Impact of Globalization on Strategic Management PDF

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Assignment on Solutions to the Problem of Chapter 5

[Submitted to] Md. Yousuf Harun Associate Professor

[Submitted by] Nishat Tasnim ID:1662, Registration No: 45418 8th Batch

Date of Submission: 24th August, 2021 Course: FNB 402- Working Capital Management

Department of Finance & Banking Faculty of Business Studies Jahangirnagar University Savar, Dhaka-1342.

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CONTENTS Introduction................................................................................................................................1 Globalization..............................................................................................................................1 Benefits of Globalization...........................................................................................................1 Challenges of Globalization.......................................................................................................2 Application of Strategic Management in Globalization.............................................................3 How Globalization Impacts Strategic Management..................................................................4 Conclusion..................................................................................................................................5

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INTRODUCTION Though globalization has become an established part of the modern world, we tend to forget the benefits it is bringing everyday to our lives. Globalization is considered to be an easy access to a variety of different culture or brand-new technologies developed by countries half a world away. Undoubtedly, globalization has brought benefits in the everyday life of a business as well, even the concept of strategic management is no different. Company happens to adopt strategies to stay more competitive than its competitors. Despite the fact that globalization is making our lives better, it is affecting the business operations along with the strategic management of the company as it starts to grow across the national borders. This assessment will discuss briefly the concept of globalization along with its benefits and challenges. How strategic management is implemented to the concept of globalization will be discussed in the first place with the different sector of application and later in the assessment how globalization is impacting strategic management of an organization going global from the national boundaries will be discussed thoroughly.

GLOBALIZATION Globalization, is the process of interaction and integration among people, companies, and governments worldwide. Advances in transportation and communication technology has accelerated globalization since the 18th century. In fact, globalization refers to an open flow of information, technology, and goods among countries and consumers. This vast flow occurs through various relationships, from business, geopolitics, and technology to travel, culture, and media. Day by day the world is getting smaller and the companies need to embrace globalization to cope up with the smaller and fast world and to continue their businesses successfully. Otherwise, other businesses will take over new opportunities in the global marketplace. Globalization has made businesses easier and less time consuming. Advances in communications technology and global travel have changed the way business is done all over the globe. Competitors from different sides of the globe can find themselves with distinct advantages or weaknesses stemming from their local geography, legal climate, national labor pool and a host of other factors, adding layers of complexity to competitive strategies.

BENEFITS OF GLOBALIZATION Globalization has a variety of effects on organizations. Those who choose to expand internationally, however, reap several benefits, which include: Access to New Cultures Globalization has made foreign culture, such as food, film, music, and art, more accessible than ever before. Because of this free flow of people, goods, art, and information, you can have Thai food delivered to your flat while listening to your favorite UK-based artist or watching a Bollywood movie on Netflix.

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The Spread of Technology and Innovation Because many countries throughout the world are always connected, information and technology advancements circulate swiftly. Because knowledge travels so quickly, scientific breakthroughs produced in Asia can be put to use in the United States in a matter of days. Lower Costs for Products Companies can develop more cost-effective ways to create their goods as a result of globalization. It also boosts global competition, which lowers prices and provides customers with a wider range of options. People in both emerging and developed countries benefit from lower prices since they can live better on less money. Higher Standards of Living Across the Globe Globalization has enhanced the level of living in developing countries. Extreme poverty has dropped by 35% since 1990, according to the World Bank. Furthermore, the first Millennium Development Goal called for halving the poverty rate in 1990 by 2015. In 2010, this was accomplished five years ahead of plan. Since then, approximately 1.1 billion people have risen out of extreme poverty around the world. Access to New Markets Globalization benefits businesses in many ways, including new customers and revenue streams. Companies interested in these advantages seek out flexible and inventive ways to expand their operations internationally. International Professional Employer Organizations (PEOs) make it easier than ever to employ workers in other countries quickly and compliantly. This means that, for many companies, there is no longer the need to establish a foreign entity to expand overseas. Access to New Talent Globalization allows organizations to find fresh, specialized expertise that is not available in their present market, in addition to new markets. Globalization, for example, allows corporations to look for tech talent in rising regions like Berlin or Stockholm rather than Silicon Valley. Again, International PEO enables organizations to legally employ individuals in other countries without the need to form a legal company, making global hiring easier than ever.

CHALLENGES OF GLOBALIZATION While globalization has its advantages, it also has its drawbacks. The following are some of the challenges that businesses encounter when becoming global: Recruiting from other countries

3 HR departments face unknowns when recruiting across borders. To identify a good fit for the firm, HR staff must take into account issues such as time zones, cultural differences, and language limitations.

