Analysis Report: Global Business Environment of Tommy Hilfiger

This report provides a comprehensive analysis of Tommy Hilfiger's global business environment. It begins with an introduction to globalization and its impact on businesses, followed by an examination of organizational governance, leadership structures, and cultural influences within the company. Th...Read More

Global Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
P3 Influence of globalization on organizational governance, leadership, structure, culture and
functions.................................................................................................................................1
P4 Influences of ethical and sustainable globalization on organization functions.................5
P5. The different ways through which decision making can work effectively in a global
context....................................................................................................................................6
P6 Various routes to internationalisation on organisation may adopt and key barriers.........8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Globalisation is an integration of policies, culture, economies and markets. Global
business environment consists of organisations in which company carry their organisational
functions on global platform (Cavusgil, 2014). Globalisation helps business organisation to
involve in exchange of goods, services, data and capital in international basis. Present report has
been conducted on, Tommy Hilfiger which is a fashion industry and deals in designer apparel,
cosmetics and accessories. This company was found in the year 1985 by Tommy Hilfiger. In this
project, discussions have been made on influence of globalization on organizational governance,
culture and leadership structure. Influence of ethical and sustainable globalization on
organizational functions and ways of decision making in global context.
P3 Influence of globalization on organizational governance, leadership, structure, culture and
functions
Organisational governance is a systematic system in which an organisation develops and
implement various decisions and ethical policies. Good governance can help any organisation to
achieve their successful business objectives.
Structure: Structure is an integration of frameworks in which an organisation develops
and arrange different types of lines of authorities and allocation of rights and duties. Tommy
Hilfiger follow matrix structure in their workplace in which there is horizontal flow of
information. With the help of this structure company effectively utilize their resources and foster
their decision-making process (Alqahtani and Saba, 2013). Organizational structure is mainly
affected by globalization when an organization is launching their new business in a new market
or selling their products and services in international market. In this situation, it is essential for
members to expand their areas of knowledge and hire diverse employees who are able to deal
with various clients of national and international level.
Culture: Organisational culture is mainly a sum total of values, assumptions and beliefs.
Effective organisational culture is a formative framework which directs members to move in
right way and perceive correct thinking. Tommy Hilfiger focused on various tangible and
intangible goals and objectives and follows soft culture in their workplace. Organization culture
is affected by globalization when fresh staff are hired with different culture. This culture helps in
managing firms in managing diversity at workplace which is beneficial for managing influence
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of globalization. The company focused on managing shared perspective and work ethics which
supports business in managing challenges which arise due to globalization. The cultural values of
firm are focused on promoting equality and diversity among employees which helps in aligning
business activities in one common direction.
Leadership: In Tommy Hilfiger, leaders make use of participative type of leadership
style. This helps them in gaining support and assistance from employees. Also, as this is a style
which makes use of encouragement as a tool to invite views and opinions from employees. This
helps the company in developing solutions to issues in enterprise as well as developing a sense of
loyalty in them to retain them for a long time.
Functions: Main function of Tommy Hilfiger is to create a product that is classic and
committed and take supplies from cotton fields to straight manufacturing units. One of the most
important function of company is to connect with buyers in positive and inclusive which helps
the firm in managing challenges which arise due to increasing globalization.(Our 3 Principles,
2018)
Governance: Corporate governance of firm is focused on policies and practices of
corporate social responsibility which helps the business sin managing socially responsible
practices which reduces the risk and uncertainty due to globalisation.. Governance is mainly
concerned with overall supervision and direction of an organisation. An effective governance can
take an organisation to get long term success (Black and Gregersen, 2013). In Tommy Hilfiger
their board of directors are mainly responsible for governance they make formative decisions and
policies which ensure responsiveness and accuracy towards their customers, regulators and
stakeholders.
Application of McKinsey’s 7S Model on organization structure in Tommy Hilfiger
McKinsey’s 7S model helps business organizations to evaluate their internal strategy,
structure, values and styles. It incorporates hard and soft elements. Its benefits company to
improve their performance and examine future changes within structure of company. Tommy
Hilfiger implement this model to determine effectiveness of their strategies and improve their
performance. Mention below there are elements of model described in brief:
Hard elements: Hard elements includes organisation strategy, charts and reporting
statements. These elements are easy to defines and management can directly influence them. In
relation with Tommy Hilfiger there are hard elements that are firmly described below:
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 Strategy (Governance): Tommy Hilfiger managers have adopted various types of
strategies in order to develop their business operation and expand them globally to gain
more competitive advantages.
