Business environment mean all internal as well as external element it shows how company function like operations, finance, human resources, competitors, suppliers, vendors etc. are affect performance positively as well as negatively. It is a management responsibilities to manage all these negative effect of enterprise environment on business activities in an effective manner. Some environmental factors are social cultural, technological, economical, political, employees, management and many more. In this assignment Unilever firm are selected in order to know impact of internal as well as external elements on organisation performance. It is clients goods organisation it includes foods, personal care product, beverages, cleaning agents and many more. Unilever was established in the year of 1930 and run their business activities at international level (Al-Swidi and Al-Hosam, 2012). The total number of employees which are work here is 169000 in the year of 2017. In this report covers strength, weaknesses of internal external factors and relationship among firm function. It also covers positive, negative impact of these element on institution operations and many more.
P1 Factors which drive an organization towards ‘’GLOBALIZATION’’:-
This way opens the opportunity for an organization to expand its business at wide level and recognition world - wide. There are many factors which drive or influence a firm towards introduce globalization this are:-
- Competitive market scenario:- Today is world of competition where a firm can sustain its profit and customers to beat their competitors through adapting various methods which communicate customer how their products different from their rivals. For this a firm provides quality of services and goods to their customer to satisfy their unfulfilled needs and wants. Unilever can implement globalization in their different operations, so that they can easily satisfy their existing customers and also by this, it will become easy for them to identify the new potential markets where a firm operates their business activities and adapt the changes in business environment (Bryman and Bell, 2015).
- Market conditions:- Market condition refers as economical condition of a country. The all economic factors like foreign policy trade, political party ideology, relation with other countries government, legislation body laws etc. are influenced the firm to start its business in other countries. If those factors are favorable then drive a company to start its operation in other company due to tap first these market opportunity and take advantage of it. Unilever have to study the market conditions of the nation in which they are deciding to expand their business, so that it will become easy for them to make strategies that can be helpful for them
- Reduce the cost of the company:- In globalization a firm produces the same product with minor changes for all markets. This can help Unilever in taking advantage of economy of scale, as the production level of them is very vast which will help them in reducing the cost of their single unit. For a MNC its product recognize by the all world. Which leads a firm to low expenditure on advertisement and other activities due to brand image at worldwide.
- Environment :- For a MNC, business environment involves the all external and internal factors which play critical role to affect the activities of an organization. Internal environment consist suppliers, competitors, employees, customers etc. and external environment consists political, legal, social, economical, technological, legal factors which influence the company’s operation (Christopher and Holweg, 2011). For Example if a change in technology introduce in Unilever then it insolvent existing technology and after this if management team introduce new technology then the employee of an organization resist the change that time if a firm operated multi level than it can easily adapt those change because its function in different nation and technology advancement level of nation different from one to other that time a firm easily introduce new technology by hiring specialist of field and give training to existing employees.
Impact of social media : Unilever can use social media in promoting their products to ample number of customers, as social is very huge network and is used by largely number of people in world. Therefore, the impact of social media over globalisation is very much positive.
Impact of connecting to global community : This can also play very effective role over globalisation, as this will help Unilever in contracting with organisations which are very much popular and successful in that nation in which they want to expand.
Impact of digitised design : This will help Unilever in transforming their information from manual to digital. Therefore, the impact of this over organisations is very positive.
Critically examine the factors of globalization as benefits and challenges:-
The benefits of globalization examines in two perspectives for company and for customer and social welfare. These are:-
- Reduce the cost of product and increasing sales which leads to profits.
- Advantage of cheap labor of developing countries.
- Satisfy customers through wide variety with quality and average cost of the products and services.
- Create new opportunity for company.
Challenges and disadvantage of globalization for company is:-
- To understand the different dimension of a country in terms of values, ethics, socio –cultural etc.
- Its take huge amount of investment.
- The existing small medium large business firm oppose the globalization due to its ruin their market.
P2 Strategic challenges faced by the firm which operated in global business environment
A globally operated firm or MNC like Unilever an UK based company is currently operating in more than 190 countries in four main divisions –Foods, refreshment, home care and personal care. This all products wide variety of range offered to customer as per their preference and choices. Company also modifies their strategic policy according country to country basis. The top management team of company faces a lot of problems while formulating policy and implement it worldwide these are following:-
- Consumer preference :- Consumer choice and preference are changes drastically in present era. Example:- people are more consciousness about their health and impact of packaged food on their body and they shift to healthy lifestyle which not harm themselves as well as their family members (Cross, and Miller, 2011). This is all impact on company policy to change their product according to customer needs and wants because customer consider as the king in present competitive era. For company like Unilever they have to beware about those preference of customer to persuade them to buy their products.
