International Business Environment - Assignment Example

International business environment Contents Executive Summary & Introduction 3 Main Body of Management Report 4 Critically outline a contemporary, global business environment issue and its relevance to the world of work today 4 Critical identify an organization/sector and country and outline its relevance to exploring the issue above 7 Critically analyze the external environment for your chosen sector (using an analytical tool like PESTEL) in relation to your chosen research issue 10 Critically analyze the internal environment for your chosen organization (focusing on a theoretical perspective such as culture, leadership etc.) in relation to your chosen research issue 13 Conclusions & Recommendations 16 References 17 Executive Summary & Introduction The management report is about the major issues concerned with the corporate world. The most important aspect that is taken into considerations by most of the organizations is of corporate social responsibility. This in act that is adopted by majority of the corporate so as to build a brand reputation and deliver the message to its customers that they are concerned about the society which would facilitate to develop goodwill of the company. The issue for this report is of corporate social responsibility and the issue would be discussed in relation to the selected organization that is of a supermarket company that is TESCO. This company is operating in UK and is the largest food retailer in the company. The company has gained its importance because of its low price strategy and its wide variety of products. The company is mainly focused on the UK market but has even adopted the strategy of global expansion and entered into many different markets. The company has gained a competitive advantage because of its adopted strategies and has also taken initiative to incorporate specific measures for improvement of various issues surrounding the society and also to ensure that their business operations would not be harmful for the society or the environment. The report outlines firstly the chosen issue, its benefits and the importance of the issue in today’s world. It then focuses on a specific organization that is TESCO and a specific country that is UK to relate the global business environment issue to it and then derive conclusions. The other aspect that the report highlights is of the external environment analysis of the selected sector and the internal environment analysis of the organization. On basis of the analysis specific conclusion and recommendations are derived for further improvement of the TESCO in making policies in relation to corporate social responsibility. Main Body of Management Report Critically outline a contemporary, global business environment issue and its relevance to the world of work today The global business environment issue that has gained importance in the recent years is that of corporate social responsibility. The term CSR is also regarded as corporate citizenship, sustainable responsible business or social performance of a company. This is a part of the business model which is a form of integration of corporate self regulation. CSR activity is an in-built function or rather a self regulating mechanism through which a business ensues and monitors that is its activities are in co ordinance with the ethical standards, law and the international norms (Mullerat, 2011, pp. 201-203). Some of the organizations implements CSR as a method of doing some good towards the society which is beyond the interest of the business. CSR activity encompasses the activities of the company that initiates a positive impact on the customers, environment, communities, employees, stakeholders, etc. This positive impact helps in building a strong goodwill and reputation for the company (Crowther and Bacchus, 2004, pp. 115-116). The term CSR has gained importance in 1960s and from then till the recent times it is used to cover moral and legal responsibility. In some journals authors have argued in regards of corporate social responsibility stating that it is more of window dressing act or a pre-empt for the government’s role that acts as a watchdog over the most powerful multinational corporations (Palmer, 2005, pp. 23-48). Political sociologists also became very much interested in the CSR aspect in the context of theories of neo liberalism, late capitalism and globalization. Corporate social responsibility forms a part of organizational mission and also acts as a guide as to what the organization really stands for and what it actually wants to deliver to its customers (Johnson and Scholes, 2002, pp. 145-146). CSR is subdivided into three sections such as CSR as value creation, CSR as risk management, and CSR as corporate philanthropy. The CSR as corporate philanthropy encompasses all kinds of monetary donations and various kind of support that is given to the non-profit local and non-local organizations and other communities (Schwartz, 2011, pp. 92-93). This even involves donations in areas such as environment, social welfare, health etc. This approach is not adopted by many organizations as it does not focus on development of the skills of the local people on the contrary the approach of community based CSR activity results into more of a sustainable development of the society (Macdonald, 2013, pp. 69-70). The next approach of the CSR is to directly incorporate the approach in the business strategy of the organization. One