Global Business Realities - Essay Example

Global Realities Name Institution Course Date Global Realities Introduction Global business realities directly interrelate with the global governance issues. The contemporary world economy has continued to become global. As a consequence, business executives must clearly understand the global context of the firm. Business managers must fully understand the ethical, cultural, cross-border and the logistic issues that typically affect international business. Business globalization comes with many benefits and setbacks in almost equal measures. Every business operating at the national and international levels must know the implications that accompany globalization. Business executives employ different strategies to beat the odds and succeed at the global levels. Well-established companies identify weakness and opportunities as timely as possible. Peng (2016) explains that many multinationals fail to celebrate their first birthday due to the lack of comprehensive understanding of the implications that come with the new global order (11). Modern business managers must understand the obvious implications that accompany globalization. This article explores the importance of studying and analysing global business realities. Global Realities Importance of Understanding Global Realities Globalization comes with many management challenges due to the variations in trust, religion, and ideologies. The sharp political divisions and diverse business operations at the global levels continue to affect business managers and smooth firm operations at the international levels (Cavusgil, Knight, Riesenberger, Rammal & Rose 2014, 17). Multinationals require three types of executives: functional managers, country managers, and business managers. Senior officials are also needed to nurture other leaders and assist in the coordination of business activities. The corporate executive functions as the developer and talent scout. Corporate managers integrate various types of obligations and play the pivotal role in the transnational management. Such leaders also play a critical role in identifying and developing talented functional, country and business managers and attempts to balance the negotiations among the three levels of business management (Chelliah, Lew, Yee-Ai, Siu-Mei & Siew-Ket, 2015, 471). Technical manager functions as the firm scanner, cross pollinator and champion. The functional managers are more often overlooked in the management of mainstream global activities. However, it is vital for businesses operating at the global level to ensure expertise, knowledge, and information becomes extremely specialized for the firm to gain massive benefits by connecting its financial, human resources, marketing, manufacturing and technical experts globally. Functional executives have a responsibility to scan for critical information at the global levels while cross-pollinating the leading-edge know-how, best practice, and champion for innovations that can provide more applications and opportunities (Cavusgil et al. 2014, 19). The country manager functions as the sensor, creator, and contributor. Global-scale competitiveness and efficiency can only be achieved through the global business manager. However, the country executive plays a fundamental role in fulfilling the needs of the local customers and satisfying the requirements of the host government and defending their firm’s market position against the external and local rivals. The business executive functions as the strategist, architect, and coordinator. Product division and global business executives share one major overriding purpose; furthering the firm’s global scale competitiveness and efficiency. The task needs the capability to recognize the risks and opportunities across the functional and national boundaries, as well as, the skills to coordinate various business functions and synergize capabilities across defined barriers (Cavusgilet al. 2014, 21). The global business executive has the overall objective of capturing the full gains of integrated global operations. The business manager also serves as the chief strategist for the organization; the chief architect of the global resource and asset configuration, as well as, the coordinator of different transactions across the local borders (Chelliah et al. 2015, 472). The business manager also works in close collaboration with the national marketing executives to propel the business to unmatched levels of success. Critical Analysis of Global Realities Globalization has taken the business world by storm. The main sectors that have become more globalized in the recent few years include migration, technology, and communication. Over time, the values, behaviours, and attitudes of people in organizations tend to change. The convergence theory focuses on the prevailing trends of industrialism that motivates individuals in a given society to embrace behaviours, attitudes, and values that mimic those in western and industrialized economies (Peng 2016, 12). The divergence theory explains how the interpersonal attributes of management diverge and the people from a given society maintain their particular behaviour, attitude and value systems. The majority of emerging economies that seemed to grow fast are now in a recession such as Russia and Brazil. The prices of the commodity have played a critical role in the opposite trend, but the issues have been escalated by the political instabilities in such nations (Meyer & Peng 2016, 17). China is another economic powerhouse, but its economy has also slowed. The Chinese economy still records slow growth rate compared to other well performing Western economies. The nation has embraced domestic consumption of services and products to reduce overreliance on exports and to rebalance the economic growth. There has been a drop in the global prices of Chinese goods due to a significant decline in demand for imported goods. In high contrast, India provides an excellent growth trend since 2014. After recording a sharp drop between 2012 and 2013, the Indian economy has registered a remarkable growth in the recent years (Cavusgilet al. 2014, 22). The new administration has tried to create a more conducive business environment as an efficient way of promoting economic growth and development. Currently, India is among the major importers of oil, as well as, other commodities. Observers point out that the country might overtake the US as the second largest economy globally by 2050 and might be the third