BUS 380 Globalization and International Business - Free Samples for St
Answer:
Introduction:
The global business environment can be defined as the environment in various sovereign countries which is different from the environment of the home country of the organization and influence the process of decision making on capabilities and the use of resources. For effective and efficient functioning, there is a requirement for the companies operating internationally to understand the social environment of the host country (Kasemsap, 2014). These days, a number of multinational companies operate in different parts of the globe and therefore are required to acquaint themselves with the culture and language of the country in which it plans to operate. Due to no control of the firms over their external environment, their success is completely dependent on their capability of adapting to the external environment. The ability of the firm to design and adjust its internal variables for taking the advantage of the opportunities offered by the external environment along with the ability of controlling the threats posed by such environment determine its success. This essay is focused on how Canadian businesses need to adjust to and utilize an ever- changing business environment and to excel in this environment.
The present global business environment is highly developed as a result of technological development. Also the growth of emerging markets is providing a number of business opportunities to businesses running in different parts of the world. However, the complexity has significantly increased as a result of globalization. Constant changes are taking place in the rules and regulations formulated by the government which are creating a great impact on the trade agreements in the global business environment. The global markets are also disrupted by Brexit which has further resulted in the fall of British pound to the lowest level in decades. However, this appears to be an opportunity for the Canadian exporters to fil the void in the European Union after Britain’s exit. Also, the global business environment is suffering from the dramatic shifts such a rise and fall in the oil and commodity prices, potential recessions, shifts in the exchange rates, financial crisis loom and technology and robotics which have taken the place of some traditional jobs (Peng, 2016). Resource based view can be defined as the way of viewing a firm as a bundle of resources. These resources and their combination are responsible for making the firm different from others. In other words, the resource based view looks at the internal resources and the manner in which it can be used for the purpose of gaining competitive advantage in the market. On the other hand, institution based view provides that proper knowledge of the host country is needed before entering a foreign market. The performance of the firm differs due to the influence of the institutional forces and its impact cannot be controlled through the firm’s competencies and industry factors.
The global business environment is beneficial from the resource based view as there is extraordinary talent available in the international market which is cheap and can provide benefit to the Canadian companies in attaining its goals. Moreover, advanced technology can also be utilized through the expansion of the business in foreign countries which will enhance their internal operations. However, the dynamic nature of the global business environment does not appear to be advantageous from the institution based view. This is due to the fact that even after gain proper knowledge regarding the trends and culture of the host country, a number of industry factors affect its performance in the international market (Apetrei, Kureshi & Horodnic, 2015). The global business environment is impacting the Canadian businesses by offering them a number of opportunities and challenges.
The global business environment offers both opportunities and challenges to the Canadian businesses. One of the biggest opportunities for the Canadian businesses is the access to the new customers across the globe. The population of Canada represents only 0.5 % of the total population of the world (Trading Economics, 2018). The global business environment is providing a number of opportunities for the market entrants as it represents 99.5 % of the total population of the world and is appealing and beneficial for the Canadian businesses. Another opportunity offered by the global business environment is lowered costs through offshoring the activities of the business. Relocation of the business activities can be planned by the Canadian businesses in countries like China and India where there is availability of cheap labor. Canadian businesses can also gain cost advantage through lowering their overall and average costs of production. The next opportunity offered by the global business environment is the diversification of business risk. Entering into foreign market reduces the business risk of operating in one market.
On the other hand, operating in the global business environment can present a number of challenges for the Canadian businesses. The most important challenge for the Canadian businesses is the political risk which is the potential for government disturbance to damage a business entity within a country. The political instability of the international markets becomes a challenge for the businesses entering into a new market. New regulations and tax regulations are also creating challenges for the Canadian businesses entering into the global business environment. Another challenge faced by the Canadian companies is the economic risk which refers to the potential of the economic policies and conditions, currency exchange rates and property rights to unfavorably impact the operations of the firm. This unpredictability of the economies of the global business environment is a challenge for the Canadian businesses. The next challenge is the cultural risk which can be defined as the potential of the operations of the organization to struggle as a result of the differences in the languages, norms, customs and customer preferences. This further becomes a challenge for the Canadian companies to survive in the global business environment (Tallman, Luo & Buckley, 2018).
