Analysis of Global Business Environment: Unit 18 Report, 2019/20

This report provides a comprehensive analysis of the global business environment, examining the key factors that drive globalization, including international economy, foreign direct investment, and international business trends. It delves into the strategic complexities faced by organizations operating globally, discussing international trade laws like WTO and GATT, and the associated risks and diversification. The report further evaluates the influence of globalization on organizational structure, culture, leadership, governance, and functions, including ethical and sustainable practices. Through the case study of Allan Reeder, the report illustrates the application of these concepts, analyzing the company's financial data, cost structures, and market opportunities. It concludes by exploring decision-making processes and routes to internationalization in a global context, offering insights into effective strategies for businesses navigating the global landscape. The report emphasizes the importance of understanding and adapting to the dynamic nature of the global environment for successful business operations.

Global Business Environment
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Analysis of various key factors of market, cost, environment & competition is that driving
global commerce & trade.......................................................................................................3
TASK 2............................................................................................................................................6
Explain the complexity of strategic challenges faced by organisations when operating in a
global environment supported by specific examples..............................................................6
TASK 3............................................................................................................................................7
Influences of globalisation on leadership, and organisational, governance structure, culture &
functions.................................................................................................................................7
Influences of ethical & sustainable globalisation on functions of a organisation................11
TASK 4..........................................................................................................................................15
Different ways decision making can work effectively in a global context..........................15
Routes to internationalisation that a organisation may adopt...............................................18
CONCLUSION..............................................................................................................................20
REFERNCES.................................................................................................................................21
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INTRODUCTION
Global business environment consists of many different brands that are part of different
industries and operating their business functions in this dynamic environment. There are many
different aspects like political culture social technological that have to be considered by
organisation before formation of strategies. What is based on Allan Reeder London-based start
up established in the year 1971 (Banka, 2017). They are dealing in providing personal services
and sole trader supplying butter to Bakery screen and all the dairy products. They have a strong
management of customer relations and marketing department. In the present scenario this
organisation is willing to expand themselves to other countries apart from UK and they are
targeting Australia. For this there is discussion of various aspects of changing Global Business
Environment. So that there can be dealing with all the prospective risk and formation of
strategies in order to internationalise the brand.
TASK 1
Analysis of various key factors of market, cost, environment & competition is that driving global
commerce & trade.
Globalisation can be defined as a scenario of development taking place across borders. With the
changing scenario there has been a completely different opinion in which globalisation is
perceived as a concept by different people (Bedianashvili, 2016). From the economic it is related
with long distance flow of goods services and capital along with perceptions and information that
is accompanying the market exchange process.
Political view point is related with diffusion of government policies taking place across
International borders.
In social aspect globalisation can be said as present of information images people and Idea.
The culture dimension is related with of an exchanging culture that takes place with different
countries because of influencing Each Other in Sub dimension. Cultural dimension refers to
transmitting of values meanings and ideas and there is circulation of culture that enables
individuals in extending their social relations across boundaries.
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There are certain factors of dimension globalisation:
International economy: International economy refers to a field of study that is used for
assessing the implications of international trade in services and goods and also having relation
with international investment. There are two major fields that is international economy consist of
international finance and international trade. National finance applies to different
macroeconomic models in understanding international economy (Chasdi, 2017). It focuses on
internet relationship between variable like unemployment rate, exchange rate inflation rate and
interest rate. It is also focusing on significance of trade in margins aggregate effects of
government monetary and determinants of exchange rate. Most important issues is related with
pros and cons of fixed and the floating system of exchange rate.
Foreign direct investment: FDI investment that is made by individual or organisation of one
country in the business that is located our present in another country. This usually takes place
when an investor is willing to establish foreign business operations are willing to acquire foreign
business assets for a foreign organisation. It is generally result of portfolio investment that is
made by Investor by purchasing of equities in the foreign based organisations. These are type of
direct investments are generally made in Open Economy that are offering a skilled workforce
and having a growth prospects for investor. They are frequently involving more than capital
investment and consist of provisions of Technology and Management (Endongand Essoh, 2019).
International business & trends: International business refers to the treat taking place related
with services good technology capital and knowledge across International borders and also at a
transnational scale (Gunn, 2017). There are some major things that a part of the international
business according to the year 2020.
Globalisation and interconnectivity that is resulting of superfast broadband and it has a major
impact on businesses functioning. From the economic perspective 2020 there is very threat for
countries like China for their International Business expansion (Hamilton, and Webster, 2018).
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There is also a complete change entrenched in the way there is perceiving of Corporate Social
responsibilities businesses are extending beyond just environment and moving towards General
awareness and their causes impact on the society.
