Professional Documents
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Archana Rai, ID: 102952
Table of Contents
UNIT: 7.2- GLOBAL BUSINESS STRATEGY...................................4
INTRODUCTION....................................................................... 4
ACTIVITY1: Your line manager has asked you to analyse the
international
business
environment
for
your
chosen
organisation and produce a report for him which includes......4
Activities 1- a, b, c...............................................................4
Business environment............................................................4
PESTLE analysis- The Macro Environment..............................4
Figure of PESTLE analysis.......................................................5
Economical Factors............................................................6
Political Factors...............................................................5
Legal Factors..................................................................9
Environmental Factors......................................................10
Employment practices........................................................14
Human rights.....................................................................14
Environmental regulations..................................................14
Corruption.........................................................................14
Moral obligation of multinational corporations (social
responsibility)...................................................................14
From Power Point Presentation: Activity 2, b..........................17
Conflict.............................................................................17
Common task that produce conflict........................................18
Conflict can classify in two ways:...........................................18
Constructive and Destructive................................................18
Common causes of conflict.................................................19
Factors causing conflicts between nations, there by affecting
International Business..........................................................19
Factors causing conflict in International business................20
Conflict Resolution................................................................20
From Power Point Presentation: Activity 2, C.......................21
Legislation...........................................................................21
Employment law................................................................21
Consumer protection..........................................................21
Competition law.................................................................21
CONCLUSION........................................................................23
Bibliography...........................................................................24
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Archana Rai, ID: 102952
and feed all aspects of planning. PESTLE analysis provides a framework for
investigating and analysing the external environment for an organisation.
PESTLE stands for "Political, Economic, Social, Technological, Legal and
Environmental" and it is used for business and strategic planning,
marketing
planning,
organizational
change,
business
and
product
development and research reports. This analysis tool helps to find out the
current status, market growth, direction, potential, and position of an
organisation in relation to their external environment and current role. By
understanding these external environments, organizations can maximize
the opportunities and minimize the threats to the organization. (Alok
Goyal, 2009)
Analysing the business environment of McDonaldss by using
PESTLE analysis, it is one of the globalized fast food company in the
world.
Government policies
Government term and change
trading policies
funding, grants and initiatives
lobbying and pressure groups
Wars, terrorism and Conflicts
Elections and political trends
Internal political issues
Inter-country relationships
Local commissioning processes
Corruption
Bureaucracy
Analysis: The Company must also be acquainted with the law in order to
know what their responsibilities and their possible liabilities. Also
McDonalds should protect its workers by ensuring all the hiring,
compensation, training or repatriation in accordance to the Indian labour
laws.
shall cost higher than the other existing products in the market,
then these franchises must take on certain adjustments to maintain
the economies of scale. However in case of India the company has
been able to maintain a constant level of prices for their products.
Economical Factor includes:
Local economy
Taxation
Inflation
Interest
Economy trends
Seasonality issues
Industry growth
Import/export ratios
International trade
International exchange rates
Analysis: Ideally before penetrating the market, the company must carry
out a well conducted market research, especially in the movements in the
economic environment which McDonalds had done before entering the
Indian market due to which the company has been able to bear the
frequency of the shifts in the inflation rate as well as the fluctuations in
the exchange rates which affects the operations of any company.
valued set of food that tenders a reliable level of quality for the
respective market where it operates. In the case of McDonalds they
establish a good system in determining the needs of the market.
The company uses concepts of consumer behaviour product
personality and purchasing decisions to its advantage which is
clearly evident in case of India as the company was quick in
removing their Pork, beef, and Mutton products from Indias menu.
For example, in India, a country in which the cow is sacred, the
menu features McVeggies instead of hamburgers. In Singapore,
customers can order a Chicken SingaPorridge; in Hong Kong, some
Seaweed Shake Fries. It is said to have a major influence on the
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Archana Rai, ID: 102952
Demographics
Media views of the industry
Work ethic
Brand, company, technology image
Lifestyle trends
Cultural Taboos
Consumer attitudes and opinions
Consumer buying patterns
Ethical issues
Consumer role models
Major events and influences
Buying access and trends
Advertising and publicity
Emerging technologies
Maturity of technology
Technology legislation
Research and Innovation
Information and communications
Competitor technology development
Intellectual property issues
Analysis: The Company must also look into the use of IT to enhance their
inventory operations. McDonalds use the internet to their advantage. The
cost-effectiveness,
interactivity
and
real-
time
effects
of
the
environmentally
friendly
is
another
important issue
to
shows
that
environmental
issues
will
have
neither
Environmental regulations
Ecological regulations
Reduction of carbon footprint
Sustainability
Impact of adverse weather
10
(Van,
Analysis: The Company should find out the environmental regime that
governs the operations in every market. It should also monitor the waste
disposal of the company. McDonalds should minimize the use of
Styrofoam materials and plastic cups to make the environment healthy.
(The Happy Manager, 2010)
Porters Five Forces analysis-The Micro Environment
The micro environment is also known as operating, competitive or task
environment business. It consists of companys immediate environment
that affects the performance of company. It becomes from internal part of
the company .Factors in the micro environment are largely within the
control of the managers. In this way, organisations can be much more
proactive in dealing with the task environment than in dealing with the
macro environment.
