Business Environment: A Report on Global Business Strategies

This report provides a comprehensive analysis of the global business environment, focusing on the key factors that drive global commerce, including cost, market, environment, and competition. It uses Procter & Gamble (P&G) as a case study to illustrate the complexities of strategic challenges faced by organizations operating in a global market. The report delves into how globalization influences an organization's structure, culture, and functioning, examining the impact of currency exchange rates, political risks, and supply chain management. It also addresses communication difficulties, cultural differences, and the importance of global pricing strategies, concluding with an overview of diversification and differentiation strategies within the global business context. The report uses P&G's international operations to highlight how businesses adapt to environmental changes and competition in a globalized world.

UNIT 18: GLOBAL
BUSINESS ENVIRONMENT

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
Key factors of cost, market, environment and competition that drive global commerce............1
LO 2.................................................................................................................................................2
Complexity of strategic challenges faced by organization..........................................................2
LO 3.................................................................................................................................................4
Operating in a global market influences an organization’s.........................................................4
LO 4.................................................................................................................................................6
Influence of globalization on organizational...............................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Global business environment are the different environment which are impacting the
decision making of the organization's resources and capabilities. There are a lot of factors which
are influencing the environment of the organization which have to be analysed so that the
organization can function and get a competitive advantage which is going to be very helpful.
Procter & Gamble is a public organization which is having its headquarters in Ohio,
United States. There are more than 97,000 employees working in the company and the net
income of the company is $3.897 Billion. The products which the company is dealing with are
cleaning agents, beauty care products, personal healthcare products, etc.
The report would consist of different factors which drive globalization, complexities in
strategies and influence of other factors in decision making like culture, structure and
functioning. Organizations must have strategies and decisions according to the people who are
there in the company so that they can give their best services and products to them.
LO 1
Key factors of cost, market, environment and competition that drive global commerce
There are a lot of factors which are influencing the functioning of the company which
have to be considered when there are decisions which are being made in the market. Factors like
cost, market and environment can make the company change their decisions and objectives
accordingly so that they can have a direction to function in so that they can have a better
productivity in market.
Cost
Globalization can make the products manufacturing increase and the cost of the products
reduce which can make the customers more satisfied and demand of the company can increase
for the customers in market. Cost can influence the organization like P&G a lot because there are
countries which are having a low GDP and the customers have low income level which has to be
matched with the product which the company is expanding with in other countries. There are a
lot of factors which are in favour of globalization because transportation is becoming easier for
the company and the company will have a lot of profit in the market (Hudakova and et.al., 2018).
Currency value also differs from place to place which is going to make an impact on the
organizations functioning and the prices which they have set on products. Labour cost is low in
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few countries which can be a great reason for P&G to expand themselves in those countries so
that they can get labour for low cost and that can make the company gain profit. There are
countries which are having a high currency value which can make P&G have a great influence
and make the company have better place for themselves in market. Technology can also make
the company have a lot of cost-cutting the quality and productivity of the organization can be
maintained if this is used. P&G is a very technological friendly company which can make the
company have a better advantage for themselves to make the expansion of the company in
different countries which is a great advantage and profitability decision which the company can
have.
Market
Customer needs for products are the same globally which is why the globalization can
take place in companies so that they can increase the customer base which will increase the
revenue generation for themselves. Strategies are almost the same in all the countries of the
world which is another great advantage for the company to expand themselves so that they can
have a better profitability. There are global customers who are there in the organization which is
a great advantage for the organization and the needs and demands of the customers is the same
over the world. Customer needs and demands in the country are increasing therefore it is very
important for the company to have a better functioning for themselves. Market has to be good for
the company to expand themselves which is why P&G is looking for different market in which
they can expand themselves. P&G is an international company which is providing the customers
with the best of products at good price which is why the customer base of the company is strong
(Buckley, 2016). There is no other company which is expanding in the field in which P&G is
there which is a great advantage for the organization and the capture of P&G is increasing. Right
strategies which are being used by P&G so that the company can function effectively and make
the company have the right customers with the right profitability in the company. There are a lot
of innovations which have been made by the company so that there is a better functioning for the
company and the organization can expand successfully in different countries.
