Transnational Business and Its Role in Contemporary Society - Article Example

? GLOBAL ORGANIZATION ENVIRONMENT Table of Contents Table of Contents 2 Introduction 3 Session Organizational form and purpose 3 Session 2: Transnational business and its role in contemporary society 4 Session 3: Understanding the managerial environment 5 Session 4: Understanding the macro-economic environment and its impact on organisations 6 Session 5: Understanding the European environment 7 Session 6: Understanding the global environment 1 7 Session 8: Understanding the competitive environment 8 Session 10: Delivering customer value 9 Session 11: Managing market performance 10 Conclusion 11 References 12 Introduction The module named “Global Organizational Environment” was an enriching experience for me. It helped to gain insight and knowledge about the global business environment concerning any organisation worldwide. This module would help me to build up managerial skills that are necessary while working in any business organisation. This is a reflective essay which summarises my learning experience gained through the entire model describing each of the sessions undertaken by me all through the course. One aspect has been chosen in each of the sessions’ and an academic journal has been selected which helped me to have a further detailed knowledge about the topics covered in each of the sessions. Session 1: Organizational form and purpose The first session of the module was meant to have an understanding about the various types of business concerns operating in different parts of the world and how they are governed. This session was a great learning experience for me that helped me to have a wide knowledge about different types of organisations, their primary motives or purposes, the concepts of corporate governance and stakeholders and the various ethical issues concerned with the business activities followed by the organizations. The concept of corporate governance and the problems related to the agency theory was an interesting topic discussed in this session. Agency theory is one of the corporate governance theories which have marked significant importance in the recent years. Jensen and Meckling (1976) are commonly associated with the term agency theory as found in most of the existing literature. The journal named “A Survey of Corporate Governance” by Shleifer and Vishny (1997) helped me to know more about the issues related to corporate governance systems followed by different business organisations worldwide. It also helped to have knowledge about the concept of ownership concentration found in business concerns. Enron can be cited as one of the many examples related to an organisation which restored to unethical accounting practices because of the existing agency problems associated with the company. It is recorded as one of the major accounting scandals which have ultimately led to the downfall of Enron (Arnold, & Lange, 2004). Session 2: Transnational business and its role in contemporary society This session was aimed at having knowledge about the various roles played by transnational companies (TNCs) and how they have contributed to global trade. This session helped me to learn about the impacts of TNCs on the global trading environment, different types of internationalisation strategies followed by organisations, costs and benefits associated with free trade mechanism, and role of General Agreement on Tariffs and Trade (GATT) and World Trade Organisation (WTO). Different types of internationalisation strategies followed by TNCs and other global organisations were of particular interest to me. Internationalisation is a process which is followed by organisations to expand their business outside their national boundaries and it can be achieved through various strategies followed by different firms. The journal named "Internationalization strategies for services" by Gronroos (1999) speaks about five types of internationalisation strategies that are followed by service organisations with their motives to establish their business abroad. Those internationalisation strategies include, a) through direct export of different types of services offered by the firms, b) through systems export where more than one firms offering complementary services export them collectively, c) through direct entry mode where the firm establishes their own business in a foreign country, d) through indirect mode of entry, and e) electronic marketing. All of them were not found to be inter-related to each other and are not mutually exclusive in nature. Lenovo is a good example of one of the Chinese multinational enterprises (MNEs) which has opted for internationalisation in various parts of the world through direct entry mode with the objective of exploring the advantages of low labour costs at foreign countries (Liu, & Buck, 2009). Session 3: Understanding the managerial environment This session was meant to gain knowledge about the impact of external environment on an organisation and the identification and evaluation of various external environment factors which has an impact on the firm operating in different industrial sectors. This session helped me learn about managing the different environmental conditions concerning a particular industry in which a company operates its business activities. It also helped to gain knowledge about how to use PESTLE as a tool to analyse the external environment of an organisation. PESTLE analysis even can be performed for a particular country like China (NewsRx, 2011). Out of the many aspects discussed in this session the utilization of PESTLE analysis in a business organisation was of particular interest to me. One of the research studies by Srdjevic, Z., Bajcetic, & Srdjevic, B. (2012) helped me to gain insight about how PESTLE analysis can be utilised in practical life. In this research study PESTLE analysis was utilised to solve a real life water management problem at Vojvodina Province, Serbia. PESTLE analysis helped to analyse the various external factors that have an impact on a given water system and thus can be helpful to develop an effective water system by taking into account all those identified factors related to the issue.. Amazon is an example of a company which took advantage of the technological factor related