assignment of unit 7.2 global business...

ASSIGNMENT OF UNIT 7.2 GLOBAL BUSINESS STRATEGY

ATHE Level 7 Diploma in Strategic ManagementSubmitted to: Teacher Sahazad

1Archana Rai, ID: 102952

Table of ContentsUNIT: 7.2- GLOBAL BUSINESS STRATEGY...................................4INTRODUCTION.......................................................................4

ACTIVITY1: Your line manager has asked you to analyse theinternational business environment for your chosenorganisation and produce a report for him which includes......4Activities 1- a, b, c...............................................................4

Business environment............................................................4PESTLE analysis- The Macro Environment..............................4

Figure of PESTLE analysis.......................................................5 Political Factors...............................................................5

Economical Factors............................................................6 Socio- cultural Factors.....................................................7

Technological Factors.........................................................8 Legal Factors..................................................................9

Environmental Factors......................................................10Porter’s Five Forces analysis-The Micro Environment...........10

Threats of new entrants........................................................11Threats of substitute product and service..............................11Bargaining power of customer...............................................11Bargaining power of supplier................................................11Competitive rivalry with in organisation (Riley, 2012).............11

Figure of Potter Five Forces................................................11Activities 1, d.......................................................................12

Activities 2: a, b, c – PowerPoint presentation.....................13Activity 3: identification of the legislation/regulation andguidance relating to corporate social responsibility fororganisations.......................................................................13

From Power Point Presentation: Activity 2, a.......................13Business Ethics....................................................................13

In the international business setting, facing the most commonethical issues involving......................................................14


Employment practices........................................................14Human rights.....................................................................14Environmental regulations..................................................14Corruption.........................................................................14Moral obligation of multinational corporations (socialresponsibility)...................................................................14

From Power Point Presentation: Activity 2, b..........................17Conflict.............................................................................17

Common task that produce conflict........................................18Conflict can classify in two ways:...........................................18Constructive and Destructive................................................18

Common causes of conflict.................................................19Factors causing conflicts between nations, there by affectingInternational Business..........................................................19

Factors causing conflict in International business................20Conflict Resolution................................................................20

From Power Point Presentation: Activity 2, C.......................21Legislation...........................................................................21

Employment law................................................................21Consumer protection..........................................................21Competition law.................................................................21

CONCLUSION........................................................................23Bibliography...........................................................................24


UNIT: 7.2- GLOBAL BUSINESS STRATEGY

INTRODUCTION: Global Business strategy is concerned with theimportant long term policy decision of international firms operating acrossfronting in the world economy. It can be defined as the business strategiesengaged by the businesses, companies or firms operating in a globalbusiness environment and serving consumers throughout the world.Global business strategies are closely related to the business developingstrategies adopted by business to meet their short and long termobjectives. The short term goals of the business would be related toimproving the day-to-day operations of the company while the long termobjectives are generally targeted towards increment of the profit, sale andearning of the company in the long run ensuring growth and stability ofthe business and dominance over the national or regional market. (Gillies,1997)

ACTIVITY1: Your line manager has asked you to analyse theinternational business environment for your chosen organisationand produce a report for him which includes.

Activities 1- a, b, c

Business environment: It is directly related to the organizationalactivities and its success. Environment needs to be indentifying oftargeted place before start the business. There are two techniques thatare used to examine the business environment within which anorganisation is operating:

1. PESTLE analysis 2. Porter’s Five Forces analysis

PESTLE analysis- The Macro Environment

The macro environment is typically segmented for the reasons of analysis.Organizations do not have any control in the macro environment. Thisanalysis commonly referred to as a PESTLE analysis. It is very importantthat an organization considers its environment before beginning themarketing process. In fact, environmental analysis should be continuous


and feed all aspects of planning. PESTLE analysis provides a framework forinvestigating and analysing the external environment for an organisation.PESTLE stands for "Political, Economic, Social, Technological, Legal andEnvironmental" and it is used for business and strategic planning,marketing planning, organizational change, business and productdevelopment and research reports. This analysis tool helps to find out thecurrent status, market growth, direction, potential, and position of anorganisation in relation to their external environment and current role. Byunderstanding these external environments, organizations can maximizethe opportunities and minimize the threats to the organization. (AlokGoyal, 2009)

Analysing the business environment of McDonalds’s by usingPESTLE analysis, it is one of the globalized fast food company in theworld.