best economy in the world by 2030; even ahead of perennial giants like Japan. India and China still continue to elevate their production levels to match the western countries’ in the coming years (Peng 2016, 14). Firms operating at international levels and the individual nations must adopt a differentiated and nuanced strategy for reviewing the prospects of particular emerging economies. Falling commodity prices have also adversely affected firms operating in emerging economies. Most African nations that had a high potential for recording fast growth like Angola, South Africa, and Nigeria have not been spared. The lower commodity prices have minimized the great growth potential in Africa, and now multinationals and investors in such economies are focusing on more diversified economies that have exceptional potential to create more jobs. 1. Global Cultural Environment Every business wishing to succeed must first recognize the changes that exist in the societies and cultures where it operates. Firms must always resonate well with their consumers and maintain a competitive edge. The business management team must pay particular attention to issues such as politics, technology, target audience, language barriers and customs, internal environment, advertising techniques, and demographics (Adekola & Sergi 2016, 4). Both current and past political influences can potentially affect the way a company operates. Some cultures exhibit a profound sense of government pride and nationalism, and therefore, consumers in such cultures purchase more from businesses that enjoy the backing of the government. Technology also enables people to perform business with other individuals from other nations. A business manager must consider the time zone while making video conferencing call or international calls. Cultural differences also affect the availability. A case in point, American cultures tend to have shorter lunch breaks compared to Spanish cultures. The business must also study the culture of the target audience before performing any advertisement. Aspects that vary across cultures include ideologies, gender views, and conservatism levels (Ferraro & Brody 2015, 27). Businesses have a responsibility of conducting market campaigns that align with the specific cultural norms that resonate with the target audience. For example, women make most of the buying decisions in Sweden, but men typically control the purchasing decisions in Austria and Japan. Language barriers also hinder the success of businesses in many ways. Business executives and their junior teams need to speak in neutral tones while making conscious efforts to suggest business deals to people from other cultures. Companies also need to respect the cultural differences of other nations such as gestures, mannerism, and other essential customs. The actions and the body language of a sales representative must be efficiently adapted to suit those of clients (Adekola & Sergi 2016, 5). The global decision-making process of a company is also affected by the socio-cultural factors. For instance, increasing focus on the family life and changing gender roles have led to great respect to paternity and maternity leaves within organizations. The socio-cultural changes more often interact with the advertising methods. Advertising departments and agencies must efficiently track the nature of the society where they engage in business. When creating an external advertising, the company must focus on the changes in fashions, values, and morals. Ferraro & Brody (2015) affirm that demographic changes also affect the business world (30). An aging population boosts the markets for health products and luxury goods while the market of fashions and music tend to shrink. Changing consumer preferences also remains one of the main socio-cultural aspects that influence business decisions. A case in point, fashion firms must recognize the changing trends while developing new products to avoid making massive losses. 2. The Global Organisational Environment Many companies tend to safeguard their brand identities at the national and international levels. The organizational cultures refer to defined and deeply held values such as rational vs. irrational, safe vs. dangerous, normal vs. abnormal, and good vs. evil (Cummings & Worley 2014, 41). Corporate values must be held deeply and learned early but still, change over time. Hofstede (1994) affirms that changing a firm’s culture is an uphill process that requires ample time. Developing a corporate culture also becomes quite difficult when companies merge. The national culture affects the organizational culture in many ways. The practices of a given organization are in most cases grounded on its culture. The founders of the firm define and develop its culture based on the assumptions, beliefs, and values of the pioneers. The organizational culture also shapes the behavior of the workers. The national values also influence corporate values of the firms operating in that country. Employees’ absenteeism and turnover results when there is increased inconsistency in the company’s values and company’s culture. Landy & Conte (2016) observe that a set of behaviour aspects (assumptions, customs, morals, beliefs, and values) affects the way people behave regarding rational or irrational actions (71). Organizational cultures also influence the essential functions of executives. Four distinct corporate cultures shape the leadership styles. Fulfilment-centred corporate culture focuses on self-fulfillment of the members. In task-centred learning, leaders make sure every employee fulfill the assigned task, and the business executives are chosen according to their professional skills. Role-centred culture is a classic example of a rigid bureaucratic culture where the role of the leaders define the power they hold. In a family or power-centred organizational culture, leaders happen to be the people who hold the influence, and they are expected to perform all the roles and duties assigned to them (Cummings & Worley 2014, 43). Low distance corporate culture allows low-level workers to communicate efficiently with their leaders and is a perfect example of the democratic leadership style while autocratic leadership dominates high power distance organization cultures. The organizational and national cultures also affect the motivational levels among the employees. National and corporate cultures must exhibit a balance between femininity and masculinity where members of either gender must have similar or almost