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In the recent decades globalisation had increased to a greater extent. With the technological development the integration among all the nations had increased and this had led to the significant rise in the international trade and increasing globalisation. In general terms it can be said that globalisation is the increased interdependence of the world’s economy and increasing international trade among the nations (Beck, 2018). But when the companies are looking forward to enter into the international market for doing trade then it is important for them to focus on different factors which are having an impact on international operations and performance of the firm in the global market. In this report the researcher would be explaining about the different factors that are required to be taken in concern by the firm while operating in international market. For explaining this researcher would be considering Jaguar as the case company which is an global firm operating in automobile sector.
LO1 THE KEY FACTORS DRIVING GLOBALISATION
Globalisation is defined as the extensive network of social, economic, political and cultural interconnections and processes that are connecting the peoples across the borders. Globalisation is having four main dimensions which are economic globalisation, social globalisation and political globalisation.
Bit of background to Globalisation (Silk Road)
Globalisation has been started earlier only and then it had increased to a greater extent. From the beginning silk route is an example of globalisation which had created a large multi-national trade network which had interconnected the different nations for doing trade effectively. The silk route had created interconnectivity among the nations of Europe and Asia. This had led to the emergency of globalisation and then later on all the economies had focused on interconnecting the economies for doing trade efficiently. In other words globalisation can be referred as the increasing interdependence among the different nations because of increasing integration of trade, finance, ideas and people across the globe in the global market. There are different factors which are driving globalisation such as cost, market, environment and competition.
Introduction of chosen company:
Jaguar is a British multinational automobile manufacturer. The company is a luxury vehicle brand and is offering luxury vehicles. The company is operating in different nations and offering luxury products. In this study the researcher would explain that how the case company is working in international market.
P1 Key factors of cost, market, environment and competition that drive global commerce and trade
There are different key factors that are having an impact on the global market and trade. These factors are explained in detail such as:
Cost: cost is having an major impact on the business operations and internationalisation. Cost drives include the economic condition of the nation, scale economies, logistic cost and the all the others cost factors related to production and operation management varies from country to country. So according to it the company have to focus on all these factors as it affects the investments and drives globalisation. So it can be said that before entering into any of the nation the cost factor requires to be considered as it would affect the required capital and investment for globalisation of the firm (Cherunilam, 2021). For an instance the case company Jaguar have to focused on cost factor which offering their products to different nations they need to focus on cost. The economic factor of the nation affects the sales of Jaguar in that nation. Due to increasing globalisation the cost of bulk shipping and the cost required for selling the products is declining and this is offering financial or the cost benefits to Jaguar.
Market: according to this factor the market characteristics of the global market and the local market are important for the international firms. The choices and shopping preference of the customers depend on diverse market factors which are required to be considered by the firms while offering products to them. The different market factors are affecting Jaguar among which the increased competition due to globalisation is an significant factor.
Environment: the environment in which the company is operating is very important for the firm. When the company focuses on understanding the impact of all the different factors of the external business environment on the firm before entering into any of the nation. All the opportunities and potential challenges needs to be analysed so that the company can select the best nation for international expansion. The global business environment is changing fast and this creates great pressure on Jaguar for making changes in their product range and business practices as well. It can be said that the dynamic business environment is transforming due to the increasing globalisation.
Competition: Competition is one of the most significant factors that needs to be understood by the firms. This can help them in getting better position in the international market and gaining competitive advantage over others. While going global the company should get enough knowledge related to the top competitors and the different strategies used by them for surviving in the market. On the basis of the analysis the company should focus on using different strategies then only it would help them in being effective in the global market. Jaguar faces high level of competition in the global market and it is having an major impact on their sales. Due to this reason the case company needs to develop effective strategies for managing the competition properly.
M1 Critically analyse the impact of key factors upon the global business environment in terms of opportunities and challenges.
When the companies are operating in the international market then they are different factors that create several challenges and opportunities for the firm.
