Business environment is a sum total of all internal as well as external factors that affect the overall functioning and growth of an organisation. It is a factor that affects both performance as well as long term sustainability of a firm. Globalisation on the other hand is a quite vast concept which infuses a changing trend where all business concerns expand their business operations on a global level and also serve needs of their customers. Almost all companies are using this medium for their overall growth and development. In present context, globalisation is studied for Siemens AG which is a global multinational business entity. It has its headquarters in Munich, Germany with a total turnover of £53 billion. It basically specialises in electricals and electronics business and operates in around 190 different nations. This report focusses on various factors of globalisation such as cost, market, environmental factors etc. Also the challenges faced by company while expansion process have been stated here. Lastly, a critical evaluation of barriers that affect business operations at international borders have been mentioned.
Critically analyse the impact of key factors on the global business environment.
Business expansion on a global level is a major factor that affects growth and profitability of a business entity. Globalisation has a number of positive impacts on businesses but they have to face a number of issues and challenges in their initial phase in order to be successful. It context of Siemens AG, it is the duty of manager to identify impact of various key factors and accordingly formulate strategies and policies for achievement of goals and objectives within a specified time frame. Various factors that affect due to globalisation have been stated as under:
Cost is a monetary factor and plays a quite important role in business expansion on a global level. In the present scenario, as business of Siemens AG is expanding globally large amount of monetary funds are needed for investment purposes as well as production process. This sometimes happens to be a major challenge for companies as it is not possible that a company may have exact amount of funds as required for fulfilling each and every requirement. Benefits or advantages of cost factor are that it will help Siemens AG in enhancing their productivity as well as profitability and also redeem their brand image in competitive market.
A stable and saturated market plays a very important role in business expansion of firms at competitive as well as global markets. Market factor is considered by managers of Siemens AG for studying demands of customers as well as their changing lifestyle experiences. Any business that plans about expanding its business operations need to carefully and critically evaluate needs of the people. It is of great use as company will be able to meet requirements laid down by customers and will also be able to earn economies of scale. This is a major challenge for Siemens AG as demands of customers may differentiate from one another and specialising for each customer differently will need a lot of time and skills.
Environment is chiefly made up of anything that surrounds business environment. Various environmental factors that need to be considered while business expansion are political, social, legal, etc. All these factors greatly help in developing an effective understandability of roles and laws that are present in countries so strategies could be framed accordingly. Main drawback or problem faced by Siemens AG is rules of every country is different from another which makes policy formulation complex and critical.
Analysing level of competition is very important for every business concern if it wishes to be successful at a global level. It helps in strategy formulation that may help in growth and also improve quality of goods and services. Siemens AG receives a number of benefits from competition as it gives an entire spectrum or variety of goods and services as per needs of common people. This will also assist the business concern in attracting a large number of customers and also provide a competitive edge over other rival firms. Analysingcompetitors and their strategies becomes quite difficult as a lot of study and evaluation needs to be done behind it.
Determination of various key strategic challenges associated with operating in a global environment.
Operating on global scale provides a business concern with two advantages namely meeting needs of customers in an effective way and also enhancing economies of scale. In spite of these advantages there is a drawback or challenge i.e. it has certain amount of complexities involved in it. Various strategic challenges in context of Siemens AG have been stated as under:
Impacts of international trade law:
International trade is a process that deals in exchange of goods and services between two or more countries. At the time of expansion every firm faces certain amount of challenges. They can be in the form of custom as well as tariff laws. When a business operates in more than one country there are chances that goods and services any get imported or exported on a timely basis. This further affects functionality of an organization at global level. In context of Siemens AG, they may have to face certain strategic complexities and challenges while supplying goods and services from one country to another. Also it needs to follow rules and laws of every country that it operates in.
Risk is an inevitable part of every business concern and its functionality. A business concern that operates on a global level receives significant benefits from expansion and geographically varied portfolio yet there are also certain disadvantages such as risk of language, cultural differences, political influences and so on. Added to all these risks, there is also a risk of uncertainty that products may or may not satisfy needs of customers. Also they can be ahead or behind their competitors in a certain country. Hence in present scenario it has been noted that if a business wants to operate effectively, they should identify risks well in advance from their expansion. Managers of Siemens should undertake strategies and policies in such a way that impact or effect of risks does not directly have an impact on functionality of business.