 Structure: Tommy Hilfiger, implemented an organizational structure in which there are
different types of particular departments and divisions such as networking, accounts etc.
 Systems: It includes day to day activities in which staff members are engage to get work
done. Tommy Hilfiger, adopted a working pattern in which specific required task in done
on priority base.
Soft elements (Culture): Soft elements are bit difficult to describe and are more
influenced by culture. It mainly includes shared values, style and styles. In relation with Tommy
Hilfiger, mentioned below there are some soft elements:
 Shared values (Culture): In this, various policies and regulations are described which
directly affects employees and management behavior (Ferraro and Briody, 2013). In
Tommy Hilfiger ethical shared values are operated which aims as welfare of society and
does not harm in any manner.
 Skills: Tommy Hilfiger, human resource department recruit effectively efficient and
skilled staff who have abilities do operate functions in required way within organization.
Moreover, company mainly recruit those candidates who are potentially enthusiastic and
understand company vision in order to work in formative direction.
 Style: Tommy Hilfiger follows Democratic form of leadership in which every employee
in their company are being equally treated. Leaders in company delegate roles and
responsibilities to their subordinates in order to achieve long term sustainability.
 Staff: Tommy Hilfiger approximately recruits 20,200 people around the globe and
perform their business operations in many countries.
Force Field Analysis Model
This model is implemented to identify factors in change management. This model was founded
by Prof. Kurt Lewin. In this model, there are mainly two factors that are mentioned below:-
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(Source: Force Field Analysis, 2019)
DRIVING FORCES
There are various factors prevailing inside and outside the business premises that
facilitates bringing about change within Tommy Hilfiger. In context of the chosen organization,
such factors are ascertained and described below: -
 Outdated Machinery: As technology is advancing quickly and automation is taking place
in business organizations at a large scale, this foster entity to come up with changes. It is
noted that assets and machinery in Tommy Hilfiger get outdated at regular intervals.
Therefore, it is important for company to ascertain and accommodate necessary changes
to fasten the process of production. For this, company can make use of cognitive
computing wherein the major tasks will be performed by workforce or driven on
machines by labor while the less important tasks will be performed by robots.
 Obsolete Technology: With passage of time, there have been rapid advancements in
technology. This fosters business organizations to adopt change to ensure their
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Illustration 1: Force Field Analysis

sustainability in market. In this regard, obsolete production systems are being used by
Tommy Hilfiger which largely cause delay in manufacturing of products. For this,
company can adopt Internet of Things to connect machines via computer and internet to
make them carry out work automatically.
RESTRAINING FORCES
Within and outside an organizational premise, there are certain factors that largely resist
introduction of changes in entity. In this context, there are some factors associated with Tommy
Hilfiger that restrain changes within entity, these are defined below: - Government regulations: This acts as a crucial factor which may hinder Tommy Hilfiger
to make necessary alteration or changes within the products and processes. Hence, it is
required for company to ascertain the restricted areas and analyses the ways to bring
about the required change within enterprise. As per the governmental regulations, any
organization can make use of Cognitive Computing or Internet of Things (IOT) only
when the management provides adequate training to workforce for the same.
 Customers: This can act as a major factor that can resist introduction of changes within
the products and systems of Tommy Hilfiger. Thus, it is required by company to
communicate the need of change to customers as well as stakeholders. Also, it is essential
that adequate training is imparted to staff so that they can deliver benefits as expected by
company while bringing change. Not all the customers are comfortable in having a
conversation with robots to make the purchase, some require human element to gain
necessary information related to product.