of the best examples of such an approach is the concept of fair trade. A different approach of corporate social responsibility is the concept of CSV or creating shared value (Sun, Stewart and Pollard, 2010, pp. 121-122). Creating shared value acknowledges more of trade-offs between social goals and the short term profitability of the organization. It even focuses on the areas of obtaining competitive advantage by incorporating within the corporate strategy a social value proposition (Mullerat, 2010, pp. 165-166). The CSV approach of the corporate social responsibility gives importance to two kinds of stakeholders that are consumers and the shareholders. Often in the highly competitive business environment the organization sets benchmarks so as to compete with other industries in terms of implementation and effectiveness of the CSR policy (Williams, 2013, pp. 21-22). The benchmark that the companies sets is on the basis of proper analysis of the CSR initiatives of the competitors as well as evaluating and monitoring the impact of the CSR policy on the environment and the society and the perception of the consumers on competitor’s CSR strategy (Thomsen, 2004, pp. 29-46). The various approaches of corporate social responsibility are stated in the diagram below- (Idowu and Filho, 2008, p.107) There are three most common ways through which corporate social responsibility is incorporated in an organization. Firstly, is as an environment sustainability which involves areas related to waste and water management, recycling, utilizing resources that are reusable, utilizing renewable energy resources, usage of digital technology, incorporation of a greener supply chain, and designing the buildings as per the standards of LEED that stands for Leadership in Energy and Environmental Design (Palmer, 2004, pp. 1075-1101). The second type is of community involvement which mainly encompasses raising funds for some local charities, local events sponsorship, supporting any form of community volunteerism, giving employment to people from the backward community, incorporating more of fair trade practices in the business operations, and facilitating more of economic growth of communities. The other method of incorporation of CSR activity is by ethical marketing practices. The ethical marketing practice that is adopted by the company for its consumers aims at occupying a higher value in the minds of customers and do not involve any form of false advertisements and manipulations for its potential customers. This kind of approach is very important for those organizations that want its operations to be viewed as ethical by the external environment comprising of customers, suppliers and other stakeholders. Critical identify an organization/sector and country and outline its relevance to exploring the issue above The issue of corporate social responsibility is further illustrated with the help of an organization that is located in United Kingdom and named as Tesco. The company is a public limited company that has its headquarters in UK and is a British multinational general merchandise and grocery retailer. After Wal-Mart, Tesco is regarded as the second largest retailer across the world. In 1919 the company was invented by Jack Cohen as a set of market stalls. In 1924 the brand name ‘Tesco’ was adopted by Cohen after purchasing a shipment of tea (Tesco and Society Report, 2013). The company even stands at the second largest position and operates across 12 countries such as Europe, Asia, North America, Malaysia, Thailand, Republic of Ireland and UK. Tesco is the market leader o the grocery sector of UK with a market share of 30%. Tesco over the years has adopted the strategy of diversification through which it has not only expanded its market but also has expanded its product line. The expanded product range comprises of books, electronics, furniture, clothing, software, petrol, financial services, internet services, DVD rental, telecom, etc (Hammett and McMeikan, 1994, pp. 4-6). The corporate strategy is of offering its own brand products at the lowest cost possible. The company has always given most importance to its values, principles and goals. The company has gained goodwill amongst the society in terms of its quality products at the best price which has facilities its operations through 2500 stores. The company over the years has expanded both internationally as well as domestically by constant focus on its customers as well as employees. The core competence of innovative use of technology has facilitated the expansion strategy of Tesco. The company has made a strong commitment to corporate social responsibility in the form of donations to local community organizations and charities which is approximately 1.8% of the pre-tax profit of the company. This percentage selected is on the basis of setting a benchmark with Sainsbury’s and Spencer’s, the major competitors of the company. The company implemented a scheme of “computers for schools” in 1192 through which encompassed offering computers in return for hospitals and schools collecting vouchers from those individuals who has purchased something from Tesco (Yip, 2004, pp. 17-24). The company from the year 2006 has been sponsoring the Tesco cup which is competition for football that is organized for the younger people living across UK. The company has given come up with the phrase of Change for Good which was even trademarked by UNICEF as activities done in favour of children as a means of charity