In context of corporative world, the term globalisation consists with moving into global area for market expansion and increasing sales as well. Present global business environment remains quite competitive cause all businesses are trying to enter into international markets (Cuero-Cravazo, 2014). There are several factors, i.e. political, economic, raising population and global warming which can affect working activities and processes. For this coursework, Unicorn Grocery is the chosen organisation which sells grocery products and services; the business wants to expand its market areas worldwide. Apart from this, the report will be describe key elements which drives global trade and challenges faced by organisations while globalisation. In addition, impact of organisational governance, leadership and its cultur
P1 Key factors that drive global commerce and trade
The process of interacting between companies, people and government on a worldwide level is known as Globalisation. In the recent year, it has grown rapidly due to advancement in communication technology and transport. In simple words, it means free movement of product, people and services in an integrated & seamless manner. The main purpose behind doing globalization is to increase trade between different countries and nations. Unicorn Grocery is UK based small scaled retailer that mainly deals in selling fresh, processed and dried food and drink that are made naturally i.e. with organic fruits & vegetables. Apart from this, it also offers general household items, grocery and body-care products. However the company wants to expand its market share and thus decided to expand its business in developing countries India, China etc. Basically their aim is to have strong market and customer base in Asia, North America and Africa. But there are certain drivers of globalisation that needs to be taken into account by Unicorn Grocery which are discussed below:
- Cost: The main motivator for many global enterprises is to maximize their investment. Single nation market is not sufficient for company's subsidiaries to get all possible economies of scope and scale. Thus, the goal of each company is to acquire most mileage from the investment cost. Simultaneously, cost related with advertisement and promotion needs to be taken into consideration by Unicorn Grocery (Harker and Armstrong, 2013). There are various others factors such as location, demography, cost of production that vary from country to country. For example: Employees of North America works at 95$ on monthly basis which is quite low in comparison with other developed countries. This implies that their labour are much cheaper. Along with this, workers of North America and Asia are enormously talented and competent which in return comes out as a great advantage for Unicorn Grocery in context of spending less on workers and earning higher output in return (Patzer and Schere, 2016).
- Market: The growth and development of any organization depend upon how effectively and efficiently it fulfil diverse needs and wants of consumer. Customers are better known as the “king” of market. Thus, it is primarily important for every business entity to first identify current likes and dislikes of target population. For example: People in North America are becoming more conscious about their health and diet. As a result, majority of them prefer to eat organic fruits and vegetables. Taking the advantage of this, Unicorn Grocery can successfully expand its product line in North America. In addition to that, majority of Asians prefer to purchase products via online platform thus respective firm can sell their product by launching its own mobile application.
- Environment: With increasing consumer mobility, technological revolution, rapid sharing of information across border etc. accelerate the demand for global goods and services. At certain times, government fix quota on certain amount of goods and services that company is going is to produce from another foreign country. For example: Trade policies of North America are little bit complicated. So before entering into market, it is essential for Unicorn Grocery to first examine all rules and regulation and then expand its business operation in such countries.
- Competition: To attain high competitive edge in the market, it is necessary for an organization to intensify its marketing all across the globe. Competitive enterprises upgrade, introduce and distribute new goods and services faster than ever before. Thus, every single company aims at establishing its own unique selling proposition so as to gain high competitiveness level in the market over its rivals (Ferros and et.al., 2016). For example: USP of Unicorn Grocery in North America is selling such products that made with natural fruits and vegetables.
P2 Complexness of strategic challenges faced by organisation while operating in global environment
Taking a business from one country to another helps business in respect of raising their sales and improving performance level. Internationalisation of companies supports to attain high revenues and profit margins. It allows them to modify their business structure and working style as per the market trends along with needs and wants of target audiences. Management also require to follow various strategies and policies which helps in obtaining maximum defensible edge to companies (Okoro, 2012). Due to globalisation, employees are tend towards recognising demands of national and international clients and produce goods accordingly.