to PESTLE analysis to compete in the retail book sector. Internet media has been utilised by the company as an opportunity to establish its business successfully and become one of the leading companies operating its business in the retail industrial sector at present. Session 4: Understanding the macro-economic environment and its impact on organisations This session helped me to learn about how the macro-economic environment works and has an impact on the business operations followed by different organisations. It also helped me to gain knowledge about the primary objectives behind the implementation of various macro-economic policies by the governments and how it can have an impact on the organisations operating its business in a particular economy. A particular aspect which was interesting to me was the role of government in a country’s economy and especially the macro-economy of a country. In one of the research studies undertaken by Carmignani, Colombo, & Tirelli (2011), it has been stated that a relationship exists between the size of government and the volatility in growth of a country. It has been observed that the larger the size of the government greater is the volatility in growth of a country. A country’s growth is again mainly driven by the growth of the industrial sector and the corresponding organisations operating in those industrial sectors of an economy. A good example of an organisation which was impacted because of government intervention is General Motors (GM) of USA. The government of USA helped GM to recover from its severe liquidity crunch situation during the recent global financial crisis and thus has a major stake in the company at present. Session 5: Understanding the European environment The primary aim of this session was to have an idea about various issues related to the European environment and its implications on the business firms. The session was also designed to gain an insight on the recent developments taking place in European Monetary Union (EMU) and creation of Euro as a single currency for Europe. It also helped me to learn about the various advantages and disadvantages related to the introduction of Euro as a common currency of Europe and how it can be beneficial for the business organisations conducting their business activities in this region. An area of particular interest that has been discussed in this section was the concept of long term and short term behaviour of foreign exchange rates related to a particular currency compared with other currencies. In one of the empirical studies undergone by Pan, Liu, & Bastin (1996) the results derived from their study indicates that the real exchange rates are generally observed to have dependence for a short term rather than for a long term. It implies that purchasing power parity which is normally used to measure the foreign exchange rates may not hold well in case of long run. This concept of foreign exchange rate is applicable for any business organisation which operates its business in more than one country because different countries would have different currencies and hence fluctuations in foreign exchange rates can have a significant impact on the profitability of the organisations. Session 6: Understanding the global environment 1 The primary aim of this session was to have knowledge about the different perspectives related to the recent trend of increasing number of organisations globalising their operational activities and the corresponding changes in the external operating environment of the firms. This session helped to gain knowledge about the globalisations, different drivers acting behind its increasing impact on the organisations and the importance of globalisation. One important aspect which has of particular interest to me that have been discussed in this session was the different drivers of the process of globalisation. In one of the research study undergone by Lane, & Ferretti (2008) the various drivers of financial globalisation has been studied. Some of the major drivers that have been identified are financial deregulation, declining communication costs, increasing use of hedge funds, creation of euro, etc. A good example of a company which has taken advantage of the opportunity to globalise its activities in a significant manner is Apple, Inc. of USA. Apple has increased its presence in large number of countries of the world with the motive of increasing its revenue generation, thereby increasing its profitability. Hence globalisation process was utilised as good opportunity by the company to increase its growth worldwide. Session 8: Understanding the competitive environment This session was designed to have an understanding about different market structures and the underlying theories related to it. This session helped me to gain knowledge about the identification and measurement of different competitive forces having an impact on the business organisations. Moreover I have also learnt how to use Porter's five forces model to know about the strategic position of a particular business organisation. A particular aspect which has been discussed in this session that was interesting was the Porter’s five forces model and how it can be utilized in case of business organisation to help it formulate its strategic plan. In one of the article by Grundy (2006) the practical use of Porter's five forces model has been discussed. It has been argued in the article that Porter's five forces model are not that appealing to the managers of a business organisation because of various reasons. Hence, some suggestions have been presented which can result in a more practical use of this model in a business firm. Some of those suggestions include mapping of the competitive forces mentioned in the model in a way that varies in a significant manner over competitive and market terrain within a particular industry, prioritisation of the competitive forces, performing macro-analysis of the drivers of the five forces, etc. This concept of utilisation of Porter’s five forces model can be utilised in case of an organisation like McDonalds in USA. If we undergo Porter’s five forces analysis of McDonald three of the five competitive forces have a significant impact on the company. They are threat of new entrants, substitutes and the existing rivalry