Competition Opportunity (Advantages) and challenges (disadvantages)
The company had to face great competition from the global giants and this is one of the significant challenges for the firms while operating in the international business environment. So, it can be said that managing the increased competition we were challenging for the firm and due to this the company have to focus on effective marketing and product differentiation for managing it. But on the other hand increased competition is helping Jaguar to invest more in innovation and offering diversified products to the customers across the globe.
Environment, Opportunity (Advantages) and challenges (disadvantages)
The external business environment is a significant factor that is having an impact on the all the business operations. While operating in the international business environment then political, social, legal and economic factors create different opportunities and challenges for the firm. The political issues among the different nations create major challenges for the Jaguar (Hopkinson et. al. 2018). Along with this the legal factors such as the different rules and regulations related to international operation management are also an significant issue for the case company. But when Jaguar is operating in global world then they are having an opportunity to create great customer base and helps the firms in getting better benefits. Great exposure to wide range of market is an opportunity for the firm to increase their sales and led their firm towards success and development.
Cost, Opportunity (Advantages) and challenges (disadvantages)
The factors which increased the investment cost of the company are considered as a disadvantage for the firm. But if the sales of Jaguar increase in the global world then it is having a cost advantage for the firm.
Market, Opportunity (Advantages) and challenges (disadvantages)
The changing market conditions help the company to gain competitive advantage and increase their customer base. But on the hand it creates pressure on the case company to make changes in their working process and products which is an disadvantage for the company.
Cloud computing and technology (Advantages and disadvantages)
Increasing use of technology is creating great opportunities for the business to create innovated products. Jaguar is investing in using the latest technologies and cloud computing in manufacturing of their products. The company is working on reducing the stress on driver with the help of AI. Along with this it is also using other technologies for reducing fuel consumption, less pollution and other issues as well. But the cost of using the technology is higher which one of the disadvantages for jaguar is.
LO2 DETERMINE THE STRATEGIC COMPLEXITIES ASSOCIATED WITH OPERATING IN A GLOBAL ENVIRONMENT
P2 Complexity of strategic challenges faced by organisations when operating in a global environment
The companies have to focus on developing effective strategies when they are entering into the international market as it is having an major impact on the business performance of the firm in the international firm. While managing the firm at international level the companies have to focus on following the different rules and regulations. The international trade law needs to be followed while managing trade between two different nations. The companies need to make the strategies according to the international trade law for ensuring better business management across the borders.
When the company is managing the international firm then they need to focus on managing all the business operations properly or they would face strategic challenges. There are different factors related to internal and external business environment that can create issue for the firm. Jaguar Land Rover one of the leading automobile company is facing the strategic challenges due to its declining sales because of increasing competition. The company is facing decline of sales in its main market such as Europe, china and US (SPOTLIGHT, 2020). Along with this the increasing concern for environment safety, rules and regulations, tariffs, competition, economic slowdown, political issues and many other reasons can also create strategic challenges for the firm. For this it can be recommended that the companies operating in international market should focus on following the market trends and changing their business strategies according to the market conditions then it can help them in operating more effectively.
M2 Strategic challenges in the context of risk and diversification strategies and the supply chain flow
The international firms need to focus on managing the different risks in an effective manner. Different risk related to environmental factors or the rules and regulations are having greater potential to create for the firms. Jaguar is an international automobile manufacturing firm is also facing several strategic challenges which are creating risk for the company. The company is facing strategic challenges related to the improvement in their operational and financial performance. For this the case company need to employee effective strategies that can help them in overcoming these issues. Jaguar is operating in the international market focuses on using different diversification strategies for leading the company towards growth and for this the company focuses on producing a new product in supply chain for increasing their profits. They focus on using different marketing strategies to different group of customers (Getahun et. al. 2018).
Apart from these issues the companies face different issues related to supply chain flow. The companies can face several issues related to natural disasters, economic issues, political issues and more. But the companies needs to have effective strategies for managing the supply chain properly as the company needs to manage the SC properly for meeting the customer demands. For the international firm like Jaguar it is important to focus on supply chain diversification that can help them in managing the different supply chain issues effectively and ensuring proper supply chain flow.
