strategic challenges in context of risk and diversification strategies
and the supply chain flow.
The strategy challenges have contained the risk of legal structure, policies and investment issues
that affected the business in the global market. The globalization of business has faced the issues
of capital and exchange rate of money that is commonly affected the cost of production and
manufacturing as well as revenue of the organization. A supply chain is a process that is used for
exporting the products in the global market. Supply chain is required for improved the
knowledge of the production and provided quality of outcome (Israel, et al., 2019).
Figure 4: Flow of supply

Source (Israel, et al., 2019)
The flow of supply has discussed the strategy, design complexity and critical issues in the supply
chain. The factors like financial, environmental and service have affected the flow of supply. The
strategy created a relation between the supplier and buyer.
Risk in supply chain:
The main risk in the supply chain is uncertainties among the demand and supply. The chain has
faced the risk in financial flow that contains the risk related to investment and payment.
Information flow and social issues are also faced by the supply chain.
Diversification strategies: The strategy is introduced large scale to share the market of the
organization. The experience and user feedback provided an effective approach for a lower cost
that enhanced the profit of the organization. It includes the strategy that reduced the risk in
supply chain and included an effective plan for improving the production service and applies
managed distribution (Yeniyurt, et al., 2019).
D1 Critically evaluate the global business environment, including the opportunities and
challenges faced by organizations.
Global business is introduced a wide range of marketplace to set the business with the
multinational level. The business faced the issues of labour law and rules of foreign country is
affected the business of the organization.
Challenges for business:
 Understand the sources of new and cheaper investment strategy for organization.
 New competition and cultural tests are a challenge for the organization.
 Global contagion and exchange rate of the other country
 Long chain for supply the product and issue or risk in supply chain.
Opportunities:
 Agreement to avoid the barriers in the business and provide opportunities for business
growth
 Large economic scale and resources that improved the skill of employee and cheap
investment
 Knowledge about the new customers and access the user of other countries (Cruz, et al.,
2019)

LO3
P3 Evaluate the influences of globalization on organizational governance and leadership,
structure, culture, and functions.
Globalization revolved the markets of each country with new ideas and opportunity.
Globalization improved the strategic planning of the organization. Due to globalization, every
organization tried to expand their market base worldwide.
Influence of globalization on leadership: Expand in business gives more opportunities
worldwide but also it creates many challenges in the leadership because the market environment
of every country is different. New challenges in the market enhanced the leadership quality of
the individual as well as organization.
Influence of globalization on structure: To fulfill the market demand, organization need to
develop the structure of the organization in a way that it can provide the service and product on
time to the customer. So, globalization increased the demand for the product which further helps
in improving the structure of the organization.
Influence of globalization on culture and function: As the market base changes than
organization has to develop its culture and function according to the market needs. So, change in
culture and function of the organization is implemented to increase sale of product in local
market so that total market can be covered. Globalization brought a new efficient way to solve
the organizational problem in a short period of time which can help in organization growth with
high rate.
Globalization introduced a new technique for doing the work with highly accurate tools and
machinery. Globalization also helps in improving the infrastructure of the market and helps in
developing the products according to market needs. Overall growth of the organization can be
achieved by the help of improving the strategies of the organization according to the customer’s
desire (Morschheuser, & Hamari, 2019)
(Howcroft, & Bergvall-Kåreborn, 2019).
P4 Evaluate the influences of ethical and sustainable globalization on organizational
functions.
Globalization creates opportunities for the organization to grow at a high rate in the same way
globalization also created competition at a global level. The competition created by the
globalization might be based on the market, product type and cost of the product, quality of the