Figure of PESTLE analysis

There are some factors influencing the business environment as shownabove in the figure which are in details as follows:

Political Factors: The international operations of McDonald’s arehighly influenced by the individual country’s policies enforced byeach government. For instance, there are certain groups in India,Europe and the United States that clamour for state actionspertaining to the health implications of eating fast food. They haveindicated that harmful elements like cholesterol and adverse effectslike obesity are attributable to consuming fast food products.Company’s licence is controlling by local government. For instance,


there is impending legal dispute in the McDonald’s franchise in Indiawhere certain infringement of rights and violation of religious lawspertaining to the contents of the food. The existence of meat in theirmenus in India is apparently offensive to the Hindu religion in thesaid market. McDonald’s stores have to contend with the issues ofemployment procedures as well as their tax obligations so as tosucceed in the foreign market like India. (Rouse, 2007)

A political factor includes:

Government policies Government term and change trading policies funding, grants and initiatives lobbying and pressure groups Wars, terrorism and Conflicts Elections and political trends Internal political issues Inter-country relationships Local commissioning processes Corruption Bureaucracy

Analysis: The Company must also be acquainted with the law in order toknow what their responsibilities and their possible liabilities. AlsoMcDonalds should protect its workers by ensuring all the hiring,compensation, training or repatriation in accordance to the Indian labourlaws.

Economical Factors: The economic environment is a directinfluence on all businesses. Exchange rate fluctuations will also playa significant role in the operations of the company. The company’sinternational supply as well as the existing exchange rates is merelya part of the overall components needed to guarantee success forthe foreign operations of McDonald’s. The rate at which theeconomy of that particular country grows determines the purchasingpower of the consumers in that country. Hence, if a franchiseoperates in a particularly economically weak country, their products


shall cost higher than the other existing products in the market,then these franchises must take on certain adjustments to maintainthe economies of scale. However in case of India the company hasbeen able to maintain a constant level of prices for their products.

Economical Factor includes:

Local economy Taxation Inflation Interest Economy trends Seasonality issues Industry growth Import/export ratios International trade International exchange rates

Analysis: Ideally before penetrating the market, the company must carryout a well conducted market research, especially in the movements in theeconomic environment which McDonalds had done before entering theIndian market due to which the company has been able to bear thefrequency of the shifts in the inflation rate as well as the fluctuations inthe exchange rates which affects the operations of any company.

Socio- cultural Factors: McDonald’s has launched a sensiblyvalued set of food that tenders a reliable level of quality for therespective market where it operates. In the case of McDonald’s theyestablish a good system in determining the needs of the market.The company uses concepts of consumer behaviour productpersonality and purchasing decisions to its advantage which isclearly evident in case of India as the company was quick inremoving their Pork, beef, and Mutton products from India’s menu.For example, in India, a country in which the cow is sacred, themenu features McVeggies instead of hamburgers. In Singapore,customers can order a Chicken SingaPorridge; in Hong Kong, someSeaweed Shake Fries. It is said to have a major influence on the


understanding of the prospective performance of the organisation ina particular market.

Socio-cultural Factors includes:

Demographics Media views of the industry Work ethic Brand, company, technology image Lifestyle trends Cultural Taboos Consumer attitudes and opinions Consumer buying patterns Ethical issues Consumer role models Major events and influences Buying access and trends Advertising and publicity

Analysis: McDonalds should obtain the relevant information from thetarget market in addition to the individual customers of the organisation.It is imperative that before a franchise is granted to a particular market, awell drafted and comprehensive market research should be conductedinitially so as to establish the acts that would conform to good customs,public policies, and morals of the said Country’s society. Similarly, thecompany should find out the shifts in areas like the consumer behaviourand purchasing patterns of the market. Also the company shouldconstantly survey and learn about local culture to better understand anddesign the best product for them.

