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Global Business Issues Sample Individual Report

Report: Global Business Issue Individual

Executive Summary

Multinational corporations face several obstacles when conducting business on a global scale. Globalisation has set the stage for an expanded global community for business early in the 21st century but at the same time it has seen the emergence of several related issues that hinder the growth, sustainability and profitability of such multinational enterprises. This report addresses some of the key issues that modern day companies operating on a global scale, face and seeks to assess their origins and influencing factors, leading to an attempt at providing solutions for them in reference to existing business literature. The issues addressed in this report entail technology and innovation, trade tariff and related policies of local governing bodies, corporate social responsibility as well as cultural factors that pose a threat to the expansion and outreach as well as sustainability and profitability of modern businesses. This report discusses the scale of impact of these issues and ways in which they affect both the internal and the external business environment. The identification of connections between the issues addressed has also been undertaken, in order to understand and analyse their interrelation and interdependencies so as to formulate meaningful solutions.

Introduction

Businesses at the global level are highly profitable to say the least but despite that they have threats facing them that have been considered as significant issues that could lead to the complete downfall and eradication of a multinational enterprise. In fact, several global businesses have disappeared into the void of debt and inequity when they have not taken into account these issues. Technology as an all-encompassing part of modern society cannot be debated and hence issues related to technology are the first to impact global businesses. Technology is not usually a mild factor but it is a limiting factor for most businesses when it comes to global scales of operation. Governmental policies regarding international trade on the other hand are factors that could either facilitate or cripple any global business. Governmental policies of trade and investment are significant considering the financial dynamic of global businesses. However, the recent generation has begun to focus more on environmental consciousness and this has become an even more impactful factor for such companies. As a result corporate social responsibility has become not just a feather in the cap of companies but an utter necessity to survive the global paradigm shift in consumer demands. Just like corporate social responsibility, the cultural factors that influence the demographics of a region in which the organisation is entering should be considered when planning the scalability of operations. The two chosen companies in this report are from different industries, namely Xiaomi, from the technology and mobile devices industry and Walmart the retail industry. Xiaomi is a mobile and electronic appliance manufacturer and retailer based in China and was founded in 2010 by the former CEO of Kingsoft “Lei Jun”. This company started out as a software company that developed ROM experiences for mobiles based on Google’s Android operating system. Just a year later, they entered the mobile devices hardware market with their very own “Mi” brand of smartphones. Xiaomi primarily uses the strategy of selling their hardware at near to cost prices and covering up for the lack of profit with their content and services . In the retail sector, Walmart has been a name synonymous with groceries and household goods among Americans for a very long time. The first Walmart opened in 1962, at Rogers, Arkansas, USA. It was founded by the visionary “Sam Walton” who believed in leadership through service. Since then in the last 58 years, Walmart has spread its outreach globally into several countries, acquiring and owning other companies to run it under the Walmart brand in some .

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Discussion

Technology and Innovation

When considering the factors that affect technology and related innovation in global businesses both the endogenous determinants as well as the exogenous variables need to be taken into consideration and their ever-increasing interdependencies need to be addressed as well . Technology and Innovation play such a detrimental role in multinational corporations that their investments into research and development often depend upon many factors that can be summed up as technological congruence, without which their ventures would inevitably fail . The signature trademark for Xiaomi Inc. has been leadership in technological innovations. Xiaomi Inc. was the first to capture the market of budget mobile devices with their range of extremely affordable smartphones for the global market. However, Xiaomi Inc. like all companies in the ICT or Information and Communications Technology industry, faces certain challenges in ways of technology as well as innovation in the market.

⦁ Intellectual and Data Security threats

One of the biggest issues in global business and marketing, faced by Xiaomi is that of data and security breaches. User privacy rights have been the most controversial topic of debate among ICT companies in the last decade. General Data Protection Regulation (GDPR) policies of companies like Xiaomi are not very vivid with a lot of grey area to be covered. Storage systems for user data that ensure privacy of data for the end user, that is the customers who buy Xiaomi products, is an issue yet to be dealt with . According to popular feedback, and investigations of “Thomas Brewster”, as cyber security researcher, Xiaomi’s mobile devices collected private user data in both audio as well as visual formats and sent these to a remote server that was hosted by Alibaba Company. Not only the mobile devices of Xiaomi (products) but also their software services like search engines have been noted by “Andrew Tierney”, another cyber security researcher, to be recording all user search data even from IP masked websites . Steps that can be taken to mitigate such personal data security risks include effective GDPR compliance  which consist of the following steps – 

Access – Accessing the data sources and assessing the different types of structured and unstructured data and investigating the personal data stored across the data landscape.

