Business environment is refer to that situation where an organically bringing their operation and functions. A business environment comprise with summary of internal and external factors that can directly affect upon their functioning in better manner. This report is based on Nike company which is multinational organisation that is engaged in the design, manufacturing, development and effective services. This assignment is mainly focus on different factors which increasing major key drivers for globalisation (Cantwell, Dunning and Lundan, 2010). There are different complexities which are encountered by organisation while expanding their business in international level. Along with this, there are various factors which directly impact on organisation structure, functions and structure on decision making and its strategy that can be known.
P1 Analyse key factors that drive globalisation
Globalisation is that process which integrate and communicate with different people, organisation and economy of country in rest of the world. In the context of globalisation of business that lead towards economic operations of an organisation. The main aim is to make and create surroundings which lead to inflow of investment so success and growth can be achieved. An enterprise can carry out their operations and functions in large number of nations which are known as Multinational organisation. They are directly impact on increasing income and contributing to their country economies. It includes various factors such as communication, finance, economic and transaction in all over the country. Therefore, global business environment determine the effective strategies and decisions at the time of smooth running of business operations and functions. These things are help in achieving competitive advantages in proper manner. There are various factors which can directly affect to the Nike company due to footwear company deals in international market so it is necessary for consider such forces while developing decisions regarding business (Cavusgil and et. al., 2014). They have major impact on business and it drive global trade and commerce in effective and efficient. There are some factors are as follows:
Cost - It is mainly related with financial term and various problems which occurs during marketing, production and research, etc. therefore, it can defined as the value of money which assist in manufacturing products and services for satisfying customers needs and demand in better manner. Nike made their material for spending around $11, for labour$2, for other costs $4 and for profit $1. Nike sells the shoes to retailers for around $36. They are mainly focus on promoting their new footwear through social media, television, other advertisement models which help in target large number of customers (Colfax, Rivera and Perez, 2010). It will assist in driving global environment and trade which increasing economies and GDP of the nation. Major key factors of costs are as under:
- Direct cost - It is that cost which generally determine while smoothly running of business that can put some efforts in the goods in better manner. There are various direct cost that includes labour, workers and material which is required for making accurate products and services by satisfying their customers needs and demands. Nike also determine Fixed and Variable costs in producing procedures for running their business.
- Indirect costs - It is determine as income or revenue which occurs during manufacturing process and other business activities in proper manner. This involves advertisement, maintenance and office expenses and management. Such costs are generally occurs for selling and purchasing of effective products and services, so it is related with compasses of price policies for managing whole business and its major activities in better manner.
Market – It can be describe as that place where products and services bring serve and sales. In this, there are different person which comes for making effective purpose such as purchasing goods with exchange of money price in the market. Nike is leading international company and they are selling different shoes or footwear products at different countries. It is not stable as market change as per their environment and time scale so this can directly affect on their firm. There are certain factors of market that are as under:
- Labour market – It is mainly concern with people who works for company and identifying the employment at different nations (De Jonge, 2011). Labour market is related with job opportunities within an organisation which help in increasing due to foreign trade and globalisation. This is majorly driving with trade and commerce that is major key factor of the marketplace.
- Market for raw material – It is another elements which is very important for every company and it is required for manufacturing effective products and services. So these factors are related with products and raw material which export and import in all over the country. It is easy for Nike to export and import their different commodities for producing better shoes.
Environment – This is one of the major factor which consist with different elements and each business are surrounded from such aspects. It is flexible in their nature which can change according to the situations (Ferraro and Briody, 2017). Thus, all the firms has to determine major environmental factors which can directly impact on business operations and its functions. Nike undertaken external and internal environment factors at the time of developing and making effective strategies and policies in proper manner. These are describe as follows:
- Internal environment – It is that factor which directly impact on company functions. This includes different factors such as customers, employees, shareholders and suppliers, etc. they are directly affect on business as Nike whose main focus on internal factors while enter in the new market so they can developing and making effective strategies for managing and maintaining the effective business organisation.
- External environment – It is that factors which directly affect on different activities and its functions. They does not controlled and managed by firm so they are directly impact on business.
P2 Strategic challenges faced by organisation when operating in global environment
Nike organisation has exist in various countries so they are determined as large number of policies and strategies for expanding entire business. It is multinational company which provide good image on products for maintaining strategies and schemes. It is not easy to smoothly running the whole business in international market so there are different rivals which exist and there are various complexities that can be created. There are different risks are accessible such as issues regarding enter into market are as under:
Differentiations – It is mainly concern with marketing mix which different from those that are available from competitors (Gecevska and et. al., 2010). Product differentiation is important for reaching effective competitive advantages and help in increasing market share. Nike is facing issues and problems regarding factors for producing new and unique products within less time frame. It is based on fickle and taste the customers needs and demand.
Innovation – In current time period, each organisation try to adopt new and unique ideas based products innovation. It is not easy tasks that Nike has been facing different challenges regarding innovation in their footwear and its additional features. The major challenges for this firm is to does not abuse the child about doing work at the minimum age and they need to reduce the labour base of child.
