Business in World Politics - Essay Example

Business in World Politics Contents Introduction 2 Discussion 4 Conclusion 12 References 14 Introduction There are two kinds of forces that drive a firm – market driven force and political environment. Often firms are considered to be market organization but in some context it is also regarded as political organization. In various theories it has been stated that firms are customer-satisfying organisms. This indicates that firms perform those activities which can help them to buy customers as well as keep them satisfied. A market organization means that firms possess willingness towards understanding the needs and demands of consumer market. The marketing mix of the products or services is so adjusted by the firms that it is able to meet the desires of customers. In order to survive in high competitive environment it is essential for firms to understand target market demand and create value proposition that gives new direction to the business. Firms that are considered to be market organization has market driven culture embedded in the system. Markets often shape a firm in terms of access to technology, capital, labour, etc. On the other hand internal and external political environment also shapes the overall operations of a firm. Within an organization there are various factors that influence political behaviour. These factors can be classified into two forms that are organizational factors and individual factors. Individual factors comprises of high propensity of risk, authoritarian behaviour, locus of control, self monitoring, and high need for security, power or status. The organizational factors indicate competition, role ambiguity, low trust, democratic structure of decision making, unclear system of evaluation and organizational level. External political environment also greatly influences the business environment. The firms often have to depend on rules and norms set by the politicians to operate in a particular region. In such a scenario a market organization is transformed into a political organization. Politics shape a firm through lobbying, responsibilities and rights, investor and employment relations, private governance and ownership structure. Discussion A firm operating in any industry is greatly dependent on two factors that are external environment and market demand. These two factors drive success and growth of a firm. Often in many situations in business world it is observed that much of importance is given to the customers and their needs. Like for instance in case of McDonald’s which portrays a complete market organization as it takes into account the preferences of consumer market in different regions. The advancement in technology is also a major market driving force that transforms firms into market organizations. Market driving or market driven strategies are well aligned with the major components of marketing philosophy that outlines desires and needs of customers (Young, 2011). Market orientation can be considered to be the reaction of a firm to various changes that is taking place in the market. However market driving is changing certain elements proactively in market place. The need for easy accessibility to labour market is another factor that state firms to be a market organization. In the highly competitive environment it becomes necessary for firms to posses superior ability to keep, understand and attract customers. There are even other constituents present in the market which plays a critical role in overall development of a firm. It can also be stated that these market factor shapes a firm such as stockholders, regulators, employees and competitors (Mesquita and Smith, 2010). In the present scenario where there are fewer barriers for new entrants in a specific industry and players are getting more competitive it becomes important to understand, respond and learn about the perceptions of stakeholders and their respective behaviours in market. Many theorists state the major goal of a firm is to maximize on its wealth which can only be achieved through proper understanding of marketing discipline. However adjusting as well as understanding market by firms is limited to certain extent and is possible only in specific market situations. The firms are shaped by markets through availability of capital that is necessary for business operations. Funds are the major tool for organizations and all its activities such as operational, marketing or even management of human resource is dependent on this tool. Markets provide a chance to these firms to access capital and thus make them a market organization (Matti, Rajala and Möller, 2005). On the contrary there is no such guarantee that technology, labour, capital or full knowledge about market would provide competitive advantage for the firm. Since the strategic moves undertaken by a firm is associated with requirements of customers it is stated that firms are market driven or are market organizations. Marketing is considered to be the science and art of creating change. This form of change guides and benefits the firm and even acts a barrier for rivals. Firms are said to be market organizations because this form of change is important for long term sustainability. Alliances that are formed by firms to increase productivity or its market share are one of the market components. In certain scenario product or service differentiation fails to give competitive advantage as rivals generate more similarities in performance and prices (Bernard, Kohli and Sahay, 2008). For firms to exhibit superior performance in business environment it is required to influence the market rather than staying only reactive in nature. Organizations shape market because it develops new business models for the society. The work culture or business model that is followed by Apple Inc in China would be totally different from other regions. Firm’s products or services play a critical role in shaping the marketplace. These markets also enable many opportunities for a firm that can be exploited which cannot be easily accessed by competitors. For example in fashion industry firms such as Burberry, Alexander McQueen etc., needs to analyze the demand of the market before promoting its new products. Proper understanding towards target market helps these firms to appropriately position themselves and gain desirable market share (Nahapiet and Ghoshal, 2006). This is the way through which market shapes the firm and makes