P4 Influences of ethical and sustainable globalization on organization functions
An organization is consisting of different types of functions such as finance, sales and
marketing, administration and research and development. It is essential for every function to
work together towards common goal of company to achieve organizational targets in effective
way. Organization functions are affected by various ethical and sustainable organization that are
briefly described below:
Influence of ethics on organizational functions
Ethics is mainly concerned with values and beliefs. It is essential for business
organizations to engage in ethical behaviour and earn more goodwill in era of globalization. It
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will not only benefit them to increase their market share but also helps them to enhance their
customer base for long run. Effective code of conduct provides organization to formulate
appropriate roles and responsibilities and serve society in better way. Managers of Tommy
Hilfiger can increase positive behaviour in their organization culture by complying with the set
ethical code of conduct. The management of company is adhered Restricted Substances List
(RSL) and chemicals testing program which ensures safety and purity of companies’ products.
This is ensured by company by adhering to the three ethical principles and 10 commitments that
company aims to achieve by 2020 to ensure their sustainability in market for long run (IT'S A
SUSTAINABLE EVOLUTION, 2018). The A Shared Commitment” is a code of conduct for
stakeholders that is, including suppliers, contractors, vendors, licensees and agents. Also, the
firm adheres to human and labour rights standards to maintain long lasting goodwill with all
business partners.
Influence of sustainable globalisation on organizational functions
Sustainable globalisation is a concept driven by a principle and value-centered approach
whereby entity ensures to operate in a manner that is desirable by law and statutory bodies. Here,
the manner of functioning of entity is aligned with the foundational values of organisation
keeping in consideration the interest of stakeholders and triple bottom line (Wetherly, 2014).
With reference to Tommy Hilfiger, company is operating in a manner so that they can become a
leader in sustainable designer brand.
The aim of Tommy Hilfiger is to acquire 100% of cotton material from various sustainable
sources so as to contribute towards sustainable globalisation. Also, Hilfiger is an active part of
Better Cotton Initiative (BCI). This implies that globally, cotton production can be made better
for environment, community and industry. This opens a number of opportunities within
international market. For this, Tommy Hilfiger will hire skilled labour who can contribute
efficiently towards the initiative undertaken by company. This is done by complying with the
principles and commitments of organisation. Company keeps a proper check upon the production
process, manages its operations effectively and maintain a healthy relationship with stakeholders
and customers.
P5. The different ways through which decision making can work effectively in a global context
Decision-making is the complex section of an organisation. The leaders and managers of
an organisation have the roles and responsibility of managing workplace along with planning,
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organising, staffing, directing, etc. Their decisions impact on functions of whole working system
and performance of organisation. They perform different activities to enhance the growth and
productivity of an organisation. Both also takes the responsibility to bring changes according to
the trends and with the need of customers, so that they can produce new creative and innovative
product in the market.
In addition, with this they also introduce the new technologies and techniques in their
business structure for creating better modification. Along with this management of Tommy
Hilfiger also focuses important things like interest of stakeholders, participation of whole
employees and performance of system while making decisions of international level. They also
motivate and encourage their employees so they can work in a proper manner and can achieve
the goals and organisation of organisation. All of these processes are done by taking proper
decisions in order to achieve sustainability at marketplace.
Along with this, the changes done in an organisation can help in utilising resources more
efficiently (Ferraro and Briody, 2013). Managers are required to formulate new aims and
objectives of association as per requirement. They should also assign work to their subordinates
with proper guidance as per their skills. However, in a firm decision can be classified on the
basis of problems that occurs in the enterprise which might be structured or unstructured. Both of
them are defined as below:
In Tommy Hilfiger, there are four ways in which leaders make and enforce decision
making in a global context. Such ways are described below: -
Command: It is a way where leaders within Tommy Hilfiger make and implement
decisions without much consultation with their teams. This is an optimal way wherein leaders
communicate the decision to workforce and work upon aligning their behaviour as per the
decision. Aligning employee’s activities is best way of making decision with regard to global
concerns within firm as it reduces the risk of uncertainty.
Collaborative: This is a way of decision-making where leaders in Tommy Hilfiger
gather their teams and take their views and opinions. The final decision is still taken by leader
but importance is given to feedback obtained from staff. In this, decision will be effectively
taken by management by seeking alternatives from all staff members which is best way of
making decision in globalisation era.
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Consensus: This is an approach where in leaders take decisions by voting or poll. The
decision is taken mutually by all the members and put into action within Tommy Hilfiger. This
implies that decision is effectively taken by incorporating suggestion of all key people which is
the best way to manage successful business process when managing organisational activities
across international boundaries.
