Globalization has become increasing important to the world. It is a major utility for liberated economies since it permits businesses and the people involved to operate and function as a component of world economy. Globalization has the potential to remove political boundaries and traditional geographic making room for the entire world stage as business theatre (Morrison 2000, p. 108). These kinds of performances have both external and internal affects on different parts of business such as employee potential, organizational branding and market and consumer examination. This paper mainly analyses how external context of strategy is affected by globalization.
Today, many companies in the world have decided to go global. However, they have to consider numerous factors in any decision they make since the global market is huge and complex. There are many environmental uncertainties in the global market which has turned to be a threat to strategic management. This is because it prevents them from developing plans to be used in the future and at the same time prevent decision making strategies keeping the organizations into an equilibrium state with external environment (Mecca & Morrison 2001, p. 122). Nevertheless, global economy makes room for new markets for obtaining both sellers and buyers hence the way businesses are conducted must change and the way companies relate to their consumers also changes. New marker environments are created which the organization must become used to especially the new laws and new people they will be exposed to in the global market.
All strategic decisions made in business are impacted by globalization. Country borders can nolonger define imagination limits for businesses (Fahey, King & Narayanan1999, p. 106). The managers need to understand their markets, suppliers, shareholders, customers, distributors, prices and creditors available worldwide. Firms operating in the global market should have quality products and services and a good price to be able to compete in the globally. Despite political boundaries being available in businesses, it is crucial to look more on globalization.
Understanding the global market is therefore crucial to all companies operating globally. They should conduct market analysis to enable them determine how it will be able to grow, know the size of the market, and lastly become aware of ways of creating market presence that will enable the organization operate at a profit based on their strategic plan. Business owners should however be aware of market entry barriers in each nation before they make a strategy of joining the market. Examples of major market barriers of entry include: local politics, availability of resources, economic uncertainties and local reaction (Neufeld 1998, p. 187).
International societal is required for those people carrying out business in the global market. This is because each country has its own unique societal environment with different technology, socio-cultural variables, economy and political-legal variables (Corson 1990, p. 210). All these factors should be considered since they will affect the business. Managers should be aware that what is acceptable in their country may not be acceptable in foreign nations where they conduct their businesses. Social-cultures and political factors in every country should be looked into carefully since they are always risky to the business. Many business aspects require a high level of attention especially in the global world. This is why it is best to look into and review business policies in each global environment before beginning a business to avoid issues. Globalization has increased sales for most companies who have followed and adhered to global environment rules and regulations creating more monetary value to them (Morrison, Renfro & Boucher 2003, p. 168).
Economists and strategists believe that focusing more on globalization and international markets can enhance company’s profits enabling it to grow in the long and short term. Companies should look for ways in which they can strategically manage their businesses to enable them excel in the global market which is competitive. Organizations should set their objectives, mission and visions in their strategy for management of the business (Brown, Slavin & Postel1991, p. 120). The company may use strategies such as situational analysis, balance score card for the business and matrices.
Companies which have decided to go global should have branding tactics that is associated to its external picture and emblem in the new market. This will create a global image for its products. The company should put more emphasize on its brands in association to the quality of services and products they offer. The company’s brand should be a spark for itself (Marien 2002, p. 98). This is because it is the brand that will market the company since it is what initially attracts the customers to the company.
Today, business owners are free to select the area where they want to run their business from; a place where they believe is more resourceful and contemptible. Most business owners have strategically identified the UK as an attractive location for conducting businesses especially those that involve financial services. This has boosted the economy of the UK and increased competition for business operators in the UK. This has increased competition among governments as each is willing to provide a low-cost and attractive location for business people to operate (Aguilar 1998, p. 129). Nations such as Ireland give tax holidays to those who run businesses in their country. On the other hand, Indonesia offers low wages to their businesses which has attracted a huge number of businessmen. London offers cheaper inputs such as labour and financial advice to business operators.
Multi-cultural and multi-national management is a big innovation to managers and business people. This is because multi-national environments are more variable and complex hence not easy to manage (Renfro & Morrison 1992, p. 124). On the other hand, multi-cultural strategy of employment usually forces the managers to select employees coming from different countries, do not share the same language, culture and faith. Due to the large difference between the employees, different reactions is always got from them. It is therefore difficult to encourage and motive these types of employees. Most managers are not always sensitive hence making workers to feel low and with no spirit to work since they are not motivated (Marien 1991, p. 132). For instance, there are those Japanese who felt disillusioned with their workers from Thai for failing to positively act in response to Japanese techniques of structuring up motivation and company allegiance. Japanese therefore decided to formulate a strategy whereby they turned their targets for production into a game which went well with Thai workers.
In the global market, consumers appear similar but they are not the identical. This is because of issues of culture and language. Those businesses which ignore local variation are usually meant to fail. Marketing in the global market is affected by language hence business owners should be well conversant with the national language in the location where they operate. Everything may go wrong if you fail to explain in details on what your product is all about. A good example is Spain’s GM Nova which failed to boom since NoVa in Spanish means doesn’t go (Coates 1999, p. 158).
Another major influence in the global market is fulfilling consumer’s tastes, preferences and anticipation. This therefore forces business owners to have higher standards to be able to attract customers by meeting their tastes and preferences. However, before going global with your business, it is best to be aware of the consumer’s wants and needs and their preferences and tastes. This will give you an easy time as a business owner to sale in the competitive global market. Business owners should also conduct consumer trends by carrying out market segmentation whereby they differentiate the types of consumers available in the market, identify motivation buying factor of the consumers and meeting the unmet needs of the market based on their strategic plan (Fahey & Narayanan 1999, p. 142). This will allow the organization to come up with unique offerings for their specialized consumers which will increase their sales.
Organizational managers should assess their worker capabilities before they decide to take part in the global market. Organizations should make certain of their employees limitations and potentials. They should also be aware of their performance qualms and restraints that may emerge as a result of global competition. Identifying employee’s strengths and weaknesses will enable the company to restructure itself in a manner that when they go global, they will be able to obtain maximum efficiency enabling the company to freely negotiate in the new market and compete well with the world economy (Brown & Weiner 1996, p. 108).
In conclusion, globalization can affect different parts of business such as employee potential, organizational branding and market and consumer examination. Nevertheless, organizations should ensure that they formulate strategies which will make them succeed in the external environment despite the challenges that comes with it.
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