Environment
There are free trade policies in most of the countries globally which is a great advantage
for P&G and the company will be able to expand themselves worldwide. There are a lot of trade
policies which are in favour of the company to have trade in the other countries which can
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increase the profitability over all. Laws which have to be followed in the organization so that
they can have a better functioning for themselves which would be very helpful. Environmental
factors which can influence the functioning of the company which have to be worked upon by
P&G so that they can get a competitive advantage for the company. Technological advantages in
countries can attract a lot of companies like P&G to expand themselves in those countries so that
they can increase their productivity in market which can make the company get a lot of
advantage. Freedom which the employees need or a motivation which is required by the
employees so that they can give their personal best in the organization which is going to be very
helpful for them to function in. Economic, social and legal aspects of the company and country
have to be followed so that the company can have a better functioning for themselves which is a
very important factor for them(Buckley, Doh and Benischke, 2017).
Competition: The competitive environment of the company leads to the evaluation of the
different competitive elements such as pricing strategy or innovation or multi- skilled of
employees, that can affect the manner in which the companies operate and indulge in decision-
making (Weltin and et.al., 2017). This evaluation helps P&G in recognizing the changing trends
in the market regarding customer preference and also leads to development of better policies and
strategies for the organisation.
LO 2
Complexity of strategic challenges faced by organization
Strategic challenges are summarised as all the aspects of business environment that create
a hustle of business organisation in conducting business operations.
International Company Structure: International company structure is among one of the
challenge company face during the process of globalisation (Paasivaara, 2017). Structure of the
organisation in influenced with factors like macro environment and micro environment as well.
Company needs to compliance with various legislations as well while framing a suitable
organisation hierarchy to operate business operations.
Foreign laws and regulations: Laws and legislation is among the major challenge company
face during the process of internationalization of business. Company needs to cope up with all
the laws and legislations associated with the corporate organisation. In order to smooth
operations of company to cope up with legislations and laws is among the necessary aspect of the
company. Legislations like company law, corporate social responsibility law and other laws that
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involved in the operational activities of the company. Coping up with legislations also support
the company management to deal with governmental restrictions as well effectively.
International accounting reporting system: International accounting reporting system is also
an effective aspect that involve in business operations of the company at international level. This
system guides about the reporting of all the company's affairs in statistical formats. This system
provide all the guidelines related to the accounting operations. Company needs to follow all the
guidelines and principle s conveyed under international accounting reporting system in order to
maintain its books of affairs.
Currency exchange rate: Currency exchange rate is also among the huge challenge company
face during the process of globalisation. Currency exchange rate denote about the fluctuation in
the value of currency. The fluctuation in currency value impacts over entire business operations
of the company (Gallagher, 2017). It also impacts over company's strategies in respect to setting
up of product prices. Currency exchange rate also influence the economic stability f the country
as it involves inflation as well. Inflation directly impact over company's sales as it influences the
purchasing power of target customers.
Political risk: Political risk is also a challenge company face during the face of
internationalization and also further after the globalization process company needs to deal with
the economic stability in the nation. Political stability impacts over each and every aspect of the
business as all the policies of the company like products launch, business expansion is deeply
impacted with the political stability in country. Political risk directly impact over business risk in
doing company's operations.
Supply chain complexity: In international market among all other challenges the challenge of
supply chain management is among the major challenge company. To sustain in the target
market is important for the company to have an effective supply chain management system.
Supply chain enables company management to serve its products to target customers by
supplying company's products to all its dealer base.
Worldwide environment issues: Worldwide environment issue also impact over business
decision-making process. In case of environment issues faces by world its become more
challenging for companies to sustain and grow in the target market. It made difficult for business
organization to sustain in such an environment.
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Universal payment methods: Universal payment methods are considered as mode of payment
channelize across the globe (Yerznkyan, Gassner and Kara, 2017). Methods like cash payment,
credit card, debit card, online modes are among the universal payment methods used by P&G
across the globe.
Choosing the right global shipment methods: Global shipment methods are considered as all
such ways used to supply the products at other places across the globe (Shropshire, 2019). For
P&G, modes like roads, air, train and shipping are utilized across the globe in order to supply
products at other places.
Communication difficulties and cultural differences:
 Communication difficulties: Communication difficulties are considered as facing issues
in the process of making effective communication. Communication difficulties can be
faced in P&G due to differences in any social aspects like religion, language and any
other aspects (Weltin and et.al., 2017).
 Cultural differences: Cultural differences are considered as all the differences attached
between individual due to social aspects like cross culture dealing and other relative
social aspects.