same job ranks while still maintaining the social values (Landy & Conte 2016, 74). In low uncertainty avoidance settings, organizations tend to encourage their employees to take more risks, become creative and innovative while following fewer rules and regulations. In a national culture that features high uncertainty avoidance, businesses refrain from taking risks and prefer to standardize their work. 3. Analysing the Global Business Environment The need to analyse and understand the situational environment of a business cannot be overlooked. Situational conditions can be created by many factors such as the general public, suppliers, distribution channels, customers, and competitors (De Vrieze, Xu & Xie 2016, 859). A marketing plan cannot be created without performing a situational analysis. A situational analysis incorporates a comprehensive analysis of the external, as well as, the internal factors that affect businesses. Situational analysis refers to a realistic assessment of a given business that defines potential competitors, projected growth, and potential clients. A SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis helps business owners and leaders to understand the situational environment of their business. A SWOT assessment examines both the present and future business situations by focusing on the current weaknesses and strengths and looking for future opportunities, as well as, threats. Successful companies focus on minimizing the weaknesses and building on the strengths (Raber, Wortmann & Winter 2013, 3797). Prospects are potential strengths while future threats are inherent flaws. Such analysis helps businesses to come up with robust business plans that help the firm to excel in a different situational environment. Other techniques used to assess the situational circumstances of business include 5 Cs (Company, Competitors, Customers, Collaborators, and Climate) assessment and PEST assessment. The internal business evaluation helps the business managers to understand the weaknesses and strengths within a given company. External assessment tends to measure the external threats and opportunities. De Vrieze et al. (2016) affirm that some of the common external changes include economic environment, new technology, rivals, customers, partners, suppliers and market trends (861). Attractive factors present business opportunities that might positively influence the performance of the firm. Companies must adopt a variety and tested methods to review to understand the company’s individual customers, capabilities, and the situational business environment. Companies that assess their situational environment more often tend to utilize the available opportunities and obviate potential threats. 4. Enhancing Communicating Across Global Cultures Communicating across cultures pose a great challenge to many firms operating at the national and global levels. Intercultural communications ensure the domestic workforce grow culturally and ethnically and plays an integral role in enhancing globalization. People from different cultures respond differently to situations. Generalizations only help to offer clues about what the business must expect to face while dealing with people from diverse cultures (Bowe, Martin & Manns 2014, 12). Well-established companies opt to pursue expert training to enhance cultural understanding in the firm. Every business wishing to succeed at the national and international levels must raise cross-cultural awareness and adopt efficient communication skills that assure sustainable communication skills across the company. Communication disruptions result when the business communication ignores culture. Workers must share a similar understanding of the processes, expectations, and goals for a given business to enhance its communication of activities. Companies that understand various cultures tend to overcome many barriers and setbacks in the adoption of new processes and policies (Samovar, Porter, McDaniel & Roy 2015, 37). Dialogue-based communications have helped many business cultures to thrive like in the case of Arab and Japanese cultures. Projects fail when new concept or ideas are suddenly imposed on the workers used to a more collaborative work cultures. Culture directly affects both verbal and non-verbal business communication. The Importance of Studying Global Realities and Application MBA students need to understand the factors that influence business at the international levels. Students only learn about the world societies and cultures through mastering international business. Transformative business leaders must learn how to approach global issues from different angles. Business executives and their subordinates need to operate in multiple global markets and work with ethnic and racially diverse workforce (Adekola & Sergi 2016, 6). Learning how to analyse the global realities help future corporate executives to fit in many international business settings including non-profit, private and public sectors. In most cases, global realities studies help students to understand other business fields better like accounting, business management, marketing, and finance. Students also know the acceptable global business practices and gain in-depth skills and knowledge in the field of global business (Chelliah et al. 2015, 474). Vast knowledge of global realities also assists students wishing to pursue graduate and post-graduate studies in other areas of public policy and international law. Global realities knowledge and skills also help students to understand international business planning and operations. All students who minor or major in global business studies must first understand the main concepts used to understand and analyse global realities. Bibliography Adekola, A. and Sergi, B.S., 2016. Global business management: A cross-cultural perspective. Routledge. pp. 3- 9. Bowe, H., Martin, K. and Manns, H., 2014. Communication across cultures: Mutual understanding in a global world. Cambridge University Press. pp. 11- 16. Cummings, T.G. and Worley, C.G., 2014. Organization development and change. Cengage learning. pp. 40- 45. Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia. pp. 17-22. Chelliah, S., Lew, T.Y., Yee-Ai, C., Siu-Mei, Y. and Siew-Ket, L., 2015. Developing a cadre of successful global managers: The critical roles and skill-sets. International Business Management, 9(4), pp.470-475. De Vrieze, P., Xu, L. and Xie, L., 2016. Situational enterprise services. 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