DSM 602 Global Strategic Management
DSM 602_Global Strategy
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Introduction
Operating a business organization globally involves the organization’s engagement in the international market. Advancements in technology have made the world a smaller place in which a business organization can reach suppliers and consumers from almost any part of the world in just a few seconds. Businesses are increasingly becoming global, like the case of targeting consumers from around the world. A global business operates both locally and internationally, but not with a single country. Operating globally has been the new trend in business operation with newer businesses trying to venture the international market and global business environment. The global business environment is associated with many benefits and advantages that pull a large number of business organizations, which were initially operating locally. The global business environment is conversely faced by various issues, which affect global businesses differently. Some of these issues include ethical, environmental, economic, and social-cultural issues. This paper looks at the social-cultural issues affecting business organizations within the global business environment. With this regard, the paper concentrate mainly on cultural integration and impact placed on international business organizations. This would include both the positive aspect of cultural integration and the negative aspects associated with this social-cultural issue. This issue is attracting significant attention to the increasing globalization of business. The world is slowly developing a common culture as many other cultures are absorbed by more superior cultures. Other cultures could be joined to form a completely new culture.
Cultural Integration as a Global Business Issue
Cultural integration is a situation whereby one or more culture assimilates another culture by gaining ideas, beliefs, technologies, and products of the assimilated culture. In this case, usually the less superior cultures integrate into the dominant culture (Answers Corporation, 2014). Cultural integration is increasingly becoming a threat to those business organizations that operate globally with a view of gaining from specific cultural practices. Typically, businesses operate in certain regions due to the cultural practices of the people living with the given region (Zhu & Huang, 2007). The world is full of cultural diversities, which define what a business organization produces and sells to consumers. Certain goods and services are hardly allowed in specific regions dominated by certain cultures and beliefs, but they are fully acceptable in other cultures. This happens as some culture become stronger while other varnish with time especially due to globalization.
Globalization is both an enemy of many businesses and great friend to other businesses. This argument can be supported from the ideology that some firms find it easy and adventitious to operate globally while others find the idea too threatening (Btucker, 2008). Cultural variations limit the operation of some business organizations, but at the same time, it provides opportunities to other organizations. Changes in cultural practices with time are thus likely to affect businesses either positively or negatively. Positively, a firm may gain advantage from cultural integration when people who had been practicing a certain culture adopt a new culture, which favors the firm’s market operations (Zhu & Huang, 2007). Conversely, when the larger portion of a population adopts a cultural practice and belief that are threat to the business operations, the firm ends up losing.
Nature of Global Business Environment
The nature of global business environment is relatively dynamic. New entrants to the global business environment are witnessed each day, but some leave the market earlier before their projected operational period. Daily changes in the global prospect impact the nature of global business environment and at times, an international economic and social shocks change it. Mainly the international business environment is affected by economic factors, but social-cultural aspects pose a significant effect to all firms operating globally. The world is increasing becoming a smaller place in terms of technology, technology, and social-cultural interactions. Firms are motivated to the global business environment by the increased use of technology in both production and marketing. Different social groups and people with completely different cultural practices are coming together for a common purpose.
Through technologies like social media, business organizations are able to predict or even evaluate the needs and expectations of target customers from various geographical locations around the world. This business environment is characterized by businesses that are busy in their activities. Nevertheless, such businesses have 50 per cent chances of making profits and losses. The global businesses are operated in all parts of the world, but the business organizations need to implement effective strategies that allow new opportunities elsewhere across the border (Frynas & Mellahi, 2011). Usually, businesses operating globally focus more on the international market than they do in their local markets. Perhaps this ideology has a lot to do with cultural aspects especially given that the local market is full of people supporting the specific business both culturally and economically.