- Competitive rivals:- For MNC must have aware about their competitors moves because a single mistake give a chance to rivals to vanish the customer base. So when drafting policy by top administration they also analyze first what is the strategy of the rival company? and how can we use our resources best to beat the competitors and gain market share.
- Government policy and ideology :- Government policy and ideology of party leaders also influenced the strategic policy of company because without their permission a company can not operate their business in country. Authorities Of company impose many ban to foreign companies to secure the right of local businessman.
- Legislation bodies:- The legislative bodies various laws regarding to secure consumer rights, businessman rights, employee unions, social groups and different rules and regulations implemented by legislative bodies have adverse and favorable impact on organization. Example :- country like India reduced a lot of barriers respect to foreign trade so its an opportunity for company to increase their market share.
- Socio cultural impact:- Culture consists the value, beliefs, ethics and behaviors of the society which make them unique and people are rigid to change those values. For MNC Unilever has to understand those local environment and offer those products which meet their culture (Dibrell, Craig and Hansen, 2011).
There are too many advantage of globalization but a company who want to go local to global faces a lot of challenges due to formulate and implement their strategy in large. Today is world of full uncertainty and complexity so the firm management has to be proactive about all opportunities and threats and use their strengths in such manner which minimize the impact of firms weakness to take competitive advantages.
P3 Globalization influence on organization policy, structure, culture and authority
The term globalization considers the whole world as one market, all economies of nation are open for business activities and no barriers imposed by the government respect to trade. when an organization become global its impact in its each factor like structure, policy, norms, vision, mission, production capacity, management team, functions and leadership also (Gharajedaghi, 2011). Unilever is global company which operates its function approximate 190 countries world extensively which headquarter in London (United kingdom) from there operate at large level.
- Organization vision and mission:- For company like this it is well communicate all its future vision and mission in combined manner and then its well defined to each region top management what the company tentative goal and top management communicate to their middle and lower administration what the company exactly want from this and perform defined task to accomplish it.
- Leadership style:- For this types of companies according to company vision and mission, adapt their leadership style to motivate employee towards their task. For this they have to change their leadership style according country to country because people of specific region posses specific traits and leaders duty to identify those factors which helps company and employee to accomplish their task. By finding new communication strategies, making employees feel comfortable, pursuing a balance of cultures, and various other ways globalization create impact upon leadership.
- Governance and Authority:- For this type of diverse organization delegation of authority is high level in firm due to their versatile activities. Top administration take strategic decision of firm according to present environmental situation and middle and lower administration perform action at various level. By influencing economy, business, life, community and environment in diverse ways, globalisation influence governance. In Unilever, by increasing competition and make change in rules and regulations it affect and influence governance and authority of the firm.
- Structure:- This type of organization requires decentralization organization structure due to Unilever deal in wide variety of products. Unilever products divided in four categories in wide variety of range and introduce new products according to customer needs and wants and operate their functions in different countries and change their dimension and working process according to situation. By increasing cultural religious and ethnic diversity in the workplace, globalisation impacted the structure of the company.
- Operations:- Operation department of different country work differently and in MNC various department function is totally diverse to each other. This is based on working culture and business environment (Kolk, 2016). The top administration have difficult task to manage all the conflicts at various level to operate and smooth the functioning of organization. By influencing the strategies, generating competition, exchange of technology, information transfer and various other ways globalisation affect the operation of Unilever.
- Culture- It is basically related to the beliefs, knowledge, customers and values of the customers. By making change in customers needs and demand cause of change in fashion and trend globalisation affect the culture of the company.
- Functions-It refers to those factors that help an organisation to run its business in a proper way such as marketing, finance, HR, operation, research and development and others. All these organisational functions are affected by globalization in various ways. For example, by making change in laws and rules for the companies when they operate global level it affect HR department. By providing various channels and mode of promotion it affect marketing department. Making change in customers needs and demand it influence R&D and operation department.
Pest analysis of Unilever are as follows:
- Political factors: It involves government legislations and defined rules for specific business within Unilever. It also involves the policies of tax, environment laws, employment laws etc. are all followed by organisation.
- Economical factors: It gauges their environment of economic like as economic growth, inflation rates, interest rates, exchange rates etc. this aid in accessing demand, product costing, growth and expansion within Unilever.
- Social factors: This factors are macro environment within company. It involves demographics, customers targets etc, these factors aid in gauging their potential sizes within a market. It involves population growth, attitude, career, age distribution etc. within Unilever.
- Technological factors: It analysis the advanced technology which aid in changing very fas5tly as well as customers are hungry to use latest technology. It includes analysing factors which are linked to advance production technology, rate of technology get issues, innovation and automation within the Unilever organisation.