The Canadian businesses have positively reacted to the dynamic global business environment and have taken their business overseas. Barrick Gold is a Canadian gold mining company which has expanded its business internationally. The company decided to explore the international market opportunities and entered into the foreign market by selecting partnership as the mode of entry. The company enjoys the benefits of operating internationally by way of getting access to the new customers which, in turn, allows it to increase its profits along with enhancing the sales volume, expansion of the programs and diversifying the risks (López ?Duarte, Vidal? Suárez & González? Díaz, 2016). Furthermore, their success is supported by the global business environment as it has used perfect strategies with full dedication and understanding of the idea of maintenance and development of partnerships and trust with host governments, local communities, NGOs, indigenous people. The response of the company was appropriate for meeting the requirements of the present global business environment. The company understood the culture of the country where it was planning its expansion which slowly assisted it in becoming the largest gold mining corporation of the world (Jaksic, Jovanovic & Petkovic, 2015).
Loblaw Companies Limited is another Canadian company engaged in the business of food and pharmacy has also turned the uncertainties and challenges in the global business environment as an opportunity for itself. This company explored the international market which assisted it in attaining product flexibility, protection from the national events and trends, increase in productivity and learning from the trends of the international market. In other words, their strategic responses for responding towards the dynamic global business environment include proper evaluation of the international moves, maintenance of performance and adoption of proper strategies for the satisfaction of the customers. It further took the needed steps for the maintenance of the accountability, excellence and commitment of the employees towards its customers (Caiazza, Shimizu & Yoshikawa, 2017).
McDonald’s is one of the successful businesses operating in different parts of the globe and can be used as an example by the Canadian businesses for their global entry or expansion. McDonald’s makes direct investment while entering into a new national market. Moreover, it also expands its operations through the franchising route. The strategic focus of the company is on delivering highly standardized and uniform products and services in its restaurants across the globe (Teichert, Effertz, Tsoi & Shchekoldin, 2015). This purpose is served by the global market entry strategy of the company. Furthermore, the company employs transnational strategy for global integration and local responsiveness. Another example is that of Starbucks which mostly adopts joint venture and licensing as its market entry strategy. The expansion strategy of Starbucks was dependent on the various licensing agreements in the areas where it did not have the ability to open its own outlets (Ang, Benischke & Doh, 2015).
After taking into consideration these two successful business cases, the Canadian businesses should also recognize the requirements of the overseas market with a high degree of local responsiveness. The businesses should construct their value chain by considering the local culture along with the economic and local- political environment in mind (Tallman, Luo & Buckley, 2018). The Canadian businesses can undertake market entry strategies such as licensing, franchising, joint venture and direct investment for entering into the global business environment. Therefore, the Canadian businesses must consider catering to the needs of the country where it is establishing its business. Under the licensing agreement, the product will be provided to the licensee (foreign firm) by the Canadian businesses (licensor) by way of granting the firm the right of using the manufacturing process of the licensor along with the patents, brand name or sales knowledge in return for payment. This way can be adopted by the Canadian businesses as it will allow them to market internationally by easily dealing with the difficulties like import restrictions, scarce capital and government restrictions (Laufs & Schwens, 2014). Franchising also follows the same concept. The other global entry strategy which can be adopted by the Canadian businesses is joint ventures which take place between a foreign and domestic firm. However, this mode of entry will be riskier and less flexible for the Canadian businesses but will provide them with expertise about the new market, networks, business connections and access to real estate and regulatory compliance (Tjemkes, Vos & Burgers, 2017). Moreover, direct investment can also be adopted as a global entry mode for competing more aggressively abroad. However, this strategy is considered to be risky because it requires larger investment and demands a proper understanding of the customs and business conditions in a foreign country. The global business environment will keep on changing from time to time and therefore, the businesses have to make adjustment for the purpose of maintaining their competitive edge in the international market (Yan & Luo, 2016). The Canadian businesses are required to utilize this dynamic nature for attaining excellence in the global business environment.
Functional excellence is attaining excellence in the management of internal value- chain and the ability of the employees to play an effective strategic role in the organization’s overall value chain. The Canadian businesses are recommended to achieve functional excellence on a global basis by recruiting the employees and managers of the concerned market (Perey, Benn, Agarwal & Edwards, 2018). These employees and managers can suggest ideas regarding the local consumer preferences, tastes and interests which will play a great role in gaining such knowledge and utilizing it for the success of the business. The Canadian businesses can best operate on the global basis if they pick a global expansion partner for market success. Such partner will play a useful role in providing adequate knowledge regarding the laws and regulations of the country (Chetty, Ojala & Leppäaho, 2015). Understanding the market where the business is going to be expanded is also a crucial task and should be give importance by the Canadian businesses. Furthermore, it is recommended that the Canadian businesses should search for a solid global expansion strategy along with making investment in the market research for the purpose of getting a better idea of the business environment. It further needs to consider that the major issues will be faced by the companies in respect of compliance with law, along with certain political problems, supervisory oversight and language and cultural barriers (Brannen, Piekkari, & Tietze, 2017). Solution for all these problems should be searched for in advance through the selection of correct market entry mode and strategy (Hamilton & Webster, 2018). The Canadian businesses should also take the advantage of the available funding which is provided by international governments for the purpose of booting their economies. In this way, some governments offer incentives to the companies planning to expand their businesses into their regions (Surdu & Mellahi, 2016). This available funding will assist in attaining the functional excellence as well. Furthermore, due care should be taken while making decision regarding the market entry mode. These recommendations will assist the Canadian businesses in evaluating the ever- changing global business environment along with excelling in it (Botha, Kourie & Snyman, 2014).