A consumer understands a firm operating locally in a better way than a foreign business organization because of beliefs and perceptions. A common perception is that a foreign firm focuses on making profits without any consideration of their needs and expectations. While this is the case, a local company that goes global is likely to gain more support from the local market due to the perception that its products or service quality has been upgraded. The firm on the other hand would have problems facing the target consumers in the international market due to their cultural diversities. This implies that firms face significant challenges whenever they choose to venture the global markets (Yip, 2003). The challenge in this case is on the market side where the new consumers have various cultural backgrounds that are completely different from the firm’s local markets. The firm management is forced to adopt the new cultural practices and regulations existing in the new business environment (Zhu & Huang, 2007).
The nature of global business environment is thus diverse and complex for many investors. Managers need to strategize on how to face the new cultural challenges in the alien business environment if their firm has to survive and achieve success. Given the possible complexities that could face a newly globalized business organization, ties between various societies and organizations have to be considered (Mellahi & Finlay, 2005). Often, these ties depend on the cultural characteristics of the people and organizations in question. The global business environment is affected by variations in various factors such as economic conditions, political aspects, the cultural structures, available policies, the used currency, and geography. A firm’s profit ratio is significant reduced by the negative side of each of these factors (Zhu & Huang, 2007).
Generally, culture can be ascertained to initiate these other factors because people think differently, act differently, and set different policies under the guidance of their cultures and beliefs. This is why cultural-integration is an issue in the global business environment. Integration of various cultures into a seemingly common culture would alter the existing business policies, the actions of consumers and investors, the way people think about a product or service, and ultimately the demand of a given product or service. Negative sides would definitely emerge, but the highly affected firms would include the new entrants and the businesses organizations, which are hardly ready to adjust accordingly and with respect to the prevailing cultural changes. The nature of the global business environment and its dynamics form the major factors considered in formulating strategies that seem firms attain success in the international markets (Mellahi & Finlay, 2005).
Effects of Cultural Integration on Businesses in the Global Environment
Cultural integration is real a business issue today due to the negative effects of globalization. Globalization of businesses and improved technologies in transport and communication are the major causes of cultural integration. Today, people are able to travel around the globe in just a few hours. Air transport has increasingly made this practice possible where business owners or managers are able to move in other world regions to interact and trade with people of different cultural backgrounds. In this case, chances are that the owners or managers would return to their home countries with new business ideas. These new ideas could be helpful, but they have been originally developed under a different cultural environment. There are 50 per cent chances that stakeholders in the home country would accept the ‘new culture’ in the foreign idea or they would disregard it (Zhu & Huang, 2007).
When the firm adopts the new culture and the local market consumers shy off from its new operations, cultural integration would have contributed negatively. On the other hand, consumers today have a better view of the international market than they had earlier because of the increase use of the internet. Consumers from some regions where cultural practices are highly preserved, like in Africa, are now adopting the western culture. Many people in these regions pay much attention to the cultural practices by people in the developed countries. This practice is a typical case of cultural integration where the western culture is growing fast to other world regions. Local firms in such regions face challenges in adapting the new trend caused by the incorporation of foreign cultures. Both local firms and global firms based in the affected areas, but operating globally are negatively affected by cultural integration. Managers of the business organizations in this case find cultural integration to be a great issue that has to be faced using the best strategies possible (Zhu & Huang, 2007).
Globalization being the direct result of cultural integration makes the world as smaller place technically and socially. This happens because consumers use the internet and specifically social media to interact with people across vast geographical distances. Global business organizations that strongly value culture in their business operations end up gaining or losing the most with respect to this cultural issue in global business operations. A typical instance could be a United Stated Company that targets the rich African culture from certain communities like the Maasai Community in Kenya whereby the company would deteriorate with time as the community’s culture deteriorates. If the company stakeholders or managers fail to look for a strategic solution in dealing with the resulting effect from the prevailing cultural integration, it would lose it value and close down (Yip, 2003).
