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The prime position of the companys operations is in the heart of city of Mumbai in India. The national business has been doing quite well with good profits and market share. It is manager's duty to understand the current scenario of international business and evaluate its own business capacity to enter into global market. To understand the global business, it is initially important to understand and analyses strategies, planning and environment of global business. This will be reported for further analysis.
Global Business Operations
Business that has its firms operating in more than two countries independently by the decision of its stakeholders for maximizing its profits is to be said operating in global business environment. These business operations are carried out cross border where commercial transactions are taken place for goods and services for worldwide markets. These organizations are known as Multinational Corporations (MNC). In global business environment, businesses are highly affected by PESTLE factors which consist of internal and external factors where operations are carried out. (Akintunde, 2008)
Global Business Operations in India
The rate of international business carried out by Indian organizations is tremendously increasing. The percentage of the growth in conduct of international business has gone up by 7% annually. India itself is a harbor for an international business where there is ample opportunity for expansion of global business due to availability of skilled manpower spread out diversely in all parts of India. India has a good international approach with expertise and managerial talents to carry international level of business. Various Institutions with authority encourages and fosters business activities. (Aggarwal, 2010)
Section 1 The key differences between global business operations
1.1 An analysis of the key differences between organizations working in different sectors, industries and contexts.
Organizations differ when it comes to their purpose of existence, aims and objectives and specialization. Organizations differ in terms of their business operations and sectors. Some businesses are privately or publicly owned and others are categorized into voluntary or non-profit organizations. The main point of difference is the business aims and focus. These aims are long term plans of the business either to its profit; break even, growth or just survival. Economic condition of economy affects the business and its focus. During the time of recession, it might just think of survival that makes no profit. Upcoming from recession, some businesses think of breakeven which cost to cost operations are. Economic situation, where economy is in boom business plan for expansion and profit maximization. Businesses are different operational wise. Some business performs operations which are governmental and provide public services called as public sector. Sectors aiming at making profits and are owned and operated by private people are private sectors. (Salaman, 2001)
The key differences can be found by means of-
Sectors- Farming, Marine, Property management, Construction and food management.
Business Entities- Sole proprietorship, partnership, corporation and co-operative.
Types- Public limited, private limited and charitable companies.
1.2. An analysis of the responsibilities of organizations operating globally.
Domestic business that aim to achieve the best and be competitive in the market are the ones that rise its standard high to international level and become very competitive. These companies need to be highly legal responsible and adapt morality. These responsibilities in contemporary business are termed as corporate social responsibility. CSR demands consideration from the organizations when they pursue in the direction of development and growth. It is more over to protect the environment and be moral and ethical with business operations.
Stakeholders are the party interested in organizations who owns some interests and ownership in the company and are benefited by company's progress. Stakeholders on behalf of companies carry out corporate social responsibilities to avoid negative effects on community and society. For this, it is important to formulate appropriate communication policy to address the CSR policies to the stakeholders. Both internal and external stakeholders are responsible for being responsible citizen and are social and ethically responsible. It is divided into four criteria.
Economical Responsible-The main responsibility of stakeholders is to advocate its business economically so as to make it profitable.
Legally Responsible-Activities of the business should be based on ethics and morals. It is necessary for stakeholders to perform within the framework of the law.
Ethically Responsible-Behavior of the organizations towards its society and community should be ethical that demands equality and fairness with due treatment to environment.
Environmentally responsible- Protecting our environment has become a challenging concern for all businesses. It is necessary for business to carry out its activities with low polluting machine and chemicals with less emission of carbon. This reduces effect on global warming too.
It is equal responsibilities of all members of the organization to contribute for the sustainable development as well as to adhere to business ethics and moral also protect environment. (Dordevic, 2008)
1.3. An evaluation of the strategies employed by organizations operating globally.
International business and strategies goes hand in hand. Competitive advantage can be earned only if industries set up a planned strategy which will help it to gain economic benefits and compete in global market. Organizations with its leading products in the market has to focus on some key aspects while formulating strategies and they are-
Consideration of global market and global customers
Creation of global marketing mix.
Concentration on international marketing, production and distribution
Competition with International brands
In consideration to these factors and aspects, strong strategies supporting to global business has to be formulated such as-
Global strategy-Global market consists of multi-domestic companies that are strongly competing each other in national and then international market. These companies adopt strategy that exactly meets plans of multi-local strategy persisting in local markets. Some factors needs to be considered while planning such strategy. Due to presence of international customers, on needs to fully focus on competition, customer's needs, control and coordination.
Multi-domestic strategy-This relates to the businesses that are global but plan and formulate strategy for individual countries. Reallocation of available resources rightly is the main function of this strategy. Decision-making as to future growth and expansion for particular country needs proper observation and decentralized control power. Tailoring strategy that best suits to the domestic market should be planned on cost-effective aspects.
