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Business Organizations In A Global Context Commerce Essay

Paper Type: Free Essay Subject: Commerce
Wordcount: 2267 words Published: 1st Jan 2015

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What is a business organization? A business organization can be defined as one or more business, which has in common the person or group of people controlling it. An organization may have more than one business but a business is limited to one organization. Business organization uses a systematic approach to achieve goals. Its people, the process in place and the policies are used to ensure that the organizations mission is realised. Within the structure of the organization is its culture which is essential to the success of the organization as it hinges on the workforce working together towards a shared goal

Section 1

The Key Difference Between Global Business Operations

Businesses are started for any number of reasons. And there are endless types of business due to the very fact that they are all started up by different people with different personalities and goals. There are three main sectors in the business world: private, public and voluntary.

The private sector is made up of organizations that are privately or independently owned and not part of the government. This sector includes corporations (profit and non-profit), partnerships and charities. Retail stores, credit unions and local business operate in the private sector. The main objectives of businesses in this sector revolve around maximum sales and market growth. Examples of Private Sector Organizations are McDonalds, Tesco and Apple.

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The public sector is usually composed of organizations that are owned and operated by the government. They are established to achieve different objectives of society. The public sector operates on the taxes collected. Within the public sector lie public corporations. These have been set up by Acts of Parliament to run an industry or service. Examples of such corporations are Bank of England, BBC and the Royal Mint.

Voluntary groups are set up by ordinary people and they aim to help others in the local community. Although they are not owned by any one individual, someone is elected to take responsibility of setting targets, budgets and day to day running of the group.

In the recent past, businesses have seen a change in the economic setting. The domestic market is no longer able to meet the demands of the globalised people. Businesses have developed to ensure it thrives in the age of globalization. This development has made many domestic businesses become a household name worldwide.

Besides globalization, an improved communication technology has also been a key factor in the success of these globally operating organizations. This allows efficient communication and swift access to global markets.

One other strategy employed by global organizations is market research. This will help organizations pin point profitable areas for marketing. The internet and world-wide web has made available databases which enable organizations to access relevant information at a reasonable cost

Section 2

The Impact of External Factors on Organization

A number of factors are taken into consideration when measuring how the performance of a national economy impacts the activities of business organizations.

Output effect: this is a measure profits generated by businesses in the UK

Income effect: this is a measure of total income generated by businesses in the UK

Employment effect: this is a measure of the number of jobs created by a businesses in the UK

Further to this the direct, indirect and induced impacts of the categories above are generated using the IMPLAN methodology where the effects of the aforementioned are combined to reflect the total economic impact on the activities of business organizations.

Direct impact: represents the purchase of goods and services by business owners from other businesses in the UK

Indirect impact: represents business- business transactions, where the suppliers of the business owners purchase goods and services from other suppliers in the country

Induced impact: The employees of the business owners and the employees of the indirectly affected businesses purchase goods and services in the UK. The second wave of economic impacts known more commonly as the induced effect is created b these purchases.

The government has taken numerous steps to influence businesses. In some regions their influence is great but in most parts of the world they are kept at bay by capitalist leanings. Among the measures taken by governments is positive discrimination, also known as affirmative action. The term ‘affirmative action’ was first used in the United States in Executive Order 10925 and was signed by President John F. Kennedy on 6 March 1961; it was used to promote actions that achieve non-discrimination. Itrequires government employers to take “affirmative action” to hire without regard to race, religion and national origin. This law forces businesses to hire staff they might not have considered to hire in the past.

Section 3

The Impact of Global Factors on Business Organizations

How businesses are run differ country to country. A combination of a number of factors such as marketing, sales and technical skills are required to increase the productivity of a business. What makes a business successful relies a lot on the staff and the world experience they bring to the business. This varied background is what brings fresh insights to solving old problems as issues are seen from different viewpoints.

Global integration is a challenge faced by all organizations. The environment in which the business is in prescribes changes in the structure of the organization. In addition to this there is also language, culture and regulations to deal with. In this instance it is essential that the organization does its best to foresee complications that may arise and put in place actions to overcome them.

International trade has both good and bad effects on domestic products and services. International trade pumps money into local economies, which helps produce more goods for the local markets. It helps expand the local markets because the money derived from it goes into other business ventures. On the negative side, international trade shrinks local markets because some imports are far much cheaper than local manufactured goods. This results in people shunning local goods for the cheaper imports.

The global economy has had an amazing impact on the way companies do business. In addition to the tremendous opportunities for growth and expansion into new markets that it brings, it also leads to interesting and unique challenges, as have been mentioned in the earlier paragraph. When contemplating expanding internationally organizations should consider a number of factors in order for it to be successful.