Technological Factors: McDonald’s generates a demand for itsown products. The company’s key tool for marketing is by means ofOnline Facebook and Google ads, Collaboration with websites likeSnap deal and Times deal to promote sales in India, televisionadvertisements, newspaper, banners and hoardings. Followingdifferent kind of marketing techniques and campaign such as “I’mlovin’ it” campaign, it has become endorsers for McDonald’sworldwide. (Van, 2012)


Technology Factors includes:

Emerging technologies Maturity of technology Technology legislation Research and Innovation Information and communications Competitor technology development Intellectual property issues

Analysis: The Company must also look into the use of IT to enhance theirinventory operations. McDonalds use the internet to their advantage. Thecost-effectiveness, interactivity and real- time effects of thecommunications are a good way to find suppliers. It is also a good way tocorrespond with the respective McDonald’s headquarters in every Country.

Legal Factors: The legal requirement is important because theoffenders will be fined or have their business prohibited fromoperating which can be disastrous. Muslim countries require theirmeat to conform to the Halal requirements of the law. In the sameregard, those that operate in countries in the European Union shouldconform to the existing laws banning the use of genetically modifiedmeat products in their food. This was prime reason which forcedMcDonalds to eliminate beef, pork and Mutton out of India’s productmenu. Other legal concepts like tax obligations, operating hours,business registration, labour and employment laws and quality &environment certification (such as ISO)and quality requirements areonly a few of important elements on which the company has to takeinto consideration. Otherwise, smooth operations shall be hard toachieve. (Van, 2012)

Legal Factors includes:

Current legislation Future legislation International legislation Regulatory bodies and processes Employment law Consumer protection


Health and safety regulations Money laundering regulations Tax regulations Competitive regulations Industry-specific regulations

Analysis: As a certified fast food operator, there are many regulationsand procedures that McDonalds should follow. McDonalds should protectits integrity and consumer confidence by ensuring all materials andprocess are as claimed or must followed.

Environmental Factors: The climate and physical terrain of acountry are important environmental conditions which have asignificant effect on the demand and the type of product madeavailable. Prior to entry into a new market, it is very important forMcDonald’s to consider the physical terrain and climate in theappraisal. Altitude, relative temperatures and humidity are some ofthe climatic conditions that can affect products in foreign markets.Being environmentally friendly is another important issue toconsider. Environmental groups forced McDonald’s to reduce its useof plastic and Styrofoam packing. While McDonald’s internal marketresearch shows that environmental issues will have neithera positive nor negative impact on sales, they have agreed to workwith the Environmental Defence Fund, an environmental pressuregroup, to reduce unnecessary and harmful waste. Several civicgroups in India have made actions to make the McDonald’sfranchises in India aware of the rather abundant use of Styrofoamcontainers and the resultant abuse of the environment. (Van,2012)

Environment Factors includes:

Environmental regulations Ecological regulations Reduction of carbon footprint Sustainability Impact of adverse weather


Analysis: The Company should find out the environmental regime thatgoverns the operations in every market. It should also monitor the wastedisposal of the company. McDonald’s should minimize the use ofStyrofoam materials and plastic cups to make the environment healthy.(The Happy Manager, 2010)

Porter’s Five Forces analysis-The Micro Environment

The micro environment is also known as operating, competitive or taskenvironment business. It consists of company’s immediate environmentthat affects the performance of company. It becomes from internal part ofthe company .Factors in the micro environment are largely within thecontrol of the managers. In this way, organisations can be much moreproactive in dealing with the task environment than in dealing with themacro environment. The Micro Environment normally refers to Porter Five Forces. Competitiveintensity of McDonald’s can be determined with Porter’s five forces. Porterfive forces is business strategy formed by Michael E.Porter of Hawardbusiness school in 1979.he determined five forces which actuallydetermines attractiveness of the market and competitiveness. These fiveforces are