Four important and affecting and determining drivers of international business strategies are -
a) Market Drivers
b) Cost Drivers
c) Government Drivers
d) Competitive Drivers
Global business is stronger if these drivers are competitive enough to stand in force and challenge of globalization. (tutor2u.net, 2012)
Global companies like Nestle, Cadbury, Kellogg's and Schweppes are the best example who have encountered realties of global business and thus have adopted suitable global strategies.
Section 2 The Impact of External Factors on Organizations
Eternal Factors-Global business is the operation or activities of the business which are carried out in business environment that is comprised of external and internal environment. This external environment comprises of some factors that affects the business badly if not considered properly as it keeps changing with growing business and competition.
Impact of External Factors-
External factors are out of control of business and affect the operations of business directly and to great extent. With changing business environment, businesses need to change its activities to pace up and meet external environment. External environment may affect business positively or negatively depending upon market conditions. Some of business impacts are-
Competition due to new rivalry and new customers with new needs and demands.
Additional costs to operational, promotional and sales and marketing activities.
Reduction or increase in price of the product due to change in cost.
Change in labour market and unemployment.
Change in legislation which brings changes in government spending and taxation.
External factors also influence business strategies and objectives. Changing market influences business and its customers as competition is very high then. Increase in costs directly affects all other costs. Government plays important role in the entire scenarios which enables to controls social costs and brings social benefits. (tutor2.net, 2012)
2.1 An analysis of how the performance of a national economy impacts on the activities of business organizations
National economy is an integration of economic factors of the country which affects the local business locally. It also compromises of internal and external factors wherein business operates. National economy is directly depended on businesses for prosperity and economic growth which means they are directly connected to each other for their activities.
The different factors of national economy affects business activities are follow-
Demand and supply-This is directly related to consumers purchasing the products and services and also demands for a particular good by the business. As they are inter-connected, growth and expansion brings in profits and opportunities to business.
Marginal and Total Utility-It is about consumption of goods by consumers wherein satisfaction decreases after certain period of time and results in fall in sales. Business thus comes up with new products to protect its sales. Thus it brings profits.
Money and Banking-Banking policies affects the customers and business. This economic factor impacts saving and borrowing capacity as money in and out.
Trade Cycles-Change in seasons, climate and market brings drastic change in the business which affects price and costs factors thus affecting the business directly.
Income and employment-Increase in level of employment and job opportunities brings in more income and profits to business. More income increases people capacity to buy things which automatically brings more profits to business.
Different economic factors of an economy influences individual business and in their operations. Above factors including inflation-deflation and economic growth and development affects business. (Trehan & Jain, 2011)
2.2 An explanation of the measures taken by governments to influence the activities of business
Government controls the business activities by its control and interference through application of different policies. This control helps to shape the market and business activities. This can be done through taxation, subsidies and support and regulations and policies.
Employment Policy-This policy of government brings in jobs opportunities in the market and creates new jobs. These are basically government funded jobs so as to enhance business capacities.
Regional policy-This policy of government helps to bring prosperity to regional areas with job opportunities for which government funds are made available.
Inflation Policy-It is government outlook to keep prices under control and protect economy from inflation which brings in crisis in economy. This inflation brings in increase in prices, costs and interests rates which affects business due to high borrowing rates and makes expensive to borrow.
Education and training Policy-Government makes sure that education level so as to eradicate poverty and increase employment level. Encouragement of education and training makes remarkable contribution and important measure to influence business activities.
Various other policies like international policies and subsidies of government are different policies to bring positive effect on business activities. (businesscasestudies.co.uk, 2012)
Section 3 The impact of global factors on business organizations.
Business organizations brings about a drastic change when its shift to global enterprise to make it global enterprise. Most of the developing countries undergo this change where company operates in global environment. It could be strategic planning of the company to make expansion analysis and to collaborate business with domestic and national business.
3.1 The implication of global integration on business organizations are based on following factors
Business strategy integration-Depending on international market surveys, countries formulates strategies for business integration which covers or are further formulated by business models and business objectives and goals.
Operational Integration-Company's processes and procedures must meet international standards when planning for integration. The effects and impacts of reporting standards of such operational integration must be met with local businesses and vice-versa.
Further on, business with global standards should meet with international compliance, sales, and marketing and distribution channels along with international marketing programs. It has to qualify to all required business concerns and also its existing market. (Keston & Associates, 2012)
3.2 An assessment of the effect of international trade on domestic products and services
Gross domestic products and services are goods and services produced in a particular country for a period of time which basically links to the standard of living of that country people. The higher GDP of the country indicates better economic growth of the country. GDP also affects the business in the sense, higher GDP results in better purchasing power which directly results into profits.
International trade is much affected by fluctuations in gross domestic products and services. International business is to deal with imports and exports. Imports impacts in reduction of GDP which indicates that company depends on much of imports than domestic product whereas an export shows a positive sign where inflow of money increases GDP. Thus country with businesses should be efficient enough to export than import which results in inflow of money than draining money. If there is trade deficit which indicates balance of payment is higher than receivables whereas surplus indicates receivables are better than payables. Thus balance of payment needs to be balanced.