The Micro Environment normally refers to Porter Five Forces. Competitive
intensity of McDonalds can be determined with Porters five forces. Porter
five forces is business strategy formed by Michael E.Porter of Haward
business school in 1979.he determined five forces which actually
determines attractiveness of the market and competitiveness. These five
forces are
operating
in
abundance
and
also
top
brands.
organizations
are
getting
opportunity
to
franchises
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Archana Rai, ID: 102952
Employment practices
Human rights
Environmental regulations
Corruption
Moral obligation of multinational corporations (social responsibility)
Employment
Practice:
ethical
issues
may
be
associated
with
Environment
Pollution:
Ethical
issues
arise
when
environmental
regulations in host nations are far inferior to those in the home nation.
Many developed nations have substantial regulations governing the
emission of pollutants, the dumping of toxic chemicals, the use of toxic
materials in the workplace, and so on. Developing nations often lack those
regulations, and according to critics, the result can be higher levels of
pollution from the operations of multinationals than would be allowed at
home. For example, consider again the case of foreign oil companies in
Nigeria. According to a 1992 report prepared by environmental activists in
Nigeria, in the Niger Delta region,
Apart from air pollution from the oil industrys emissions and flares day
and night, producing poisonous gases that are silently and systematically
wiping out vulnerable airborne biota and endangering the life of plants,
game, and man themselves, they have widespread water pollution and
soil/land pollution that results in the death of most aquatic eggs and
juvenile stages of the life of fin fish and shell fish on the one hand, whilst,
on the other hand, agricultural land contaminated with oil spills becomes
dangerous for farming, even where they continue to produce significant
yields.
McDonalds has also been active in educating its customers about the
companys
environmental
activities
and
positions.
McDonalds
is
in
an
unethical
way
to
attain
this
objective.
Some
Conflict:
Lobby governments
Destructive:
It may distract attention from the task
It may result in disintegration
Looser may go into denial
Damages co-ordination
Common causes of conflict:
Language
Poor translation or limited skills
Lack of understanding cultural norms
Inappropriate behavior
Decision-making
Centralized or Decentralized
Cultures propensity for conflict
Avoid or accept
Factors causing conflicts between nations, there by affecting
International Business:
insecure or inequitable access to resources,
competition between social groups for political power,
Incompatibilities between groups with distinct value systems
Personal differences in global issues
Role incompatibility
Power based Domination
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Archana Rai, ID: 102952
Political Instability
Threat for Security
Terrorist activity
Inter communal violence
Abundant availability of valuable resource located in particular area
oil, water
Environmental Stress :
Climatic change change in rainfall
Resource scarcity decline in water supply,
agricultural productivity,
Poverty
Environmental related Migration
Factors causing conflict in International business:
Business can cause conflict over control of the resource or area.
Business can cause conflict over the right to participate in decision
making and share in benefits
Companies can be a target of conflict.
No clear cut goals
No clear cut agreements and contracts
No ethics followed
Misleading communication
Improper communication
Corruption
Difference on values among the partners Value differences
Dealing with the laws, policies and political authorities of more than
one nation
Unexpected changes in currency rate affects the international
business deal
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Archana Rai, ID: 102952
Employment law
Consumer protection
Competition law
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Archana Rai, ID: 102952
But may reduce cost in the long term because of a reduction in staff
absences and not having to pay compensation for injuries.
Equal Pay Act 1970: Employees who do equal work or work of equal
value must receive the same pay as workers of the other sex.
Sex
Discrimination
Act
1975:
Employees
cannot
be
sexually
Trade Description Act: goods and services must perform in the way
advertised by the business
Consumer Credit Act: this protects the consumer when borrowing
money or buying on credit. Consumer protection imposes additional costs
to businesses since they have to comply with the laws. If they do not
comply they risk fines and ultimately being put out of business by the
courts of law.
Competition law: Competition law aims to ensure that fair competition
takes place in each industry. Governments believe that greater
competition leads to lower prices, better quality goods and a wider variety
of products.
Competition
Commission
(CC) and
the Office
of
Fair
Trading
(OFT) investigate any business that has more than 25% of the market
share, especially if it merges with another business. They may feel that
the business has too much power and can set high prices and provide
poor quality products. The CC and OFT has the power between them
either to fine these businesses, or prevent the merger taking place. The
OFT can also fine businesses who fix prices or prevent other businesses
from trading in their market. Most recently they investigated the
car industry and warranties
(Emerson, 2009)
McDonald's is committed to conducting business ethically and in
compliance with the letter and spirit of the law. This commitment is
reflected
in
McDonald's
Values.
Inherent
in
each
value
is
their
refer to
those strategies
Important
of
GBS
From
company
Bibliography
Alok Goyal, M. G., 2009. Business Environment. New Delhi: V.K.
Enterprises.
Anon., 1995. MacDonald's Environmental Strategy. [Online]
Available
at:
http://www.umich.edu/~nppcpub/resources/compendia/CORPpdfs/
CORPcaseA.pdf
[Accessed 20 Jun 2013].
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Archana Rai, ID: 102952
Strategy.
London:
2011.
MacDonald's
Response,
New
York:
2012.
Business
[Online]
at:
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Archana Rai, ID: 102952
Strategy.
http://www.tutor2u.net/business/strategy/porter_five_forces.htm
[Accessed 16 Jun 2013].
Rouse,
M.,
2007.
Globalization.
[Online]
Available
http://searchcio.techtarget.com/definition/globalization
[Accessed 15 Jun 2013].
at:
The End
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Archana Rai, ID: 102952