Big and small business have in recent decades grown all over the world. More so, the organizations are increasingly becoming a force in global trade as they venture into the world market. Going global has no longer ceased to be a massive corporate and brand venture, but also small business entities are going global. The Internet has fielded the aspect of globalization and in turn opening doors for companies to trade all over the world. The gig economy has become one of the many factors behind the organizations going global. Additionally, different other factors have influenced the global business. These include government policies towards international trade, corporate social responsibility and related ethical issues, cultural factors, technology and innovation among many other factors (Chartrand 1992, p.64). With different factors favoring the massive trend in business establishments going global, the same elements have influenced the success rate and performance of businesses in the global world. This report analyzes how an organization operations, strategy and overall business performance are affected by a host of global issues.
Introduction
According to Adekola & Sergi (2007), key factors affecting or influencing global business can be categorized under the PEST heading which refers to political, economic, social and technological related ones. Over the years, different reasons have been identified to be behind companies engaging in international business with one key factor being to generate more revenue. With new markets continuing to emerge, business organizations are focusing on taking advantage and make more income. On the other hand, with ever-increasing competition, business organizations are focusing on going global to increase their overall influence and revenue as well as maintain their competitive edge over their rivals.
However, despite the increasing rate of business organizations going global, the successful companies have been the ones that have managed to reduce or minimize the negative impact of social, legal, economic, political, and technological related factors which has become critical determinants of how successful an organization is in the global market. Business organizations are affected by the external environment just as they are influenced by competitors. Understanding of global issues affecting business has remained an integral aspect for every organization that plans going global while developing its business strategy. According to Valentine (2014), the business environment is greatly influenced by different global forces which tend to define the way business organizations relate or interact with customers as well as react to competitions. Ranging from advances in technology to religious and cultural factors, the success of a business in the global market has come to be defined by events influenced by external forces leaving business entities with little choice but rather to adapt to the changes. Siow (2011), in his article identified that globalization in itself has resulted into uniformity and fierce competition and in turn business entities have been forced diverse strategies that improve/enhances dominance with current markets and market trends.
Technology and Innovation
Advances in technology coupled with recent innovations in the same field have resulted in the current global grid driven by one aspect which is information technology. Technology and innovation remain a substantial factor and force in determining the success rate of business entities in the worldwide market. Successful global companies are wise to take advantage of the various technological development that emerges and influences the overall global business. According to Bantau & Rayburn (2016, p.700), new technologies have become essential components of every company in the world. Technology and innovation are infiltrating every facet of today’s business world. The different technology innovations have made it easy, less expensive and quicker for businesses to communicate with each other as well as with its customers. Change in technology can bring about advantages and opportunities for a company. However, failure for the company to keep up to date with current technology can turn out to be a remedy for failure in the global market. It has, in turn, become an essential aspect of every global business entity to ensure it is up-to-date with technology and innovations related.
Regarded as one of the giants in the mobile manufacturing industry, Nokia has gone through success and failure as it keeps its fight in the mobile phone manufacturing market. However, the trend of the overall Nokia Company compared to its competitors can be a tale of how failure to keep up with technology change and latest innovations can hurt business. Opened in 1895, Nokia grew to become one of the significant global names when it came to mobile phone production. Through its devices, the company made its name, however, with the rising competition in the industry from recognized brands such as Apple and Samsung, the inability to keep up with advancement in technology adoption rendered the Nokia Company more of a mare player in the mobile market (Tan & Tan 2012, p.473). With increasing change in technological trends and innovations, companies such as Apple redefined the role and production of smartphones with a touchscreen. More so, the invention of software’s such as Android by Samsung and iOS by Apple dramatically changed the mobile phone production and end usability. At this time, Nokia was slow to respond to the changes and trends controlling the mobile phone production market (Laamanen et al 2016, p4). Despite Nokia being the pioneer in the smartphone market, introducing consumers to the world of smartphones with its Symbian series 60 products, the technological advancement of their competitors failed to catalyze them to change or respond with more advanced and improved devices.
