Business Management
a domestic newspaper company (Herald Sun) into one of the most powerful media empires in the world. Its newspapers, television stations, pay TV, books, movies and videos reach three-quarters of the world’s population and its shares are traded around the world. Technological developments such as improved communication and changes in legislation have allowed world trade to occur and have assisted in the development of global businesses.
There are numerous forms that a global business can take, two of which include the multinational and transnational strategies. The multinational strategy focuses on treating the domestic market of each host country differently. In each host country a separate foreign subsidiary is established and managed as an independent organisation as each develops its own strategies, which adapts to local market and environmental conditions. Examples of industries that adopt this strategy are laundry detergents, cosmetics and processed food products.
Another strategy is the transnational strategy. It is an overlap between multi domestic and globalisation strategies. McDonalds adopts the transnational strategy. Through international franchise arrangements, the business moves around international borders by duplicating the successful business formula. In this strategy activities are centralised by the applications are adapted to local conditions. Change agents can evaluate the effectiveness of introducing a business into a global environment by using key performance indicators.
Key performance indicators are quantifiable measures used to measure the progress of the work team or workplace towards the achievement of organisational goals or objectives. Two key performance indicators that would indicate how effective the change implemented has been while competing in a global environment are profitability and market share. Profitability is the capacity or potential of an organisation to make profit. Measures of profitability include return on capital employed, positive net cash flows and the ratio of net profit sales. Market share is the share of the total sales of all brands or products competing in the same market that is expressed as a percentage.
A business operating in a global environment can increase their market share by increasing their efficiency, which relates to the relationship between resource inputs and outputs. This therefore leads to the business lowering costs while at the same time maintaining quality and achieving a competitive edge. Profitability can be achieved if a business is achieving their target profit figure.
The establishment of a global business impacts the internal environment. There are several ways globalisation can influence the internal environment of a business, one of which is structure - expanding the business. This can be achieved by increasing employment in the business, purchasing of new capital equipment, venturing into new markets or new product lines and being involved with mergers and takeovers. Another impact on the internal environment of the business is the introduction of technological change. Technological change involves new capital equipment, new technology training and new production methods. When a business is competing in a global environment changes within the internal environment have to be [next page]