Generally, cultural integration is becoming persistent in the world and this affects many global firms in a negative way. Conversely, some giant companies are actually benefiting from the trend as their products and services gain increased popularity in the international markets. This happens when a globally operating firm is based within a region considered to be the home of the dominant culture. A useful example could be American, European, and Japanese business organizations that operate globally. Consumers from the regions where the foreign cultures are absorbed prefer imported products from these companies to any similar product that is produced locally (Richard & Alba, 2003). Global companies from less preferred cultures face the same level of competition as the local competitors or even greater fate than the local companies. The effect of cultural integration in this case is so severe that the affected firms find it difficult to thrive well as far as the cultural practices associated with them remain inferior (Answers Corporation, 2014). The only best strategy in this case is to focus on quality improvement as well as investing heavily in advertisement to win the consumers’ confidence. The good thing about the effect of cultural integration on changes in consumer perception is that some consumers are so keen on product specifications and quality that they can hardly be blinded by cultural beliefs and cultural perceptions.
Strategic Solutions to the Issue
Naturally, every business organization in the world wants to record a rapid and constant growth with minimal operational costs. Achieving this dream is relatively easy especially when firm managers and other stakeholders adopt the latest trends, which prevail in the global world of business. One of the best strategies is to set high quality standards that would divert consumer choices that are based on their unfounded believes and cultural perceptions to choice based on quality and actual specifications of a given product. A culturally disadvantaged, but a global firm would withstand any changes in culture and beliefs caused by globalization and cultural integration due to the trust customers have on a given product line or services. Resisting the cultural dynamics is hardly wise either since a firm that can hardly use quality as an option in withstanding the effect from the prevailing cultural dynamics would have to adopt the ways of the dominant culture (Richard & Alba, 2003).
Whether to focus on quality improvement or adoption of the new culture, a global businesses would have incur some additional costs. In both cases, investing heavily on the strategy chosen would be a necessity to the business organization. This means that cultural integration as an issue in global business increases the general cost of operating global businesses (Mellahi & Finlay, 2005). Another strategy is to hold a constant completive position that consumers would always trust irrespective of any cultural changes in future. This however happens to large multinational companies, which have gained adequate trust from consumers for a relatively long past. This happens with great efforts and sacrifices, but the goals of such organizations are to offer the best products possible in the global market (Yip, 2003). Consumers in this case focus on the product or service quality rather than the cultural convictions placed on the organization alongside its products or services.
Conclusion
As far as social-cultural factors are important in starting a business, cultural integration is indeed an issue that managers of global and local businesses need to solve. The issue affects business organizations differently with some global firms finding significant benefits from the issue than the possible losses. The best strategy would depend on the nature of the global business affected, its geographical location, its performance history, and the cultural convictions placed on it by consumers. The impact from cultural integration as an issue should be approached accordingly. For the global business organization establishing benefits from cultural integration, the management should strategize on how to maximize on the created opportunity. Increasing the level of investment or diversifying the global business firm in this case would be the best strategy (Yip, 2003). Conversely, the negatively affected global firms should focus on quality improvement with heavy advertisement programs to divert the interest and perceptions of the consumers. Alternatively, adopting the newly incorporated culture could be of great advantage. Heavy advertisement is also requires to strengthen the consumers’ perceptions towards the firm’s products or services. In all cases, the social media should be used as a platform for promoting cultural integration if it is a benefit to the firm or disapproving cultural integration as a global business issue and supporting actual product specifications and quality.
References
Answers Corporation. (2014). What is Cultural Integration? Retrieved from http://wiki.answers.com/Q/What_is_Cultural_Integration
Btucker. (2008, December 1). Global Business Environmen. Retrieved from http://www.articlesbase.com/business-articles/global-business-environment-665499.html
Frynas, G., & Mellahi, K. (2011). Global Strategic Management, 2nd Edn. Oxford: Oxford University Press.
Mellahi, K. F., & Finlay, P. (2005). Global Strategic Management. Oxford: Oxford University Press.
Richard, D., & Alba, V. N. (2003). Remaking the American Mainstream. Assimilation and Contemporary Immigration. Harvard University Press.
Yip, G. (2003). Total Global Strategy. 2nd Ed. Haworth, England: Pearson Education.
Zhu, Z., & Huang, H. (2007). The Cultural Integration in the Process of Cross-Border Mergers and Acquisitions. International Management Review , 3(2) .