So there is dynamic change of environment and rivalry among the firms to make business leader in market and globalization is best way to achieve this goal its converts whole world as one market which break all the barriers respect to business in another country. But an MNC start working in new country then its challenge able to understand the behaviour patterns, lifestyle of the customer what they exactly want and also working behaviour of employee. The MNC operation affected by Government policy, rules and regulation, technology advancement etc. The firm has to analyse its internal and external factors through (SWOT and PESTEL analysis ) to use company opportunities and strengths to take advantage and minimize the effect of weakness and threats for firm to gain competitive advantage in present business scenario so the company has to adapt change continuously basis in their policies, structure and their operations (Li and et. al., 2011).
P4 Impact of ethical and sustainable globalisation on organisational functions
Ethics are the set of moral behaviours that ensures the act of one person does not affect the working of other person. In business the business ethics are the set of rules and regulation which ensures the transparent working of business that does not violate the social standards. In business there are various rule and policy governed in the national boundary for the transparent and legal working of business. These policies are the symbols of ethical working. In international trade also there are various organisation and policy that creates standard for the ethical process of business operations. The ethical business operation stands for the quality product, environment conservation and social welfare. This includes the practices such prohibition of child labour, ISO certified product quality, employer act and trade unions, taxes and corporate social responsibilities. This ensures that firm is not employing child labour, products of the company are ISO certified, and employees are hired in accordance with the employee act of the nation, company is following tax policy of the country and also contributing in the social welfare of the nation economy (López-Gamero, Molina-Azorín and Claver-Cortés, 2011). The term sustainable globalisation is in much talk because of if capabilities for analysing financial decisions. Sustainable means long term stable growth which brings the equal result to every section of world. Globalisation means distribution of goods and services across the world. It empowers business houses to run the operation in all over the world.
It eliminates the national boundaries hence business grows multiple times as market size increases. In globalisation the business houses are free to run the operation in any country. Liberalisation made it easy to do business anywhere in the world. The policy and rules of countries has become much easy and flexible hence more and more companies are doing business across the world. It gives many benefits to company as low cost advantage and exports benefits. In many countries labour are very expensive. With producing goods at low pay labour countries the companies get advantage of low cost hence more profit to the firm. Sustainable globalisation means that the each portion of the world should get benefits from globalisation. With this term only few countries like. U.S. and U.K. has registered remarkable growth. Whereas continent like Africa has noticed diverse effect. Developing countries like B.R.I.C.S nations has noticed few improvements in the GDP. Here the business ethics and sustainable globalisation addresses the issue of imbalanced growth in the world. The ethics state here that business houses should work ethically and for contribute for the stable long term growth of the nation and the world (Meiners, Ringleb and Edwards, 2014).
In the 21st century the market is very competitive. Buyers have become wise and smart. They choose the product which has good quality as well as good market reputation. By following the fundamentals of business ethics business houses earn respect and global recognition. This gives competitive advantage to the firm. This gives uniformity to the different function of the organisation. Business operation runs as per the ethics which bring transparency in the overall organisation. It creates trust on the company hence business receives great esteem and appreciation. Unilever believes in sustainable growth and it is a vision of the company to achieve the same (Onetti, Zucchella, Jones, and McDougall-Covin, 2012). Unilever A big brand name for consumer products follows the following 3 goals for the smooth functioning of business on ground of morality at global space:-
- Improving health and well-being for than 1 billion.
- Reducing environmental impact by Impact.
- Enhancing livelihood for millions.
If the organisation operate its business at international level, the functions of the company will work properly so that the company work ethically and sustain in global environment. For example, HR department will help in designing strategies and rules so that the firm can suffer internationally. Cause of ethical and sustainable globalization, R&D department properly conduct research and identifying the consumers needs son that they can provide products according their needs and gain competitive advantages. Marketing department will use different ways and channels of promotion so that they can provide information about it products and services to its customers. For example, HR department develop privacy policies to provide protection to its customers and their information.
P5 Various ways of decision making that can work effectively in a global context
Decision is an action for most possible outcome of future. Decision making is a process of selecting best course of action from many alternatives. This process includes selecting, evaluating and analysing the alternatives. In global business scenario it is very important for the organisation to make good decision which gives them long term benefits. There are various ways of decision making. Few of them are stated below:-
- Proactive decisions: These decisions are very much in use now a day. A great emphasis is there to use proactive decision. These decisions are known for the capabilities of assessing the occurring of an event and take a decision in advance to win that event. Proactive decisions are very crucial for business as it help to become market leader in the industry. Since firm takes the first step or action to deal with a situation which has not even come yet (Palo and Tähtinen, 2011). It gives benefits of firm mover advantage to the firm. With this first move Unilever become more efficient with new ways of doing business hence get the position of market leader. This decision is also important for the long term growth of the firm as it reduces the issues and problems for the company. For a global firm it is immense useful because company receives a global competition hence reactive approach positioned as mimic of the market. So proactive decisions are very important for the firm to be competitive and profitable.
