Concept of Going Global, Globalisation Models - Coursework Example

Business Essay Name Institution Business Essay Table of Contents Table of Contents 2 Introduction 3 Concept of Going Global 3 Globalisation Models 4 Factors affecting Globalisation 5 Challenges of Globalisation 6 Cultural Differences 6 Resource Constraints 6 Regulatory Obstacles 7 Shifting Risk profile 7 Lack of Flexibility 7 Overcoming Cultural Differences 8 Conclusion 9 References 10 Introduction In the modern context, business entities focus on exploiting globalisation in the process of achieving competitive advantage in the industry of transaction. Globalisation associates with increased effectiveness and efficiency in the course of handling the needs and preferences of the consumers in the global context. Globalisation refers to the processes and procedures of interaction as well as integration among the people, business entities, and authorities of diverse nations under the influence of technology, international trade, and foreign investment. The purpose of this business essay is to examine the major challenges managers need to consider in the course of making a vital decision to go global. In addition, the essay will concentrate on discussing the most effective strategies as well as actions in the course of handling and dealing with one of the major challenges of going global. Concept of Going Global The concept of ‘go global’ relates to the issue of globalisation. From this illustration, it is ideal to understand the essence of globalisation in order to facilitate effective description of diverse reasons why organisations tend to ‘go global’. Globalisation refers to the expansion of the global linkages, organisation of social life on a global context, and development as well as growth of global consciousness in attempts to consolidate world society. Globalisation is essential in connecting diverse economies, social well-being, ecology, and culture from individuals and places across the globe through integration of trade, travelling, technology, and media fraternities (United Nations, 2002). Business organisations tend to have diverse reasons and perceptions in relation to the concept of globalisation. In the first instance, business entities focus on exploiting the concept of globalisation to gain substantial access to a larger market. In this context, going global enables managers to maximize diverse opportunities while operating on the huge economies of scale as well as scope in relation to a much larger and more diverse market of transaction. In addition, some business entities focus on integrating the concept of globalisation in order to gain access to low-cost input factors such as labour and technology. From this perspective, globalisation is ideal in the achievement of improved profitability levels. Similarly, business entities tend to consider globalisation to develop new competencies to aid achievement of competitive advantage in the market and industry of transaction. In the course of ‘going global’ business entities and managers focus on adopting and implementing diverse models as well as frameworks in accordance with the needs and requirements of the organisation (Baldwin & Winters, 2004). Furthermore, there is need to consider the trend while evaluating internal and external factors in relation to the industry in which the organisation transacts its business operations. Globalisation Models There have been four critical phases of globalisation in its history of development. The first phase of globalisation peaked between 1830 and 1890 under the influence of the rail and ocean transportation systems. In this case, globalisation was mainly associated with automation of manufacturing as well as cross-border trading of diverse commodities. The second phase of globalisation peaked between 1900 and 1930 under the influence of electricity and steel production. The main characteristics of this phase include the emergence of the European and American manufacturing as well as extracting industries. The third phase of globalisation peaked between 1948 and 1970s under the influence of GATT and the end of the World War II, which was essential in the course of rebuilding diverse economies. Some of the characteristics of the third phase include increased efforts to reduce trade barriers as well as rise of Japanese multinationals. The fourth phase of globalisation started in 1980 under the influence of ICT, automation, privatisation, and consultancy. Some of the characteristics the fourth phase of globalisation include influence of FDI in enhancing growth in LDCs, technology, innovation of transportation systems, global media, and the essence of branding. In addition, there are diverse processes and procedures business organisations tend to follow in the process of ‘going global’. In most cases, business entities adhere to five critical processes or phases in the course of achieving effective and efficient outcomes of globalisation. These phases include exporting, cooperative contracts, strategic alliances, wholly owned affiliates, and global new ventures. Business entities also tend to consider three fundamental techniques in relation to globalisation: complementary expansion, vertical expansion, and horizontal expansion in accordance with the needs and resources of the organisation. Factors affecting Globalisation There are diverse factors affecting the growth and development of globalisation in the modern society: economic, social, political, and technological factors. Some of the economic factors affecting globalisation include increasing income rates, global trade, and global competition, deindustrialisation in some nations, world financial markets, and appropriate market forces. From a sociological perspective, some of the factors affecting globalisation include consumerism, convergence of consumer tastes, and skills as well as education. Some of the technological forces affecting globalisation include transport revolution, information systems, and communication innovations (Hannum, Park, & Butler, 2010). From a political perspective, some of the essential factors in globalisation include reduced trade barriers, technical standards, privatisation, intellectual property rights, and emergence of trading blocs. Challenges of Globalisation In the course of integrating the concept of globalisation in organisations such as McDonald’s, Coca-Cola, Wal-Mart, and Costco entities, managers tend to face critical challenges, which might limit the effectiveness and efficiency in achieving competitive advantage. This section of the essay will focus on evaluation of diverse challenges managers face whenever they go global. Cultural Differences One of the major challenges of globalisation is the essence of cultural diversity. Managers tend to face numerous obstacles or challenges in the process of managing workforces whenever thousands of miles, cultural differences, international time zones, and religious differences separate operations (Homann et al, 2007). Business entities tend to face different business concepts, culture, and perceptions in other nations whenever they decide to ‘go global’. Culture refers to a