GLOBAL BUSINESS ENVIRONMENT 1

  • Category:
    Business
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  • Level:
    Undergraduate
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Global business environment

The global business environment is the environment occupied by the various countries that have exogenous factors to the home environment of a given organization. These factors and surroundings are responsible for making decisions about the business on how to allocate and use the available resources. There are both internal and external environments (Collings, Scullion, & Morley, 2007). The external environments influence the progress of the business and include; technological environments, tax, legal, cultural, economic, regulatory, political and social environments. Business has been made easier across the globe by globalization since it has made the world smaller. There are advantages associated with globalization which includes: generation of wealth, many countries are able to get wealth from interaction with the developed countries and also by getting raw materials for their industries. Jobs have been created where people are even able to work even outside their motherlands. Goods availability, through trade, countries are able to exchange goods and services. More business opportunities have been created globally through experiencing more challenges in the global business environment (Need, 2006). International management which involves the application of the techniques and the concepts of management in the international environment is, therefore, crucial in the business. It is set in order to overcome the international challenges.

In the global market, business thrives in a competitive environment. Managers of the various businesses, therefore, should be keen in that investors, suppliers, locations, business partners and business locations can be anywhere in the world (Zikmund, Babin, & Griffin, 2013) . Businesses which will be more successful will be in a position to secure opportunities whenever they arise, and successful business managers are also prepared for any downfall that may occur in the business. Managers are also entitled to understand clearly the similarities and the differences that exist between the boundaries for them to be in a better position to utilize the opportunities that arise in the global market (Vogel, 2008). The managers also should set global strategies that maximize their benefits. Some of the international challenges that are faced by the manager are:

Compliance and regulations

There are countries that have very strict policies concerning the type of business that are allowed in the given countries. Sometimes managers find the policies set in some countries so strict to comply with. The Australian government has subsidized in the motor vehicle industry, but this has led to a decline in job opportunities in Australia (Hill, Cronk, & Wickramasekera, 2013). In Australia, the car industry and other major industries have been put under the control of the working class. This policy has led to the major challenge of the Ford Company as they make low profits.

Social forces

A business that operates globally has faced social challenges. These challenges arise due to the differences in the cultures of the various countries. The other social challenge is a language barrier. Managers should, therefore, look for the best way to overcome language barrier (Mellahi & Frynas, 2015). The managers also should understand not only the cultures of the different countries but also the religious boundaries. This will induce a smooth running of the business and also get full information on the demand for a given commodity (Ball, 2012). In the international environment, managers should understand the consumer’s preferences for goods and services which are determined by their faith.

Technology and communication

Communication has been the major challenge in the businesses operating globally. Consumers need to get full information about the existence of a given business (Acs, 2006). The firms also need to keep communicating from time to time; therefore, the companies that have poor means of communication will always miss crucial information (Immelt, Govindarajan, & Trimble, 2009). The managers should ensure that there is a good communication system to avoid bogging down of the bookkeeping.

Different political systems

Managers should understand the different political systems within which the business is operating. There are countries that embrace democracy while others do not. In countries where democracy has embraced the managers, and their businesses are protected while those operating in the authoritarian regimes, they experience less protection by law (Trompenaars, & Hampden-Turner, 2011). There are also trade barriers across the boundaries which limit the freedom a given business. Market research is, therefore, necessary before managers start their businesses globally. Managers also face import quotas as a challenge. This is where given countries set the number of import that can be imported into the economy (Hollensen, 2007). This means that the managers have to limit the goods and services that he should deliver in that country.

Different economic system

In the international environment, there are different economic environments within which the business operates. Managers will enjoy a free market system where the states have less regulation. On the other hand, the business will managers are expected to comply with the business policies within the command economies where the government has full control over the production and distribution of commodities (Fulponi, 2006). These economic forces are different depending on the various economies. The economic forces are not permanent as they keep on changing from time to time. Managers are expected to understand the different macroeconomic objectives set by the various states aiming at the maximum growth of the economy. In response to this, the manager should also ensure that their stakeholders are in a position to understand these economic policies (Marchi, Maria, & Micelli, 2013). In Australia, the Ford Company has been experiencing the financial challenge and forced to reduce the number of employees (Roberts, 2006). The Gillard state and the workers have been in a political fight. The fight results from a number of poor management decisions which affect the entire economy.

