Economic Challenges Faced In A Globalization Commerce Essay

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There are several definitions of globalization consisting of economic and non-economic but according to most renowned definition of globalization is, "The process by which an increasing flow of ideas, people, goods, services a, people and capital lead to the integration of economies and societies" (Kohler, 2002).

Globalisation is not a new concept; it can be traced back about to 1800. During 1870-1913 e.g. the emphasis was on expanding the world trade and on cross border sharing of labour and capital. The current wave of globalization that has unleashed spreading starts I as early as 1950. For developing countries, it gives opportunities for development in economy and to reduce poverty. The rapid development of the developing countries encourages the developed countries to grow with the dynamics and also provides opportunities to the investors and exporters to explore new market for new supply chain and try to provide cheaper goods to be delivered to the consumers (Berr, 2008).

Globalization is very dynamic change in the world economy which invites the world to come under one umbrella in terms of free trade, common currencies and common languages, It development and shifting of businesses for achieving more cost efficiencies and profitability.

Globalization has been characterized variously as "the intensification of world-wide social relations which link divers nationalities in such a way that anything happens locally is considered as occurring many miles away. (Giddens, 1990) as "time-space contration. (Harvey, 1989); as " the of geography on social and cultural arrangements" (Waters, 1995) and as "the compression of the world and the intensification of the consciousness of the world as a whole" (Robertson, 1992).

Economic globalization is also being seen in the rapid pace and also expansion in the scope of economies that have been carried out across the border. This leads to integration of economies on capital and financial markets ignoring how much these econkies are developed.. These integrations have comprehensive implications for economic, social and political system for n both internally and between the countries. (Ayres, 1998). Globalization is a complex and competitive concept. If we consider increasing international integration such as growth in the trade flow, financing and communication between countries so what the people thinks about this term, then 'globalization' has been happening over the past 50 years (Hirst and Thompson, 2002; Kalirajan and Singh, 2009) .

1.2 CHANGE

One of the greatest challenges faced by the industry in current environment is to challenge the forces of institutional theory that result in impairing the organizational volatility. (Hamel and Pralahad, 1994).

John Naisbett defines change as, A society, we are passing from the old to new ans we are still in momentum but we are caught between periods we experience problems.

There is consistent pressure on the organizations to keep on changing themselves in order to remain competitive and innovative (Leonard-Barton, 1995; D'Aveni, 1994). One of the most difficult task for themanagers is to manage change especially at the time of implementation because change ahs significant influence on the stakeholdhers of the company such as employess, suppliers and custoerms and even the cultures are also affected.

In today's competitive environment, organisation are facing rapid changes like nevr before. Globalisation has not only increased competition but also increased opportunities for growth and revnus in the market. Due to the diverse markets have created varied needs and expectations. Thus, the ability to manage the change, while continuing to meet the deamds of the customers demand for specialized skills for the today's leaders. and managers. (McNamara, 2011).

1.3 CULTURE

According to (Gertsenl et al 1998) culture can be defined as "A shared, learned, symbolic system of values, beliefs and attitudes that shapes and influences and perception and behaviors."

The management, literature try to explain culture to its behavioral elements e.g.' how things are done around here' and neglects its cognitive aspects. According to (Bright and Cooper, 1993) this show a real aspect of culture as organization has something. From this point of view, culture is considerd as set of accumulated values. Culture of the organization is assessed thorugh its values,belief and attitudes shared by the people with it. Cultural formalist's emphasis that "culture is a collective facts, which is socially developed and non static 'relating to what an organization 'is'.

Sociologists define culture as unwritten rules and guidelines of pattern of behavior which are developed through social interaction.  It is set of norms, values and artifacts which continuously influence people interaction to their society and vice versa for several generations. Culture is not acquired, though it is learned independently or through symbolic interactions of individual with the society.  Usually, people through formal or informal training with their family or educations learn what the environment perceives as cultural marking. In anthropologist's perspective, culture is not constant and stable rather it's growing, expanding and evolving. Changes to culture occur simultaneously in order to provide its direction for behavior, feeling and affiliation of the society. Individuals are not aware or unappreciated of the applications of their culture unless they are offered with different ways of how to behave or respond with their environment. It is not possible that any man in this world is without culture because it is biological necessity.  Culture is considered as expectations of the socity from individuals that it expects from an individual to behave when interacting with the people within the society. Due to this reason, common culture such as nationality is differentiate from sub culture and also from individual culture such as personality.such as nationality is distingiuhed from sub-culutre and also to individual culture such as personality. That culture embodies every aspect of social habits, therefore it is difficult (Ivy Thess, 2009).

On the cultural issue, many authors agree that getting understanding of culture and viewing organization from cultureal perspective are key to acieve effectiveness, while while interpreting culture in organization for the 'quick fix' is likely to cause disruption and ineffective (Clayton and Fisher, 2006).

A number of writers explain, management and leadership are likely to be improved if there is proper understanding of the organization culture and its importance in improving performance. Martin and Alvesson (2002) have shown how an understanding of the culture results in imporving the performance , proftitability and productivyt of the organisaton. It also helps analysts by suggesting solutions and idea for routine interactions which are helpful in eliminating rivalry.