Competitors – In the international market, there are large number of rivals or competitors which can directly affect on their business and its selling due to introducing new products of shoes. In the current market condition, there are various competitors which create issues or problems to the company in directly or indirectly manner (Hamilton and Webster, 2015). This can affect on their prices. This is the biggest challenge for Nike so they can mainly focus on their effective strategies that lead towards brand and acquisition, mergers partners which considered with them.
Substitute products – It is mainly related with products which is became big threat on the footwear sector. It is also consider as major material and resources that can cause to demand for goods shifting. Nike mainly concentrate on high quality rather than prices so it directly affect on target customers as well as customers.
P3 Evaluate influences of globalisation on organisation governance and leadership, structure, culture and functions
An organization has various factors which influences on a company while expanding in global market for trading, so it is obvious to face so many problems while extending across borders from origin place. These forces can impact in both ways, that may occur positively or negatively as depended on the scenario, so it is better to take all these aspects under consideration that can lead an organization in effective way (Kasemsap, 2014). As it is given in the case study, that Nike Inc., needs to develop a such code of conduct that can draw focus on prepare strategies and decisions, that can support a business to manage its situations, the factors are as follows:
Governance : Governance is a ruling body in every organization, they manages a corporate company, only the ruling authorities have the power of decision-making. Until or unless they don't take any decision , no action will be taken. Governing body have the capabilities to over come challenges. Chief executive officer or managing director is an example of the administration, that forms a firm. For instance, Nike Inc., is formed by Phil Knight and Bill Bowerman as Blue Ribbon Sports (BLS), these two people begin a firm, so when they were about to expand their business, they need to give a responsibility to someone else who can manage entire business in another country to increase the manufacturing and profitability with amazing way.
Leadership : Leadership is important for to execute all the task efficiently, a leaders who stands to guide subordinates, to accomplish goals, and if there is any obstacles, leader can remove that to make associates work smoothly. Similar to that if a company wants to show the leadership in the competitive market, then it have to stand in such a way where all the rivals or equal companies admire it (Laudon and Laudon, 2015). Although, Nike is a big brand in present and has many rivals in sports products, but it has own image as it is leading brand in active-ware and sports gears and other companies are following its trend.
Structure : Every country has different structure in terms of economy, and business development that impacts on organization nature, so it is good for the company that it develops own code of conduct to maintain its structure. The structure should be in top to bottom apprach so that there information flow can be maintained. According to the given case study, it is clear that Nike Inc., did not has any structure of business, that's why it was faced the bad situations, in several countries, like employees were not satisfied, child labor etc., but when it developed in its code of conduct after that it grows the business with new rise.
Culture and functions : A firm must be able to understand a culture of expanding countries, as that is most crucial, because mos the things depends on the local populations, the beliefs, religions, life style, etc. So it is necessary to know about the culture of across the borders, especially when that have an intensive impact on business. As Nike has largest selling in Asia, because of its awareness about the culture. According to this, company's culture has a significance too, because, the company is well cultured, the workers of the company must be well behaved so that they can interact very well with others, as communication matters a lot (Louhiala-Salminen and Kankaanranta, 2011). Training and development of employees and ethics of a firm captures attention of customers. In case study, Nike was not well cultured in some countries, the labor faced hard times, this kind of bad things affects a companies reputation when expand across limits.
P4 Evaluate the impact of ethical and sustainable globalisation on organisation functions
It is not easy task which lead towards international market so it is require to integrate the regional society, economies through adopting effective communication procedures, transportation and trade. Along with this, globalisation is one of the best source which help in grab the opportunities and enhancing financial strength, productivity and make proper value or good brand image in the large market in better manner. After that it will became easy for reaching the sustainable growth in the competitive environment (Peng, 2016). The main motive of Nike company is to conduct training and development program for their employees which assist in increasing their skills and knowledge for getting desired goals and objectives. They also monitoring their suppliers for providing better products and commodities in proper manner. They are focus on cleaning and maintain healthy workplace, respect the labour management relations, fair salary and working situations and minimise the working age of person. There are different areas which directly affect by ethics and sustainability in different manner that are as follows:
Reducing the liability of finance – It is one of the major impact which affect on business operations while smoothly running in the international market place. Nike is producing various unique or new shoes and it will sell in the global market place to the desired customers. They are using appropriate method such as Just In Time (JIT). It will help in reducing the financial liabilities by managing costs along with ethical exercises or practices.
Health and care facilitates – It is essential for each business is to maintain the health and safety aspects while manufacturing process of Nike is producing the effective shoes and footwear of the company. They are facing many health and safety issues and problem but in current time period, they are free from all the major risk regarding health and security in better manner.