Administrators of Unicorn Grocery should develop market segmentation in different demographical areas as per their cultural. With this assistance, demands of each specific group will be fulfilled in the best possible manner in respect of delivering value added goods and services. Along with this, while doing business at global level different strategic challenges are being faced by an association
- Political risk – This kind of risks faced by companies in sort if government actions and sometimes inactions. Political risks means adverse corporate consequences cause of attitude or behaviour of government towards business associations. It increases threat of nationalisation and wars or civil strife. Corrupt government of a nation can also affect a business and its operations.
- Cut throat competition and diversification – Due to globalisation, e-commerce and further alternations are occurred within business environment. In this modern aura, corporate world has become more competitive and dynamic where organisations cannot survive for long run without having an effective competitive strategy. Apart from this, business are trying to diversify one market to another for getting high revenues; to minimise this risk corporations, like Unicorn grocery is also trying to diversify its operations. All these aspects creates a big challenge for business organisations.
- The Legal Landscape – As long a business crosses its borders, management is subjected to diverse laws, regulations and tax rules in several countries. Such rules and legislations are applied on online as well as large business corporations ( Cavussil and Rammal, 2015). Therefore, this aspect is a major challenge cause changes in laws from nation to nation forces business to up to date with these jurisdictions thus to ensure that management always fulfil its laws. On the other hand, ignorance of government laws can diminish business expansion at global level.
P3 Cause of globalization on organizational leadership, governance, structure, culture and functions of a company
In today's economical world, where competition is rising at fast rate it becomes necessary for all firms to introduce globalisation in their business. It would help them in increasing sales performance and enhance business activities so that a tough competition to be given to rivalries who are selling same in a marketplace. The term globalisation refers a process of moving or establishing business of a company at international level (Wild and Han, 2014 ). In this manner, an established association which has a large working organisation try to launch business in such nations where purchasing power of people as well as economical condition of country is high. This would help them in selling commodities on high rates which generate high profitability and productivity of business as well. But this will effect mostly organisational structure, corporate governance, leadership and culture of such companies which are going to introduce their business on global level. In case of Unicorn Grocery which wants to expand its market in some developing or under developed continents like North America, Africa and Asia. So, its management needs to develop some effective policies and strategies which help in making proper decision to open business in such areas. In this manner, some major factors of business which are impacted most by globalisation can be described in following manner:-
Leadership: In a company major responsibilities of business are taken by managers and leaders who help in managing and handling all operations in an effective manner. The main duty of them in a business is to provide proper direction to workers and give guidelines to them so that they can work in efficient manner. But when a firm wants to organise its business in global level, then will reflect on leadership styles of managers. They need to redesign structure in which new goals, strategies, policies, mission and vision are to be set (Webster and Hamiliton, 2015) . But this process will effect performance of workers most as due to change in system, employees work get much disturb. They start to move on or switch from their jobs in such a condition. In addition to this, it will also raise some big issues like conflicts among employees, their resistivity and more which will rise labour turnover. Thus, in such situations, managers and employees are required to change their leadership styles and handle the problems in high efficient manner.
Structure: Organisational structure of companies is also affected when business of a them gets globalised. As to understand behaviour and demand of international customers, employers are required to change hire new employees in business. In Unicorn Grocery, management of this firm used to recruit workers having good knowledge of different languages as well as skills to deal with customers of different societies (Morrison, 2013). This would help in understanding and completing demands of national and international clients on time.
Culture: This factor of business also gets affected because of moving organisation in different countries. As when management hire new employees at workplace then this will disturb work of other staff members. It will also rise various problems like conflicts, feeling of competition and more which would affect performance of them too. These problems majorly rise due to different culture and background of employees. So, management of Unicorn Grocery is required to take some procedures through which such problems can be solved. They can develop some strategies like assigning work to new and existing employees in group, organise conference meetings with them on regular basis in order to understand their problems and find solution of the same.
Functions: As Unicorn Grocery is going to enter into new market era, therefore, it is required to make some changes in existing function also. Managers should introduce new technology in business and do some modifications in operational activities too. This would help in understanding demand of international clients and complete the same in effective manner.