Threats of new entrants Threats of substitute product and service Bargaining power of customer Bargaining power of supplier Competitive rivalry with in organisation (Riley, 2012)

Figure of Potter Five Forces

1) Threats of new entrants: Entry to a restaurant Business is verydifficult. It is hard to make a prominent brand name. There is high


research and development costs and high cost of entry. Strongbrands already in competition make it more difficult such asMcDonald’s, Pizza Hutt, Domino’s etc. New entrants face a very highcompetition in the start of the business. (MacDonald, 2013)

2) Threat of substitute product and service: The substitutes inthis industry are very high. People can choose variety of productsthey can either choose Burger King, KFC, Indian Cuisine, Indian localshops, Indian Vegetarian restaurants. The same situation is faced byMcDonald’s in USA and all over the world.

3) Bargaining power of customers/ buyer: Bargaining power ofcustomers refers to pressure a customer can exert on a business toget good quality of food, good customer service and low price.Bargaining power of customer in this industry is low. As McDonalds’provide a standard service, one price strategy and quality of food.Customers have low bargaining power throughout the world in foodindustry.

4) Bargaining power of supplier: Bargaining power of buyer in thisindustry is low. Situation can change if the main ingredients are notavailable. But with McDonalds’ simple menu and working with manysuppliers, they are not facing a big threat. So the bargaining poweris relatively low.

5) Competitive rivalry with in organisation: Fast food restaurantindustry is very competitive. The competition is as high as all theorganisations want to get hold of customer base. Food industry allover the world has the same criteria because there are many smallbusinesses operating in abundance and also top brands.McDonald’s knows about the customers taste and preferences allover the world. So they started Mccafe (morning breakfast).soMcDonald’s is providing quality food from early morning till latenight in order to get competitive edge in the market. (Van, 2012)

Activities 1, d

Globalization is the worldwide integration of economic, cultural, politicalreligious and social system. MacDonald’s is one of the globalized fast food


companies; it has about 31,000 restaurants in 118 countries out of 193countries in the world. All franchises company are profitable because of itsimage, service, quality, price and brand name. Another reason whyfranchises have become so popular is the simple fact that they can befound all over the world. When tourists are in an unfamiliar city, especiallywhen the culture is different from their home town, they may feeluncomfortable with trying new foods. Luckily for them, in most majorcities, it is still possible to find a fast food chain that also has restaurantsback where they are from. One of the main reasons why they are soprofitable is that their business structure is focused around havingconsistent performance standards that aim to provide the customer withthe service they need every time they visit any one of the company’sstore or restaurant. For example, when customer walk into a McDonalds,they always expect their menu, trademarked McFlurries, fries and burgers,and of course the popular Happy Meals. Along with the food, they knowthat the service will be quick and easy so they can get their meal and goon their way. With some variations, this is basically what all fast foodrestaurants aim towards, because they know it is what the customerwants. MacDonald’s was challenging and changing their plan to moveforward during the greatest recession of 2008 globally. McDonald'sdecided to close the three locations that it had in the island country ofIceland. The Krona, the currency of the country had collapsed and lost 80percent of its value. This all about the effect of the globalization thatMacDonald’s organizations are getting opportunity to franchisesinternationally wherever they want. They normally do the researchglobally to find out the demand of market, location, economic, politicalsituation, culture and custom so that they will place their business if theyfound a suitable environment to start the business. (UK Essays, 2013) Activities 2: You are now required to give a presentation to agroup of managers on the importance and nature of CorporateSocial Responsibility to organisations operating internationally.