Being strategic about the countries chosen to expand in

Having a local presence in the country

Taking into careful consideration the people, the culture and business environment

Ensure all employees who are not local be given cultural awareness training

Financial stability

Developments in technology have made communications swifter and more efficient. Information Communication Technology has had a very positive impact on global economy. It can be said that ICT is one of the precursors to the success of global economy. Emails and internet ready mobile phones has allowed globalization to take place. The internet is also key to the achievements in banking, production of capitalism and globalization.

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ICT has made the banking industry the economic mover of the world. The adoption of ICT in banks has improved customer services, facilitated accurate records, provides forHome and Office Banking services, ensures convenient business hour, prompt and fair attention, and enhances fasterservices.ICT directlyaffects how managers decide and plan and what products and services are offered in thebanking industry. It has continued to change the way banks and their corporate relationships areorganized worldwide and the variety of innovative devices available to enhance the speed and qualityof service delivery.

Not only has ICT impacted the globalization of banking, it had also impacted productivity. Productivity is one of the driving forces of economic progress. ICT has impacted economic progress in two ways. Firstly it has made it possible for an organization to spread itself around the globe, i.e. headquarters in London, design facilities in California and manufacture in China. The second way in which ICT has affected productivity lie in the ways in which companies are producing. Lines in the manufacturing industry which used to rely heavily on manpower have been replaced by computerised robotic production lines leading to faster, more efficient and better quality products.

Section 4

A Review of the Current Issues Impacting On Business Activities

After the recession of 2010, the global financial system remained fragile but this did not last for very long as economies started moving toward recovery and growth. Some economies, especially those from the emerging markets, continued to grow rapidly. There are six broad, long-term developments that shape the business world:

Emerging markets increase their global power

Clean-tech becomes a competitive advantage

Global banking seeks recovery through transformation

Governments enhance ties with the private sector

Rapid technology innovation creates a smart, mobile world

Demographic shifts transform the global workforce

Global economies are strongly unified that companies, governments and industries will find that they are forced to cooperate in ways they did not imagine a few years ago. Ernst & Young believe the six trends are themselves connected by three underlying drivers that have helped establish each trend and perpetuate it.

Demographic shifts that see population growth, increased urbanization, a widening divide between countries with youthful and quickly aging populations and a rapidly growing middle class are reshaping not only the business world, but also society as a whole.

Reshaped global power structure. The balance of global power between the public and private sector has shifted quickly as the world recovers from the worst recession in decades.

Disruptive innovation. Improvements in technology continue to have massive effects on business and society. Emerging markets have become sourcesof innovation, especially in its efforts to reach the growing middle class and low-income consumers around the globe.

As these trends change the ways in which businesses operate, grow and compete, winners and losers inevitably will emerge. The winners will be easy to identify. These are the organizations that will monitor trends in the environment, look for talent everywhere and embrace technology. They look outwards in their attempt to adapt to local environments and create global workforces. They are looking in to ways in which Clean-tech can fit into their growth plans and making it part of their global strategy.

It is essential for organizations to develop strategies that will help expand the business in the environment it is set in. These strategies should address the issues that affect the business. A deep knowledge of the culture of the environment is key to success. Understanding the values and beliefs will promote the business as this makes the locals feel that the organization respects its interests and needs.

Many times language can be a barrier. If effective communication does not take place business activities will slow down and in some instances come to a halt. Employees will need to be able to communicate verbally at a basic level, with on-going training to develop their language skills. It may be necessary in this instance to hire an interpreter or hire locals to do the job.

The regulations of the country may also form another inhibitor. Each country comes with its own laws and regulations that apply to all businesses. A highly skilled and experienced specialist with experience in global integration would be the ideal choice. Such a person would help the company not only resolve and regulatory problems but also iron out problems where language and culture are concerned.


As businesses and governments move forward they will need to think deeply about the opportunities and risks that are presented by changing trends and the forces behind them. The mindset of organizations needs to undergo a transformation so that it can re-imagine what is possible, discover what they can do that is new and how to do it. With a different mindset, they can re-imagine what is possible, discovering what they can do that is new, and how best to do it. The dynamics of the global market is changing. Emerging markets are coming out strong and as they rise so do their companies. Many companies that had previously posed no competitive threat to multinational corporations now do so.These emerging market leaders represent a major shift in the global competitive landscape – a trend that will only strengthen as they grow in size, establish dominance and seek new opportunities beyond their traditional domestic and near-shore markets.Those that succeed may find themselves not just navigating tomorrow’s global trends, but actually shaping them.


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