Gurnani et al. (2011) commented on the fact that globalization is a procedure that allows the companies in interacting with the rest of the word either by providing services or products keeping in mind not to hurt the sentiments of others. This helps in making the operations of the organizations in the successful way to gain success and expand globally as well as collecting revenues (Contractor, 2001). In addition to this, the organizations that are planning to expand globally also need to focus regarding the financial condition of the company. The main aim of this report is to recognize the advantages as well as the disadvantages of taking a business for operating globally.
Gong (2013) commented on the fact that the organizations that are operating businesses globally on the different sectors are affected by shortage of skilled employees or workers. In addition to this, the global organizations that are operating globally also may be subjected to growth on international financial markets. According to He et al. (2012) it is to be remembered that when an organization is marketing and operating globally, then there are several things that need to be kept in mind. This is because; different countries have different cultures, sub-cultures, traditions, belief and religion. So the organizations tending to market globally have to be aware of the things that shouldn’t hurt other feelings or religious beliefs.
In addition to this, Lu and Hung (2011) had commented that the other factors that the organization also needs to focus on for operating globally are the cost constraints, productivity measures and efficiency gains. Moreover, it also needs to be remembered about the roles and responsibilities of the company regarding the goals that need to be focused. Moreover, Slepniov et al. (2010) had an opinion that the company goes global due to several reasons such as for increasing sales and profit of the organization, increasing the customer database and also it helps in reducing the labor cost that are outsourced. Apart from this, globalization occurs in order to make the whole world feel the taste of each other culture.
Wagner (1995) commented on the fact that the organization has several responsibilities that need to be focused and analyzed before the organization plan to go global. The economic conditions, the financial stability, need of the products and services to the global world all are to be assessed before the company thinks of operating in this global world. According to Soeda and Murao (2010) though there are several disadvantages such as severe completion, linguistic barrier and risks of operations, still the company wants to reduce the barrier to the maximum extent for operating globally. In order to analyze or evaluate the severe competition, initially the company needs to understand the factors for which the competitors are getting upper hand in the global countries (Matsukawa and Kurita, 2010).
In addition to this, the linguistic barrier is another problem that also needs to be considered during the global operation of the organization. Hockley (2010) had a view that this linguistic problem needs to be focused since it is an important responsibility of the organization to focus on for operating globally. The global company also needs to remember that the global countries have extensive taste and preference that the company also to focus due to gain competitive advantage over other companies (Lasdon et al. 2010). The corporate laws, CSR standards and the environmental rules all need to be taken under consideration for operating globally. Moreover, the induction of new technology for providing services to the huge customer data base and manufacturing of the products also need to be considered since these responsibilities also affect the company that are planning to operate globally (Hansen, 1984).
The value chain of the organization also needs to be bounded by the laws and norms that start right from the manufacturing of the product to the delivery of the products to the potential customers. According to Gurnani et al. (2011) each and every company that are planning to operate globally have to undertake the responsibility of performing logically and ethically for not hurting the sentiments and feelings of the global people. Since, this will be giving a bad affect on the people as well as on the brand name of the company. The political factors also is an essential part that also
Gheciu (2012) commented on the fact that the organization in order to expand the market globally and in order to operate globally for collection of profits and revenues need solid strategies. These strategies will be helping the organization to utilize the resources to the maximum extent for getting success while operating globally. The strategies that the different organizations have adopted for operating globally are-
Manufacturing strategy- Flaherty (1996) commented on the fact that the different organizations have different procedure and methods of manufacturing. In order to cope up with the market trend globally, the organization needs to focus on low cost production along with high quality of goods. For manufacturing the high quality goods, both labor as well as modern technology is essential that also need to be analyzed for having the best product at nominal costs (Corra, 2012).
Supplying strategy- One of the major strategies that the organization need to focus for operating globally is having a superior supply chain management for the finished goods and services as well as for raw materials (Mahafzah et al. 2010). This is because; an excellent supply chain management will ensure that the product and services are reaching to their target places or not. This helps the organization in providing goods and services to the targets at time ensuring the satisfaction level of the customers are maintained (Montoya-Torres et al. 2010).
Production Strategy- According to He et al. (2012) the production strategy of the company also needs to be focused since this involves the low price for the entire production. The entire production strategy should be low but the quality need to be kept uplifted for the satisfaction of the customers globally. In addition to this, Gong (2013) commented on the fact that the production strategy also includes the tax and legal problems that also need to be focused that are affected during the production of goods and services at different countries. The restrictions regarding trading outside also need to be focused since it is one of the major barriers of trade.