Activities 2: a, b, c – PowerPoint presentation Activity 3: identification of the legislation/regulation andguidance relating to corporate social responsibility fororganisations

From Power Point Presentation: Activity 2, a

Business Ethics: Business Ethics is a specialized study of moral right andwrong. It concentrates on moral standards as they apply particularly tobusiness policies, institutions, and behaviour. Business ethics is asystem of moral principles applied in the commercial world. It is awhole new scientific area because it combines law theory andpolitics as much as philosophical and historical documents. Ethicsbecome a term very flexible and have many different aspects.Business ethics provide guidelines for acceptable behaviour byorganizations in both their strategy formulation and day-to-dayoperations. An ethical approach is becoming necessary both forcorporate success and a positive corporate image.

Especially nowadays ethics in business are obligated becausemany businessmen are only interested in making money despitethe ethical costs or the harm they would probably cause to peopleor even to nature (environmental pollution)

Many of the ethical issues and dilemmas in international business arerooted in the fact that political systems, law, economic development, andculture vary significantly from nation to nation. (Daniela, 2010)

In the international business setting, facing the most commonethical issues involving

Employment practices Human rights Environmental regulations Corruption Moral obligation of multinational corporations (social responsibility)

Employment Practice: ethical issues may be associated withemployment practices in other nations. When work conditions in a host


nation are clearly inferior to those in a multinational’s home nation, whatstandards should be applied? Those of the home nation and host nationwhile few would suggest that pay and work conditions should be the sameacross nations, how much divergence is acceptable? For example, while12-hour workdays, extremely low pay, and a failure to protect workersagainst toxic chemicals may be common in some developing nations, doesthis mean that it is OK for a multinational to tolerate such workingconditions in its subsidiaries there, or to condone it by using localsubcontractors? MacDonald’s company is applying all the policy andprocedure to maintain the employment practice as home country and hostcountry. MacDonald’s does not allow working more than contracted hourand giving career opportunity to all races, sex, ages and culture. (Frank B.Cross, 2009)

Human Right: Beyond employment issues, questions of human rightscan arise in international business. Basic human rights still are notrespected in many nations. Rights that we take for granted in developednations, such as freedom of association, freedom of speech, freedom ofassembly, freedom of movement, freedom from political repression, andso on, are by no means universally accepted. One of the most obviousexamples was South Africa during the days of white rule and apartheid,which did not end until 1994. Among other things, the apartheid systemdenied basic political rights to the majority non-white population of SouthAfrica, mandated segregation between whites and nonwhites, reservedcertain occupations exclusively for whites, and prohibited blacks frombeing placed in positions where they would manage whites

MacDonald’s value and respect all the employees who work at McDonald'srestaurants. The majority of McDonald’s restaurants around the world areowned and operated by independent business men and women. Both ourcompany and franchised-owned restaurants work hard every day to treatMcDonald's employees with dignity and respect. Employees are paidcompetitive wages and have access to a range of benefits to meet theirindividual needs. In addition, employees who want to go from crew to


management can take advantage of a variety of training and professionaldevelopment opportunities. (MacDonald's, 2011)

Environment Pollution: Ethical issues arise when environmentalregulations in host nations are far inferior to those in the home nation.Many developed nations have substantial regulations governing theemission of pollutants, the dumping of toxic chemicals, the use of toxicmaterials in the workplace, and so on. Developing nations often lack thoseregulations, and according to critics, the result can be higher levels ofpollution from the operations of multinationals than would be allowed athome. For example, consider again the case of foreign oil companies inNigeria. According to a 1992 report prepared by environmental activists inNigeria, in the Niger Delta region,

Apart from air pollution from the oil industry’s emissions and flares dayand night, producing poisonous gases that are silently and systematicallywiping out vulnerable airborne biota and endangering the life of plants,game, and man themselves, they have widespread water pollution andsoil/land pollution that results in the death of most aquatic eggs andjuvenile stages of the life of fin fish and shell fish on the one hand, whilst,on the other hand, agricultural land contaminated with oil spills becomesdangerous for farming, even where they continue to produce significantyields.

