Impact of Globalisation on Business Operations Assignment sample

Impact of Globalisation on Business Operations Assignment sample

Introduction

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The globalisation refers to an interchange of different elements among various communities, which is not a recent development, but a continuing process. What makes the modern-day trend of globalisation distinctive and distinguished from the earlier ones is the rapid rise in the frequency and the intensity of such interchanges (Agwu, 2020). The present report will discuss the concept of globalisation and the key factors that drive the globalisation process. It will further identify the strategic challenges and benefit of the key drivers in creating opportunities and threats for RCS Logistics in operating business in the global environment. The company operates a storage and transport business and has years of experience in this sector as a senior body in operations, business development, management and sales. The report will then understand globalisation's influence on various organisational aspects of RCS Logistics and develop strategies with key barriers and their mitigation approaches.

1. Key Drivers of Globalisation

1.1 Key factors driving global commerce and trade

1.1.1 Cost

Various factors such as growth, location and demographics vary among countries, and the cost of production factors inevitably vary in accordance. These gaps, as per Goharian (2019), boost trade and investment abroad and thus help to drive foreign trade. An accurate and realistic evaluation of global opportunities and costs would possibly lead to difficult decisions on which markets, consumer groups and product positioning are focused on and which are bypassed and where solutions are acceptable.

1.1.2 Market

Organisations must collaborate to be able to operate on the international market and adapt their organisations following their respective market environments. In the advanced economies customers in terms of education, jobs, behaviours, expectations, and the usage of leisure time is becoming more and more identical. Marketing teams of certain companies find suitable customers in nations that have high-capacity and well-developed infrastructure.

1.1.3 Environment

Expanding and exploring new markets is encouraged by global trade expansion, though it does not ensure their success. According to Picincu (2018), various environmental factors will make or break a business, including national legal practises, politics, social systems and technologies. The international system, however, cannot be controlled by businesses which plan to go global. Therefore the host country and its markets must be researched before a company extend its business.

1.1.4 Competition

Competition in global trade and commerce is the shared situation of merchants or industrialists who are seeking to draw consumers with more favourable price rates, improved sales conditions or supply of better quality (Adiguzel, 2020). The uprising concept of cost minimisation and risk reduction, intending to survive in a competitive environment, has led to the rapid growth of the internationalisation process.

1.2 Benefits and challenges created by key factors on global business

Factors	Benefits	Challenges
Cost	· Locating a business in higher-income regions can result in obtaining favourable externalities of the business. · If companies specialise in the production of goods that they have a comparative advantage in and lower the opportunity cost, they can benefit lower price-rates on goods and services for consumers, greater competition, superior preferences for products, and larger market of export Goharian (2019).	· Escalation of import price of the host country, inflation in its economy as well as national trade tax, insurance, tariffs etc. are liable for stimulating the price package of RCS's service in that market.
Market	· The common advantages of extending into the markets of production are unsaturated demand for new goods, lower labour prices, lower natural resources and other supplies for products of global organisations, also referred to as multinational corporations (MNCs).	· Increasing globalisation is possible to reduce the global rate of innovation and new product development, with a strong potentiality for this rate to decline in the long-term.
Environment	· Globalisation from economic environment perspective demands consideration of direct inflation and interest rates along with investment and savings rate, which leads to strategy development for revenue maximisation and cost minimisation. · If RCS obey the laws and regulations, obtain a license and pay adequate fees of the host countries, the business operation will be run without conflict.	· Cultural differences in business professionals from various countries may consider the intention of negotiation or verbal agreement from a different point of view. · Consumers from a particular society might not be interested in the same service or product sold in another society.
Competition	· Companies have tended to supply the raw material and intermediate products of the lowest cost nations, increasing competition and developing their units in the various countries, lowering the operational costs and reducing financial risk.	· As per Adiguzel (2020), to sustain in the competitive market, multinational competitors have to strengthen their marketing in all places by trying to establish benefits that, if undermined, could make them vulnerable to market share erosion throughout the world.