Identify – Parsing the different data fields to identify and categorise personal data elements.

Govern – Rules of data privacy must be shared across all business dealings to ensure effective governance of who is using what data and whether they have the rights to it.

Protect – Using “encryption”, “pseudonymization” and “anonymization” systems to protect the identified personal data.

Audit – Develop reports to show evidence of compliance of data security as a means of review.

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⦁ Innovation in After Sales services

The popular quote “Necessity is the mother of invention” has become redundant and does not usually apply to the modern business scenario. In recent years, innovation has become the primary driver for success. Companies like Google, Amazon, Apple and Facebook have focused on innovation in leading their teams to success. Xiaomi in this regard have based their business model on innovation in providing consumer friendly products and services. However, they are lacking in certain aspects. Since talent is the primary driver for innovation, companies like Xiaomi need to find talented personnel and develop a strong work culture to nurture innovation . Xiaomi according to popular feedback has poor after-sales services especially for their mobile devices. Xiaomi lacks skilled workers to deal with their customers across their global markets spanning the South East Asia and South America. This is one area where they need to innovate and as stated, such innovation can only be facilitated by effective recruitment of talent at a global scale . Xiaomi needs to indulge in strategic recruitment for effective talent acquisition. Talent acquisition is the basis for nurturing innovation in any particular field and strategic recruitment, which is yet a largely unexplored domain, can go a long way in resolving Xiaomi’s service issues .

Related report sample: Royal Gym , Columbus CafeManukahealth.

 

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Government Policies

Multinational enterprises that plan to indulge in foreign direct investments in host countries usually shy away when the fiscal and regulatory policies of the host governments are limiting to their strategic freedom . In more recent years, the dynamic quantitative model of multinational enterprises have been used to evaluate the cost of expansion for these companies and how they can be increase or decrease based on the existent trade policies of governments of either their native or host countries . Xiaomi has recently faced immense difficulties due to the stringent steps taken by Governments like that of India, wherein, mobile based software applications from Chinese companies have been banned in the country. Google India have complied with this decision and removed a number of highly popular applications from their application store (i.e., Google Play Store). The Reserve Bank of India has delayed the granting of Non-Banking Financial Company (NBFC) permit to Xiaomi and this has hindered Xiaomi’s expansion plans into the Indian financial technologies market . With almost a 50% market share and over 100 million products sold in the Indian mobile devices market, Xiaomi with this recent government ruling has faced a major obstacle and the primary cause of this has been speculated to be compliance with GDPR . It has also been investigated that the reason for such a ruling is a result of a backlash due to the existent border conflicts between the two countries. In order to circumvent this obstacle, strong diplomatic ties need to be established between the two countries and effective Free Trade Agreements (FTAs) need to be signed as well. Such regulations by governments generate pitfalls in the global value chain (GVC) of companies like Xiaomi. Placement of bans or restrictions on such products and services builds barriers to providing effective end to end services and this is creates a disruption in the GVC of companies like Xiaomi .

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Corporate Social Responsibility

Post the 1990s, the immense environmental pressure created by rapid expansion of globalisation has led to increased level of environmental consciousness among companies of the 21st century . In fact, Corporate Social Responsibility or CSR as it is popularly known today has become a primary catalyst for the increase in competitiveness of Multinational Corporations (MNCs). In this context, Walmart can be identified to indulge as well as invest in extensive CSR according to their CSR policies as well as news reports. Walmart boasts of contributing to the community, the environment as well as working towards the welfare of their global suppliers. They increase economic opportunity, enhance operational sustainability and GVCs, strengthen local communities, foster diversity and inclusion and practice responsible product sourcing . However, there are certain drawbacks for MNCs like Walmart that have active involvement in CSR. It has been stated by several managers and scholars in the management field that corporate social responsibility is key factor of increasing competitiveness among companies and companies that practice CSR face certain drawbacks .