Due to Nokia inability to keep up with the technology and innovation changes within the mobile market, the global organization suffered regarding revenue gained. To save its fast dwindling market share whereby in 2007 Nokia controlled a market capitalization of an estimated 110 billion Euros and by May 2012, this had drastically fallen to just 14.8 billion euros, Nokia chooses to change its operations (Laamanen et al 2016, p14). Apple and Google Android were its significant competitors in the technology front, Nokia decides to support its Symbian operating system which provided no real platform to compare with Apple’s. According to Laamanen, Lamberg & Vaara (2016, p.12), within two years, Symbian project was abandoned, and Nokia embarked on a search for a new alternative. With Apple iOS ad Google Android leading the market as the standard and preferred operating systems, Nokia again chooses to affiliate itself with Windows, a lesser-known platform which led to a dismal performance in their operations. In summary, the inability to keep up with the technological changes in the market within the mobile phone markets almost pushed Nokia out of business until recently, when they launched themselves and accepted to use the loved platform of Android.
Government Policies and Attitudes towards International Trade
One of the determinants of the success of the global business is the impact and role of government agencies. Every nation has defined government policies and attitudes towards a global industry which in turn any business entity that is venturing into any country as an international investor has to ensure they meet the standards set. According to Caiazza, Shimizu & Yoshikawa 2017, p.149), every government has a set of policies established to govern and guide business for both local and international investors. Some procedures such as minimum wage are mandatory while other may indirectly impact the business. Every globally established business ought to be flexible enough to respond to any change in rules and policies imposed by any government. Through taxes, political environment and regulations, government policies have a direct impact on business activities globally.
Regarded as one of the giants in search engines, Google sought to find a perfect market environment in Asian market after the government of China insisted on censorship. The Chinese government policies had a direct impact on what Internet providers such as Google exposed to Chinese people. However, when Google ventured into the Asian market, the giant organization agreed to pay to the tune of Chinese government policies. However, it wasn’t the case as the giant company found it hard to establish its dominance in the Asian market like in other markets such as the US. Despite the Chinese people seeing nothing significant concerning censorship, Google viewed its status as a global and multinational agency that would serve as an educator to the Chinese from the authoritarian regime and governance. According to Platzek, Winzker & Pretorius (2011, p.102) Baidu - Google's rival in the Chinese market came into terms with the governance regime and law that was in place, Google had ideas of possible change to the policies. In China, it was part of the regulations for the government responsible agencies to keep surveillance of what people were accessing over the internet.
Google was against laws which looked on handicap foreign players in the Chinese Internet market. To establish itself in the market, Google was required to have a license to be allowed to operate in the Chinese market. Despite buying it, the grant was revoked due to Google constant violation of government orders. Google was also required to devote resources and energy towards censorship requests from the nations related ministry to establish and maintain government relations. Thirdly, Google was needed to deal with Baidu which was its main competitor in the market. With Google reluctant to adhere to the authoritative regime of China, and in turn its license was hamstrung by the state policies which in the end affected the competitiveness in the Chinese market.
Google China, an equivalent of Google Inc. operating in the country, has been a third prominent service provider in the Chinese market. Not only did the collision with government agencies made it hard for the giant global company to expand in the Chinese market, but also leave the company on the bad books with the government. This case of China government policies concerning internet and search engine Google has indicated how global business organizations have to adhere to government rules and policies (Ferrell 2004, p.127). Google China had to accept the terms and conditions, to be allowed to operate in the Chinese market. Nevertheless, government and attitudes towards business can either benefit or hamper the overall business development in the country. Despite their decision to leave the Chinese market in the year 2010, the giant global company made a turn allowed and focused on exploiting the ever large internet market in China. For Internet business companies, they have an abode by local laws to do business in other parts of the world away from their home ground.
Corporate Social Responsibility and associated ethical issues
Social responsibility has remained a key metric used to define a successful business in today’s business world and also to the business ethics. Every company is responsible for its customers as well as employees welfare not forgetting respecting the society’s wellbeing. Some of the social responsibilities by business organizations to the society entails minimizing of adverse environmental impact, helping the needy and taking the burden in case of a dangerous product. However, sometimes it becomes a hard case for organizations as they weigh their responsibilities to shareholders and the society. Over the years, claims have been lodged where business organization has been on collision with the community concerning social responsibility. Sometimes large corporations have been hurt while others which observe the best of social obligations and ethical practices benefiting greatly.
KFC Corporation is among the leaders in fast food chains in the world owning more than 36,000 locations worldwide. As so, the organization is open to the concept of corporate social responsibility (CSR), and it is a commitment by this company to uphold responsible and ethical behavior so that it minimizes negative impacts while increasing positive effects which will favor both the stakeholders and their business interests. Currently, CSR is entrenched in “stakeholder democracy” which states that many varying stakeholders make up business organizations whose interest are multiple, But all of their interests influence the interests of the organization ('KFC Case Study', 2009). KFC pays attention to every aspect of its performance currently than they ever did so that they do not get inclined to the economic benefits only but also care to the society’s social commentary and even protection of the environment.
