Revision

It is my last blog of this term. I would like to discuss what management theories we have learnt in this term. Let me introduce those theories first. We have learnt some methods for anglicizing the organization; the globalization; some types of organization structures. In this essay, I would mainly focus on the analysis of organization and globalization.

First of all, one of the analysis method, which is Porter five forces, there is a direction for us to analyze the micro environment of the organization. It means there are 5 forces would affect an organization- Threat of Substitute Products, threat of New Entrants, Bargaining Power of Suppliers and Bargaining Power of Buyers (Customers). The other method for analysis external environment of organization, which is PESTLE, it provides a quick and visual representation of the external pressures facing an organization and their possible constraints on strategy. PESTLE analysis includes 6 parts, which are political, economic, social, technical, legal and environmental. SWOT analysis also is very useful for the managers to find suitable plans between internal capabilities and external changes. It is a method for the management department to know the company’s saturation and set up the strategy. That includes Strengths of the organization, Weaknesses of the organization, Opportunities in the external environment and Threats in the external environment. Moreover, CSR is a good method to analyze a company which is a responsible organization or not.

 On the other hand, let me talk about the globalization. How to make an organization become global business? There are lots of methods. I would like to separate two parts to discuss- internal strategies and external strategies. Firstly, let me talk about what things the companies can do by their own. Exporting means selling goods or products to the other countries without establishing operation overseas. The company may promote their products through the internet, which called E- commerce. Also, the companies can do investment directly. It means setting up operations in other countries. This is a fast way but expensive. If the company wants to use this method, it must have a lot of resources. Let me move on to external strategies. Joint venture, which means two or more firms sharing the investment costs, risks and returns by creating a new business in another country, is a lower cost method for investment. Strategic alliance means two or more companies have cooperation with benefit on a project, such as human resource and financial resource. They can save the development cost in different countries because they share the resource. Franchising, which is fast way to make the companies, trade under its name, using its products, image, for example McDonald’s. Merger means two or more business amalgamate as a business. Acquisitions are similar advantages as a merger.

What may stop globalization? That’s tax, tariff, bans, quotas, subsidies, etc. Those causes almost are because of the local government. The government wants to protect the local companies. Avoiding increasing the competitive for the local companies.

Globalisation

The definition of globalisation is the worldwide movement toward economic, financial, trade, and communications integration. Globalization implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers. However, it does not include unhindered movement of labor and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately. Globalisation concerns are trade in goods and services, investment, labour force movement, products, production, technology, research and development, exchange of ideas and knowledge and intellectual property.

There are lots of advantages of globalization. It can lead to improvements in efficiency and gains in economic welfare. Trade enhances the division of labour as countries specialize in areas of comparative advantage. Deeper relationships between markets across borders enable and encourage producers and consumers to reap the benefits of economies of scale. Moreover, it gains in efficiency should bring about an improvement in economic.

The main disadvantage of globalization is losing culture. It is because the majority cultures of the other countries would replace the local cultures. For example, the culture of US is the most popular culture in the world. The other con is a major long-term threat to globalization is the impact that rapid growth and development is having on the environment. Threats of irreversible damage to ecosystems, land degradation, deforestation, loss of bio-diversity and the fears of a permanent shortage of water are afflicting millions of the most vulnerable people are vital issues. Unemployment is also a very bad disadvantage. Investment and jobs in advanced economies will move to developing countries. This can lead to higher levels of structural unemployment and put huge pressure on government budgets.

Then, if companies want to go global, there are lots of methods. Exporting which is selling good to customers in another country. No need to establish operations overseas. Direct investment which is establishing operations in another country, ie, establishing a distribution network, production facility. This is a very expensive method.

International Business

If an organization wants to go international, they may have a lot of methods, such as outsource, exporting, importing, licensing, etc. International trade is a kind of international business. In this blog, I would mainly focus on international trade and globalization.

Firstly, let me talk about the ways to conduct business internationally. Outsource is the practice of contracting out defined functions or activities to companies in other countries that can do the work more cost- effectively, such as manufacturing. Companies in some developing countries now outsource some work to emerging economies where staffs are cheaper or more plentiful.

As for the exporting and importing, it means dealing with overseas customers and suppliers is by transporting physical products or delivering services across national boundaries.

Licensing is when one firm gives another firm the right to use assets such as patents or technology in exchange for a fee. When a business grants the right to a firm in another country to produce and sell its products for a specified period.

Franchising, which is the practice of extending a business by giving other organisations, in return for a fee, the right to use your brand name, technology or product specifications, is similar as licensing.

On the other hand, let me focus on the context of international business. When people managing international operations pay attention to the international aspects of the general business environment, they also can analyze through the PESTEL. Political risk is the risk of losing assets, earning power or managerial control due to political events or the actions of host governments.

Economic states that by specializing in the production of those goods which they can produce more cheaply than other countries, and trade them with others, nations will increase their economic well- being.

Sociology- cultural context is distinct from human nature and from an individual’s personality. It is a collective phenomenon, shared with people in the common social environment in which it was learned.

As for the technological context, some physical facilities support economic activities- ports, airports, surface transport and, increasingly, telecommunications facilities. That is also important for companies operating abroad.

Lastly, environmental context is a further aspect for business. One important aspect is the resources available in an economy, such as oil, coal, agricultural land, etc. These considerations affect the kind of businesses that people create in different countries, and on the pattern of world trade.