Key factors affecting globalisation:
1) Cost:
Cost is a very important structure and in case of Allen leader there are certain situations
of cost that can lead to decision of expansion or not expansion to other different parts of the
world. Cost structure that has to be considered is related to higher amount of structural
unemployment environmental cost. There is situation of tax competition and also Brain drain
from many countries all these is leading to less cultural diversity and impact on higher costs for
the organisations. For example: In Allan Reeder there has been accidents of high cost all the
situation to create a high burden on Allan Reeder and there is inadequate availability of financial
resources for fulfilling the requirements of globalisation but there have been certain incidents
like partnership with Samsara to undertake new technologies and optimization of delivering of
customer service (Allan Reeder, 2020).
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Illustration 1: Financial data of Allen Reeder for year ending
2018

Allan Reeder has total assets worth 7.72 million in the year 2019 and their net assets are just 5.57
million in the year 2020. further their turnover is 33.81 million and debt equity ratio is at 27.87
percent that has increased as compared to year 2017all this financial data clearly indicates that in
case of Allen Reeder there are no sufficient financial resources that can be used by organisation
for purpose of expanding them to other countries (Allan Reeder Limited, 2018).
2) Market:
There are opportunities and threats both part of environment in which a particular
organisation is functioning (Tsanwani, Mulaudzi, and Raselekoane, 2017). There are certain is
that are part of external environment that consists of integration of multinational organisation,
effective communication improve means of transport. That is leading to higher business
opportunities for smaller organisations like Allan Reeder.
3) Competitive factors:
There are many competitive factors such as domestic monopolies have lead to removal of
competition. But globalisation is a scenario that helps organisation to phrase higher amount of
competition from other foreign organisations.
4) Environment:
The external environment consists of certain factors that are very critical and are
impacting the organisation. Allan Reeder has to consider all the different factors that are
affecting and part of the external business environment.
TASK 2
Explain the complexity of strategic challenges faced by organisations when operating in a global
environment supported by specific examples
Trading of goods and services as well as carrying out business operations and functions at
worldwide level is knows Globalisation. There are various laws and regulations related with
international trade which needs to be followed and considered by the management team while
doing business operations. Also it has been said that there are risk associated with diversification
which have there both as well as negative aspects. Some elements such as WTO, GATT,
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Embargo, ban and sanction are related with international trade which have the capability to
influence their overall profitability and performance. Some of these most essential elements are
going to be discussed as follows: WTO: It is one and the one international entity deals with the regulation and rules of
trading among different nations. The World Trade Organisation is based in Geneva and
act as the forum in order to conduct negotiation among trade agreements, maintaining
peaceful settlement between different members. GATT: It is said that the General Agreement on Tariffs & Trade (GATT), was signed by
23 countries on the date of Oct. 30, 1947, which was a legal written document helps in
reducing the barriers to global trade by minimizing tariffs, quotas & subsidies while
preserving specific rules and regulations. This is the international trade law which needs
to be considered by various organisations at their own level.
 Ban: It is said that ban is a informal or formal restrictions or prohibition of something.
Usually, it is said that bans are developed by the government in order to prohibit some
activities within a specific area or region. According to some critics it is a negative act
but sometimes ban something helps in the overall development of the society. For
example, ban of tobacco helps in reducing number of mouth cancer all over the world.
Apart from this, there are some economical factors which can highly affect the international
trade which consist of some risk as well as benefits needs to be considered by the management
team.
Economies of Scale-It refer to condition of cost and money advantage for business entity
mainly established by manufacturing products and services in a bulk quantity. Economies of
scale mean some products are manufactured and produced by the business entity for a specific
region. For instance, China is following economies of scale strategy in order to get leadership or
position in different sectors across the world. Risk associated with this is that sometimes it might
reduce the profit margin of the company which is affecting the overall performance.
Technological Change-Advancement in technology said to be the biggest benefit and
disadvantages for the business while doing globalisation. It has been said that adopting unique
and latest technologies assisting reducing the overall cost. International trade laws need to be
followed by adopting latest technologies which might be a difficult task for the organization. In
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addition to this, it has also been said that Patents of some advanced and latest technologies assist
business entity in order to exploit international and foreign markets
For example 1: WTO is the only global organization that is dealing in rules of trade
across nations. WTO provides a common institutional framepwrk for conducting trade relations
among their members for matter related to WTO agreements. WTO makes a “single
undertaking” for all the WTO agreements as “Whole and indivisible package”. All the members
of WRO have top follow the regulations of “Covered regulations” that regulate different apsct of
trade among members. Members have to commit to all the restrictions because of imposition pf
tariff barriers & non tariff barriers of trade. WTO members also make commitments related to
protection of intellectual property rights, customs valuation, agriculture and subsidies.
For example 2: There has been a Punta Del Este declaration on implementation of WHO
framework connection on Tobacco control. That recalls the provision of general agreement on
trade and tariff, agreement on trade related aspects and agreement ion technical barriers for
implementation of public health barriers and specifically declares that it consist of right to define
and implementation of national public health policies for compliance with commitment and
contention in WHO specially with WHO FCTC.
TASK 3
Influences of globalisation on leadership, and organisational, governance structure, culture &
functions.
Structure:
There is falling apart of a structure that is direct information flow takes place in different level of
organizations and all the functional department (Trad, 2019).
