Globalization applies to a company’s method of doing its activity abroad (Freeland, 2015). Previously, nations maintained control of the capital crossing their borders, the goods created in the community, but the market has changed. The ideas and values of political science, history, sociology, and economics are interested in globalization. Organizations often go multinational to widen their market and raise their levels of production.
Companies have felt the need for any customer to be able to access the products and services generated by them, regardless of their language and nationality. The businesses felt the need for the users to get the products their need in their native languages as it is that is the only way for complete assurance that the information passed was accurately understood. In globalization, the communication of the company is the key to them delivering the right message (Bartsch, Riefler, & Diamantopoulos, 2016).
Different forces contribute to the globalization of a company. Use of advanced technologies leads to improvement in the access of information by the user, which subsequently leads to the rise in the economics activities, carried out by the firm. With advances in information and communication technology, innovations have become smaller and more efficient making them more affordable to the consumer. The internet makes most of the important part of the improvement in communication and information technology. People across the globe can access the information of a firm ranging from the products they offer to the pricing and the system of delivery. The internet has connected people across the world through social sites, and the cooperate world has taken advantage of this move to stay in contact with its customers.
In addition to these, falling trade barriers between nations have encouraged the globalization of companies. Most of the policies are executed on the imports with the use of heavy tariffs on the goods and services. The host countries are expected to provide the products at considerable prices. The integration into world market has enabled small companies in the developing countries become more important in the world trade. The action leads to the company increasing its exports of the manufactures, expanding their reach in the country and consequently achieving a large scale of the market internationally.
With great power comes even greater responsibilities and the growth of the market of the company necessitates the company to more diligent in their internal structure to continue the rise in trend of the market (Gaur, 2015). The advance in technology has led to more regulatory requirements. The board of the directors will for instance, be required to show more competence and the same level of expertise in technology will be expected of the managers in the company depending on the structure of the enterprise. The management will engage in technology training to be fluent with the usage of the technology.
As more data is expected to flow into the company, the need for the firms to improve their computing services to protect the received becomes greater. The company’s internal structure design will mitigate the risk associated with the computing in the organization. The level of information received will also necessitate the need for the firm to have more monitoring activities in their internal framework to control the traffic of flow of the information. The control services will be critical to ensuring the company’s technology advancement is available to serve the company for a longer period.
Reduction in the trade barriers will enable the company to control their new environment to the desired effect of achieving their interests. The management will require their employees to observe a higher level of ethical and integral values to please their users and retain them to be regular customers. Therefore, the company will seek to employ workers with a higher degree of competence. The expansion of environment accessible for trade will make the company careful in their risk assessment methods. As the company is not aware of the environment, the risks are analyzed and integrated with the objective of the enterprise.
The change in the market structure of the company offers plenty of risks. The management will henceforth be required to be up to date with the emerging regulatory information and using the new information depending on the jurisdiction of the host country (Stefea & Lacatusu, 2013)Such work is tough but necessary for the company, but the business requires a clear understanding of the regulations governing the target market.
Navigating the legal requirements of the land is vital. The employment requirements, for instance, vary from one country to the other. In European countries, the law stipulates a minimum of 14 weeks for maternity leave while in the United States, no such requirement is necessary. Compliance with such a law will prevent lawsuits to the company for failing to abide by the legal system of the nation.
Companies are also required to comply with the cultural guidelines of the country. Such cultural guidelines will include the foreign corrupt practices, which prohibit the global firms from practicing bribery, and unethical practices while conducting international businesses. The aims should be to avoid the certain activities that might have future repercussions to the company.
Effective communication across different cultures is vital to the success of the company. However, communicating across cultures can be a huge challenge for most of the employees. Developing a multicultural competency among the workers is important for the company to eliminate the chances of them experiencing fraud from the consumer reducing the risk of the business going bankrupt.
For instance, different cultures have different body language associated with a particular action. Nodding of the head means being in agreement with a person but in the Greek cultures nodding of the head corresponds to be in disagreement with a person. The personnel should use the appropriate technique to get the desired effect in line with objectives of the company; wrong interpretation of the actions will obstruct achieving the targets set by the enterprise.
A businessperson may also decide to explain their goods to their potential market by use of action such illustrating of ideas by use of the hand. Many cultures use their hands freely, but the northern Europeans find their use very hard to tolerate. When an employee employs the use of hands in illustration, the potential user is deterred from engaging in any business activity, risking putting the business of the market.
Additionally, it is paramount for a company to understand that what might have worked in the local demography might not work on the international scale. People from different countries have different preferences to the goods and services produced (Abbas, Muhammad & Ali, 2016). Individual demography will prefer to buy local products while another population is more inclined to purchase goods from abroad.
A firm should choose the location of the business after ascertaining the preference of the users in the areas will be beneficial to them. Setting up a firm in an area not likely to buy the goods and services of your company will risk the business operating at a loss. The firm should also be mindful of the needs and preferences of a population before engaging in the production process. The careful consideration will help reduce the risk of producing unwanted goods.
The guidance offered in the COSO framework considers the evident changes in both the firm and the operating surrounding with an aim of improving the control of the firm, strengthening the anti-fraud efforts besides improving the quality of risk evaluations. COSO framework identifies the opportunities and areas of weaknesses towards enhancing the anti-fraud efforts. The communication between the management, the board, and the consumers will also be strengthened through implementation of the COSO framework.
The monitoring activities in the framework are intended to widen the awareness of supervision as an activity undertaken individually rather than as a group. The financial reporting structures have illustrated for the framework not only to report the external financials but also to accommodate the reporting of internal reporting of financial matters (Duggan & Peo, 2013)
The framework comprises of the change of organizational structure to fit with their enterprise risk management. The structure illustrates that for a company to have an effective internal control structure, the organization is expected to contribute at all levels both dependently and independently.
Implementation of the framework will take time. Most of the institutions are seeking help from third parties to update their structure to meet the objectives of the COSO model while others are using internal resources to make changes to their structure of operation.
Abbas, S., Muhammad, S. D., & Ali, S. (2016). Globalization Challenges and Opportunities: An Empirical Analysis of Pakistan. Pakistan Journal Of Commerce & Social Sciences, 10(1), 192-199.
Bartsch F. Riefler P. & Diamantopoulos A. (2016). A Taxonomy and Review of Positive Consumer Dispositions toward Foreign Countries and Globalization. Journal Of International Marketing, 24(1), 82-110. doi:10.1509/jim.15.0021
Duggan, J. W. & PEO, C. (2013). Preparing to Implement the 2013 COSO Framework. Financial Executive, 29(7), 12-13.
Freeland, C. (2015). Globalization Bites Back. Atlantic, 315(4), 82-86.
Gaur A. (2015). Impact of Globalization on Trade and Employment. International Journal Of Multidisciplinary Approach & Studies, 2(5), 110-113.
Ştefea, P., & Lacatusu, C. (2013). IMPACT OF GLOBALIZATION ON FINANCIAL REPORTING. Agricultural Management / Lucrari Stiintifice Seria I, Management Agricol, 15(3), 39-49.