⦁ Greater Scrutiny

Companies like Walmart that are involved with active CSR are often subjected to greater levels of scrutiny when conducting themselves in a public domain. Usually a misstep can lead to tarnishing of the brand image despite their social service activities.

⦁ Competitive Disadvantage

CSR, when fully integrated with the operations of a company like Walmart can result in increased costs of product design and production of products or services. Consequently prices for the end user or consumers are increased although more conscious consumers are ready to bear such costs.

⦁ Reputation Risk

When practicing CSR, many companies, particularly in the retail sector are forced to reveal their existent shortcomings like not sourcing produce responsibly or lack of focus on equity and inclusion. This can initially pose as a risk to the reputation of companies like Walmart.

⦁ Contrasting Business Interest

Taking into added consideration the interests and welfare of the people and the environment can result in conflicts with the business interests of profitability both in the short as well as long term. Sustainability of the company usually takes a backseat when such conflicts occur .

In order to overcome these global business issues, Walmart needs to identify and prioritise its investments into CSR and look for ways to enhance sustainability of the company at the global level. Incorporation of CSR into the operational framework both at the micro as well as the macro level can benefit Walmart in the long term. Overhauling the company work culture so as to mandating minute yet effective environmentally conscious activities within the work culture is always useful. It can help to mitigate the financial burdens and risks of an extensive and public CSR indulgence.

Related report sample: ANZ BankColumbus CafeManukahealth.

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Cultural Factors

 

Brand identification and awareness goes hand in hand with the cultural norms of the host country for a multinational enterprise. The several cultural factors have impacts on the companies’ departments starting from HR to Marketing . Walmart has penetrated the markets of countries like UK, Chile, Japan, Mexico, India and the African countries by means of acquisition of popular brands in these regions that it now runs and operates. Asda in the UK, Superama in Mexico, Lider in Chile, Seiyu in Japan, Best Price and Flipkart Group in India and the Mass Group in African countries. With such an extensive global outreach, several cultural factors are involved, that need to be dealt with appropriately . The demographics of these diverse regions vary greatly and along with that the ethnic belief systems can pose significant challenges for Walmart especially in terms of human resource and market segment analysis. The education level of the population of the particular region also has great impacts on the brand awareness and consumer response of Walmart. For example, consumers in India recognise Flipkart more than Walmart. The gender roles, social conventions, class structure and social hierarchy also play a major role in defining the dynamic of the international labour market. Attitudes and leisure interests of the target consumer segment in these different geographical regions generate enough risks and challenges for Walmart. Such risks if not identified and mitigated can develop into major business risks . Since MNCs like Walmart have a profound effect on the socio-cultural milieu of developing countries, it inevitably faces a response to this in terms of either increased profit or loss. Cultural factors that can affect acceptance of a brand like Walmart in developing nations are: customer service policies, policy of inclusion or exclusion of certain products, class and religious equity in recruitment and other such socio-cultural factors .

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Conclusion

As discussed, the technological factors are closely linked to innovation. Xiaomi as an ICT brand lacks innovations in the incorporation of data security systems for its end users in the mobile devices market worldwide. In comparison to Samsung, that has strict and powerful security measures for personal user data as well as big data, Xiaomi has a long way to go and needs to invest more financial as well as human resources into this field. Innovations regarding after sales services are practically absent for Xiaomi. Once these pertinent technological threats have been overcome, the company can focus on extending its reach into its developing and emerging markets in order to improve their customer support services and ensure a complete and effective GVC that delivers end to end services to the consumers. Since technology and innovation work hand in hand, Xiaomi can focus on recruiting valuable talent that can help them solve both these issues, that have in this case, led to certain governmental legislations in countries like India. In case of Walmart, the more relevant issues pertain to CSR and socio-cultural dynamics. Corporate social responsibility can only succeed if the existent socio-cultural dynamics of a region have been identified and assessed. Taking mitigating measures in this regard can ensure that Walmart attains success in a more diverse geographical region as well as.

Related report sample: ANZ BankColumbus CafeManukahealth.

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