McDonald’s has also been active in educating its customers about thecompany’s environmental activities and positions. McDonald’s iscommitted to protecting the environment for future generations, and thatit believes that business leaders must also be environmental leaders.McDonald’s has also reduced the weight of packaging in its sandwichwraps, hot cups, and napkins, removed corrugated dividers in someshipping cases, and switched to bulk containers wherever possible.

McDonald’s tries to use recycled materials whenever possible. Forexample, it is one of the largest users of recycled paper in the U.S.However, packaging that has direct contact with food, which constitutes


approximately 42 percent of McDonald’s packaging, is strictly regulatedby the FDA not to contain post-consumer recycled materials. Therefore,McDonald’s strives to increase the recycled content for non-foodpackaging, such as corrugated boxes, which must be made of 35%,recycled material according to a 1990 mandate. In addition, it usesrecycled paper for non-food items such as Happy Meal boxes, carry-outdrink trays, and paper towels. (Anon., 1995)

Corruption: corruption has been a problem in almost every society inhistory, and it continues to be one today. There always have been andalways will be corrupt government officials. International businesses cangain and have gained economic advantages by making payments to thoseofficials. A classic example concerns a well-publicized incident in the1970s. Carl Kotchian, the president of Lockheed, made a $12.5 millionpayment to Japanese agents and government officials to secure a largeorder for Lockheed’s TriStar jet from Nippon Air. When the payments werediscovered, U.S. officials charged Lockheed with falsification of its recordsand tax violation.

Moral courage: Companies can strengthen the moral courage ofemployees by committing themselves to not retaliate against employeeswho exercise moral courage, say no to superiors, or otherwise complainabout unethical actions. For example, consider the following extract fromUnilever’s code of ethics: Any breaches of the Code must be reported inaccordance with the procedures specified by the Joint Secretaries. TheBoard of Unilever will not criticize management for any loss of businessresulting from adherence to these principles and other mandatory policiesand instructions. The Board of Unilever expects employees to bring totheir attention, or to that of senior management, any breach or suspectedbreach of these principles. Provision has been made for employees to beable to report in confidence and no employee will suffer as a consequenceof doing so.


Corporate Social responsibility: power itself is morally neutral. It ishow power is used that matters. It can be used in a positive way toincrease social welfare, which is ethical, or it can be used in a manner thatis ethically and morally suspect. Consider the case of News Corporation,one of the largest media conglomerates in the world, which is profiled inthe accompanying Management Focus. The power of media companiesderives from their ability to shape public perceptions by the material theychoose to publish. News Corporation founder and CEO Rupert Murdoch haslong considered China to be one of the most promising media markets inthe world and has sought permission to expand News Corporation’soperations in China, particularly the satellite broadcasting operations ofStar TV. Some critics believe that Murdoch used the power of NewsCorporation in an unethical way to attain this objective. Somemultinationals have acknowledged a moral obligation to use their powerto enhance social welfare in the communities where they do business. BP,one of the world’s largest oil companies, has made it part of the companypolicy to undertake “social investments” in the countries where it doesbusiness. (Hurst, 2004)

Being a responsible corporate citizen, MacDonald’s firmly believes ingiving back to the communities it operates in. They love to providesupport and encouragement to the people who need it the most. Theirentire restaurant contributes to their local community and every year theyhelp set up and supports numerous educational, sporting and charityprogram designed to help a wide range of people. MacDonald’s has aproactive approach to charities and sponsorship. MacDonald’s believethese help inspire and support the people of Pakistan, especially theunderprivileged ones, to live a better life. They are dedicated deliveringgreat experience through their ongoing community support program.(MacDonald, 2013)

From Power Point Presentation: Activity 2, b


Conflict: When disagreements and friction arise in the course ofinteraction because of opposing interests or cultural differences. Manychances for distorted, confused, or missed messages may occur.Negotiation and diplomatic skills is increasingly important for solvingconflict. American managers spend 20% of time on conflict issues; it’shigher for international environment than national.