Taking Care of Employee Immigration Internally, immigration issues cause a lot of problems. Immigration regulations change frequently, and obtaining visas for foreign national employees can be extremely difficult in some nations. Imposing Tariffs and Fees on Exports Depending on the market, acquiring products to sell in another country can be costly. Payroll Issues and Compliance Issues Managing abroad payroll and being compliant with changing employment and tax legislation is another major global growth stumbling block. When managing businesses in numerous markets, this management role becomes considerably more onerous. Cultural Identity Loss While globalization has made it simpler to travel to other nations, it has also begun to bring disparate communities together. However, when cultures lose their distinguishing characteristics, we lose our worldwide diversity. The exploitation of Foreign Workers Lower prices benefit many consumers, but they also foster fierce rivalry, prompting some businesses to look for low-cost labor. Some western corporations outsource their manufacturing to countries like China and Malaysia, where low labor laws make it easy to exploit workers. Difficulties in Global Expansion Setting up a compliant abroad presence for organizations that wish to go global and reap the benefits of globalization is difficult. Companies must be aware of how to handle new legal systems when expanding into new countries. Otherwise, blunders result in roadblocks as well as serious financial and legal penalties. Local Job Loss and Immigration Issues Many countries are tightening their immigration policies, making it more difficult for immigrants to find work in new nations.

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APPLICATION OF STRATEGIC MANAGEMENT IN GLOBALIZATION Strategic management concepts and ideas enable entrepreneurs to implement strategic thinking in their organizations in a clear and practical manner. To grasp their company's current status and planned future, strategic thinking managers adopted the strategic management model. The entrepreneur will not only be aware of the company's current status, but also its future. Better coordination among personnel, departments, and levels is possible with a common integrated framework. When decisions are coordinated, they can be made more quickly. As a result of the improved alignment of expectations between the home nation and the abroad branch, strategic management allows for better delegating. This can enable for a shared understanding and language, as well as mental model congruence across the enterprise, in a globalized business world. Choices are at the heart of strategy. Most practitioners will think about the industry structure and the firm's specifics. Before deciding on a strategy, they must consider their resources and talents. The integrated approach contributes by emphasizing the necessity of cooperative strategies. This means that during times of turmoil, entrepreneurs might collaborate with other partners to expand resource capacities or mitigate the economy's negative effects. Finally, what should entrepreneurs do in times of global turbulence? According to the integrated theory, cooperative methods, in addition to firm resources or capabilities and adaptation to its continuously competitive industry, can help firms perform better, at least in part. This idea is supported by Porter's five forces.

HOW GLOBALIZATION IMPACTS STRATEGIC MANAGEMENT When a firm plans to go global, it must be prepared to adapt its internal systems. This enables them to accommodate new markets while also ensuring that their global workforce feels at ease and accepted at work. When a company enters the global economy, several parts of their business alter. Globalization, for example, increases the diversity of the workforce. Although this diversity is a beneficial thing, it does present some obstacles, such as language limitations and cultural expectations. There are some changes in strategic management organizations happen to expect from globalizations and these are: Global Communication Challenges Because global workforces are likely to work in a different time zone and speak a different native language, organizations must build an internal communication plan before branching out from headquarters. Software and other digital technologies make it easier for teams to interact and communicate across borders. Companies seeking to manage staff in numerous offices, regions, and time zones will find Zoom, Slack, and Google to be extremely useful.

5 International Employee Expectations When it comes to matters like income and perks, as well as how they handle their daily work schedules, foreign employees have distinct expectations. Companies that wish to take advantage of globalization by hiring overseas workers must make every effort to accommodate them. During the hiring process, HR professionals must also ensure that their offers are competitive and meet local standards. Supporting Foreign Customers Companies must plan for how they will manage customer care and assistance in new nations, similar to how they would communicate with staff. Customers in the new market where you sell your goods or services may not speak your original language or live in the same time zone as you.

Increased Competition More than internal operations must be adjusted by international companies. Going global opens up additional revenue streams and expands the pool of talent available. The worldwide marketplace is competitive because of these appealing benefits and the convenience of going global thanks to services like International PEO. As globalization becomes the norm, numerous companies are vying for the same overseas markets, increasing commercial competitiveness. Marketing and Communication Changes Companies face hurdles in selling their products or services to a completely new audience, just as they face hurdles in employing personnel from different nations. Businesses must adapt their marketing methods in order to communicate the benefits of their product to a foreign audience. It is hardly assumed that a marketing effort aimed at an American audience despite the location of HQ will appeal to consumers in Europe, Asia, or any other big market, because their demands and needs are vastly different.

CONCLUSION Today, the term "international corporation" is a very typical occurrence that refers to genuine economic transactions and enormous distances between a group of people from various cultures and perspectives. The necessity for development, quick exchange of resources and tools, and integrated cooperation, which should help to assuring collaboration and capital transfer, is what binds them in the intricate network of relationships. It may be stated that today's decisions to cross national borders and internationalize a firm are a requirement for serious corporate growth and development. As a result, businesses are continuously looking for and analyzing possible areas where the company might grow from a small or medium corporation to a corporate entity that is continually expanding and increasing its own portfolio. Making the decision to invest outside of one's own country is a lengthy and

6 complicated procedure. This is accomplished through a series of stages and methods that include a long-term comprehensive analysis and scanning of a newly chosen investment area....