P4 Influence of sustainable and ethical globalization on organizational function
In today's competitive world, it is critical for each business undertaking to settle on moral choice while working their business rehearses. Presently a days morals has increased substantially more significance in the aggressive business condition. Prior world has confronted numerous moral issues, still they are confronting however at aggressive lesser rate. In spite of the fact that business developed it faces numerous openings and difficulties yet they additionally came up issues like duplication of item, illegal tax avoidance, youngster work, condition issues and numerous different components (Kankaanranta and Louhiala, 2015). This empower organization to take after every one of the standards and direction of that nation in which they wishes to extend its business. In numerous nations red is the shade of risk or peril yet in China it signifies inspiration. In this manner it is important to comprehend the way of life and morals of that specific region. For instance: Unicorn Grocery wishes to grow their business in the district of North America and India so they must be extremely specific if there should be an occurrence of not hurting condition for organization's close to home use as North American individuals not want to hurt their condition. Moral basic leadership isn't an alternative today yet it is a sort of commitment that should be trailed by every business undertaking. In the present existence where there is not kidding sort of crumbling of one's practices, conviction and qualities all over. Each organization is in material race to gain to an ever increasing extent. Following are a portion of the advantage of Ethics:
- Ethics and morals develop high credibility and goodwill of the company
- It help in achieving economical sustainability
- Morals help in yielding higher revenues and profitability
- It indirectly safeguard society
- Increase brand image of firm in the eyes of customer
P5 Different ways to decision making
Decision-making viewed as a fundamental part of administration. Essentially it is the one of the key function of the administration that assumes indispensable part in overseeing everyday activity in a powerful way. Discussed below are some common method decision-making that needs to be taken into account by Unicorn Grocery:-
Command: It implies choices are taken by organization's director without the inclusion or assent of workers. In setting of globalization, it expresses the choice made by home nation for the sake of host nation. Such sorts of choices by and large occur in two different ways one is organization assumes choice or position their request on other nation. Also, the organization force their choice on others without including them others simply need to take after their lead. It is for the most part appropriate where all the real choice are taken by supervisor of the organization. Despite the fact that this strategy advance less inspiration among representatives yet still takes after by every single Multinational organization who work their business in remote nations.
Consult Style Decision-Making: This style of basic leadership ends up being exceptionally compelling as they include the contribution of representatives and also contribution of individuals from other nation where Unicorn Grocery wishes to expand it business operation in other developing countries. The term “Consulting” alludes to the procedure in which workers are welcomed by organization to put their conclusion or proposal before they settle on definite decision.
Vote Style Decision making: This is the most widely recognized strategy utilized by companies so as to decrease the chance of arising conflict. It fundamentally incorporate choice made by organization and colleague by doing vote and different individuals simply need to tail it. This strategy is most appropriate where productivity and viability is at most noteworthy esteem. There are sure circumstances when numerous choices are given by representatives yet organization needs to pick best among that. So keeping in mind the end goal to dodge to such circumstance, association want to request vote (Ferraro, 2011).
Following discussed are some common ways of decision making that should be considered while extending business on worldwide level. By picking suitable decision making strategy Unicorn Grocery can attain high competitive advantage and capture vast control on market of untouched or developing country like Asia, North America.
P6 Identify different routes to internationalization including key barriers as well:
There are various modes of market entry that Unicorn Grocery can be used by for expanding its business operation and products into other global market. Some of the common routes to internalization are discussed below:
- Licensing:International Licensing can be define as a cross border agreement that usually takes place between two parties one is licensee and licensor. This agreement provide permit association in the objective nation the privilege to utilize the property of licensor . Here property include intangible factors like copyright, patent and so on( Popescu, 2013). It is generally utilized strategy as it includes low risk as compared to other modes of market entry and has incredible exposure to political and practical condition. Licensee is required to pay a decent measure of expense to licensor consequently from asking the rights from licensor specified in the agreements.