D1 Critically evaluate the global business environment, including the opportunities and challenges faced by organisations
Different factors of global business environment are having an influence on the international firms. The different environmental factors affect the firms differently. For example if the country is having better economic condition then the sales of the high quality and expensive products would be more. But the country would have higher unemployment then the customers would not purchase expensive products. So it can be said that the company would face different opportunities and challenges in the global market.
LO3 IMPACT OF GLOBAL MARKET ON ORGANISATION’S STRUCTURE, CULTURE AND FUNCTIONS
P3 Influence of globalisation on organisational governance and leadership, structure, culture and functions
The organisational governance and leadership are having an major role to play in the organisation. The company needs to focus on having clear goals and objectives of the firm. Then on the basis of the organisational governance which means a system needs to be cleared. An effective organizational governance is important for success of the firm in global market. Apart from this leadership is also having an crucial role to play in the firm so the company should have effective leader. The leader should apply effective leadership style for motivating the employees (Stevenson, 2019). This is important because globalisation means new strategies, work ethics and new working style. So in this situation highly motivated employees are required for delivery high quality work to the firm.
When the company expands their business operations to global level then the organisation function changes to a greater extent. Due to this Jaguar needs to focus on having highly skilled and experienced employees for every job role. Accordingly the organisational structure of the firm also needs to be changed. The companies should use hierarchical structure which is used by majority of the international firms. Both the organisational structure and organisational functions would be highly changed because globalisation makes them more complex.
Organisational culture of the firm is also affected due to globalisation so when the company focuses on expansion then they need to make changes in their company culture. The company should develop the values, norms, ethics and belief in the firm which prompted equality and respect for all the employees working in the firm (Nguyen and Tran, 2018). The companies should focus on having an cross cultural organisational culture that can help them in managing diversity effectively in the firm and helps them in creating better cooperation and trust among all the employees. Due to this reason Jaguar focuses on creating an positive organisational culture that hold better values and ethics which help them in managing the employees effectively.
P4 Influences of ethical and sustainable globalisation on organisational functions
When the firm focuses on working in global market then they have to work in more ethical manner. Also they have to focus on taking ethical decisions and following all the business ethics while managing an international firm. Due to globalisation the companies have to be more ethical and have the responsibility to work in more ethical manner with all the suppliers, employees and the customers as well. Along with this the company needs to ensure that their international expansion should not affect the environment negatively. So they have to focus on sustainable globalisation. All these factors affect the organisational functions and the company have to manage their operations in more sustainable manner so that they should not affect the environment negatively.
M3 Evaluate global influences in application to appropriate theories and models related to organisational structure and culture
Globalisation is having a major impact on the organisational structure and culture of the firm. The company should focus on following all the factors of McKinsey 7s model because globalisation would be affecting all the factors (Gökdeniz et. al. 2017). The company should focus on creating interconnectivity among all the factors such as structure, style, skills, staff, strategy and system. Also they should create a culture that promotes workforce diversity. All these internal factors are having an impact on organisational effectiveness so the company should focus on these factors while going global.
LO4 INFLUENCE OF GLOBALISATION ON ORGANISATIONAL DECISION MAKING AND STRATEGY
P5 Different ways decision-making can work effectively in a global context
While operating in the international business environment the companies needs to make effective decision that can help them in operating in an appropriate manner. When the firm focuses on entering into the global market then competition is increased to a greater extent. In this situation the company have to focus on developing effective strategies for managing this competition. Increasing globalisation had increased the access to the cultural values and belief of the people living in different nations. This had created great pressure on the management of the firm to focus on all these factors while working in global market. The leadership needs to be changed (Lang and Tavares, 2018). Due to globalisation the workforce diversity had increased to a greater extent due to which the leaders have to focus on using participatory transformational leadership for better management of the global firms. Along with this the different strategies related to management, marketing, pricing and all other things. The customers are also having great access to information and due to this reason the companies needs to keep their pricing almost similar for all the different markets. The case company is one of the leading firms but it focuses on using the demographic, geographic and influencer marketing strategies for effective marketing and promotion of their products. So, it can be said that the companies need to focus on all the factors related to globalisation and need to develop the strategies accordingly (Wi?cek-Janka et. al. 2017).