certain way of life of a group or community. Different nations have diverse backgrounds and cultures, which are critical in the determination of the management process and techniques. Cultural differences also relate to diversity in modes of communication and interactions. These hindrances limit the ability of the business entities to achieve effective and efficient community in the process of adopting and incorporating different management and marketing strategies. Resource Constraints In making a decision to ‘go global’, business entities and managers have to face and deal with the challenge concerning resource constraints. It is essential to note that increase in the level of competition for the local skills and talent contributes to shortages of such key resources, thus limiting the ability of the organisation to achieve its goals and targets with reference to competitive advantage in the market and industry of transaction. The challenge contributes increase in demand for effective planning processes in accordance with the dynamic resource management capabilities (Globalisation, 2002). In addition, business entities might face limited capital and other valuable resources in the course of handling their globalisation needs and operations. Regulatory Obstacles Modern society is associated with fast-changing regulations as well as local and international policies, which have dramatic influences on the profitability of business entities operating in the global context. This challenge contributes to increased uncertainties in the rapid growing markets and industries in the global context. In addition, managers tend to face economic, political, and social policies as well as regulations hindering their attempts to maximize diverse opportunities in the globalised economy. Moreover, managers tend to face strict economic regulations such as tariffs and other relevant taxation systems, which limit their profitability levels at the end of the financial period. Shifting Risk profile It is essential to note the increased scale of globalised operations within an organisation is directly proportional to the level of risks and uncertainties. Managers tend to face increased amount or level of risks and uncertainties whenever they decide to go global with their business operations in attempts to achieve competitive advantage (Bigman, 2002). Some of the risks are evident in fluctuations in interest as well as exchange rates and supply chain piracy. The globalised risks are strategic in nature, thus generating greater levels of uncertainty with massive implications on capital investments. Lack of Flexibility It is difficult for the managers to integrate their skills and expertise in the course of managing the consequences of major systematic disruptions because of the increased level of interdependence of international value chains. In this case, managers have the responsibility and obligation of adopting and implementing diverse concepts in order to achieve the required level of stability and flexibility in handling the needs and demands of the consumers in the global contexts. Overcoming Cultural Differences In order to overcome cultural differences in the course of globalisation, managers tend to focus on adopting and implementing the following actions and techniques. In the first instance, there is need for the central organisation to refine portfolio management with the intention of creating an infrastructure, which can maintain the diversity of international teams. In addition, such infrastructures and portfolio management need to focus on the empowerment of local delivery with the intention of incorporating the cultural and religious affiliation of the natives (UN, 2004). Moreover, managers should focus on incorporating training and development programs with the intention of improving their expertise on multicultural skills and knowledge. The level of training and development is ideal in handling diversity in cultural and religious affiliation through respecting and understanding different cultures in the global contexts. Multicultural training and development should be available to employees of the multinationals in order to facilitate their delivery and performance. Similarly, managers have the ability to tailor the operations and processes of the business entities in relation to perceptions and demands of the locals. This is critical towards increasing the consumer base of the local entities in the course of pursuing organisational goals and targets at the end of the fiscal period. Managers should organise and execute substantial research concerning backgrounds and experiences of the host nation (O'Meara, 2000). The process is crucial in the course of handling the needs and preferences of the locals hence enabling business entities to achieve competitive advantage. It is also ideal for the managers to acquire and integrate diverse techniques such as franchising and exporting as well as licensing in order to overcome cultural differences in the globalised economy. Conclusion Globalisation refers to the processes and procedures of interaction as well as integration among the people, business entities, and authorities of diverse nations under the influence of technology, international trade, and foreign investment. Business entities decide to ‘go global’ in order to achieve three goals: gain new competencies; reduce cost of operations, and increase market coverage as well as size. In the course of globalisation, managers tend to face diverse challenges such as cultural differences, shifting risk profile, resource constraints, lack of flexibility, and regulatory challenges. In order to overcome cultural differences, business entities tend to consider licensing, franchising, and exporting techniques. In addition, managers integrate multicultural training and development to gain substantial skills and knowledge of handling diverse needs and preferences in the globalised economy. References Baldwin, R. E., & Winters, L. A. (2004). Challenges to globalization: Analyzing the economics. Chicago: University of Chicago Press. United Nations., & Ocampo, J. A. (2002). Globalization and development: [Economic and Social Commission for Latin America and the Caribbean], Twenty-Ninth Session, Brasilia, Brazil, 6 - 10 May 2002. Santiago: United Nations, CEPAL/ECLAC. Homann, K., Koslowski, P., & Luetge, C. (2007). Globalisation and business ethics. Aldershot, England: Ashgate. Hannum, E., Park, H., & Butler, Y. G. (2010). Globalization, changing demographics, and educational challenges in East Asia. Bingley, UK: Emerald. Globalisation. (2002). London: Economist. O'Meara, P. (2000). Globalization and the challenges of a new century: A reader. Bloomington [u.a.: Indiana Univ. Press. Bigman, D. (2002). Globalization and the developing countries: Emerging strategies for rural development and poverty alleviation. Wallingford, Oxon, UK: CABI Pub. in association with the International Service for National Agricultural Research. UN. ESCAP. (2004). Meeting the challenges in an era of globalization by strengthening regional development cooperation. New York: UN. 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