which is not for any kind of retail or commercial use. UNICEF has also congratulated Tesco on such an initiative where it needs to compromise on one of its income arm so as to do charity for those children who are really dependent on such charitable organizations (Tesco Corporate Responsibility, 2014). The company has its own labels for household products and personal care which are regarded as cruelty free which states that they have not been tested on any animals. The company in 2011 had announced that it is working with 2 degrees network and this was more of implementing an online hub with the goal of reducing the total carbon footprint of its supply chain by 2020 by an amount of 30% (Acur and Bititci, 2004, pp. 56-57). However there are many issues in relation to the CSR activity of the company as stated by Greenpeace report in the year 2011 the grocery that was sold in the market of Chine by Tesco had content of some illegal pesticides which had exceeded all the legal limits. UK has always been considered as a very tough market to carry on the business operations. In this country CSR activities were started off many years ago which is used by many corporate as a method to build goodwill in the society, an approach for improving the societal conditions, or developing a corporate identity and reputation amongst customers and other stakeholders.UK as a country have been a home for many charitable institutions and communities and CSR activity is a very common issue in this region and is supported by majority of the organizations performing its business operations in this country. Tesco works in providing value to the customers in the form of quality products and maintaining long term relationships with the suppliers so that there is no compromise on delivering quality. The company effectively works with many communities to help the needy and other backward classes. However there are certain issues such as improper waste management, high volumes of carbon evolution, product contamination, and charitable contributions for surviving in intense competition are some of the major social responsibility issues that is affecting the business operations of Tesco and thus enforcing the company to understand the need of this global business environment issue and develop effective strategies in relation to the concerned issue. Critically analyze the external environment for your chosen sector (using an analytical tool like PESTEL) in relation to your chosen research issue In UK the largest industry is that of food and retail sector. This sector provides employment to over three million people in manufacturing, production and even in retailing. In 2003 the GDP of UK was contributed by 9% by the retail sector. In the present years there has been a lot of scrutiny carried over on the supermarkets of UK in relation to supplier treatment in the own label products though there has been immense growth in supply networks and has become one of the vital element in the formation of supermarket strategies (Randall and Seth, 2011, pp. 191-192). The external analysis of the supermarket sector of which Tesco is a part is conducted using PESTEL framework. The elements of the PESTEL framework comprise of political, economical, social, technological, environmental and legal factors. Tesco operates in a globalized environment where it has stores situated across the globe. The performance of the company is highly affected by the legislative and political conditions of the countries in which it has extended its business operations which even include the European Union (Clarke, Bennison and Guy, 1994, pp. 11-20). As per the employment legislations it has been highly encouraged by government to support the retailers in providing various kinds of job opportunities ranging from lower paid, local and flexible jobs to higher paid, centrally located and higher skilled jobs. This even facilitates in meeting the population demand coming from senior citizens, students, working parents, etc. The company has the knowledge that there is a great impact on jobs by the retail sector which is more of labour intensive and local sector (Branson, 2008, pp. 174-176). There is a large section of disabled, students, elderly workers that are employed by these supermarkets and that too at a lower salary package. The competitive business environment has resulted into a high staff turnover and having this kind of workforce ensures great degree of commitment towards job, more loyalty, and hence is considered as desirable employees (Martinell and Sparks, 2003, pp. 577-590). The economic factors are a major concern area for the supermarket sector as these factors have a great impact on the prices, demand, costs, and profits. There are various kinds of influential factors in the economy such as high levels of unemployment which affects the demand for products and in turn even affects the demand for manufacturing these products (Ritz, 2005, pp. 22-23). The economic factors prevailing in the external environment are beyond the control of an organization but these factors has an adverse affect on the performance level and requires proper marketing mix to overcome such an issue (Flavián , Haberberg and Polo , 2002, pp. 125-138). Many supermarkets that operates in UK like that of Tesco are highly dependent on food market of UK and any kind of slowdown in this market can eventually bring down the revenue generation of these organizations, and this market of UK is subjected to market