What do you believe to be the main force driving change in the International Business Environment - Essay Example

? Main Driver of Change in International Business Environment al Affiliation) Main Driver of Change in International Business Environment Abstract The Globalization of international economy is transforming world business environment and businesses operating at international level need to devise effective tactics or policies that will appropriately respond to current changes. The current information technological changes are restructuring the existing business functions all over the world. Globalization of technology is significantly increasing the demand for knowledgeable and highly skilled workforce. The traditional ways of transacting businesses are becoming obsolete due rapid changes and inventions. Cultural, political, environmental, and economical forces characterize globalization and have great impact in the international business environment. Introduction Globalization is the process by which people all over the globe are interconnected into one village such that an occurrence in one part of the world will have a direct impact on the other part. Major changes in international business environment and business operations are because of globalization of business. Today, several significant transformations can be observed in the international business environment and most of these transformations are occurring spontaneously. The changes are unpredictable and inevitable such that one transformation is leading to emergence of more numerous changes. Similar to industrial revolution that completely transformed business environment in Europe, these transformations are necessary in both their outcome and magnitude. The main transformation includes increased competition, rapid changes, and increased use of computers and adoption of sophisticated information technology and networks. Investors or rather employers need to learn the new principles of success, and keep reinventing the objectives of the business (Batra and Dangwal, 2005, p.88). People from different states have developed similar tastes and preferences leading to homogeneity of needs. Globalization encompasses numerous processes by which, institutions, money, people, goods, and services are able to cross territorial or domestic boundaries freely Globalization as a process is a result of sociocultural, political, economic, and technological forces. Globalization is mostly used to mean economic globalization, which is the connectedness of world economies into international economy though exchange of goods, capital investment, migration, and increased use of technology (Brooks and Weatherston et al., 2011, p.165). The continuing increase in globalization raises the need to understand the different cultures of the world more so corporates and communities cultures. There is an increased transfer of workforce or experts from one country to another, in effort to assist establish new locations of the company or boost existing ones in order to achieve their objectives (KPMG International, 2013, p. 2). Mere knowledge of communication skills is not enough but also the understanding of cultural influences, varied communication designs and social settings of every society do drive the success of globalization. The real standing of globalization can be understood by focusing on three main changes. The first major change is the one witnessed in the job markets. The increased demand of employees with multilingual knowledge has led to people moving from state to another for employment or travelling internationally for the purpose of business transactions (Gelbart, 2012, p. 1). Also of important is the emergence of e-commerce, which have a major impact on competition and growth of market as the original location of firm is not an issue anymore. Increased in cross boarders travels has in turn led to wide spread of traditional cultures and practices all over the world. People’s cultures all over the world seem to rhyme and everybody seems to be adapting to global behaviors, especially in trade industry. Focusing on our social environment the entertainment industry is trying to merger to an international combination of movies, videos and music which is now wide spread, it also possible to find variety of foods from all over the world in almost every city or town (Buckley, 2004, p.4). Most states have adapted to multicultural practices and habits including allowing diverse religious denominations. Moreover, we can observe establishments of subcultures within states or even towns. The presence of subcultures denotes that there still some parts in every country or city that has not yet given up on their traditional values and rituals and has not adapted to the change brought by liberalization (Martinez-Lopez, 2012, p. 1). For instance, while everybody is adapting to the modern technology the Amish people have strongly resisted the change and have not allowed any global behaviors or developments change their way of living. Similarly, in China it have been witnessed communities, which had a deeply rooted culture but changed all the same after moving to the cities or in the main metropolis. All this presents the great influence of globalization in the modern world, which does not only affect the socio-cultural changes but also has rapidly, brought great changes in international business environment (Ghauri and Powell, 2008, p.7). Economic globalization result from increased growth of world cross border investment and international trade, business Corporation is a significant outcome of economic globalization. Globalization has appeared to be a complex force to measure or comprehend. Today, more than a quarter of global production finds markets outside its place of origin, liberalization of these markets continue to increase, and international trade progressively increases beyond the global production. On average, very small countries either market over 50 percent of what they produce in the global market or source over 50 percent of their consumption from other countries. More so, the main contributor of capital in most developing countries is still local markets. Several interlinked factors have been the main source of increased globalization (Greenaway and Upward et al., 2008, p.107). Technology forces Technology has been the basis driver of globalization. Emergence and development of information technology have brought many changes in both business environment and economic life of individuals since the creation of sophisticated tools to exploit emerging business opportunities, such as quicker and more advanced analyses of economic trends globally and communication with other business people (Pearson, 2009, p. 1). Communication is now quicker and more reliable due to the development of advanced technological tools. For instance, businessperson can now communicate easily through the e-mail, video conferencing, smartphone services, and faster transfer of messages through the satellite. Currently, business customers can now easily access all information on company’s products and services through use of sophisticated communication tools. In addition, decrease in the cost of communication leads to faster and cheaper transfer of information. This has significantly transformed how businesses conduct their transactions, communicate, and increase liberalization due increased advancement in information technology, creating international corporations to regulate and control their global activities easily (Rodrigue, 2012, p. 1). International Cooperation In order to solve homogenous problems in the current world, increase competitive advantage of individual states, and