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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