concentration risk. There has been a change in the cultural norms of British consumers as they have move towards more of bulk and one stop shopping. This social change has facilitated many companies in the supermarket sector to include non food items in its product range like that which has been incorporated by Tesco (Lindgreen and Hingley, 2003, pp. 328-349). There have been even demographic changes in UK in terms of increased number of female workers, aging population, and reduction of preparation of home meals that has enforced the retailers in the country to deliver value added service and products. The organizations in the supermarket sector now focus more towards own label share of the supply chain, business mix, and various kinds of operational improvements that eliminate the cost factor from the business system (Graiser and Scott, 2004, pp. 10-14). The consumer demand for the products and services are totally dependent on their beliefs, attitudes and social conditioning. The consumers are more health conscious in today’s scenario and there is a constant change in their attitude towards food. This factor is taken into consideration by many companies in the supermarket sector through incorporation of organic products in their product mix. The technological factor is referred as a major macro environmental element that has influenced many of the supermarkets for development of their products. The adoption of new technologies benefits the company as well as customers. With the use of technology products are readily available which in turn increases the satisfaction level of the customers. This in turn even makes shopping by the customers at the supermarkets more convenient and offers personalized services. The main technological implementations in the supermarkets are such as intelligent scale, wireless devices, self check out machine, electronic shelf labelling, and RFID. These implementations have also been by Tesco in its business operations. The adoption of electronic funds, electronic point of sale, transfer systems, scanners has greatly facilitated the efficiency level of stocking activities and distribution along with the requirements being communicated effectively to the suppliers. By the end of 2003 there has been excessive pressure on many corporate for adopting measures that would be beneficial for the society in total. The societal issue that has been surrounding the food retailers is of environmental issue which enforces the companies in this sector to perform its activities in concern with the society. This practice has been adopted by Tesco through its corporate social responsibility act through which the company tries to exceed the minimum obligations put forward by the stakeholders through corporate governance and regulations (Wrigley, 2000, pp. 891-920). The government has even invented a new strategy with the motive to cut waste through sustainable production and consumption, minimize the damage caused to the environment, and even minimize the resource consumption. The legislation had also imposed a fatty tax on the companies for advertising fatty and highly processed foods. This tax greatly affected many companies in the retail sector as I the case of Tesco ahs spoiled relationships with the suppliers as well as customers. There are various government policies and legislations that have a great impact on the operations of the different supermarket chains. The FRC or food retailing commission has issued a code of practice which abandons any company to demand payments from the suppliers or even change without prior notice any form of agreed prices. In a highly competitive environment as in case of supermarket sector creates pressure in the terms of required product differentiation and even intense price wars. The government can reduce the buyer’s power and gain control over monopoly business which would limit many new player from entering into the market with control such as limitations on the raw materials accessibility and license requirements. This is the external analysis of the retail sector of the company where it operates which even highlights the pros and cons of the particular sector. Critically analyze the internal environment for your chosen organization (focusing on a theoretical perspective such as culture, leadership etc.) in relation to your chosen research issue The internal environment of a firm is the way in which the firm organizes and structures their different business activities so as to achieve the common goal. The internal environment of a company comprises of management, corporate culture and the employees that determines the behaviour of the members of the organization. The organizational structure comprises of the relationships between the individuals internal to a company, and even encompasses the functions, production lines, and various other responsibility areas concerned with the decision making process (Iqbal, 2011, pp. 45-46). The employees working in Tesco are divided into various departments so as to enhance their efficiency and performance level. The main functional departments of the company are Finance, HR, Administration, ICT, distribution, Sales, Marketing, Customer service, production, and R&D. The specific departments have different responsibilities and activities. The company is a multinational corporation that has different subsidiaries across the globe though it has a set of standard functions for performing its business operations by incorporates sudden changes