Impact Of Globalization On The Business Environment

In this report I am going to define the meaning of Globalisation and assess the impact of globalisation on the way the business operate.

One of the core tenents to running a business is for a business to make money and to increase in size. As a result of that engaging in activities that increase a businesses capability to make money and increase its size is of great importance. Furthermore, as a result of that focus on increasing the sizes of businesses, globalization has furthered the spread of business. Globalization influences the world economically,

The need for the best use of scarce resources has made the issue of management very important in every organization.

The business activity of companies in most industries is affected by the process of globalization. The need of globalization was determined by the necessities of companies that had to address markets in other countries in order to expand their business. In addition to this, they had to reduce their costs by hiring employees from other countries, and by outsourcing some of their processes to other regions.

Hill, C. (2011). International business, competing in the global marketplace. (8 ed.). New York, NY: McGraw-Hill Irwin.

Globalization has an impact on almost all aspects of a business, as they can no longer survive without taking a global perspective into consideration in this ever-changing market. Increased levels of transportation and communications have made customers much more aware and selective than before. The petroleum refining and manufacturing industry’s revenue is falling rapidly, with a decline of 16.7% expected in 2016 alone. It’s also estimated to decline at an annual rate of 7.7% over next the five years due to rising competition from new South-East Asian refineries.”

Caterpillar Inc. is a construction company that has been round in the late 1800’s. Caterpillar is arguable the most popular construction company in the United States and was a merge of Benjamin Holt’s business of Holt Manufacturing and C.L. Best Tractor Company. But when Caterpillar was first born they did not have the intention of becoming a construction company. Both Holt and Best started off as manufacturing companies that were centered around building inventions that would improved agricultural live in the late 1890’s.

Caterpillar Inc. is a global company headquartered Peoria, Illinois. They specialize in the manufacturing and selling of construction, mining, and farm equipment. Caterpillar Financial Services is a subsidiary company that offers financing options to their customers. I currently work of a construction company and I specialize in the accounting management of the company’s assets. Approximately 80% of the company assets are from Caterpillar and 70% of the assets that are financed are through Caterpillar Financial Services. The stability of Caterpillar Inc. is important to the company I work for.

The process of globalization has numerous significant effects on countries, organizations, and individuals. These effects can be observed in the quality of products, in their prices, but also in their availability. Because of globalization, numerous companies prefer to expand their business on international level. Some of them outsource some of their processes and activities to cheaper destinations that allow them to reduce their investments.

Caterpillar has always been a market seeker since its inception. Within a span of ten years, it expanded its business from the USA to Europe and Australia by supplying machinery for the World War 1. As it entered the construction industry, its influence in the market grew and so did its market share. After reaping the benefits of operating in developed economies, caterpillar started expanding its business to Asia and Africa. Although these markets were heavily dependent on the developed economies for their growth, the gradual rise of the BRICS nations who started acquiring more share in the world trade made them an attractive investment. When the global economic crisis loomed over the world’s most powerful economies, businesses in these countries became nervous and they were to incur huge losses. On the other hand, emerging markets adapted very well to the global economic crisis and proved to be a safe haven for companies. This is where caterpillar’s strategy of constant market seeking ensured that they were virtually unaffected by the global financial crisis. On the contrary, analysts saw a rise in the value of caterpillar during this period. While economies like Europe and the USA were experiencing depression in 2008, caterpillar reported an all-time record for its sales, revenue and profit per share. Its sales increased by 30 percent outside North America while it could squeeze only 7 percent growth from North America. This

In doing business so many times an organization must think globally. This might be done to increase sales and/or profits or to lower labor costs. In either case problems can occur due to ethical and cultural barriers in global expansion. In this paper I will attempt to show some of what a global organization and a cultural issue that affects their interactions outside the United States by identifying and comparing some of these cultural differences.

The mature market is a cyclical market in which quantity varies at or around a stable pattern of demand: the value added for product sales becomes cyclical and generates cash from surplus to deficit. (Neale.S, Haslam.N, Johal, 2009). Late capitalist product markets that affected Caterpillar within its Northern United states home-market, Infrastructural investment declined from the construction industry. The quantity sales' peak of 85.000 models during the year 1973 was not exceeded due to the growth of new requirement weakened, and Caterpillar's market became more cyclical. The overall income produced in Caterpillar's product market dropped, as market maturity was combined with with continual fall in unit costs was also along with a continual fall in device costs. In 1986 the actual price per unit was only 70% of the price in 1972 when considering the product value trends of U.S. shovel loaders. The saturation of the market clearly shows the progressively challenging external environment changing trajectory. switch back fluctuations in quantity, and financial price restoration were made more challenging as the final product prices reduced because of the

With the increase in globalization, there is more communication occurring between people not only of the same culture but of different cultures, making clear communication more difficult with regards to the syntax of different languages. These different cultures all have varied ways of teaching their people with regards to education, societal norms, and their culture as a whole. Cultures may be similar in one value while at the same time, they can be complete opposites in another. It is because of these differences, misunderstandings can occur and can lead to high tension within the workplace. Whether in written or verbal form, this is why you cannot just divulge your thoughts and expect the intent to be understood by the recipient.

As trade increases hyper-competition grows forcing organizations to go global. By a company going global it requires them to rethink strategy and reform (Ananthram and Pearson, 2008). Global organizational structure is the way a company aims to merge local preferences with global strategy. The definition of global strategy is “strategic choices that have the characteristics of being globally uniform or integrated,” (Yip et al., 1997) such as standardization of products, uniform marketing, and competitive moves, but all globally (Townsend et al., 2004; Zou and Cavusgil, 2002; Bayraktar and Ndubisi, 2014). Global strategic strategy is a way to adjust to globalization. Globalization is “the economic and social process by which economies and communities grow inextricably interdependent “(Jhirad et al., 2009). The recent financial crisis (Das, 2010), large amount of poverty, and climate change are all problems that show how the world is globally connected because all countries impact each other (Jhirad et al., 2009).

In today’s world, with a few notable exceptions, nearly everyone in every region of the world has access to the same products, information and services. A long-distance relationship is no longer so distant, since each party involved in the relationship can communicate through Skype, Facebook or through any of the vast amount of social media available. A person in Easter Island, one of the most remote inhabited islands in the world, can go to the other side of the world and travel to Canada. An economic crisis in Argentina could affect the economic landscape in Brazil. A person in Chile or Peru can buy an Abercrombie and Fitch t-shirt because this transnational corporation decided to expand its market to developing countries, or as you might prefer, to emerging economies in South America. Although many of these examples might be trivial, these are the consequences of globalization.