Technological forces

A change in technology ensures there is a reduced cost of production and there is efficiency in the production process. Managers should ensure that the goods and services they offer in the market are competitive enough for the business to make a lot of profit (Cohen, & Winn, 2007). The managers should also enhance continual innovation by all the stakeholders. This will ensure that the business fits in the competitive market. The commonwealth bank of Austria always encourages an innovative platform. The aim of the bank is to improve its online service. Businesses operating under a low level of technology are likely to experience a lot of losses thus discouraged to operate in the international environment. The business should also look for well-trained employees who are able to work with the new and latest level of technology. The Internet is a basic infrastructure in the business operation as it facilitates communication among stakeholders it also assists in the advertisement thus reducing advertisement cost (Thomas, 2007). Global warming is a global challenge. The managers are expected to cooperate with the states in fighting against global warming. The managers are therefore discouraged from using technologies that will lead to the emission of greenhouse gasses into the atmosphere. The managers are, therefore, expected to set strategies that show a positive response to global warming.

However, there are opportunities that arise in the international business opportunities

Market opportunity, business managers, have secured market opportunity in the global environments. This has been influenced by advance in transport system, technology and trade agreement (Kotler, Burton, Deans, Brown, & Armstrong, 2015). Business managers who are able to set up offices in various countries stand a better position to meet the demands of consumers in globally. The managers are therefore entitled to come up with strategies that will exploit the opportunities available (Orsato, 2006). The business manager may also look for franchising opportunities where they come to an agreement with other business partners to use their logo and trademark as they are charged a fee. This will ensure that the business expands its market and also able to make a lot of profit.

Management skills is also an opportunity that the managers will acquire in the global environment. In order for the business to remain competitive and to meet the demands of the consumers globally more and new skills are required. The managers are, therefore, supposed to develop new techniques of employing the workers. The managers also look for the right personnel to employ in the business Da Xu, 2011). Global training and seminars equip the managers with the right skills which are useful in the expansion and progress of the business.

Mergers and acquisition, the managers, should merge with other companies and join alliances in the global market. In the global environment, the managers will be in a position to join a global network where they learn the new trading channels. The business can also be solidified by joint ventures in the foreign economy (Johanson, & Vahlne, 2009). The main challenge is time constraints. When business merges they are in a position to avoid heavy taxation from a foreign government and also are able to reduce the competition rate in the market. This will help the business enjoy profit in the market with less competitive (Kedia, & Lahiri, 2007). The managers will also be in a position to adjust to the latest level of technology at a lower cost compared to when the business has not joined any alliance.

Joining international joint ventures, business managers may be in a position to get into an agreement to operate the business as a joint venture. The business will improve efficiency. The business being controlled by partners from various countries may have an advantage in that there is diverse knowledge acquired from the different countries involved. The Cultural and religious environment will not be major threats to the business since manager in the respective countries have a clear understanding of their own religious practices as well as their cultural practices (Ireland, & Webb, 2007). The business will also face reduced political factors since the managers understand the policies that are set within their countries. They are therefore able to advise on the proper measures to be taken.

Subsidiaries and foreign direct investment, as the business expands they secure a chance to invest in foreign countries. They are able to build offices, building networks and also factories outside their motherlands. The foreign direct investment is influenced by the availability of a competitive market as well as the market size. Foreign companies, on the other hand, enjoys foreign subsidiary (Carroll, & Shabana, 2010). A parent company will always enjoy the freedom to access the local market and also do not face the tough regulations that hinder foreign companies.

International infrastructure is also another opportunity available for managers in the global market (Reuter, Foerstl, Hartmann, & Blome, 2010). There are a number of infrastructures that have been developed in support for the international trade. For instance, there are seaports and airports. This infrastructural advancement will ensure that there is timely delivery of commodities to meet the demand of the consumers globally. This will help the market of the business to expand and make huge profits in return.

The cosmopolitan workforce will be available in the market. In the global market, there are many people with a lot of skills and economic knowledge. For the business to be successful, it looks for individuals who are multilingual, individuals who are culturally diverse as well as those who are highly skilled. Managers who are able to reach to such employees enjoy an advantage in the global business competition. The business which will employ this kind of works will stand will be in a position to expand more easily than even those business with a large stock of capital but lack skilled personnel.

Managers play a vital role in the expansion and in the progress of the business. Successful businesses depend on the successful progress of the managers. Managers should learn a lot of skills from the global market in order for them to offer competitive products a meet the demands of the consumers all over the world. In the international environment business face a lot of challenges that affect its progress. For that reason, business managers should look for ways in which they can overcome these challenges (Cantwell, Dunning, & Lundan, 2010). The challenges could arise as a result of differences of, economic system, the system of governance, cultural differences, religious activities as well as poor communication channels. The challenges can be solved by joining in the international joint ventures. This will reduce the tough market competition that the business is likely to face in the global market and it is, therefore, able to make some profit. The business should also employ the higher level of technology. The employing higher level of technology in the business it ensures that there is efficiency in production. It also ensures that the products are competitive to meet the demand of the consumers in the market.

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