The global environment is getting affected with various changing factors in the contemporary world of the business. There are various factors behind the change; however, two factors have the highest effects on the changing nature of the world business. Globalization and the internationalization are the two important factors, which are affecting the business practices in major terms. The technological advancement and the desire to enhance the competitive advantages have collectively given birth to the two most important terms such as globalization and internationalization. However, both the terms are different in their meanings and the attracting power (Hill, Cronk and Wickramasekera 2013). The main purpose of this assignment would be to understand the terms globalization and internationalization.
Globalization can be referred to a process, which has narrowed down the gaps in between different cultures and the countries. In the hunt to reach to a global destinations just for the betterment of business problems and acquire the solutions have initiated the significance of going to global countries (Cox, Clegg and Ietto-Gillies 2013). The forms of business have now been changed, which initially was limited only to the exports and important majorly. The rates of merger and acquisition have now become enlarged than before, which is simply because of the growing thirst for the global success. One important factor has also attracted different organizations for the globalization process, which is to acquire success in some other countries. In some cases when companies get stacked with the revenues growth in their parent country, they at that time look for some other options where they could actually find some alternatives to the ongoing problem. For example, Walmart in America has done the same thing, which has moved to some other potential market simply to find answers for its potentialities (Dunning 2014).
Internationalization can be understood as the real outcome of a globalization process, which facilitates the exchange of different trades at the international platforms. It can also be understood as the outcome, which renders the integration of different cultures at one place. The highly progressive nature of world business and the different prospects of the different international markets have collectively changed the world business environment. International includes but is not limited to such as opting higher education at some international centres, going to global countries for the expansion of existing business and reaching to the international countries for addressing the business related problems (Wild, Wild and Han 2014).
· Globalization is the process, which facilitates the business in global countries
· It enhances interdependence
· It is inevitable with the highly incrementing communication modes
· Internationalization is reaching to the international countries by maintaining the same identity
· It retains the identity of one country
· Internationalization is need based, which expands after sensing the needs
Table 1: Globalization Vs Internationalization
Source: (created by author)
An institution resource based view is the governance of sets of rules for the internationalization as it is very important to consider the different requisite works before the assimilation with the different cultures. The internationalization of a business to some other countries attracts and facilitates the integration of different cultures at the same place. At that point in time, it then become important to have an institutional back up for the understanding the institutional understanding of their cultures. The company when move to some other country for the business process it bears some institutional backups behind it. At the same time, it is also coming closer to the institutional beliefs of some different countries. Nevertheless, it is widely useful and hugely important to understand the institutional beliefs of the target business countries. The institution-based views are of two types such as formal and informal (Harrison 2013). Institutions are not one-dimensional; they are rather multi dimensional, which can be classified as follows:
The formal institution based view is also known as regulative, which deals with the rules and regulations of the different cultures. In an internationalization process, the companies going for some international locations they are bound to adhere to the different sets of rules and regulations of the targeted country. The company had some other kinds of legal proceedings back in his parent country; however, when it reaches to the international location, it has some different sets of rules and regulatory frameworks. Nevertheless, the business practices and every other activity are now affected by the international rules and regulations. This is indeed problematic in some instances as companies might not be able to meet with the requirements of the local government. Companies might have their tendencies to carry with their existing local country’s rules and regulations. This is where the find difficulties in adjusting with the foreign rules and regulations. A very good example of such phenomena is of Vodafone when the British Prime minister came to India to sort out the issues imposed by TRAI on Vodafone (Attfield 2015).
The informal form of institution-based view refers to a behaviouristic approach, which governs the social behaviour of the company or the people working in it. It is about the culture, the social and the custom, which different organizations needs to posses in order to be integrated different culture at the international place. In the internationalization process, socialization is a vital factor, which might even test the feasibility of the highest standard organization. It plays a vital role in the business as it governs the selection of products according to the societal needs and requirements. Someone selling a product in India with high spiciness in it can never be successful amongst the Australian customers as they are highly diet oriented (Ferraro and Brody 2015).
Resource based view advocates the importance of internal resources for being competitive in the market. Different experts have believed that looking on the external environment is not the solution the rising competitiveness in the market (Axelrod and VanDeveer 2014). The organizations should rather try to realize the internal resources and utilise them to attain the maximum competitiveness. An organization is never competitive if it has no idea about its own capabilities. External opportunities should be used by utilizing the existing resources, which is the most viable thing an organization can do. The existing capabilities are identified and enhancing the existing capabilities would certainly produce maximum results (Hill and Hernández-Requejo 2012).
Tangible things are all those things, which have some physical existence such as machines whereas intangible are those things that do not exist in physicality. However, both the tangible and the intangible things have their own limitations, which can also affect the business performance of an organization. It is advisable to stick to the existing resources as guided by the resource based view; however, it is never inevitable to depend all the time on the available resources. The available resources might not be competitive enough, which makes this necessary to have some change. For example, an organization relying on the traditional form of business might succeed to some extent but to address a larger customer base, it requires some advanced and more technologically advanced system. Nevertheless, e-commerce has established its viability and the importance in the world of business. Companies can now reach to a larger customer base with the usage of e-commerce platform, which was never possible with the traditional format of business (Cavusgil et al. 2014).
Capabilities are another important resource of an organization, which they could use to attain a maximum success. Identifying the hidden potential in employees by conducting some training and development program is a good way to attain the competitiveness in the market. However, the ageing population is a problem in this context, which is putting enormous pressures on the HRM to recruit substantiate amount of replacements (Peng 2016).
Based on the discussion in the resource based views and the institution-based views following issues and challenges can be concluded, which the managers of contemporary world are facing (Parhizgar 2013):
The global business environment is highly affected by the impact of globalization and the internationalization. The international and the global businesses are being highly influenced by the challenges and the issues, which each of the institution-based and the resource-based views are posing to the contemporary managers. Nevertheless, the global business environment is challenged by various external and internal forces, which are limiting the actual growth, which an organization can have.
Attfield, R., 2015. Ethics of the global environment. Edinburgh University Press.
Axelrod, R.S. and VanDeveer, S.D. eds., 2014. The global environment: institutions, law, and policy. CQ Press.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia.
Cox, H., Clegg, J.L. and Ietto-Gillies, G. eds., 2013. The Growth of Global Business (RLE International Business). Routledge.
Dunning, J.H., 2014. The Globalization of Business (Routledge Revivals): The Challenge of the 1990s. Routledge.
Ferraro, G. and Brody, E.K., 2015. Cultural Dimension of Global Business. Routledge.
Harrison, A., 2013. Business environment in a global context. Oxford University Press.
Hill, C.W. and Hernández-Requejo, W., 2012. Global business today. Toronto, ON: McGraw-Hill Ryerson.
Hill, C.W., Cronk, T. and Wickramasekera, R., 2013. Global business today. McGraw-Hill Education (Australia).
Parhizgar, K.D., 2013. Multicultural behavior and global business environments. Routledge. Peng, M.W., 2016. Global business. Cengage learning.
Wild, J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.
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