take care of variety of issues that goes beyond the control of all nations, state governments are continuously entering into agreements and treaties. In most cases, these international or territorial treaties are signed within the principles of international communities such as the United Nations, World Bank, World Trade Organization among others (Guy, 2009, p.36). Political Situations Changes in political situations around the world have also characterized the aspect of globalization. Most noticeable is the rapidly rising world markets such as India, China, and other countries associated with Russia. World business environment has witnessed a great transformation due to changes in democratic system of governance in traditionally lead communist nations most being in the eastern parts of Europe. Countries such as India and China have experienced a rapid change from communism to market oriented system. China is among the countries whose leap highly from the effect of liberalization since it opened its boundaries for a free market economy two decades ago. In addition, the high population in China means high supply of workforce hence a good gap for explicit investment and increased trade (Li, 2011, p.63). Improvement in Transportation System The cost of transportation or shipping for far distances has greatly reduced due to the development of containerization system. The business of transportation before the discovery of containerization was labor demanding, cumbersome, and time consuming. Moving goods from one nation to another took several days or weeks depending on modes of transport and led to wastage and losses where perishable goods were involved. Today, it takes a few hours to transport trade commodities or business documents a few hours due to development of electric trains and high speed and reliable air transport (Mead and Andrews, 2009, p.17). Globalization and Human Resource Management Forces of globalization have led to increased complexity in business environment increasing the need to restructure human resource management. Since both external and internal international business environments are changing, the system of managing of human resources needs some restructuring. Every business is competing to match the current needs and improve the expected future outcomes. Increased dynamics in workforces has aroused the need to improve efficiency in managing diversity. Modern business is characterized of employees with diverse language and culture, the lack of a common language and cultural backgrounds complicates the overall working environment. With the situation of globalization, managers are trying to turn the emerging challenges to earn competitive advantages (Mead and Andrews, 2009, p.118). An organizational with a dynamic workforce is more likely to penetrate new markets, meet and retain new customers, and employees, over national and cultural territories. Globalization has brought both new challenges and opportunities in human resource management especially due to the increased diversity of employees (Samii and Karush, 2004, p.15). Same employees can adapt to different countries in the world and at different times of the day and the diverse employees consist of people from different gender groups, races, religious, and economic origins. Therefore, human resource managers need to sensitive and careful when dealing with women or workforce from minority communities and different cultural orientation. Competitive advantage with the modern globalization calls for managers to accept and tolerate cultural diversity, initiate team building, and design working management practices and styles (Wijen and Zoeteman et al., 2005, p.46). Overcoming the Challenges of Globalization The survival rates of most international companies are declining day by day with the increased globalization of international business environment. For instance, looking at some of the current big companies in the United States, and then comparing those that existed about fifty years ago, only approximately 10 percent are still in operation. In addition, survival of these businesses is not determined by how big or popular they are, but by their flexibility. Globalization has led to increased mergers and acquisition of companies, in effort to survive the rapidly changing business environment. A merger presents an avenue to cut on cost and increase savings by avoiding competition cost and by unifying consumer base (Andrea, 2012, p. 1). The new principles of success have also changed significantly due to globalization hence investors need to run the tactics to succeed. The most important principle for success in the rapid changing business environment is that the workforce must be knowledgeable and highly skilled in their area of work. Some decades ago, employees were required to do a good job and follow stipulated procedures, but that has changed, today employees should be able to think outside the box and possess problem-solving skills. Currently, no company is secure and no company is guaranteed to operate forever. Company’s workforce should ensure that what they offer to the company is beyond what they cost the business (AACSB International, 2011, p. 3). Globalization has revolutionized the business world such that employees are not bound to move from one company to another as liberalization intensifies. With new market liberalization, the traditional lifetime employment and organization culture is becoming outdated. Employers are now focusing on the value an employee is adding to the organization, and they will not hesitate lying off inefficient employees (Acikalina, 2007, p. 6). Projecting on future or forecasting into the future is important to keep a business informed of what to expect and avoid future uncertainties. Looking into the future possible occurrences in the world business environment will help investors evade future losses and remain ahead of competitors. Integration of globalization into the company’s strategic plan is gaining popularity among modern managers; this further manifests the impact globalization in today’s business environment. Researchers are increasingly exploring on globalization, state government leaders are also holding various debates on investment and international business issues in effort to keep abreast of the changes (Edwin, 2006, p. 11). Conclusion Transformations in international business environment and business activities are inevitable with the increasing level of globalization. Changes in global business operations are occurring spontaneously. The greatest challenge is that these transformations are occurring in multiples and influencing each other simultaneously. Transformations of globalization are crucial in the modern business and society and are comparable to the historical “Industrial Revolution.” To increase chances of survival, business organization should take part and adopt modern information structures in combination with the establishment of an international logistic structure. On international level, increased flexibility towards economic changes should shield or motivate companies adapt to rapid transformations. Success in stabilizing the international business environment requires appropriate global coordination of policies and regulations. References AACSB International, 2011. GLOBALIZATION OF management Education:Changing international structures and adaptive strategies, Tampa: Emerald Group Publishing Limited. ACIKALIN, S., 2007. CHANGING BUSINESS ENVIRONMENT, New York: Praegerpulishers. A. H., 2012. Globalization and its Effect on International Business, New York: Global Awareness Society International. 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