them a market organization. When the mentioned luxury brands design new fashion items then it becomes a trend in the market which can be said as firms shaping the market. Previous research states that there are various factors which help a firm to drive the market. Market structures are usually built by construction that is adding more number of players in the value chain of the industry, deconstruction or eliminating competitors from the industry and functional modification or shifting player’s functions in market (Valle and Perrewe, 2008). The market behaviours can be shaped directly by removing the constraints of competitors or indirectly by reversing and creating preference of competitors and new customers. There is a great need for a firm to drive a market as it enables them to develop a unique business system and even helps in increasing value proposition for customers. SouthWest Airlines is a typical example that has adopted this strategy for increasing customer value by charging competitive prices. This organization also delivers unique service creating an exceptional business system which shapes the market. Such strategies are usually implemented by firms when it aims at long term sustainability in the industry (Pekerti, 2009). In such a scenario when there is intense competition in the market and other factors like availability of funds and labour is associated directly or indirectly with competition then firms can be considered to be market organizations. The organizational process is fully integrated with the concept of market driving as illustrated in figure 1. (Figure 1) (Source: Charles, Sinha and Kumar, 2007) Figure 1 states that culture and leadership of an organization shapes it to become a market organization. Organizational learning, risk taking attitude and innovativeness is equally important as that of customer acquisition. Transformational leadership is most important in firms which are totally market oriented. This leadership style does not focus on rewards or punishments but aligns values and goals of team members with the behaviour in workplace. In highly competitive environment superior performance can only be executed when the strategic capabilities of a firm matches the market opportunities or customer’s preferences. Market organizations are those which operate as per the requirement of market such as Sony which decided to launch Playstation that would prove to be double powerful than its rivals and due to this Nintendo and Microsoft had to adapt new technologies in order to survive in the industry. Appropriate strategy formulation as per changing scenario of market reverses preference of customers. This can be highlighted in terms of policy that is followed by Proctor and Gamble. The company’s everyday low prices have enforced its rivals to lower down prices and finally incorporate their strategy into the system. Apple in China is another example of a market organization as this market has increased revenue margins of company by 13% in last few years in comparison to other parts of the world. It has utilized available factors in the market such as technology, cheap labour and capital to set its position in the specific region. This firm has been able to shape the market by promoting its innovative products and acquiring maximum percentage of market share. Firms are often affected by political conditions of its operating region. These conditions vary from one place to another. Politics is not only associated with external political environment but is very closely linked with the internal environment of the organization. In terms of workplace politics it is resulted due to differences in individual’s self interests. The factors that greatly influences political behaviour in workplace is given in figure 2- (Figure 2) (Source: Zanzi, Arthur and Shamir, 2006) Politics is supposedly more prevalent in larger organizations in comparison to smaller firms. With more number of people present in larger firms there results more differences in thoughts and opinions. These differences are then transformed into lobbying which positively or negatively affects an organization. The rights and responsibilities and ownership structure transforms a firm to a political organization. Power and politics is most observed amongst those managers that belong to upper and middle level of an organization. Majorly in heterogeneous firms such politics can be observed as there are limited values and interests shared amongst the members (Terrence, 2007). Political processes are likely to evolve in such a scenario where team members compete so as to decide on whose interests would be given more importance. In firms political coalitions often makes an organization to be transformed into a political organization. Political coalition and affiliations are utilized by firms so as to succeed towards the common goals which were not that easy while being a single organization. This form of political organization can be demonstrated through an example of US Congress. In this there are representatives from various industrial regions who vote for bills in order to provide farm subsidies (McNaughton, Osborne and Imrie, 2005). This form of collaborative approach transforms firms to political organizations. Politics within an organization majorly results due to various types of conflicts between the organizational members or with other stakeholders of the firm. The first type of conflict is termed as goal conflict in which the goals and interests of an individual is not aligned with the organizational goal which in turn creates differences. Affective conflict is associated with incompatible emotions or feelings that exist between individuals. Cognitive conflict arise when ideas and thoughts within a group, between individuals or within a person is not compatible. The other form of conflict is procedural conflict and this happens when team members do not have the same opinion regarding a process which is been undertaken so as to succeed towards a goal. These conflicts results into politics within the organization. Lobbying and trade union are some of the most common form of political platforms that are established within an organization. Team member who are not satisfied with the operations of a firm are more close to union and this poses a threat for the firm. In order to survive in highly competitive environment human resource management should be appropriate (Salimaki and Jlimsén, 2010). The top management in such