Conflict over MacDonald’s religion: McDonald’s crop, which is angeringIsrael’s religious leader because its burgers violate Jewish Dietary laws bymixing cheese and meat, is also drawing ire over its employment practice.Sometime conflict comes around the business environment in the sameway McDonald’s have been face with some of the conflict such as:McDonald's has agreed to pay a $10m settlement after Hindus living inthe United States started legal action against the fast-food giant. Thelawsuits said the company had failed to disclose that it had used beefflavouring in its French fries, In a leaflet produced by London Greenpeaceit accused McDonald's of paying low wages to its workers and exploitingchildren in advertising campaigns. (Chicago Tribune, 1997)

Common task that produce conflict:

Foreign labor strikes

Negotiate with overseas vendors, clients, & partners

Lobby governments

Mediate relations with outside pressure groups

Managing diverse employees

Conflict and business

Not always bad

Can be productive exchange

Key is to understand role of culture

Conflict can classify in two ways: Constructive and Destructive

Constructive:

In can introduce different solution19

Archana Rai, ID: 102952

Power relationships can be clearly defined

It may encourage creativity and the testing of ideas

It focuses attention on individual contribution

It brings emotion out into the open

It can release hostile feelings

Destructive:

It may distract attention from the task

It may result in disintegration

Looser may go into denial

Damages co-ordination

Common causes of conflict:

Language

Poor translation or limited skills

Lack of understanding cultural norms

Inappropriate behavior

Decision-making

Centralized or Decentralized

Culture’s propensity for conflict

Avoid or accept

Factors causing conflicts between nations, there by affectingInternational Business:

insecure or inequitable access to resources,

competition between social groups for political power,

Incompatibilities between groups with distinct value systems

Personal differences in global issues

Role incompatibility

Power based Domination20

Archana Rai, ID: 102952

Political Instability

Threat for Security

Terrorist activity

Inter communal violence

Abundant availability of valuable resource located in particular area– oil, water

Environmental Stress :

Climatic change – change in rainfall

Resource scarcity – decline in water supply,

agricultural productivity,

Poverty

Environmental related –Migration

Factors causing conflict in International business:

Business can cause conflict over control of the resource or area.

Business can cause conflict over the right to participate in decisionmaking and share in benefits

Companies can be a target of conflict.

No clear cut goals

No clear cut agreements and contracts

No ethics followed

Misleading communication

Improper communication

Corruption

Difference on values among the partners Value differences

Dealing with the laws, policies and political authorities of more thanone nation

Unexpected changes in currency rate affects the internationalbusiness deal


Conflict because of cultural differences:

Competition

Share in benefits

Domestic political pressure

Conflict Resolution:

Avoidance—ignore altogether

Accommodation

Compromise

Collaboration

Competition—face head-on

Negotiate (Suder, 2008)

From Power Point Presentation: Activity 2, C

Legislation:

The way in which a business can operate is controlled by legislation. Lawscan be imposed by the UK or European Union courts and government.Legislation mainly acts as a constraint on business. The main areas oflegislation that affect businesses are:

Employment law Consumer protection Competition law

Employment law: This is aimed at protecting the health, safety andrights of employees. The main employment laws that a business needs toconsider are:

Health and Safety at Work Act 1974: Employers must provide safepremises and machinery. They must ensure that workers health is notaffected by their work. The key costs and benefits of the Health andSafety at Work Act for a business are:


Adds to costs to businesses that need to train staff and spendmoney maintaining the standards set out.

But may reduce cost in the long term because of a reduction in staffabsences and not having to pay compensation for injuries.

Good health and safety record is a good way of encouragingrecruitment of good workers.

Equal Pay Act 1970: Employees who do equal work or work of equalvalue must receive the same pay as workers of the other sex.

Sex Discrimination Act 1975: Employees cannot be sexuallydiscriminated in employment, training or recruitment.

