The Problem Global Business Face When Exploiting International Business Opportunity
5 Pages 1295 Words 4191 Downloads
Strategic vision has global experience of developing tools to measure human behaviour, decision making and perceptions (Honig, 2004). It is well understood that comprehensive theory of human behaviour creates efficient strategies for effective decision making in business development and communication in many fields. This report is prepared for the purpose of understanding problems that global businesses face while exploiting international business opportunities.
McDonald at the global level
Organization that operates in the global market faces many difficulties on regular basis. The firm faces many problems such as ethical issues, technological, economic, social and political issues depending on the nation in which organizations are establishing their business (Meixell and Gargeya, 2005). McDonald is an international restaurant chain and has businesses in many countries. The firm is still growing at incredible rate at the global level. The firm is under a tremendous stress while dealing with different cultures and environmental factors of establishing restaurant chain in various countries. In global environment, every country possesses different food habits and preferences depending on their culture and religion. Organization is required to design its products and services according to the culture of the market in which they are entering. It is very difficult for the business to compete at the global level. There is a need to perform high level of research and development activities. It is evident that research of the market is essential before taking an entry into it. There are many differences within the demographic conditions of different nations. It is because people belong to different culture and ethnic backgrounds. Their choice of consumption of products depends on their behaviour and social factors.
For instance, McDonald has built its global empire based on the consistency of its products such as fries, burgers and sandwiches, etc. Since the origin of firm is from US, the burgers and sandwiches were made of beef and pork. However, while entering business in India, firm has changed its beef burger to veg potato burger. Similarly, in Islamic countries also, the firm was facing issues related to cultural and social factors (Sekaran, 2006).
Samsung at the Global Level
Moreover, Samsung's smartphone business was also struggling while exploring international markets. People were dissatisfied with the services and prices of Samsung. However, its competitors were taking the benefits. However, while entering Smartphone business in an economic country like India, the sales of firm was in poor condition. It is because generally the Indian consumers are highly price conscious. Their purchase decisions are very concentrated and attentive. Responding to that firm implemented the idea of bringing economic phones in the country (Zikmund, Babin, Carr and Griffin, 2012). However, now Samsung has product range for all customer segments in India and business is profitable and in stable condition.
Similarly, the firm uses different strategies in every country based on their social and economic factors. Thereby, while exploring business globally, the organizations should analyse all the political, economic, social, technological, legal and environmental factors through PESTEL analysis. PESTLE is a strategic tool to analyse all the factors that affect the businesses. These factors are as follows:
For all the global businesses, it is very important to analyse current regulations of country (Seelos and Mair, 2005). The analysis of political factors can reveal the restrictions of market structure. The political factors of country include country's law's taxes, structure and policies, etc. For instance, global country like Brazil has high import and export duties to defend its economy. However, some countries have low import and export duties but high tariffs in other sectors. Thereby, global businesses must analyse these factors while exploring international market opportunities.
Moreover, the global businesses also face financial issues due to weak economy of country. For example, before few years, stock market of US was dropped and due to this, economic recession was caused (Beamer and Varner, 2008). This economic recession caused a negative impact on almost every business in US. However, the retail firm of UK, such as Tesco was also struggling in US market due to weak economy. Thus, the firm lowers down the prices of products to survive in the US market. Moreover, currency fluctuation in overseas countries also affects the businesses. However, these are the main issues that firm faces while exploiting international business opportunities.
One more important factor that affects the global business is social and cultural preferences of people. Every country is different and all the countries possess specific mind-set (Miles, 2005). These differences cause an impact on global businesses. For example, if McDonald should consider all the social and cultural factors of country before opening a restaurant chain in global country. Similarly, if Tesco expands its clothing retail business in country like Italy, the firm can provide fashionable and trendy clothing range over there. It is because, people of Italy are more fashion conscious.
Furthermore, the technology greatly influences global businesses. Technology changes very fast, thereby, global businesses need to stay connected to the integrated systems (Zürn, 2004). Technological factors of country affect in many ways whether it is related to product development or communication with people for sales or marketing purpose. The technological factors of country help in promoting brand and communicating businesses among people (Blocher, Chen and Lin, 2008). These factors help in increasing the profitability and sales of global organizations. However, it is essential for global businesses to consider the technological development of country.
The legislative changes of every country occur with time that affects the business environment. Regulatory bodies of country set up various laws, rules and regulations for businesses to control conflicts and struggles in country's economy (Kotabe and Murray, 2004). However, sometimes, legal factors of country also create problems for global businesses. Thus, the organizations need to analyse all the legal factors of country.
Furthermore, the location of business provides opportunities to grow. The environmental factor of country involves climate changes, geographic location and weather which are not controllable. These factors mostly affect the farming sector, clothing retail, food businesses, etc. (Levi-Faur, 2005). For instance, if organic farming organizations such as Velcourt start business internationally then it must consider the weather of that specific area for a successful business growth.
However, these are all important factors that affect the global business. To overcome the problems that global businesses face while exploring international market opportunities, the organizations must consider social, economic, technological and environmental factor of the country.
Hence, it has been concluded by this report that every global business faces conflicts while exploring business opportunities in international markets. These problems can be resolved by considering all the economic, social and environmental factors and by changing the business strategies. Through this, global businesses can bring effectiveness and would become more successful in international markets.
- Blocher, E., Chen, K. H. and Lin, T. W., 2008. Cost management: A strategic emphasis. McGraw-Hill/Irwin.
- Honig, B., 2004. Entrepreneurship education: Toward a model of contingency-based business planning. Academy of Management Learning & Education.
- Kotabe, M. and Murray, J. Y., 2004. Global sourcing strategy and sustainable competitive advantage. Industrial Marketing Management.
- Levi-Faur, D., 2005. The global diffusion of regulatory capitalism. The Annals of the American Academy of Political and Social Science.
- Meixell, M. J. and Gargeya, V. B., 2005. Global supply chain design: A literature review and critique. Transportation Research Part E: Logistics and Transportation Review.
- Miles, I., 2005. Knowledge-intensive business services: prospects and policies. Foresight.