Therefore, it can be concluded that the global business environment is the environment in various sovereign countries which is different from the environment of the home country of the organization and influence the process of decision making on capabilities and the use of resources. These days it has become the basic requirement of every company to expand its business globally for increasing its sales and profits. However, this is not an easy task and requires a proper understanding of the culture and language of the country in which the business plans to operate. The technological developments that have taken place in the recent years have made the present global business environment highly developed. This essay analyzed the present global business environment from both institution- based view and resource- based view and highlighted the opportunities and challenges offered by such environment.
Moreover, this essay provided the examples of Barrick Gold and Loblaw Companies Limited who have dealt with this global business environment and have attained success as well. Also, this essay highlighted the successful cases of McDonald’s and Starbucks who have planned their global market expansion and are operating successfully from years. At the end of this essay, some recommendations have been made which should be taken into consideration for the smooth operations in the global business environment. The businesses should properly plan their market expansion strategy as it will assist the business in resolving a number of challenges faced by the businesses in the global environment.
References
Ang, S. H., Benischke, M. H., & Doh, J. P. (2015). The interactions of institutions on foreign market entry mode. Strategic Management Journal, 36(10), 1536-1553.
Apetrei, A., Kureshi, N. I., & Horodnic, I. A. (2015). When culture shapes international business. Journal of Business Research, 68(7), 1519-1521.
Botha, A., Kourie, D., & Snyman, R. (2014). Coping with continuous change in the business environment: Knowledge management and knowledge management technology. Elsevier.
Brannen, M. Y., Piekkari, R., & Tietze, S. (2017). The multifaceted role of language in international business: Unpacking the forms, functions and features of a critical challenge to MNC theory and performance. In Language in International Business (pp. 139-162). Palgrave Macmillan, Cham.
Caiazza, R., Shimizu, K., & Yoshikawa, T. (2017). Cross?border M&A: Challenges and opportunities in global business environment. Thunderbird International Business Review, 59(2), 147-151.
Chetty, S., Ojala, A., & Leppäaho, T. (2015). Effectuation and foreign market entry of entrepreneurial firms. European Journal of Marketing, 49(9/10), 1436-1459.
Hamilton, L., & Webster, P. (2018). The international business environment. Oxford University Press.
Jaksic, M. L., Jovanovic, M., & Petkovic, J. (2015). Technology entrepreneurship in the changing business environment–a triple helix performance model. Amfiteatru Economic Journal, 17(38), 422-440.
Kasemsap, K. (2014). The role of social networking in global business environments. In Impact of emerging digital technologies on leadership in global business (pp. 183-201). IGI Global.
Laufs, K., & Schwens, C. (2014). Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda. International Business Review, 23(6), 1109-1126.
López ?Duarte, C., Vidal? Suárez, M. M., & González? Díaz, B. (2016). International business and national culture: a literature review and research agenda. International Journal of Management Reviews, 18(4), 397-416.
Peng, M. W. (2016). Global business. Cengage Learning.
Perey, R., Benn, S., Agarwal, R., & Edwards, M. (2018). The place of waste: Changing business value for the circular economy. Business Strategy and the Environment, 27(5), 631-642.
Surdu, I., & Mellahi, K. (2016). Theoretical foundations of equity based foreign market entry decisions: A review of the literature and recommendations for future research. International Business Review, 25(5), 1169-1184.
Tallman, S., Luo, Y., & Buckley, P. J. (2018). Business models in global competition. Global Strategy Journal, 8(4), 517-535.
Teichert, T., Effertz, T., Tsoi, M., & Shchekoldin, V. (2015). Predicting brand perception for fast food market entry. Theoretical Economics Letters, 5(06), 697.
Tjemkes, B., Vos, P., & Burgers, K. (2017). Strategic alliance management. Routledge.
Trading Economics. (2018). Canada Population. Retrieved November 29, 2018 from https://tradingeconomics.com/canada/population
Yan, A., & Luo, Y. (2016). International Joint Ventures: Theory and Practice: Theory and Practice. Routledge.
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