2. Strategic Complexities of Business Operation in the Global Environment

2.1 Complexities and challenges of strategies for global business

When challenges to trade across national boundaries are eliminated, a business environment becomes global. It implies that companies and countries become interdependent, making virtually non-existent national boundaries. In this process of globalisation, as per Bowen, Baker and Powell (2015), an organisation might face complexities in its globalisation strategy from political, economic, social, technological, legal and environmental perspectives. While long-term managerial goals of RCS might face vagueness of future political stability, policies and tax, the same level of uncertainty is applied with the economic challenges. Socio-cultural diversity is another point of complex approach that RCS would face while expanding the business in other regions with different consumer preferences and behaviours. Alongside, RCS might face international trade laws as a challenge as they are different in different economies and make business and marketing plans accordingly. Environmental protection, energy consumption and waste disposal create challenges in business strategies as well. Apart from that, different countries might adopt technological innovations differently, including access to the internet, adaptation to advanced infrastructure etc.

Competitive environment and markets have turned into global, supported by technical development, and strengthened networks of transportation and among others, regional trade agreements (Oghenejode, 2017). Companies and nations are thus interdependent and interrelated, creating a dynamic structure. There can be no simple evaluation, interpretation, influencing, and estimation of the behaviour of a complex system. This makes it impossible to make strategic decisions when the environment is turbulent and unpredictable.

2.2 Strategic challenges related to risk, diversification strategy and supply chain flow

2.2.1 Risk related challenges

A business is ought to face a bunch of risks in any stage of operation, and it must be ready for confronting and mitigating such risks. Naturally, a complicated process of expanding and operating the business in the global market possesses numerous transparent and vague risks in the strategy that is being implemented for expansion. One of the most important strategic risks for RCS is to identify the exact leadership style for the business in a certain regional market, as well as finding the most effective ways for public relation there.

2.2.2 Diversification related challenges

Diversification is what companies consider for fresh approaches of growth, and it demands them to diversify into various fields and pursuits. However, such a critical strategy throws challenges in the way of smooth business operation of a company. One such challenge of overextension of resources occurs when companies do not approach diversification with caution, and many operational units might face a lack of resources (Bowen, Baker and Powell, 2015). RCS would need infrastructure, training of workers and travel between distinct fields for diversification, which might lead to the risk of increasing the overall organisational cost. Besides, wide and sudden diversification of small businesses with specific goals might lead to losing or lessening their focus, and their innovative attributes might deem. Furthermore, if RCS wants to expand into an unrelated area of business, will fall apart if a proper and adequate set-up is not done, which might be completely different from the ongoing business.

2.2.3 Supply chain flow related challenges

The operation of suppliers and supply chains could also be a complicated method when it comes to obtaining goods and services internationally. Sadly, the scope and complexity of supply chains increase the likelihood of dealing with suppliers in business practises who are illegal and unethical. Another big problem is that each organisation in the chain has conflicting strategic priorities and criteria. For instance, a raw material retailer, such as RCS with its coal section, would like a production firm to routinely purchase large quantities of raw materials (Wu and Chen, 2018). The retailer, on the other hand, would still like its raw product at the best possible price.

3. Influence of Global Market Operation on Organisational Culture, Structure and Functions

3.1 Influence of globalisation on organisational governance, leadership, structure and culture

In the international business market, the term globalisation is a regulating and developing factor. It has an exquisite impact on all aspects of the organisation. It is an effective concept which expands the globally business outcomes in the organisation. The globalisation has a huge impact on organisational governance, leadership, structure, culture and functions. In an organisational operating program, globalisation has a deep influence on the organisational structure. Globalisation reflects the potent pressure on the aspect of governance. In the changing globalised platform, the board members have to be changed the governance policies (Lewis, Boston and Peterson, 2017). Leadership is also influenced by globalisation. Due to the globalisation leaders also changes their thoughts and perspectives towards the business expansion.