in the system as per the culture of the particular country where it operates (Bonnici, 2011, pp. 76-77). The different department of the organization performs separate functions as per their performance standards. This helps in improving on the system operations as and when required. The complexity of the business activities are reduced to a great extent by subdivided the multi operations of the business and then allocating them with specific tasks (Okumus, 2003, pp. 871-882). The culture refers to attitudes, value, knowledge, belief that are shared in common by a group of people. Earlier culture was directly linked with communication. It stated that people belonging to the same culture communicated more efficiently in comparison to those who do not belong to the same culture. Culture plays a very important role in the business operations of many organizations and has gained importance simply because of the market expansion strategy that is adopted by many companies (Daenzer, 2009, pp. 213-214). It is very essential for an organization to clearly understand and analyze the culture of the country in which it plans to extend its operations and achieve success in that particular market. Corporate culture is the firm’s personality which states the beliefs and values of a firm (Lussier, 2012, pp. 101-102). This culture differentiates a company from that of its competitors in the business environment. This culture has made Tesco achieve a brand name amongst all its competitors in the sector. The main aim of Tesco is provide value creation to the customers so that they become loyal customers for the brand. This aim can only be achieved by through the customers and employees (Leathy, 2004, p.15). The company analyzed the needs of the customers and then act in a responsible manner towards all the communities. Tesco enter into new markets with a well structured community plan that comprises of local communities, climate change, healthy nutrition and more of responsible sourcing (Guy, 1996, pp. 3-10). In some countries the company performs its operations based on the approach of green policy and in some countries it focuses more on creating value through its products so that the customers are more loyal towards their brand (Drejer, 2000, pp. 206-220). All the operations that Tesco performs employees occupy an exceptional position in all the business operations. The company even incorporates fair trade practices so that they do not compromise on any ethical standards. The leadership style that is adopted by Tesco is a participative or democratic style in which the leaders of the organization work towards the common goal taking into consideration the goodwill of the employees. The staff’s opinion is involved towards improving upon the working conditions and even their issues regarding to work are effectively eliminated by the leaders. The corporate social responsibility team forms a separate department of the company which develops various plans in consideration for further improvement of societal issues and even to set up a corporate identity in the business environment (Lewin, 1997, pp. 132-133). The strategies that are adopted by the CSR team forms a major part of the company’s contributions towards charities but there are some of the issues regarding the society that are not properly handled by the company in terms of environmental damage that is caused by the carbon evolution of the operations of the company and even excessive amount of wastage of resources that are not being controlled effectively by the company. The leadership and corporate culture of Tesco has enhanced its social responsibility measures but at the same time there exist certain areas that need proper improvement for sustaining the brand reputation of the company. Conclusions & Recommendations Corporate social responsibility forms an integral part of the business strategies and there are measures adopted by the company towards this approach so that can build the perception amongst its customers that they perform according to the ethical values. Often CSR activity helps in developing an image of the company and at the same time if the activity is not performed well then it can effect drastically the corporate reputation and identification. In the recent years this approach is gaining importance because of the high competition and companies adopt this measure so as to set up a benchmark in comparison to its competitors. Tesco a supermarket company has adopted this approach so as to facilitate their business operations. They have set strategies to donate to different charitable organizations and even work together with various other communities for the betterment of the society. However, the company is recommended to take active measures to reduce its food wastage content and control the carbon emission from its operations as fast as possible as this greatly damages the environment. The company can even set up CSR activity such as involving any major society related problems such as child labour, aids, poverty, global warming, etc in its advertisement so that they can spread more of awareness and benefit the society in an useful way. References Acur, N., and Bititci, U. 2004. A balanced approach to strategy process, International Journal of Operations & Production Management. Vol. 24 (4), pp.388-408. Bonnici, C. A. 2011. Creating a Successful Leadership Style. United Kingdom: R&L Education Branson, C. M. 2008. 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