Schein (1992) suggests that success of the organization depends upon highlighting and managing the intricating of cultue that exist within the organization and to bring synergy among them and avoiding the conflict among themselves wherever possible He stresses that for providing better customer services and meeting the demands and expectations of the customer , it is necessary to understand the culture.

1.4 STRUCTURE

According to Hurley (1998), Organizational structures are series of relationships between different positions in a company and those who occupy the positions.

This definition explains that in an organization structure, positions and relationship are defined and during this procedure the roles, authorities and responsibilities are allocated among the people in deferent functions. In order to get productive performance from the employees, tasks are allocated to the people and also authorities are assigned to the personnel so that they are able to perform their allocated responsibilities more effectively but it depends upon the organization and nature of the work that determine how to allocate power to the particular person. It is unlikely that all organizations have same structure because each organization has its unique presence and offerings. There are some structures which are common considered when planning to design and develop the organizational structure:

Functional structure.

Divisional structure.

Line structure.

Line and staff structures

Hierarchical structure.

Matrix and flat structure.

Organizational structure considers as the package of relationship which is develop at the time of processing of company. There is no standardized way to set out the structure. An organization has multiple options for establishing its structure. So the organization adopts the structure which perfectly matches with its own characteristics. There is no conditions to adopt any specific structure, the structure could be any. (Singla, 2010).

On the issue of structure, Mintzberg (1989) and others have argued that environment has significant influence in selecting or developing organization structure and the way it responds to the surrounding. They emphasize that environmental diversification has an important influence on understating and building the organizational structure. Because sue to changing environment, business dynamics are changing that also result in creating new styles of organization structure.

According to Gunneson (1997) agility is an important structural aspect in achieving the organizational effectiveness and efficiencies. It relates to the company ability to operate profitably and at the same time, adoption of the complexities and uncertainties in the current environment. Traditional structuring of the organizations has been checked for their ability to adoptability and flexibility. Highly mechanistic (Burns & Stalker, 1961) organizational structures give importance to the organic approach to organization structure.

1.5 RETAIL

The retailing word is derived from the French word 'retailier' which means 'to 'split a bulk'. In general terms, its constitute as the direct dealing with the customer without involvement of any intermediaries. Retailing involves a direct interaction with the customer which involves the process of coordinating the business activities from manufacturing, packaging, delivering to the end users and after sale services as well. The retail industry has major contribution in the development of many economies of countries and is considered as one of the fastest and dynamic sector which rapidly changes with the changing environment (Pooja, 2007).

In recent decades, UK retail industry has an important role in the economic development. According to the "clone town Britain survey", when the retail market of the UK was operated by family owned stores, news agents, pubs, book sellers , are now being replaced with big supermarkets, mobile phones, fast food restaurants and international fashion brand outlets.. At the end of twentieth century, there was not only shift from small independent shops to the supermarket but more dynamic changes are also perceived. In 1955, it is perceived that British high street trend have been changed and there is growth in the establishment and development of the independent shop. Many multiple and corporative stores were opened and also first supermarket come into existence for competing with the old styled grocery stores. These large multiple stores had huge contribution in the economic growth of the UK in late twentieth retail history. During the period of British war, retail business was in the boom period because working class had more purchasing power and imported and cheap was available. It was estimated that cooperative stores made about 24 percent in retail business and multiple retailers made about 25 percent in 1939 (Jefferys, 1954). Before the end of Second World War, self services food was practicised by the corporative movement. In late 1960s, self services stores were seen all over the UK and this market was rapidly expand due good standard of living of people in 1950. In 1950, there were 50 supermarkets which were increased to the 572 markets. After the removal of the resale price maintenance agreement in 1969, these supermarkets grown to 3400 within next five years (Hamlett et al, 2008).

Retailing is perceived as core sector which has significant contribution in the UK. Retail industry of UK has around 221 billion sales which give employment to about three million people in UK. This industry has its presence in the whole country which is estimated about 300000 shops.UK retail industry consist of mix of business and store levels. Many leading retail stores are dominating the retail market which has control over the economy by operating from major supermarkets to the small convenience stores. In social terms, it has important influence as well. Because it has an effect on the whole society. It is difficult to find out any person who does not go for shopping or at least have an experience of working with the retailer or attached to retail in any way. The quality of UK retail industry and its locations thus have economic and social effects on the perceptions of country (Ming, 2006).

I feel further research should be carried out specially on the connection of globalisation in the culture and structure of retail business in UK, because during my literature review I feel that there is lots of research on the culture, structure, and globalisation itself but not too much on the topic which I have selected.

1.6 OBJECTIVES OF THE RESEARCH

The basic aim of the study is to find out what steps retailers have taken in their culture and structure due to the effect of globalisation. Retail market is one the biggest market in the UK, and generating a huge revenue for the country and to find out how they maintain their reputation in the market to attract customers and what they have done to overcome the challenges of this global world.

To find out how Primark faced the resistance while implementing a change.