The governance policies of the leaders are changing due to the demand of the international market and its choices. It can help defenestrate all kind of international business obstacles. Globalisation also affects organisational culture. The concept of globalisation reflects the adjustment of the cross-cultural atmosphere. It can change the organisational behaviour and ethics. In the global business platform, the concepts of globalisation provoke all the organisations to enter a new cultural sphere (Farooq, Hao and Liu, 2019). Globalisation affects the organisational structure and its management. Likewise, RCS organisation also affected through the concept of globalisation on its several aspects mentioned above.

3.1.1 Globalisation theories and models relating to organisational structure and culture

McKinsey 7S Model

This model has introduced the interconnection between the six elements which are categorized by "Soft Ss" and "Hard Ss". Structure, Strategy and system consist of "Hard Ss". And skills, styles, staff consist of "Soft Ss". These elements have connected somehow to each other respectively. 

Figure: McKinsey 7S Model

Source: (Lewis, Boston and Peterson, 2017)

In the context of the globalisation, an organisation can use this model to build an overall prominent structure. A proper strategy can develop an organisation and gives it a lot of competitive advantages (Roy, 2020). RCS organisation has interested to enlarge its services in a wide way. The proper strategy helps to achieve the key to success in business expansion.

Due to this particular theory, it has been evaluated that the global supply of this organization has splendid services. The company try to achieve the apex performances of their services of coal supply. In that manner, it has evaluated based on this particular theory that, the company has the same vision and mission about their global services. Additionally, it has also evaluated based on this theory that the company has a potential vision. The vision and its objectives are the same for fulfilment its services in the global context. The whole operation of this organization has a great concept of how to implement their services following the changing demand of the worldwide market. From this model, it has concluded that RCS Company has a potential business-building under its services that is proper. However, despite all of these, the company have concern more for its all kind of requirements in their expansion of global context. Each element represents helps build an expansion in the international level (Cuervo?Cazurra, Doz and Gaur, 2020). In the international level, several organisations used this theory in the context of the globalisation and have got a great success. Likewise, RCS organisation, if follow this model with concern then it will more helpful for the organisation.

Hofstede's Cultural Dimension

Figure: Hofstede's Cultural Dimension

Source: (Shamne, Milovanova and Malushko, 2019)

The theory of the Hofstede's Cultural Dimension reflects the understanding the cultural differences globally. In this model, there are six elements which help in identifying the different cultural atmosphere. These are:

1. Power distance Index

In the international global market, organisations have to use this model to understand the difference between the several cultural aspects. In the power distance index, there are two types of PDI: high PDI and low PDI. This section helps to understand the cultural demand about equal and unequal power distribution towards the society members. By using this concept RCS organisation understand the difference the acceptance of the services towards the society.

1. Individualism versus collectivism

Individualism versus collectivism helps the organisation to understand the expansion of its business internationally (Shaqrah, 2018). In the international level which country has the concept of the individualism that means weak interpersonal connections among peoples, the RCS organisation will not promote their services there.

1. Masculinity versus Femininity

The Masculinity and Femininity reflect the understanding of differences of thoughts in the masculine and feminine culture. As an example, Japan is the MAS society where female candidates have not enough advantages to growing themselves in a workplace. By comparison¸ Sweden is a more feminine society where female candidates have equal advantages in an organisation (Shaqrah, 2018). In the context of the globalisation, RCS management has to select the country for international business expansion where male and female both prioritised in the workplace.

1. Uncertainty Avoidance Index

In the context of the globalisation, the association of the uncertain avoidance concept has released the characteristics of the peoples. High UAI reflects the conservative, structured, many social conventions and expressive minded people (Shamne, Milovanova and Malushko, 2019). Low UAI reflects the inclusive, innovative but less sense of urgency minded people. For the multinational expansion of RCS organisation, it is necessary to understand the proper country to execute their programs. That will give them a good and positive response from the people. However, RCS organisation has a great understanding and aims among all the employees in every logistics.

1. Long Versus short Term orientation

. In the concept of the long versus short term the RCS, the organisation has well maintained the long term implementation process with expertise seniors and management. This concept reflects the period of business development based on the countries.