Cost Calculation and Global Pricing strategy: Cost calculation is considered as utilising the
accounting principles like accrual basis accounting to report all the respective cost incurred in
conducting operation's (Asfaw, Pallante and Palma, 2018). All entities along with P&G across
the globe follow the principle of cost accounting to report all associated costs.
Global strategic challenge: Global strategical challenges are considered as all the social aspects
that create difficulties for business organisation to conduct profitable business operations. For
P&G, this can be happened due to social changes across the globe like religious and other social
aspects (Alshamsi, Pinheiro and Hidalgo, 2018).
Diversification strategies: Diversification challenge is considered as the challenge associated
with making or creating a unique identity of business organisation in front of the society. All the
planning and practices P&G company's used to build a brand identity is considered as the
diversification strategies.
Differentiation: Differentiation is considered as making a different brand identity in target
market (Abdul‐Halim and et.al., 2016). It enables corporate organisation such as P&G to mark a
specific presence in target market with the support of logo or any other mode.
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Market Penetration: Market penetration is a process which involves entering into a new market
to expand the customer base.
Product development: Product development is a process involve to upgrade the existing
products or services and also to launch a new products in the target market (Moore, Dev and
Goncharova, 2018).
Market development: Market development is a process that indicates P&G about entering into
a new market with the launch of existing products in the new market.
A supply chain: Supply chain is considered as a process to supply company's products in the
target market (Stewart and Brown, 2019).
LO 3
Operating in a global market influences an organization’s
There are a lot of internal factors which influence the functioning of an organization
which have to be considered so that P&G can function better. This frame work can make the
company have a better strategic plan for themselves after analysing this factor and plan for them
effectively (Civelek and et.al., 2016). Human resource in P&G is very good which is making the
organization function so effectively and efficiently which is making the organization have a
competitive advantage and have a good customer base for themselves which is going to be very
good for a long run in market (SILVA and SIMÕES GOMES, 2019). McKinsey 7 stage model is
the best framework which can be used to understand this factors in detail about P&G.
 Structure
There has to be a structure in the organization so that the company can function
effectively and efficiently which is going to make the company have a better command in the
organization. Hierarchical form is being used in the organization so that the employees of P&G
are under control which is going to make the company have successful functioning for
themselves.
 Skills
There are a lot of experienced employees which are hired in P&G which is an advantage
for the company and the organization will be able to have a good productivity in market for
themselves. There has to be motivation in P&G staff so that they can effectively operate in the
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company have a sense of direction which is a very important factor for them so that they will be
able to have a better competitive advantage (Oyedele, 2016).
 Strategy
There has to be a developed plan with the organization so that they can plan further and
making the company have a structured plan for themselves so that they can function effectively.
It is very important that there is communication in the organization so that the company can
function better and the organization will have a direction to work in.
 System
There has to be decisions which have to be made daily so that the organization can have
an effective working for themselves. System has to be good in P&G only then the company can
function effectively and have a competitive advantage which is a very important factor for the
company. Procedures have to be followed in the organization so that the organization can have a
better functioning for themselves which is going to make the company have a better market
image for themselves which is going to get loyal customers in the company (Hakanen, Helander
and Valkokari, 2017).
 Style
The style of the organization can speak for themselves in market which is that they will
have to have a better functioning for themselves which is why the organization has to have a
motivated working force for themselves so that they can achieve their objectives and aims from
time to time. Productivity and performance can be measured through his factor which is a great
advantage in the company which can make the company have a better operations in market.
 Staff
Right skilled and knowledgeable employees are taken in P&G so that the productivity of
the organization is not effected and the organization will be able to have a better competitive
advantage (Dey, 2019). Training will have to be given to those who are not being able to meet
with the standards of the company. Staff has to be in the best performance level therefore
motivation should be given to them so that the organization can profit from it and the
organization can get more customer base for themselves.
 Shared Value
Shared value has to be strong in the company so that the behaviour of the employees can
be managed and that is a very good factor for the company and that will make the company
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achieve their objectives and aims faster. Employees have to have the same dedication as the
management has for the company so that they can have a better functioning for themselves
which is a very important factor for the company.
Structures of organizations
Vertical organization is when there is a management to have a command on the
employees of the company. Horizontal organization is when there is an equal treatment to the
management and the employees is given so that the barriers in the company can be removed.