Distribution Strategy- The distribution strategy needs to be balanced and globally operated for having a successful business operation. According to (Matsukawa and Kurita, 2010) in order to have a successful business, the distribution strategy of the organization has to be strong for expansion of the organization. Along with the distribution cost, the communication cost is also higher as the working of the organization needs sufficient monitoring and control for a successful result. In addition to this, Gurnani et al. (2011) had a view that the management co-ordination cost also essential for proper channeling and distribution.
The performance of the national economy can have significant affect on the growth and development of the business organisations. The economic factors that can have impact are economic policies of government, rate of interest, per capita income, foreign investment, etc. The impact of national economy can be well explained by a real life example. The economy of Ghana is relatively well diversified among services, agriculture and industry. However, the growth of economic of Ghana is still poor. Furthermore, real investment in Ghana is just 34% and the net exports of services and goods is negative 27% and moreover, the foreign direct investment in the country is only 6%. Therefore, the growth is very slow and due to that GDP per capita is only $635. Thus, the specific economic condition has severe impact on the performance of Standard Chartered Bank of Ghana which is one of the oldest banks of the nation. The slow economic growth has affected the bank to gain expected amount of deposits from the customers or clients. Major portion of the Ghana are poor and does agricultural works. Therefore, fewer amounts of deposits are made approx 13% into the banks and due to that flow of capital is weaker. On the other hand, it can be seen that Standard Chartered Bank makes major financing from the foreign savings as there is large amount of capital is deposited from foreign customers. Therefore, around $609.4 million is financed from foreign savings whereas from domestic savings it is only $287.6 million (Sc.com, 2015). Therefore, it is clear that earnings of the people of Ghana are not high and due to that they make less deposit to the banks. Thus, overall it can be analysed that performance of economy has weaken the outcome of Standard Chartered Bank in serving the nation and providing large benefit to the customers.
The government of any economy can play effective role in enhancing the performance of the business organisations. Therefore, the government can take up the serious steps for the betterment of the economy, people and companies (Boehm, 2010). In order to protect the community interest, the government can either ban or boundary the production of specific services and goods. For instance, the Kaja Beedi of India which was illegally involved in the production of tobacco caused harm to around 150 people of Thrissur, Kerala (Tobaccofreekids.org, 2015). Therefore, the Government of India banned the company from its operation. Thus, as a result, there was sudden increase and improvement in the health of the people. On the other hand, the if government of any economy finds that employees of the business organisations are treated well and are not provided health and safety environment at work then the government can formulate legislation for health safety at work (Hadi and Nawafleh, 2012). For instance, it has been found from the case study of Virgin Atlantic that there has been higher percentage of accidents during aircraft maintenance and in such case the management of the company did not or least provided safety measurement or capital for treatment (Hse.gov.uk, 2015). Therefore, the government of British made legislation employers’ liability so that employees can take insurance against any mishap occurred during performing job (Hse.gov.uk, 2015). Therefore, it can be understood that government of any economy measures, track and monitor the activities of the organizations in order to whether they are treating well with the employees and customers or not.
Sunspel Ltd. is operating globally that has undertaken PESTLE analysis strategy for understanding the favorable and unfavorable conditions. The political factors include the laws, rules and regulations of the global countries that help in operating globally (He et al. 2012). The Economic analysis includes the GDP, inflation rate, taxes that are needed to be focused for operating globally. The Social factors also include the culture, population growth rate, literacy rate etc. that also need to be considered for operating globally (Contractor, 2001). The technological analysis shows the development of the modern technology that helps the organization in operating most efficiently and effectively. The legal issues include the employment laws and regulations that the organization need to follow for operating globally. The environmental factors also include the environmental friendliness of the organization towards the environment in reducing the carbon footprint (Gong, 2013).
Gurnani et al. (2011) commented on the fact that Stonehenge initially understands the activities of the organization that wants to trade and expand globally. For that the organization make the strategies that includes the financial, economic, legal issues, social issues and technological issues that all need to be considered by Stonehenge. These factors are the steps of success for an organization to achieve their objectivity of expanding globally. The strategic planning of an organization is the process of allocating the resources in the most fruitful manner for using these resources in the most effective way.
The company such as Sunspel Ltd. that works in global countries such as France, Spain, Poland etc that faces issues such as linguistic barrier, high completion barrier, operational barrier etc. that affects the global operations to the maximum level. With the increase in completion, the cost of production also increases that affects the global business operations. So, the company needs to focus on low price strategy for getting maximum output and operates efficiently globally.
Globalization is essential for the organization in order to expand itself globally for collecting profits, revenues as well as customer database. This report has focused on the expansion, responsibilities that the organization focuses on for global business operations. In addition the report also discusses the different strategies the company needs to undertake for successful expansion.
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