Culture:
Use of a soft culture that is adopted by the management in Allan Reeder, where there is
importance given to both intangible and tangible objective. It becomes easy for the organization
to recruit employees from different cultures so that there can be diversity in the functioning of
the organization.
Leader:
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Allan Reeder is the one man startup leading Dairy suppliers. They are using two different styles
of leadership that is autocratic and participate in which there is involvement of other team
members of organization in making crucial decisions.
Governance:
Allan Reeder is making continuous effort for the purpose of creating efficient policies and
decision making for the organization. Globalization such policies and rules have to be concerned
to set up a business in different country apart from UK.
Hofstede's model:
It is a culture model that is related with practices solution ideologies that are helping in
differentiating one business organization from another. There are four basic elements that are
part of this model:
1) Masculinity vs Feminity:
It is element that relates to providing power and responsibility to female staff over male in
organization. In Allan Reeder the team members consists of both the male and female staff that
is they have Heidi Reeder as the director and leader of their organization who influence functions
of the staff members of their organization (Tallman, Luo and Buckley, 2018).
2) Power distance:
Power distance refers to delegating the powers and responsibility in the organization. In Allan
Reeder there is not much delegation as major decisions are made by the four team members that
is Managing Director and the marketing manager.
3) Individuals vs Collectivism:
First to letting one employee takes all the decisions in organization and Collectivism refers to
taking group decisions. It is very essential for every employee to take part in the process of
decision making so that there can be promotion of innovation and creativity in Allan Reeder.
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4) Uncertainty Avoidance:
It is a factor that helps in solving all the conflict that can arise in organization among the
workforce (Tolkach, and Pratt, 2019). Director of Allan Reeder himself as a leader of their
organization is making all the efforts to minimize the conflicts that can take place between
employees while working towards achievement of a common goal.
Above discussed model helps in understanding four major aspects of the organization culture
that is prevailing in Allan Reeder.
McKinsey Seven S model:
It is a tool that is used for analyzing organization designed by looking at 7 internal elements as
mentioned below:
1) Structure:
Structure represents the way of business organization has divided and organize different
functions of their organization (Wei, Thurasamyand Popa, 2018).. The structure that is used in
Allan Reeder is functional division where there is division of functions based on functional
departments.
2) Strategy:
It Refers to the plant that is developed to achieve a sustained competitive advantage and
is reinforced by the overall mission vision and objective statement of the organization. In Allan
Reeder the main strategy that is used is eating all their customers as individual units and
understanding them as a person to maximize their satisfaction level.
3) System:
System is the process that is used by a business organization and determines how
business organization is functioning. Allan Reeder is operating by its own distribution centre
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Heathrow Airport and they are serving many different types of businesses that include best
known restaurants hotels and coffee shops.
4) Skills:
Skills are referred to as abilities that are very important to perform all the functions. In
Allan Reeder there are still such as Ben Reeder has been appointed as the marketing manager
because of the strong researching and analytical skills possessed.
5) Staff:
This element is concerned with how many employees will be required by the
organization. Allan Reeder there is four major positions that are part of the team that is managing
all the function it consists of the two directors marketing manager and managing Director.
6) Shared values:
It is the core of this model where there are certain standards and norms to guide the future
of employees and actions of organization. In Allan Reeder there is incredible work to deliver the
product according to customer requirement to cause of the distribution channel and the quality
guarantee that is provided by this brand.
7) Style:
Style represents the way organization is being managed by the top level authority. In
Allan Reeder there is a style of leadership that is democratic being practiced in the organsuiation.
Also they have a highly committed workforce and they have made all efforts to enhance the
customer relations by adopting the suitable style according to the customer trust and know how.
Ethical globalization means the procedure of different information according to goods and
services. It is a concept that is used for the purpose of encouraging associated stakeholders like
consumer government suppliers and Society to work in a more ethical way.
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Influences of ethical & sustainable globalisation on functions of a organisation
Sustainable globalization is used for expansion of business activities at International School so
that there can be sustainability maximization. This concept is used for operation of business
according to a suitable structure and maintaining sustainability at global level. There are different
functions that are part of organization and sustainable globalization might create some challenges
in performing this function:
1) HRM:
Human resource function is related to employees of a organization. In Allan Reeder sustainable
globalization will impact the management of all the top authority and employees working in
different functional organization. There will be more consideration given to optimum utilization
of resources and this might impact the satisfaction level of employees as they could feel scarcity
of resources.
2) Finance:
Finance function is one of the very important functions as it relates to all the financial resources
that are essentially required for functioning of organization. In sustainable globalization Allan
Reeder will be making efforts to ensure the availability of resources that is required in order to
expand them for smooth functioning of already existing unit.
3) Marketing function:
Ben Reeder is the marketing manager and is responsible for performing all the marketing
activities of organization. In Allan Reeder, there will be provisions made for effective marketing
activities so that there can be transmission of adequate value to prospective customers.
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