- Exporting:It implies cross out-skirt offer of locally created or developed products. By and large there are three kinds of fares coordinate sending out, aberrant trading and co-agent trading. Roundabout sending out is considered as the most generally safe passage mode for an association to go into industrialized nation. There is less introduction of organization to the remote markets and besides there is less hazard related with it. For this situation, organization will pitch their item to operator without specifically offering it in outside business sectors (Louhiala-Salminen and Kankaanranta, 2011). It is the most widely recognized technique utilized by company when they out of the blue go into any remote market. The main thing that contrasts is it does exclude specialist in offering their item. It is prescribed for those for needs to get the introduction of outside business sectors. Co-operative sending out means when an association utilizes remote market section methodology i.e. they go into a concurrence with other outside association.
- Franchising: It is another mode of market entry in which franchisee who is semi-autonomous entrepreneur pay expenses and royalties to the franchisor in order to utilize company's trademark so as to offer its items or services. This technique is generally utilized for cross border market entry. Franchisee needs to take after every one of the standards and direction indicated by franchisor. The principle preferred standpoint of this is franchisee is now mindful of the standards and strategies of franchisor's organization. Anyway there are couple of inadequacies related with it, for example, diminish brand quality as franchisee does not have enough right or control over franchisee.
- Joint Venture: It is reasonable when one association wishes to team up with other outside industry with a point of uncovering its item or administrations on universal level. It is exceptionally prescribed when an organization wishes to impart its hazard and benefit to another firm. So as to improve it fruitful it is that gatherings engaged with it must have shared objective or target. In this sort of understanding everything is shared by individuals based on proportionate chose by them as it were. Also, it enable a business entity to access finish new market which prior they proved unable. It expands the odds of increasing greater gainfulness as everything is shared similarly by its accomplices (Mcavusgil and Knight, 2015).
- Wholly owned auxiliary:It alludes to the procedure in which an organization goes into outside market with 100% responsibility for remote element. There are two conceivable routes through which entirely possessed backups can go into remote market is either through green field task or securing. Obtaining implies when an association buy new outside organization just to go into remote market. Then again, greenfield task implies production of new association in the outside market. It is reasonable for those associations who needs to restrain their hazard as far as going into outside market and needs to expand its presentation so pick up or capture high market share in foreign countries as well.
Apart from all above mentioned market entry modes, most suitable mode for Unicorn Grocery is franchising. The reason is simple because this market entry mode enable respective firm to have proper control on its business operation and activities.
Key barriers related with internationalization are discussed below:
- Money related Barriers: This is one of the significant hindrance that each firm faces while growing its business into remote nation is absence of monetary assets. Absence of satisfactory capital prerequisite and other imperative assets makes it troublesome for organizations in correlation of officially industrialized firm.
- Market based Barriers: Lack of information of outside market turns out as a noteworthy impediment as far as terms of globalization or extending business into other remote nation. It is vital that products or administrations delivered by organization would resemble individuals or inhabitants of other nation. In this manner, they are required to assess the need and desire for advertise and their clients with the goal that they can change their items or administrations as needs be. For instance: the impact of social and social are huge as it specifically influence the purchasing conduct of inhabitants (Armstrong and Harker, 2011).
- Industry Specific Barriers: It primarily accentuate on business zone that are owing to business condition in which organization works. The case of this can be in the for, of rivalry looked by nation while extending its business in other remote nation.
From the above mentioned report, it can be concluded that for obtaining high market share on world-wide level, globalization is critical. It assume enter part in extending the business in remote nation which empowers to increase higher focused edge all over the globe. There are different repetitions to internationalization including entire possessed backup, franchisee, authorizing and so on. Anyway there are sure sort of hindrances related with like budgetary boundaries, advertise based obstruction, Industry particular boundary and so forth. Each organization is required to considered every basic standard and control of specific nation in which they needed to set up its business. Indeed, even the morals additionally fluctuates from one nation to nation.
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