To find out how culture of the Primark effected due to change.

To find out how structure of the Primark effected due to change.

To find out what steps Primark should take to maintain the sustainable competitive advantage.

To find out the number of ethical limitations which effect the Primark change process.

To find out to adopt an ongoing change how Primark can develop a system.

To find out the role of leadership in managing the speed and process of change.

To find out the main reasons Primark to change.

To find out how Primark managed to implement change.

1.7 HYPOTHESIS

H0 Globalisation has negative impact in culture and structure of Primark.

H1 Globalisation has positive impact in culture and structure of Primark,

1.8 CASE STUDY - PRIMARK UK

The research is carried out on Primark UK, which is one of the UK's leading clothing retail stores. Primark opens its first store in Dublin in June 1969. Primark starts its business from first Penney's store in Ireland then to the latest Flagship store in Liverpool." (Primark Stores Limited, 2010). Primark commences its trading in UK in 1973 and targets the Derby and Bristol market by opening first high street store. In 1995 it takes over the BHS ONE-UP discount chain and adds 16 stores in its UK business. It also has presence in different countries of Europe. Company has about 207 stores in total of which 145 are located in UK. The major portion of UK workforce is attached with the Primark and it has been discovered that about 27,500 employees work for this retail chain. In 2008, this retail giant has made the revenue of about £1933 million annual and annual sales has been jumped to 6 percent in September 2010. (Wikipedia, 2010).

The main reason for its success is a unique combination of its smart operations and adoption of fastly changing fashion. In 2000, C & A withdrawn from the UK, Primark acquired about 11 of their stores which increase the number of stores to 108. In October 2001, retail chain opens the big store in Manchester which has area of 75000 square ft and now further expansion has been done by including 25000 square ft of storage are to the sale areas which is resulting in widening of sales area to 100,000 sq ft.

In 2001, a store was opened in Blanchard's Town in Dublin. At the end of 2001, Primark also adds some stores in its list and number of stores is grown to 109 in total, consisting of 75 in UK and 34 in Ireland. In 2002, Primark also shows its presence in Birmingham and Glasgow by opening major stores. Till the end of 2005, further 14 stores are added in numbers list. Due to its unique selling strategy and low cost products, Primark forces other retail competitors to leave the market. Primark also takes over six stores of 'Alders' which have been started their operations in 2006.In July 2005, ABF plc completes its acquisition of Littlewoods stores of which Primark gets the 41 premises and proactive actions are taken by the management of Primark to open these premises and as a result 40 locations have been completed and ready for business.

In May 2006, Primark enters into the Spain retail market and opens its first store in Plenilunio (Madrid) and second one in Murcia i n September 2006. In November 2007, two more stores are opened in Spain- in Jerez and in Xanadu (Madrid). Primark targets the Spain market very aggressively and opens about three stores in 2008 - in Bilbao, Islazul (Madrid) and Oviedo. In September 2008, Primark opens its stores in Zaragoza and at the end of 2008; this retail company opens stores in Asturias and in A Coruña.

As mentioned before, Primark has stores in Europe, it steps into the Netherlands (Rotterdam) in December 2008. In May 2009, Primark also commences its trading in Portugal (Lisbon) and in Germany (Bremen). In Frankfurt-Germany, Primark opens second store in November 2009. In December 2009, Primark also opens its first retail store in Belgium (Leige) and also expands its business in Portugal (Port) by opening its second store. In the mid of 2010, Primark opens its first store in Gran Canaria (Las Arenas, Las Palmas) and second store in Netherlands (Hoofddorp). Lastly, In December 2010, Primark introduces its third store in Germany (Gelsenkirchen).

Number of Stores Trading Till December 2010

Ireland - 38

Spain - 19

UK - 150

The Netherlands - 2

Portugal - 2

Germany - 3

Belgium - 1

Total - 215

Products

Primark product range consists of Menswear, women swear, childrenswear and home (Primark Stores Limited, 2011).

In 2008, Primark has been selected as the best cloth retailer in UK.. It has achieved 22 percent of profit in March, 2008. In 2007, it has about 300 audits and normally it has audit of about 500 which shows its high turnover and high sales volumes.

In 2009, Primark has completed its 40 years in 2009. Primark shows remarkable growth in profit and sales during this year. Its sales increase by 20 percent due to the growth in selling space and sales growth of 7 percent. There are about 1000 audits carried out during this year which is estimated double from the last year being achieved. This is nearly double the amount of achieved last year. In 2009, Primark performs well in the recession period when customers looking for the bargaining. There are also some concerns that increase in tax and price cutting have to be an impact on the profitability (Oppapers.com, 2011).

Plan of study:

The study is divided into five chapters and each chapter has its own importance:

Chapter1: This is the main introduction of the study. It sets the background to the study.

Chapter 2: This chapter reviews the available literature on the research topic

Chapter3: This chapter discusses the Methodologies used to meet the research objectives.

Chapter 4: This chapter examines the Finding and Analysis which are outcome of the research paper.

Chapter5: This chapter summaries all the discussion, Analysis, Conclusion and recommendation

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