A Knowledge Management Perspective - Term Paper Example

School: THE MOST CHALLENGING ASPECTS OF TODAY’S GLOBAL BUSINESS ENVIRONMENT Lecturer: THE MOST CHALLENGING ASPECTS OF TODAY’S GLOBAL BUSINESS ENVIRONMENT Introduction The way global business was done decades back is not the same way that it is done today. This is because there has been a shape shift in global business, where some key forces in the global business environment now serve as the driving factors for business (Carroll and Buchholtz, 2011). Four of these forces as illustrated in figure 1 below are political, economic, social and technological forces, together referred to as the PEST forces (Porter and Kramer, 2006). In the opinion of Ghemawat (2007), the kind of evolution being experienced in business gives a very clear indication as to why the world is not flat. Today, social networks have created an information age, where businesses need to be part of the evolving network to succeed (Castells, 2010). In with the changes, the paper seeks to identify the most challenging aspects of today’s global business environment and the opportunities that exist in them for business operatives. Fig 1: Four Forces of Business Change Emerging Markets Johansson and Leigh (2011) cited the penetration levels of multinational companies into the BRIC markets as a typical scenario of the growing importance of emerging markets in today’s global business environment. As a result of the concentration, business leaders are forced to follow the new flow of social influence by also making meaningful impacts in emerging markets (Dholakia and Talukda, 2004). On the opportunities that emerging markets present, Wilson and Purushothaman (2003) made mention of conducive political provisions that exist in most of these markets as a way of making them globalised destinations for foreign direct investments. There are also economic incentives including tax holidays and access to government supported loans (Crane, Kawashima and Kawasaki, 2002). Even more, consumers in emerging markets have become part of a global consolidation that has developed a new twist to consumer behavior, where the preference for quality forces companies to optimise their potentials (Gupta, 2011). The opportunities notwithstanding, there are key challenges that most emerging markets present multinational companies and other companies in the global business environment. For example, the use of superimposition, which for a long time was seen to be a major advantage for companies have been cautioned by Featherstone (1991) as having major disadvantages in any competitive global engagement. Again, the economic growth pattern of most of these emerging markets has been questioned by Smith (2014) and The Economist (2013) as being unsustainable but rather short-lived. This is because in most of these emerging markets, the attention of government is on short term financing of government projects (Brecher and Smith, 2000). Consequently, a syndrome of unsustainable consumption has been created, making it very difficult to use most forms of market based research to identify specific consumer culture traits that will influence line of production of goods and services for these markets (Moore, 2014). As a solution, China’s model of activism has been recommended by some scholars (Xie, 2011), while others see activism as a complex methodology that does not promise contingency changes (Castells, 2013). Diversity and Change in the Environment Again, the issue of diversity and change is one that business players have to deal with in today’s global economy. This is because the continuous creation of network societies and cultural differences signify the inadequacy of a singular business approach to penetrating the business environment but a diversified one (Craig and Douglas, 1997). The complexities of today’s business environment however carry some levels of opportunities for leaders who would want to be effective in their management skills (Moran, Harris and Moran, 2007). As noted that by Doh (2005), flexible working conditions that have been created in the current business environment opens up for some processes that hitherto where noted to be highly bureaucratic and resource intensive such as offshore outsourcing to be carried out much easily. It can be said without any doubt that the diversity and change have also affected the human resource base, making it highly ethical, knowledge based and strategically discerning (Holden, 2002; Maxwell and Stone, 2013; and Kalkan, 2008). Lying hand in hand with the opportunities are the challenges of the diversifying and changing business environment. For example, as the human resource gain knowledge, knowledge management has become part of the political system of organisations, requiring the use and creation of various knowledge management systems and improvements in the IT infrastructure to meet the challenge (Stahl, Maznevski, Voigit and Jonsen, 2010). Still on the changing and diversifying nature of today’s global business environment, mention has been made of ethical issues, where working arrangements and ethical considerations in the business environment continues to become complex by the day (Price, 2013). In the opinion of Price (2013), major global outfits like Amazon would have seen more growth than they are currently witnessing if some of the major ethical issues they are faced with in the conduct of their business did not become a barrier to them. The need to play in-between corporate desires and ethical provisions therefore remain a very huge challenge for most global managers. Global Crisis According to Castells, Caraca and Cardoso (2012), the global financial crisis that was experienced was not a onetime virus that the global business environment had to deal with. By implication, the aftermath of the crisis has left businesses with much challenge that has to do with how to clean their houses by way of making up for losses and at the same time cushioning themselves against any possible shocks of the future. In the opinion of Lewis, Kay, Kelso and Larson (2010), companies must continue to ask themselves if the economic crisis that was experienced was as a result of poor corporate ethics. If it was, then there must be a collective approach to fixing the problem in a manner that is ethical agreeable among all players. Meanwhile, in such situations of consensus global fixing, it is an open secret that agreements are very hard to reach. This is because of the differences in business interests and ambitions of corporate executives across the world. The challenge with the economic crisis and corporate ethics has to do with the fact that it has to be fixed on an individual basis, where by business executives diverse their own ingenuities in solving their unique problems. There are also researchers who have argued about the place of zero sum’s game in fixing some of the problem for producers in the business environment. Such reviewer argue that using zero sum’s game will get producers to be fair headed whereby they will be focused on utility and therefore practice continuous processing improvement (CPI) that ensures that they always break even instead of running at losses (Brecher and Costello, 1998). In effect, zero sum’s game could be used as a model for achieving sustainability for producers (Hornborg, 2003). This claim has however been challenged by many as rather posing a challenge and not a benefit (Hornborg, 2009). For example, as the world becomes a global village, the need to use competitive strategies that help in achieving competitive advantage has been recommended as against the use of zero sum’s game. This is because by striving to stay competitive, businesses are motivated to be result oriented, rather than result cautious (Porter, 2011). In order words, the need to sustaining superior performance as recommended by Porter (2011) should be appreciated as an opportunity for growth rather than a challenge for mediocrity. Finally, issues of sustainable development, corporate citizenship, climate change and the need for humanism all come together to present two sides of the same coin. In one breath, the presence of these factors is a major challenge for start up businesses that must use part of their breakeven capital to satisfy these provisions (Stern, 2009). On the other side, there are well established businesses, who must actually embrace these factors as a means polishing up their corporate image to become user oriented. In a typical example, a new business will find the use of raw materials that are not sustainable and climate change friendly as very affordable and cost saving. Meanwhile, for the sake of corporate citizenship, they would have to forgo such options and do with expensive products that only suck up their starting capitals. But rather unfortunately for such as small business, no one really appreciates their corporate citizenship efforts to boost their brand equity. But when a well establish company does the same thing, it would go the world over, promoting its love for the universe for practicing corporate citizenship. All things being equal, there must be the weathering of the moral storm to ensure that all businesses have fair representation for their contributions to society (Gardener, 2011). Indeed, one of the easiest ways to achieve this is to make use of the internet, which now presents a fair platform for all businesses to compete (Carty, 2010). Conclusion From the discussions above, it would be concluded that the changing global business environment may be seen as highly challenging from the outside but when viewed closely, it is full of opportunities (Friedman, 2009). Because of this, business leaders must learn to position themselves in a manner that puts them at advantaged positions to take charge of the opportunities. As noted by Van Djik (2012), the network society that is created belongs sorely to those who are ready to learn to play according to the rules of the changing scope. 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