International supply chain management and its complexities:
Managing suppliers and supply chain is a quite complex process in context of supply and distribution of products in the market. Supply chain complexity refers to a condition which studies inter dependence as well as interconnectedness across one or more network may effect other areas of business also. Siemens AG is a globally operating business concern which has numerous production and supply sites which creates a complexity due to a number of factors. This often to a rise in customer's demands and expectations due to goods and services also have to further be expanded. This often leads to delay in work and company may even have to face certain complexities such as choosing appropriate suppliers, ensuring in time delivery of goods and services.
Critically evaluate the global market influences by using appropriate theories.
Globalisation refers to a process that deals in integration of various economies of the world by using a method of cross border trade between various countries. In today's scenario, there is there happens to be a greater market influence. This happens mainly due to certain reasons that are demands of customers as well as competition that prevails in any country at a given point of time. It is a global trend in today's scenario as business expansion leads to attainment of higher profitability that can be achieved by fulfilling customers demands. Various theories have been explained in context of Siemens AG:
McKinsey 7S model of organisational structure:
McKinsey's 7s model is a tool or technique which helps in examining organisational design or structure of a firm by understanding various internal elements such as strategy, structure, systems, shared values, styles, skills, staff and so on. This model is considered by Siemens AG so that it can analyse global market influence . It also helps an organisation in improving its overall performance by adopting effective designing and implementing strategies as well. Furthermore, there is also a global influence on structure of an organisation as strategies need to be framed as per market situations and also employees or candidates are recruited accordingly. This helps Siemens in achieving long term stable growth and sustainability. This model infuses a number of independent factors which are further classified into two categories i.e. hard and soft elements. This model is adopted by Siemens AG so as to have a better understanding of their organisational structure.
Elements or factors that are easy to identify as well as define are referred to as hard elements. Hard elements includes various factors such as organisational strategies, systems as well as structure of a company.
Elements that are difficult or complex in nature and cannot be defined easily are referred to as soft elements. These elements are generally influenced by organisational culture such as values shared by organisation, skills, styles as well as staff members.
7s of McKinsey model has been stated as under:
Hard Elements( Structure)
Strategies are mainly defined as a plan that is made for maintaining and building a competitive edge over competition. Implementation of strategies as per market conditions that are prevailing in a country is quite important and helps a business concern in effective performance on a global level. It also has a higher market influence on strategies and they need to be framed as per competitive pressures, issues of environment and also customer demands. In relation to Siemens, it has been analysed that company works with a innovative global strategy for reducing its marker influence.
Organisational structure of present organisation Siemens AG is such that functionality of company revolves around their production units that are present in different countries. Siemens AG operates in numerous countries in the present scenario yet their final reporting is done at parent branch located in Germany. Every business unit produces different goods and services as per needs of customers and culture of countries they are currently operating in. Every employee follows a certain code of conduct and cooperates with other employees while performing activities but they still have to report to parent branch about each and every activity.
Systems is an important keyword that is used to define or understand a process, procedure as well as routine that is undertaken by personnels or managers in a business concern. In context of Siemens AG, managers follow a unique system which they use for production of goods and services as per current market situations. Systems also have a global influence over market due to various processes and procedures that need to undertaken as per environmental conditions in a specific target market.
Shared values refers to various strategies and policies that are made in a company and affect behaviour of workforce as well as overall management. In context of Siemens AG, it is found out that employees share common values and beliefs while undertaking operational activities in business in an ethical manner. Also these values are never affected by any sort of global market influence.
Skills are special talent of individuals and help employees of any business concern so that they can perform in an effective manner. Siemens AG has a number of production units in different nations worldwide where a number of individuals are needed as work is to be done based on needs and requirements of customers. It has also been suggested that since this company operates in various countries, hence this geographical diversity has a great influence on competitive market. Also while recruitment of employees they should recruit individuals who have highly developed skills and potential to perform as changing needs and demands of customers.
Leadership and management style of every business concern differs from one another. In context of Siemens AG, leadership approach undertaken by its leaders and managers is democratic style where each and every employee is entitled to a right that they can themselves choose task they wish to perform, only condition being that it should be beneficial for the company. Also it is suggested that leaders should always timely delegate tasks and authorities to employees so that they can achieve long term growth as well as sustainability.