amongst the competitor organisations of the company. Session 10: Delivering customer value This session helped me to gain insight on some of the marketing concepts like segmentation, targeting and positioning and how these concepts can be applied in an organisation to help in delivering value to the customers. After undergoing this session it helped to learn about various stages involved in the segmentation process and how organisations can develop its brand value through the implementation of effective segmentation strategies. Effective utilisation of segmentation strategies in a business organisation to result in increased satisfaction and values for its customers is a particular area of interest that has been discussed in this session. One of the research articles by Onufrey, & Moskowitz (2008) explains how the process of segmentation can be used in the banking industry. The segmentation strategy applied on this research study was based on technology related services offered by the banks. A total of four segments have been identified depending upon the customer needs in banks. The successful implementation of this segmentation strategy can prove to be beneficial for banks to deliver increased values and satisfaction for the different group of customers of the banks. A good example of a company which has utilised the segmentation, targeting and positioning strategies to develop and enhance satisfaction of its customers and deliver value to them is Apple, Inc. of USA. The company is known for innovation and has been successful in targeting high income group customers to deliver higher values to them through their products offered to them. Session 11: Managing market performance This session was designed to gain an insight on different analytical methods that can be used by organisations to evaluate a particular type of value proposition. This session helped to gain knowledge about how various marketing performances can be managed in an effective way through various means of performance analysis. This session also helped me to learn about different methods that can be used to assess the financial performances of various brands. It also introduced me to various issues that can be developed while performing such analysis of marketing performances of different organisations. A particular area of interest related to the topics discussed in this session was how the market attractiveness could be measured by an organisation. El-Diarby, Costa, & Singh (2006) did a research study of evaluating market attractiveness by taking a case of Toronto contractors. It has been mentioned in the research article that evaluation of market attractiveness is the first step towards the development of marketing strategies in an effective manner. Some of the important factors which are found to have an influence on market attractiveness are the supply of finance, sustainable profitability and the prevailing economic conditions. The multinational organisations like Wal-Mart, Tesco, etc. have successfully established their business in China through the implementation of effective marketing strategies to run their business activities in the Chinese economy. Economy in China is distinctive in nature and organisations need to adapt to the particular market conditions in China to successfully establish their businesses (Cui, & Liu, 2001). Conclusion As a whole the Global Organisational Environment module helped me to gain an insight about different perspectives related to business organisations and its associated external environmental factors. This module can help me to develop myself into a successful manager of an organisation. Through this module I learnt how to identify various external environmental factors that can have an impact on the performance of an organisation. Hence identifying those factors can help me to manage an organisation in an effective manner. This module also helped me to understand how I can identify various opportunities and threats associated with a company operating in a particular industrial sector and thus could be helpful to effectively utilise those opportunities to develop strategies that can lead to the sustainable growth and development of the organisation. This module also introduced me to the recent developments taking place in the European market and how it is having an impact on the business organisations located in this region. Overall the topics discussed in this module would help me to become a successful manager of any given organisation operating its business worldwide. References Arnold, B., & Lange, P. D. (2004). Enron: an examination of agency problems. Critical Perspectives on Accounting, 15, pp. 751-765. Carmignani, F., Colombo, E., & Tirelli, P. (2011). Macroeconomic risk and the (de)stabilising role of government size. European Journal of Political Economy, 27(4), pp. 781-790. Cui, G., & Liu, Q. (2001). Executive Insights: Emerging market segments in a transitional economy: A study of urban consumers in China. Journal of International Marketing, 9(1), pp. 84-106. Gronroos, C. (1999). Internationalization strategies for services. Journal of Services Marketing, 13(4), pp. 290-297. Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15, pp. 213-229. Jensen, M., and Meckling, W. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. The Journal of Financial Economics, 3, pp. 305–360. Liu, X., & Buck, T. (2009). The internationalisation strategies of Chinese firms: Lenovo and BOE. Journal of Chinese Economic and Business Studies, 7(2), pp. 167-181. NewsRx. (2011). Research and Markets; Agricultural Machinery in China - Industry and Country Analysis. Agriculture Business Week, p. 10. Onufrey, S., & Moskowitz, H. (2008). Rethinking segmentation. ABA Banking Journal, 100(10), pp. 26-34. Pan, M. C., Liu, Y. A., & Bastin, H. (1996). An examination of the short-term and long-term behavior of foreign exchange rates. The Financial Review, 31(3), pp. 603-622. Shleifer, A., & Vishny, R. W. (1996). A survey of corporate governance. The Journal of Finance, 52(2), pp. 737-783. Srdjevic, Z., Bajcetic, R., & Srdjevic, B. (2012). Identifying the criteria set for multicriteria decision making based on SWOT/PESTLE analysis: A case study of reconstructing a water intake structure. Water Resources Management, 26(2), pp. 3379-3393. Read More