KFC is devoted to transparency and openness as well, and they have been trying to practice the two concepts. This way, they can contribute to the society in which they are based through proper business practices and besides combines the business resources that improve the life quality of the people and focus on the environmental issues. Their CSR and ethical responsibilities require them to conform to the societal expectations and their moral norms, allows the organization to recognize and respect the standards evolving in the society. The management of KFC plays part involuntary and charitable activities that take place in the local communities to show their support. Additionally, KFC seeks to remain leader in good citizenry by always doing what is morally and ethically of them. Furthermore, they provide proper assistance to both public and private institutions of education, are compliant with the regulations and laws of the land and also offer support voluntarily to the projects enhancing the quality of life of these communities in which they are based. Ethical considerations practiced by KFC allow them to be fair and just by embracing the practices and activities that are that are accepted by the society and shunning those that are not practiced by the community even though they may not be codified into laws. The responsibilities of KFC are performed in a manner that they do not benefit the operators of the company only but also the stakeholders, local communities and the public in general. The CSR and ethical considerations push organizations to run businesses in manners that enhance the customers’ wellbeing and consequently impacting the society positively.
Cultural Factors
Global business deals with cross borders and cultures, according to Tsui & Ngo (2016, p.369), culture impacts how people think, behave and even communicate. More it defines how people make transactions and the manner they conduct them. As business entities choose to go global has become an inevitable practice for them to learn and understand cultural aspects of the target market as t determines in great extent what and how to offer their products. According to Björkstén & Hägglund (2010) “Culture is a strong part of people's lives. It influences their views, their values, their humor, their hopes, their loyalties, and their worries and fears. So when you are working with people and building relationships with them, it helps to have some perspective and understanding of their cultures.”
Cultural factors that are affecting KFC as a brand influences the way the food chain operates using four elements which include the products, properties, presentations, and publications. The four contribute to the aesthetic components as well as components which eventually affect the customer’s experience. The product-offering and the way the identity packages the consumer goods because they reflect the “trade dress” of an organization. The factors are customized by KFC to fit the response of local consumers so that they do not sacrifice the global image of the organization. Multinational brands like KFC understand that services and products must be customized to reflect the varying needs and preferences of the customers. The culture of KFC is ensuring they create an identity that is positive and one that leaves a lasting impression on their local communities and in their minds. It is the prevailing cultural values that determine how the markers respond to the markets. To make sure the local cultural flavour is created, the native motives are incorporated with the characteristics of global trade (Zhu, Anagondahalli & Zhang 2017, p.489). Taking care of store layouts, restaurant signage, colour schemes, trade characters and menu choices are easily recognizable across all KFC locations all over the world because they are influenced by their organizational culture. In the case of KFC, it is the cultural standardization together with their sheer ubiquity of the company’s operations that have made the organization a symbol which in some cases has also influenced the local cultures.
With references to cultural factors influencing KFC, it is the beliefs, norms, customs, lifestyles, and values that have significantly influenced the brand identity across cultures. The factors consequently determine the level of economic development and the competitive measures the company embarks on. Proper cultural practices can positively influence an organization in numerous ways (Asgary, Samii & Frutos-Bencze, 2016). These include increasing sales and market value due to the impact it has on customers buying behaviour. It also leads to strengthening brand positioning because of influencing the psychological and emotional aspects of the brand image, which dictates the corporate image and clout. Lastly, it leads to high appeal to financial analysts and investors. Some people are of the opinion that cultural factors have a direct relationship on how well a brand manages risk and also on how they increase the value of the stock.
Conclusion
In conclusion, the business environment is greatly influenced by different global forces which tend to define the way business organizations relate or interact with customers as well as react to competitions. Ranging from advances in technology to religious and cultural factors, the success of a business in the global market has come to be defined by events influenced by external forces leaving business entities with little choice but rather to adapt to the changes. With new markets continuing to emerge, business organizations are focusing on taking advantage and make more income. On the other with ever-increasing competition, business organizations are focusing on going global to increase their overall influence, increase revenue as well as maintain their competitive edge over their rivals. Technology and innovation, government policies and attitudes, corporate social responsibility and ethical issues as well as culture are some of the global issues impacting the global business management in terms of operations and how the conduct their businesses.
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