Race Relations Act 1976: It is illegal to discriminate against someoneon the basis of race, ethnic group or colour.

Employment Protection Act 1978: Employees must be given a writtencontract of employment. It protects against unfair dismissal (without goodcause) and says that redundancy pay must be paid if the worker hasserved more than two years and their job is to be abolished.

Employment law imposes additional costs to the business because theyhave to spend additional money on training, recruitment and pay. Like theHealth and Safety Act there are also benefits if the workers feel they aretreated fairly and there is more security, they will be more motivated.(Emerson, 2009)

Consumer Protection: This is aimed at making sure that businesses act fairly towards their consumers – especially since consumers are sometimes in a much weaker financial position. The main consumer protection legislation is:

Sale and Supply of Goods Act: this states that goods must be of satisfactory quality)


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Trade Description Act: goods and services must perform in the way advertised by the business

Consumer Credit Act: this protects the consumer when borrowing money or buying on credit. Consumer protection imposes additional costs to businesses since they have to comply with the laws. If they do not comply they risk fines and ultimately being put out of business by the courts of law.

Competition law: Competition law aims to ensure that fair competition takes place in each industry. Governments believe that greater competition leads to lower prices, better quality goods and a wider varietyof products.

Competition Commission (CC) and the Office of Fair Trading(OFT) investigate any business that has more than 25% of the marketshare, especially if it merges with another business. They may feel thatthe business has too much power and can set high prices and providepoor quality products. The CC and OFT has the power between themeither to fine these businesses, or prevent the merger taking place. TheOFT can also fine businesses who fix prices or prevent other businessesfrom trading in their market. Most recently they investigated thecar industry and warranties offered by leading electrical retailers.(Emerson, 2009)

McDonald's is committed to conducting business ethically and incompliance with the letter and spirit of the law. This commitment isreflected in McDonald's Values. Inherent in each value is theircommitment to be ethical, truthful and dependable and this is reflectedthrough our Standards of Business Conduct which serves as a guide tomaking good decisions and conducting business ethically.

Each year McDonald's employees certify that they have read and willabide by our Standards of Business Conduct. Employees also completeregular training on the Standards and various laws, regulations and


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company-specific policies. In addition, McDonald's and its employees in allcountries must comply with the Foreign Corrupt Practices Act (FCPA). Ingeneral, the FCPA prohibits parties or political candidates for the purposeof obtaining or keeping business or improperly influencing governmentaction. Included in the anti-bribery prohibition is a corrupt paymentthrough a third party. (McDonald's.com, 2013)

CONCLUSION

Global Business Strategy: Global Strategy' is a shortened term thatcovers three areas such as global, multinational and internationalstrategies. Essentially, these three areas refer to those strategiesdesigned to enable an organisation to achieve its objective of internationalexpansion. Important of GBS From a companyperspective, international expansion provides the opportunity for newsales and profits. In some cases, it may even be the situation thatprofitability is so poor in the home market that international expansionmay be the only opportunity for profits. For example, For example, poorprofitability in the Chinese domestic market was one of the reasons thatthe Chinese consumer electronics company, TCL decided on a strategy ofinternational expansion. It has then pursued this with new overseasoffices, new factories and acquisitions to develop its market position in thetwo main consumer electronics markets, the USA and the European Union,Clothing companies expand in order to take advantage of low labour costsin some countries. (Gillies, 2002)

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The End


INTRODUCTION: Global Business strategy is concerned with the important long term policy decision of international firms operating across fronting in the world economy. It can be defined as the business strategies engaged by the businesses, companies or firms operating in a global business environment and serving consumers throughout the world. Global business strategies are closely related to the business developing strategies adopted by business to meet their short and long term objectives. The short term goals of the business would be related to improving the day-to-day operations of the company while the long term objectives are generally targeted towards increment of the profit, sale and earning of the company in the long run ensuring growth and stability of the business and dominance over the national or regional market. (Gillies, 1997)Activities 2: a, b, c – PowerPoint presentation

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