In present scenario, Siemens AG employs a number of employees estimated more than 450,000. It also has its place of operations in around 190 nations . Managers of Siemens recruits and selects employees as per their vacancies. Also they conduct an overall skill test of employees that are hired by them. It greatly helps in timely completion of assigned tasks and activities.
Another important theory that is being studied in this aspect is Hofstede's culture theory which has been explained as under:
Hofstede's Dimensions of Culture:
As per this theory, it has been assessed that organisational culture is greatly affected by culture of market that is present on a global level. It happens so due to certains factors such as perceptions, cultural differences, values, as well as beliefs of a person. This theory infuses six main cultural dimensions. Dimensions of culture and its influence on Siemens AG is specified as under:
Power Distance Index:
PDI is a quite important tool that is used to define less powerful or weak members in a company. As per this factor, power is assumed to be distributed in unequal amounts in a business concern. This approach lowers motivation level of employees and also hampers their overall performance.
Individualism v/s collectivism:
It explains or underlines ways which people consider for performing both individually as well as collectively. In context of Siemens it has been said that employees should work in a coordinated manner . Also collectivism should be promoted so that business can achieve its global targets.
Uncertainty avoidance is a quality that defines extent to which people in a society are not comfortable with ambiguity as well as uncertainty. Siemens prepares its employees in such a way that employees can easily deal with any uncertain or complex situations. This keep their organisational structure and culture intact.
Masculinity v/s Femininity:
Masculinity is a term that underlines preference of society for assertiveness as well as heroism whereas femininity refers to a condition which represents both cooperation as well as modesty. Both these factors should focus on both key factors so that cultural differences can be avoided and company can also earn profit.
Long term orientation v/s short term orientation:
Long term as well as short term goals are both important and Siemens should focus towards achieving both.
Indulgence v/s restraint:
Employees who have a high indulging skill enjoy their life as per their wishes whereas restraint employees always have a concern regarding their behavioural characteristics and conduct as per the social norms. Such cultural differences within the workforce have a large scale impact upon the operations of Siemens AG. It is essential that top management of enterprise allows personnel to work in a manner that promotes enjoyment and positive atmosphere at work station. Such culture being a significant part of the organisational working assists an enterprise in successfully running the business across the world and accomplishing the goals and objectives of company.
Influence of globalisation by analysing key barriers in doing business internationally
When any company makes a decision to carry out expansion in global market, there are various factors or challenges which hinder this process. These hindrances can be in terms of cultural, technological and financial aspects. A company has to design and develop such strategies that can facilitate a positive business commitment within global market. Siemens AG needs to evaluate such barriers of global expansions and determine ways to cope with them. These barriers have a massive impact upon the profitability and functioning of business. Some of the barriers that need to be considered by Siemens are as follows:-
Cultural and Financial barriers:
When a company strives to expand in a global market, it needs to take into consideration the diversities within the workforce in terms of cultural and national backgrounds. This may give rise to linguistic barriers and lead to conflicts between individuals. Thus, it is imperative for Siemens to analyse the culture of new country prior to entering it so as to avoid such barriers. Also, the cost associated with conducting operations globally can be high and need to be largely taken into account by Siemens.
In today's competitive world, it is essential for companies to take into account the advancements in technology so as to feasibly enter the new market. By gaining knowledge about the latest trends and techniques existing in market, Siemens cam make use of high-end technologies so as to gain a strategic edge in market.
Recommendations to overcome those barriers
Itisrecommended to Siemens to take these essential steps while expanding operations in international market so as to overcome the barriers, such steps are:-
- To overcome the cultural as well as financial barriers, it is imperative that management of Siemens AG takes into account the prevailing culture of the country in which expansion is being done so as to avoid cultural barriers. Also, it is essential that cost associated with this process is priorly ascertained so that there is no issues related to it later.
- To overcome the barriers related to technology, it is significant that company makes use of latest tools and techniques so as to gain a strategic edge in global market. For more information about your assignment writing service.
From the above report, it has been concluded that globalisation is a process of integration of people, economies, companies, nations and governments across various parts of the world. Also, it has been analysed that by gaining proper knowledge of this process, business entities can feasibly enter a new market and foster expansion. Besides this, it has been assessed that it is imperative for companies to assess the needs and requirements of customers so as to become profitable in global marketplace. Furthermore, it has been assessed that there are various factors which facilitate and hinder the expansion of enterprise in global context.
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