scenario needs to formulate strategies that are aligned with interests of team members so as to reduce overall conflict. This indicates that a firm can be regarded as a political organization. Politics within an organization is developed due to conflicts between individuals or with that of organizational goal. The major causes of conflicts are structural factors and personal factors. Structural factors comprises of authority relationships, goal differences, common resources, jurisdictional ambiguities, interdependence, specialization and status inconsistencies. The personal factors encompass conflict management style, perception, communication barriers, abilities and skills, ethics and values, cultural differences and personalities. Such form of conflicts is usually the basis of politics in an organization. Apart from internal political environment there are also external political surroundings that affect a firm’s operations. For instance Facebook in China is an example of a political organization (Liu, Liu and Wu, 2010). In China the government has strict regulations in terms of technology and social networking sites. The websites such as Facebook, Twitter, etc., has been blocked in Mainland China. This indicates that political regulations in this country is strict and acts as a barrier for technology based firms. In case of entering into a new market the political environment is often analyzed by firms as that denotes growth and success of the firm in that region. The rules and norms that are set by the government have a major impact on tax rates which affects profitability margins of a firm. However firms also shape politics in the form of lobbying, private governance, etc. These can be considered to be internal politics within an organization. On the other hand politics shape firms in terms of management structure, rights, investor relations, employment relations, etc. The rules that are set by the government drive the operations of the firm. A firm needs to be aligned with the rights that are given by the higher authority so that there is smooth flow of operations. More of opportunities can be created if firm satisfies the interest of employees and aligns them with the common goal of the organization (Pudelko and Harzing, 2008). Unions or lobbying is a medium through which issues between management and employees can be quickly resolved. This form of lobbies helps the employees from being dominated by the top management. On the other hand it is a platform through which firms can easily increase on its productivity by aligning the organizational vision with that of the goals and objectives of employees. Markets and politics are inter-related and one factor can give rise to another. Markets provide a framework for firms regarding the ways in which it would be operating in an industry. Thus in certain context firms can be stated as a market organization where it analyzes the demand and competition in the market and accordingly position themselves. On the other hand in certain scenario firms are said to be political organizations. This is due to the fact that external as well as internal political environment imparts excessive pressure on operations of a firm. The firms in such cases often act as a political organization so as to resolve issues and exercise power. However markets can be created as well as abolished by politics. Structuring and re-structuring of a market is at times influenced by political conditions. On the other end marketing activities that are undertaken by a firm generates wide range of political issues. This clearly states that influence of market and politics is in equal proportion on a firm. A firm shapes markets as well as politics and in certain scenario it is considered to be market organization while in other context it is political organization. It can be stated as highlighted in some examples that firms are a combination of both political and market organization. This form of transformation depends on the situation and environment in which the firm operates. Being a market organization becomes crucial when it comes to sustaining in competitive environment (Sinkula, 2005). On the other hand the need to work collaboratively with government and employees tends to make a firm a political organization. Market driven organizations are mostly inclined towards satisfying the needs of customers but in that situation even politics play a critical role as the support of employees and external political environment is essential for executing operations. In certain scenario political issues are more intense which needs special consideration and in particular cases market driven forces form an integral part of the entire work process. However factor of politics are more significant in the initial stages of firm’s operations but in the later stages market driven factors are more essential. Conclusion Political or market organization are different segments and comprise of specific components. A firm needs to analyze various situations while performing its operations. The political issues denote the various situations that are prevailing inside as well as outside of an organization. The internal factor corresponds to employment conditions, private governance or lobbying. On the other hand the external factor states the rules and regulations that are set forth by the government. These factors are taken into account by a firm while expanding its operations into a new region. In such a scenario where a firm formulates strategies as per political scenario internal or external to an organization it is regarded as a political firm. The scenario is completely different when it comes to considering marketing environment. Marketing activities are the key factors that set position of a firm in the industry. Market comprises of various components such as capital, labor and customer preferences that guides operation of a firm. In this context a firm is considered to be a market organization that performs as per the conditions set by the market. Market and politics are inter-related and each of them drives the other. Politics can create, shape as well as abolish a market and on the other hand marketing activities often results into various political issues. A firm operates in both domains as it shapes politics through lobbying, etc. and markets by new product development and business models. References Bernard, J., Kohli, A., and Sahay, A. 2008. 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