P6 Various routes to internationalism and the key barriers
When the companies are looking forward to expand their business to the international level and start trading and doing business in global market then it is not easy. The company needs to focus on selecting an appropriate route for internationalisation (Ahi et. al. 2017). Along with this they have to face different types of barriers while entering into the global market. The different routes of internationalisation are mentioned below such as:
Exporting: this is one of the most easy way or route for internationalisation. In this the product is been sent to another nation for selling. This requires less legal requirements but one of the trade barriers is the trade relations between the nations. For exporting both the nations should have effective trade relations and low tariffs then only this can be done (Schellenberg et. al. 2018).
Licensing and franchising: in this method an international licensing agreement allows the foreign company to sell the products which are being produced by another company. For example McDonald's and KFC are franchising and licensing only. This type of internationalisation requires less investment and helps the companies in expanding their business effectively.
Partnership and strategic alliance: in this type of internationalisation the company focuses on forming a strategic alliance with the local partner for entering into the new market and doing business effectively. In the recent decades strategic alliance and joint ventures had gained a lot of importance and are widely used for internationalisation.
Acquisition: this is also an effective method in which the company gains the control over another firm (Shen et. al. 2017).
Foreign direct investment: this is also the company directly invests in a foreign market but it requires a lot of capital for entering into the international market with this strategy.
M4 Key barriers in doing business internationally and recommendations
When the company is working on expanding themselves to the international market then they have to focus on different barriers. The socio-cultural differences between the nations create major issues for the organisation while operating in international market. For addressing this company have to focus on creating an effective organisational culture that promotes better knowledge related to different culture. The legal rules and regulations are required to be considered by the firms while operating in international market. The companies have to focus on offering the products as per the customer’s pReferences and their social factors. One of the most important factors for the success of the firm is their choice of strategy for entering into the global market (Burlacu et. al. 2018). So it can be recommended that the firm should focus on all the factors related to external businesses environment and its potential impact on the firm and after this analysis the company should use an effective mode of entry in the firm.
D2 Critique strategies that can be adopted by organisations operating in a global business environment
The international firm needs to focus on managing the organisation in an effective manner and for these better strategic choices are required to be made. While entering into the international market the company should use multiple strategies that can help them in establishing themselves effectively in the global market. For instance McDonalds one of the leadership restaurant chain focuses on using cost leadership strategy. This is the most generic strategy used by them and this helps them in offering high quality food at minimum cost and it is helping them in attracting the customers. Similarly if we compare this example with the case company then Jaguar is having an super premium pricing. The case company is using this strategy because they are targeting only the rich people.
Product differentiation is also an effective strategy to use in international business environment. This strategy can help the firm in getting competitive advantage over others. Jaguar is selling unique products that are offering great value to their customers and they are offering high quality and luxury cars with advanced features. This is helping the company in diversifying their product from others in the industry and is helping them in gaining competitive advantage over others (Althafairi et. al. 2019). From this it can be said that the companies can use different strategies such as cost leadership, multiple marketing strategies, product differentiation, competitive pricing and many more. The choice of the strategies need on type of business and different factors related to the external environment of the industry.
In the above mentioned report the researcher had focused on explaining the different factors which are required to be taken in concern while going global. The report concludes that the globalisation is having an major impact on organisational structure, functions, culture and operations. So the company should focus on developing better strategies and adopting an cross culture that can help them in entering into global market effectively. Also they should use an appropriate entry mode for international expansion so that they can create and should use better strategies for marketing and advertising so that they can effectively create an better image in global market.
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