1. Indulgence versus Restraint

The last one is indulgence and Restraint that is helping to identify the IVR score among the several countries. As an example, the IVR score of Russia is low, that means here people are less interested to busy themselves all-time in the workplace, they want sometimes a leisure time. For the future multinational expansion, RCS organisation has put a glance on this matter then it will beneficial for them. In the concept of the globalisation, these theories are helpful to execute the sense among the international companies.

3.2 Influence of ethical and sustainable globalisation on organisational function

The concept of ethics and sustainability is an important factor for every organization. In the path of global expansion, the concept of ethics and sustainability work as core components. In the context of the globalisation, corporate ethics is fruitful for to maintain the prominent extension of the services which also conduct the concept of sustainability. To sustain the business in the global platform the corporate ethics is important. The proper ethics of an organization reflects a proper brand view on the internal platform. The proper ethics of an organization is essential to regulate all the key aspects in a single trigger (Lewis, Boston and Peterson, 2017). In the operational system of an organization ethical work is important otherwise the services is not sustained for no longer through the suitable path. In that case, of the RCS organization has to imply the proper ethical path in their global services then it will beneficial factor for them to locate their services in apex level. The ethical and sustainable globalisation has a wide range of ramification in the organizational operations of RCS. To maintain the proper level of business ethics is helpful to meet the organizational objectives easily which has a great ramification on sustainability on organizational functions.

4. Influence of Globalisation on Organisational Decision Making and Strategy

4.1 Different way of the effectiveness of decision-making

In the platform of the global business decision making is the important elemental aspect. A proper decision has an effective implication in the way of global business expansion. In that case, the RCS Organization has chosen an effective decision about its global promotion of business. In the process of decision making, the company has consulted its decisions about each other. In the way of global business expansion, RCS Organization has taken the proper decision. From the organizational report, it has proved that the customers are enough satisfied with their services (Roy, 2020). It has proved that they are fulfilling the services of the customers based on the demand of customers. The concept of globalisation works as a force behind the decision-making process of each organization. The adequate level of the decision-making process is essential for a business. In that case, the RCS organization has always tried to take the adequate level of decisions based on the global market.

4.2 Different routes of internationalisation to adopt and critically analyse key barriers and their mitigation process in operating business internationally

In the context of global business, there are several initiations which are fruitful for internationalisation. The proper initiation about the internationalisation of business is beneficial for the organization. In the way of the globalisation, the growth motivation is a core key. The growth motives are helpful for the business to accelerate with proper strategic growth. In the other hand, for the globalisation of the business, the knowledge related motives are important for the business. Additionally, in the path of globalisation of business, the potential link of the supply chain is necessary (Cuervo?Cazurra, Doz and Gaur, 2020). In the process of internationalised services of RCS Organization, these factors are crucial. There are several obstacles faced by the organization in way of globalised the business like financial barriers, managerial barriers, market-based barriers etc. In that case, the RCS Organization has maintained its overall functions exquisitely. However, this company have to more eloquent and effective to resolve these several key barriers regarding the internalisation of business.

Conclusion and Recommendations

Globalisation, as described in the report, is a far-reaching phenomenon with its mark left, though in differing degrees, in all walks of contemporary human lives. In terms of business operation, the transition toward a more interdependent and interconnected global economy provides greater prospects for international markets. Such globalisation, where trade barriers decline and consumers' tastes evolve, will take place in the markets. As RCS is considering entering the global business of transport and logistics, it must follow some key recommendations below:

• The company must concentrate on how the key drivers of globalisation are influencing in the business and marketing plan for each target market.
• RCS, with a good collaboration among employees, needs accurate strategic leadership to retain the success in foreign markets as well.
• With a proper understanding of the organisational structure, culture and function according to targeted country and strategically following the business plan, it will gain knowledge on potential consumers and provide most effective logistic and transport solution to them.
• While entering the global market, RCS needs to focus on the risks, challenges and barriers and implement the recommended mitigation approaches for effective operation.

References

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