P&G is following this kind of structure in the organization so that they can function better and
the company will be able to function better. This will give all the people of the company a clarity
of working and the company will be able to come up with better ideas and satisfaction level of
the employees so that the productivity of the company can be increased.
Main Departments in Organization
There are five main departments which help an organization to achieve their objectives
and goals so that the organization can gain the market share and increase their revenue. This can
make the company function effectively and efficiently so that they can get a competitive
advantage. Human resource hires the right employees in the company and trains them so that
they can meet the standards of the organization. Marketing departments understands the
customers and helps the research and development department to improve the products so that
the company can satisfy the needs and demands of the customers. Research and development
department help the company to improve the products or create unique products in the company
so that they can get a competitive advantage. Production department is that department which
converts the raw material into finished goods so that the customers get what they want.
Charles Handy Organization Culture Model
There are a lot of factors which have to be considered in the organization to have a better
role, task, person and power in the organization which needs to be followed. Roles power, person
and task have to be fair in the organization and the distribution of work and power should be
good only then the organization will be able to function better which is a very important factor
for them (do Carmo Silva and Gomes, 2019). There is an influence of global aspects in P&G
organization which has to be maintained and standards of the organization has to be good only
then they will be able to have a better functioning for themselves in market.
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LO 4
Influence of globalization on organizational
There are a lot of factors which have to be considered before any decision is made in the
company so that there is a better functioning and the organization will be able to make those
changes effectively (Nikolaev, 2018). Understanding the barriers is very important before any
organization makes decisions for becoming globalized.
Route to internationalization
There are a lot of routes which businesses can take to route into internationalization
which are local agent, franchise, joint venture, own local office, acquire a business. The route
which P&G would prefer taking is from head office which is the company will expand
themselves in other countries but headquarter of the company will remain in the same location.
The company will operate from Ohio and the company will be able to have a larger customer
base for themselves which is going to be a great advantage for the company.
Barriers
 Technological
There are a lot of employees who are not having the knowledge of technology which has
to be given to them through training so that they can use the technology effectively so that the
organization can function better. Technological improvement in the organization can make the
organization have a good functioning for themselves which will make the company have a better
functioning for themselves and the organization will be able to have a great impact on the
company. Productivity of the organization and performance of the company can increase which
is a great advantage for the company of P&G.
 Language
Language can be a great disadvantage for the company if that factor is not maintained
because there is a requirement of communication within an organization and if that is missing
then the company will not be able to function better (Chang, 2016). P&G does not have this
trouble because they have people to translate languages so that there is a clear sense of direction
which can be provided to the people which is very important for the organization to function in.
It is very important that there is transparency in the organization so that there is a sense of
direction which is present in all the employees of the company which will make the company
function effectively. Due to the language it can become a huge problem for the company if this
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factor is not solved on time which P&G has already faced in the past and they do not want ot
repeat it therefore there are translators in the company.
 Workforce
Workforce of P&G is motivated which is a great advantage for the company and that is
why the company is being able to make the organization get the kind of loyalty from the
customers over years. There is a lot of factors which can influence the employees but it is very
important for the organization to have a better functioning for themselves (Kasemsap, 2016).
There are a lot of facilities which are being given to the employees from time to time which is a
great advantage for the company and that will make the company have a better functioning for
themselves. Workforce has to be given freedom and incentives so that they find a satisfaction
and motivation to continue working with the company so that they can have a good workforce in
P&G.
 Government Regulations
There are different regulations which all the countries have for companies which want to
start in different countries. P&G will have troubles in few of the countries regarding the rules
and regulations but mostly the company will be able to expand themselves in almost all the
countries of the world.
 Cost
The cost of the products will also increase in the countries because of the import and
export trade taxations which can make the prices vary from one country to the other. The
customer base in all the countries will differ from one place to the other which make the revenue
generation of the country differ which can be a great barrier for the company.
CONCLUSION
From the above report it can be concluded that there has to be a detail analyses of the
factors which can influence the functioning of an organization. Be the factors internal or external
but the organization will have to make decisions accordingly so that there is a better functioning
of the company. This is done so that the decision-making of the company can be better and the
productivity of the organization so that there is a better functioning of the company. There are a
lot of factors which have to be considered by organization so that the functioning of the company
can be better and the organization will be able to give their personal best in the company. It is
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very important to motivate the employees of the company so that the organization can get a
higher productivity for themselves so that they can make the company have the best of results for
a long run in market.
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