Changes in the International Business Environment - Case Study Example

Changes in the International Business Environment  Name: Professor: Course: Due date: Introduction In the past two and half decades, different changes in the international business environment have been witnessed which have continued to impact on different ways the business operates to both large and small businesses. The changes in management and governance practices like diversity management and innovation in the majority of the global businesses is a result of the changes that have continued to take place in the international business environment like increased use of new technology and globalization and also good corporate citizenships demands by the public. To achieve these outcomes more than before requires business consciousness of what is happening around and how best one can comfortably survive in the competitive business environment (Kose and Prasad 2003). It is with this regard that this essay seeks to tackle the question of changes in the international business environment that have taken place in the last 25 years and resulted into convergence in business practices. Changes in international business environment The major three changes that have taken place in international business environment include technology, globalization and concentration of power. These are important changes in the business environment that have contributed immensely to the changes in management practices and the way people are perceiving their businesses in relation to the international operating environment. Technological advancement The world in the recent past has been witnessed to make a major progress in the world of business following its aid in the process preparing and disseminating information in a more cost-effective way. The technology that has been developed is of lower cost in doing business because it is high speed digital and at the same time can support the transmission of both video and data. This in the world of business has facilitated the process of communication between different businesses and operations within the business alone. The new technology that is supported by different hardware like PCs and smartphones and software, has been very instrumental in the business environment in producing information and dispatching it in a more efficient and quick way (Norrbin and Schlagenhauf 2006). The development of different software and emergence of the use of the internet which has now advanced into online business is one important change that has affected virtually almost every business. The level of accessing information about the market and prevailing trends and various factors affecting consumer demands has increased following the interconnectivity among different businesses. What new technology has had in business is very significant and different businesses are embracing it with the aim of improving its performance (Norrbin and Schlagenhauf 2006). In the last 25 years the digital technology has completely changed the way people do things. This is consumers like is the case of the business people, have the devices that enable them to communicate with each and order for their services in the most cost-effective way. This is important in solving some of the problems that have been considered complex in the past like distance and accessibility of the market both by the consumer and the supplier (Forni and Reichlin 2009). Globalization Undertaking business across borders is increasingly becoming more common and this is because of a number of factors such as liberalization of the global market by removing previously existed barriers and also with the advancement of technology which cannot be limited to boundaries. For instance, the way different methods of transportation like rail, water and air have advanced alongside instantaneous flow of information have been very instrumental in making the world one large market that can be accessed by virtually everybody. What this means is that each and every business has the opportunity to expand its market territories while at the same time dealing with the stiff competition that is likely to be experienced when new foreign firms come into the industry (Prasad and Lumsdaine 2003). With globalization, consumers are now presented with the opportunity of accessing and buying their products from whichever market and firm with more ease as is the case with local stores and dealers. For instance, organizations such as General Motors are likely to worry and not because of what Chrysler and Ford are doing and likely to do but because of the kind of competition that is likely to come with invasion by other car manufacturing and selling companies like Toyota and Volkswagen as well as BMW. As a matter of fact, Chrysler can be said not to be Chrysler anymore, but a combination of different car manufacturing companies from Europe, America and Asia known as DaimlerChrisler. Therefore, instead of General Motors competing with just two other American companies, it is to compete with more other car manufacturing companies that have come into play as a result of globalization. Further, with the increase in the availability of information, it is becoming clearer that is so much known about General Motors as a car manufacturing company and its key competitors in the industry as opposed to the past. What this is implies is that with globalization businesses are known more to the market and incase there are any weaknesses, then there is a possibility that the world is likely to know instantly and at the same time competitors try to capitalize on it (Norrbin and Schlagenhauf 2006). Concentration of power Also what is emerging a major change in the international business environment is the concentration of power among investors in certain markets and in particular in vast mutual pension funds. Take the example of Mutual Funds like Fidelity and Vanguard as well as pensions funds which include CALPERS, they are known globally to own major positions in many different companies in terms of stock. The influence of these players in the market, no doubt, is very significant and this can be learnt from the way they handle the company executives whenever they are displeased with their decisions. Many of the company executives for example, find their positions in jeopardy following a very inconsequential mistake (Kose and Prasad 2003). Since the investors are now armed with a lot of information which is readily available about the investees’ activities and their competitors, they are now determined to raise their competitive bar higher than the standard and also try to reduce the time duration in which success could be measured. More important now because of the investors’ decisions and information, is the process of accounting that is being used and the relationship that exists between the company and the investors which is becoming very important. This can be looked at from the corporate governance and disclosure of important information and which is of great interest by the investment group. Therefore, companies are more obligated than before to report on their performance as part of the company’s good citizenship responsibility and transparency and accountability. For instance, the accounting officers are expected to apply a most efficient and low cost approach that is of global competitiveness and that shows high level of responsiveness (Forni and Reichlin 2009). Impact of change on business and society These changes have had very significant impact on the people do things including how we live alongside having two major dramatic impacts in the world of business. To start with, in the past, models of doing business were assumed that the process of accessing information was very expensive. However, today contrary to the past organizations, it is viewed that being armed with the right software, can be a great achievement in accessing and processing important information about the customer and the market in general as well as producing very competitive financial information about an organization within a very short time. Second, there is also an element of increased competition among different organization. What this means for the majority of the investment is the establishment of best performance practices. Different global competitors now have well established cost structures that are put in place for utilization in producing most successful business models and given the fact that information is made available for every organization, only those that are best that are likely to survive (Prasad and Lumsdaine 2003). It is from this view that businesses are undertaking different developments so as to ensure that they are more adapting to the business world in a more competitive way. The commonly witnessed changes in many of the organizations operating in the business environment include: increase pace towards technology development, producing products with shorter life cycles and competitive advantages, lean structures for making better, quick and more effective actions by the management and product diversification as well as outsourcing those products that are considered secondary to the company core activities (Norrbin and Schlagenhauf D2006). All this is done to ensure great performance and survival in a highly competitive and dynamic environment. Conclusion Despite the fact that change in the international business environment has continuously been experienced in the recent past, the pace has increased and this is due to a number of factors which include advancement in technology, globalization and concentration of power in certain markets by the investors. It is from these changes in the international business environment that different organizations are trying to enact different changes to keep in pace. In general, it is very clear that change will continue to be witnessed and for any organization to survive, it must ensure that it is in access to as much information as possible alongside appropriate structures for making quick and effective decisions. References Forni and Reichlin, L. "The Generalized Dynamnic Factor Model: Identification and Estimation," The Review of Economics and Statistics, 82, 540-552, 2009. Kose. and Prasad. M, “How Does Globalization Affect the Synchronization of Business Cycles?,” IZA Discussion Paper no. 702, 2003. Norrbin. and Schlagenhauf. D. “The Role of International Factors in the Business Cycle: A Multi-Country Study,” Journal of International Economics 40, 84–104, 2006. Prasad and Lumsdaine, E. “Identifying the Common Component of International Economic Fluctuations: A New Approach,” Economic Journal 113, 101–127, 2003. Read More