- Brainstorming: The brainstorming is a session where a problem is put before the group. The group discusses the problem and bring some solution. Individual gives the solution and then these solution are discussed with it merits and demerits. The brainstorming is very important for Unilever, as it gives varieties of solution to different problems. This technique provide ample number of advantages to them, in both a discussion method and problem solving method. This method is useful in a situation where problem has currently arisen and giving a tough competition to the firm. This method is however reactive in nature.
- Delphi technique: It is very common and useful for every organisation and quite popular now a days. In this technique individual of Unilever give ideas and suggestion in a blank paper along with their name (Pham, Segers and Gijselaers, 2013). All these papers are collected and distributed randomly among group member. Then the idea and improvement on the suggestion are asked from the person who has got the suggestion in the from random distribution. This process goes on till the last decision is made. This is decision making process is very important because it gives an in depth analysis of each decision. This applies to global firm because it gives an option of the exchange of idea among group member.
- Informed decision: This decision is based on the collection of information. In this Unilever get opportunities as higher the data of information, higher the chances of making a correct decision. In this method they will use to collect information form each and every entity of organisation. Than it is analysed from financial point of view. After that decision is evaluated on the ground of long terms applicability of the decision (Pikka, Iskanius and Page, 2011). In this method a sort of competitor analysis is also done. This is important technique of decision making for middle level management.
P6. State various ways to internationalisation of an organisation with barriers
In this era of liberalisation and globalisation it has become very important for the organisation to break the national boundaries and enter into international market for more market share and profit. There are various ways to enter into international market which helps in enter the market but it is not that much easy because each method has its merits and demerits. Stated below the few methods with its merits and demerits:
- Exporting: It is a process to send the product in the other nation. Export is a very common method of establishing business internationally. The person sending the goods is known as exporter and the person who receives the goods is known as importer. In export the product is send to other country buyers. This is form of exchange of goods from one place to another place in exchange of money. It is trade of international trade and the seller usually send the material and buyers do the all formality etc. This usually happens when a country produce goods a low rate and it can be sold in other country at much high price. This method is very easy and does not require extra investment for the international trade. It is non-expensive as well as it is not a lengthy and time consuming process (Scheer, 2012). This is one of the best method for Unilever, which they can use for performing international trade for those firms who does not have much resources and skills to enter into the international market. However in this method the exporter does not get the benefit of promoting its brand internationally. Because importer label the product by its brand name. In this the exporter brand identity gets hide. Since the brand does not get international exposure. In this the exporter does not understand the international market. It works upon the demand of the importer. In this way exporter loses the profit that could be gain by direct selling in the country.
- Relocation: As the word states it is the way where firm shifts its operation from one place to other place .This relocation takes place in many ways. It may take place by shifting a part of business to other location. For example, for low cost company shifts its factory in other company and headquarter remains at old place. In this Unilever have chance by which they can fully and whole shift to other location for low cost. Apart from this Unilever may enter into contract in collaboration to share its resources and skills with the organisation. This is very important way to go international as it gives an international exposure to the firm (Welter and Smallbone, 2011). However this approach has also certain limits. It is a time consuming process. For this company need to meet the political and legal framework of the country. It is risky as well because collaboration may fail due to the lack of synergy between contracting companies.
- Franchising brand: It is a marketing concept in which real owner of a business organisation allow any other individual to use rights of brand name, adoption of business model and authority of selling products or services. This method provides opportunities to Unilever so that they can expand their business in market and operate their business functions in many geographical locations.
Barriers in ways to industrialisation
- Mismanagement of cultural differences: It is bit difficult for companies working in joint ventures and as an franchiser to to deal with other location culture. This factor may results in creating so many hindrance in path of Tommy Hilfigers as it can create numerous conflicts.
- Communication Barrier: Communication can be seen as an barrier which can hinder growth in industrialisation. Tommy Hilfigers may find various difficulties in maintaining proper contact with all of their franchiser in relation to check whether franchisers are using name of company in ethical and right way.
- Political Factors: Political factors are related to rate of lending and borrowing rates and taxes. There are different political environment in different locations which may create problem for Tommy Hilfioger to abide all political demands in all locations. It may results in creation of confusion and mismanagement on organisation culture.
Globalisation is key term for the business in this 21st century. Even local suppliers also face the global competition. This project addressed the issues with the globalisation and its impact on business and society. This project has also led the impact on managerial skills of globalisation. The challenges and benefits of globalisation have given full attention in this project. In the end it can be concluded that the business needs to go global for it growth and profit but is also need to keep in the mind the value of right and wrong in the business. Businesses are run for profit but in order to earn profit it also needs to take care of society from which it is getting the benefits. Business needs to deliver this profit to society irrespective of the boundary of the nation.
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