Convenience: This is a way wherein management can delegate the decision-making
power to workforce so as to increase their intellectual capabilities as well as boost their morale.
This helps in creating an effective coordination with team where decisions are with collaborative
efforts which will help Tommy Hilfiger in dealing global issues according to different ideas from
diverse employees.
P6 Various routes to internationalisation on organisation may adopt and key barriers
There are various methods through which a company can make themselves successfully
enter in global market (Savrul and Sener, 2014). There are different ways with the help of which
organisation can enter in a foreign market. It is important for an organisation to make formative
strategies while entering in new international market to ensure long run sustainability and
profitability. Mentioned below there are some ways through which a company can enter in
foreign market:
Licensing: It is mainly a contractual agreement in between two firm in which, official
right or permission is given to firm for conducting business operations. In this method an
organisation grants other entity to use their brand name, patent right and manufacturing process.
Tommy Hilfiger by using this mode can expand their area of services and earn large amount of
market share. This can be done by this company by connecting to the local market of country in
which they are planning to expand their business. By connecting with the local market company
can permit them to use their name and operate its store. But, at the same time there are chances
that this route might harm brand name of the company as there is a possibility of misuse of brand
name of Tommy Hilfiger. This can be seen as the main barrier of Licensing.
Franchising brand: Franchising is seen as the marketing concept in which owner of the
business gives many rights like usage of intellectual property, adoption of business model, brand
name, authority to sell products and services etc. to the other person named as franchisor. This
method can be adopted by firm in order to earn more rapid expansion in market. This method can
be suitable for those entities who have repeatable business models which can easily be
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transferred. Tommy Hilfiger can adopt this route at the time of expanding its business at
international level as it is easier for the company to operate in many countries by allowing
franchisor to use their business model and other intellectual rights. The main barrier of this route
is the lack of communication because it will be going to be difficult for Tommy Hilfiger to
communicate with all of its franchisor in order to check whether they are using name of this
company in right direction or not.
Joint Ventures: It is mainly a form of partnership in which there is a creation of another
independent company. In this method, two entities are agreed to work in collaborative manner in
a separate particular market. In this mode profits and risks are being shared equally or as being
decided by partners. Tommy Hilfiger can take various advantages from this method and expand
their market share and increase their brand image. In this regard, it can be said that Tommy
Hilfiger can adopt this route by collaborating with the well settled company of that nation where
they are planning to expand. This help the company in easily entering into new market
effectively with the good back support. The main barrier of this can be seen as issues related to
mismanagement of cultural differences. This is because, in reality it is not possible for the
company to deal with joint venture partner belonging to other culture. It can also create conflicts
which is a barrier for the Tommy Hilfiger while expanding its business in international market.
As per the above specified different routes of expansion, it has been identified all of them
can be seen as the good option for the company by which they can expand their business. The
different ways through which decision making can work effectively in a global context
effectively. It has been observed that lack of communication is considered as its main barriers of
expansion. By analysing this barrier effectively, it has been analysed it can be overcome by
having good management team who communicate to its franchisor at regular basis. Apart from
this, another barrier is the cultural difference that will be faced by workforce while undergoing
expansion. It has been assessed that to overcome this, company can give training to staff so that
they can be made aware of the ways using which they can communicate efficiently with
multilingual and multicultural people. Yet another barrier in relation to this is ascertained to be
the misuse of name by local person while execution of licensing. To overcome this, company can
strive to build healthy corporate relationships and only engage trustworthy people for this
process.
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CONCLUSION
As per the above-mentioned report, it has been concluded that globalisation is a process
of increasing interdependence of various countries in order to increase variety of cross-border
transactions in relation to products, services, economies and capital. Globalisation effect on
organisational leadership structure, governance and culture in many different ways. It is essential
for organisation to perform their business operations in proper code of conduct to stimulate
formative growth. Company can gain more competitive advantages by implementing appropriate
decision-making approach in their workplace and the study also evaluated various routes of
internationalisation.
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REFERENCES
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Online
Our 3 Principles. 2018. [Online]. Available Through:
<http://global.tommy.com/int/en/about/retail-stores/franchise-application/14>.
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