Recruitment and selection process – Business can smoothly run with the help of talented and skilled employees in effective or appropriate manner. Therefore, Nike mainly focus on recruiting and selecting skilled and best employees which are able for bring out new innovation and creative products in better way (Simic and Dimitrijevic, 2012). Nike has been conducting training and development session for their workers for improving their abilities and skill for achieving desired goals and objectives.
Customers confidence – Customer are play an important role of an organisation also they are main asset of the market place. Therefore, it is main responsibility of firm to provide effective products and items to satisfy their needs and requirements in better manner. Nike determine customers demand and needs and also manufacturing new or unique quality based shoes items and products in proper manner. It is essential for satisfying customers for enhancing long term relationship in the global market areas and also attract large number of customers towards firm goods and services.
P5 Evaluate different ways of decision making doing work effectively in global environment
For success and growth of the business, it is required for developing and making correct decisions and taking corrective actions while smoothly running the business operations and its functions (Tarique and Schuler, 2010). There are various factors which directly affect on business so it will reduces the loss and decreasing in the company's products and services. Nike is the multinational footwear and it is leading global market for determining the correct decision regarding business growth or success and adopting appropriate strategies and policies which help them in achieving potential targets and goals. There are certain ways which help in making efficient decision that are as follows:
Pinpoint different issues – For taking best activity or making favourable decision in Nike company, company manager need to address and highlight the whole problems which occurs for making effective decisions while adopting latest technologies and try to expand business in other location of country. It will assist in getting proper ideas and thoughts which provide right direction that can help in managing or maintaining the issues or major risks factors in better manner.
Determine solution – In this process, organisation can identify correct and appropriate solution after resolving specific issues or problems. It will help in making and developing better decisions for Nike in manufacturing shoes and generating ideas and thoughts regarding new products and services.
Implement solutions – After analysing definite issues and problems, it is main task that help in performing it in better manner (Trompenaars and Hampden-Turner, 2011). It is necessary for Nike company for executing appropriate planning and strategies so that they are able for facing different challenges and reduces certain issues in systematic way.
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P6 Determine and articulate various routes to internationalisation for organisation
Globalisation has provide some advantages to the company which help in expanding their business in all over the world in easy manner. It is that procedure which assist company for carry out their business operations at international level. This will help in leading them for becoming more powerful and gain strong position in the competitive market area. Along with this, globalisation is that business which lead towards many issues and problems. It required to firm is to executing some modifications and changes such as change management, alterations in organisation cultures, etc. Nike has facing many economical crisis in their business operations and other functions (Werther Jr and Chandler, 2010). Therefore, for overcoming with this problem, management has establish their business in many other nations. For carry out this operation, they require to evaluate and operate all activities and stages which is used for improving the same. There are certain issues which occurs in globalisation that are as under:
Legal protection – The company should follow all major rules and regulations of countries where they need to introduce their business operations. Therefore, it is that process where managers develop strategies, terms, conditions of business (Wild, Wild and Han, 2014).
Monopoly – It is that process which states in the competitive world, an organisation does not survive as individuals. It possess the largest issue which compete with global market.
There are defined various kinds of internationalisation routes that support to the firm in entering new marketplace and expand business at other countries. Nike can use better strategy for the purpose of effective business expansions that facilitate in increasing wealth and size of the organisation. There are describe some major internationalisation routes for Nike firm such as:
Franchising: This is the best method for organisation in entering into new market as in this, a single company supplies the tangible property to the other organisation. It is generally used in service sector including car rental, restaurant chains and hotels. Therefore, most of companies considered this mode for developing business at international market.
Strategic partnership: this is another important method which Nike can consider for entering in the new marketplace. They can make strategy for coming under a contract of partnership with other organisation who already established so that better growth can be enhanced. Most of companies considered such strategy to expand business at various places.
Direct exporting: It is defined as an entry strategy which has divided into two approaches as direct and indirect. In the direct strategy, company can sell sits products into the market of interest. Nike can sell its trendy and fashionable shoes direct in the international market and reach at potential customers. On the other side, indirect export is defined as company exports its products or services by followings some procedures.
Licensing: In this, overseas companies take rights to use of products and services within given time. It included copyrights, designs, trademarks, designs and brand names etc. This strategy is generally used in manufacturing sector where firms offered the rights for using process of technologies and royalty payments to the company.
Therefore, Nike can use the Licensing strategy among various internationalisation routes so that more customers are to be targeted in an effective manner.
According to the above mentioned project, it can be concluded that globalisation create huge impact on business operations as different factors which are available in the environment that includes internal and external environment. There are such factors which are related with political, economical, social, technological, legal and environmental that directly impact on firm productivity and profitability in different manner.
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- Colfax, R.S., Rivera, J.J. and Perez, K.T., 2010. Applying emotional intelligence (EQ-I) in the workplace: Vital to global business success. Journal of International Business Research. 9. p.89.
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- Gecevska, V., and et. al., 2010. Product lifecycle management through innovative and competitive business environment. Journal of Industrial Engineering and Management. 3(2). pp.323-336.
- Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University Press, USA.