Therefore it can be concluded as international business may have both positive and negative effects on GDP depending upon balance of payment situation which can be judged by its imports and exports. (infoplease.com, 2012)
3.3 A review of the impact of the global economy on businesses
As can be clearly seen from Euro-Zone crisis, global economy has affected internal and external environment of the business. The influence of global environment can be seen overall on political, social, technological and financial sectors of the business. Tough competition is the worst face of this integration.
Political effect-Stability of government and political authorities has relatively down fall. Government has been unstable and policies and strategies are not wisely favorable.
Economic environment -International trade has brought about tremendous change in exchange rates, economic systems, economic stability and inflation overall which can be seen in Euro-zone crisis.
Social Environment-corresponding economic environment conditions have affected economic stability and have bought about unemployment, job satisfaction and fall in education and development of individuals.
Technological environment-With advancement of technology, delayering and redundancy level has gone up leaving most of people unemployed. Advancement of technology has left small business at the verge of close down.
Overall global economy has brought catastrophic change in business environment. (Topolinski, 2011)
3.4 An assessment of how ICT has facilitated globalization
Due to ICT, the wider and bigger world looks like a small village which is connected to each other at all times. Innovation and advancement in I CT has proved miracle to the global business and has proved to be a key instrument in fostering growth for globalization. Technology has helped to bring social and economic advancement. ICT has fostered its advancement into almost all areas due to its attributes of networking like-
Administration and support
Operations and functional areas
Accounts and maintenance
Sales, marketing and distribution
It can be summarized as ICT has helped economy to boost the economy and its various sectors. (Dhameja and Medury, 2010)
Section 4 A review of the current issues impacting on business activities
In general there are many concerns and issues which are global and affect business activities in modern business. These issues pertain to environment, diversity, financial crisis, terrorism and natural disaster which affect business activities. Some of these factors are controllable whereas some are natural and are beyond human control.
A review of the global environment in which business are currently operating in your named country.
Global business environment in India has changed over period of time simultaneously which has brought great change in management, leadership and communication which forms basis for various strategies for future strategies of the business.
Succession Planning- Businesses in India are found to be poor in succession planning which is similar to other developing countries as well. It has become necessary for managers and executives to identify potentials and abilities in their team and fill in the gap wherever required so as to make future planning for succession of promotion. This forms to be an important part and is considered as wealth for the company. This strategies down the line helps to prospers internal candidate for future positions in the company.
Leadership Attributes-In past, leaders were considered to be born which is replaced by the attributes that person can be made leader. In India, leaders are required to adapt the principle and theory of leadership to endeavor leadership qualities in them so as to help them to make a good team and perform well. Most of the organizations has adopt modern theory of leadership but needs to implement them into their day to day routine. International business are attracted to diverse cultures, thus the best leadership policy that best suits the company should be adopted to accept and adjust diverse culture in the company.
Human Resources Functions- HR functions start from job hiring to firing. Thus it is crucially depended on HR department to identify the right candidate with deserved qualification and experience to occupy the vacant position in the company. Thus HR department policies towards their new and existing employees should be robust to attract new talent and retain the old ones as well.
Country like India has gone far ahead with globalization and international business but some more criteria with gaps needs to be filled up so as to reach the peal and make most of global business. (Korn/Ferry, 2007)
4.2 Proposed Strategies to address issues affecting business activities in this named country.
1. Career progression and Development- Succession planning comes from planning and development of an employee that fills in the vacant position in the company. With training programs, one can pursue knowledge and can gain promotion in the company. This helps in career progression of the employee and indirectly this employee turns to be an asset to the company.
2. HR Policies- HR recruitment and retention policies should be robust so as hire right candidate for the right position and also facilities should be provided to the employees so as to retain their presence, knowledge and experience in the company and its operations. This forms important function of HR.
3. Diversity- Countries like India is not free to diversity and still believes in its cultural attributes and tolerance becomes difficult. Businesses and employees should accept cultural diversity at work and tolerate the other culture so as to see business flourish in international market. This helps to bring leadership attributes in individuals. It also helps in performance and production of the company as the consequence is team work. (Korn/Ferry, 2007)
For businesses to flourish its business activities in an international market, it is necessary for them to integrate in global environment with diversity and multi-culture. Globalisation has impacted environment of the business completely through change in its internal and external climate and environment. To prosper in global environment, a business needs to identify its own strengths, weaknesses, opportunities for growth and expansion as well as threats which can be rectified. Shift from national to international level business needs to understand impacts of globalization, global environment, international trade and its strategies for meeting up the global standards. With analysis, understandings and evaluation of these factors, global business can cope with negative effects and take most benefits of globalization.