BUMGT5920 Management in a Global Business Environment Assignment Help

Describe, using academic references, the international challenges and possible opportunities for managers operating in a global environment. Provide a recent practical example of an Australian organization which has faced the challenges of international competition and expansion. You can use companies which have been in recent news.

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Introduction:

For the last two decades, the world economy and international business have seen speedy, sustained and constant growth. After the introduction of computer and internet, the area of market and business has crossed the nationwide boundaries for almost every goods, and service. The yearly world product rate has increased by more than six percent since 1950. And the most dramatic expansion has occurred in the financial market. If we look at the global forex market, we can see that billions of dollars are transacting every day, and among them, almost 90 percent of transactions are related to the financial market. For the last few decades, there has been a rapid improvement in the field of science and technology, which helps businesses to spread across the globe. Nowadays, not only smaller countries, even the largest economies in the world, including China and the U.S., cannot protect themselves from the effect of the global economy. For that reason, organizations and managers who work in a global environment had to face a different kind of challenges in everyday work. In this article, we shall provide an in-depth discussion about the challenges and possible opportunities for managers who operate the business in a global environment.

Definition and meaning of international business: International business refers to a business activity which crosses over the boundary of a nation. In international business, production or supply of goods and services do not limit within a country, hence creating a worldwide market and opportunities for organizations (Carpenter and Dunung, 2012). There are several reasons behind the spurring of international business. The rapid improvement in technology, science and transport system made the communities interact with each other easily while exchanging goods and services for trading (Business environment, 2005). Besides it, governmental restrictions are also becoming liberal and allowing trades to services across borders. This is making the global market filled with more competition and countries are also getting benefited by this in terms of generating new employment and infrastructure and earning more foreign money. In today's life, a lot of companies outsource their business to other countries; many companies accumulate fragmented work from different parts of the globe. And to do their job smoothly, they appoint managers and other officials. There are many challenges managers have to face while working in a global workplace. In other sense, these are the part of worldwide business and economy, and to sustain in this field, they must need to cross over these hurdles.

Challenges for managers operating in a global environment:

1) Political Differences: Every nation has its own political culture and structure, which also affects the respective national market and trading. When an organization does business in more than one country, then they have to deal with the different political structures of those countries. Generally, with the increase in the numbers of countries, the complexity of work increases (Gupta, 2013).

2) Cultural Differences: For the international market, cultural differences is one of the most challenging problems. Every country has its own work culture. While the work culture in the USA and the American continent is quite fast-paced, the work culture in India is slower and time taking. In Japan, they have a different time-based work culture. Managers of a multinational company had to deal with this work cultural and adjust themselves according to the culture.

3) The difference in Language: The language of people differs from region to region. Even in a country, people speak in different languages. And to communicate with customers or to display product details, knowing the local language is quite necessary. Or else it can create distance between the brand and customers. While operating in a global market, managers had to face this challenge (TradeGecko, 2017).

4) The difference in Currency and Economy: The currency units vary from country to country as well as the economic condition. Managers may face problems in terms of currency convertibility, exchange rate fluctuations. Adding to that, the monetary system and regulations may also vary.

5) High Cost of Distance: When two places are located geographically far from each other, then the shipment of goods or mode of transportation may face troubles. This also takes more time. With distance, other additional costs also increase.

6) The difference in Market Infrastructure: Marketing facilities are also not the same in all places. As an example, an advertisement which can be effective in the USA, cannot be at all effective in Middle East countries.

Scopes and Opportunities:

Survival: The number of countries with a large market and resources is very limited in the world. Maximum countries are small in size, having a smaller proportion of the market for trading. For example, most European countries are small in size. So, without having a foreign market, European companies would not have enough economic criteria to compete with U.S. companies.

Growth of Overseas Market: With time, many countries are experiencing strong economic growth. From the last decade, many Latin American and Asian countries have seen significant development in their economy, which expands the global market and add stability to continuous growth. If we consider the market of Amway corps.A U.S. based private manufacturer of cosmetics and soaps, Japan holds a larger market segment than U.S. A (Pondiuni.edu.in, 2019).

Sales and Profit: With globalization, the area of market increases. Hence, demand and supply also increase. Previously for a nationwide company, their market is limited under the country. But after globalization, the whole world becomes the possible market for an organization. So, the sales and profit ratio increases with globalization.

Standard of Living: Globalization of trading allows to increase the standard of living for common people. Without trade, people would have to pay more for less because of product shortages. Today we can get almost anything delivered to our doorstep because of globalization. This also helps managers and professionals to gain access to raw materials, while at the same time fostering competition and efficiency.
Employment: With the increase in business, it requires more human force to run it and spread it successfully. For that reason, organizations require more employee to work. When a company does business in some different state, they need local employees, which also helps to increase the economic status of that state.

Overview of National Australian Bank

National Australian bank had been a successful organization in Australia as it had provided bank services over a long period, and they had been very successful as they are the largest bank of Australia. They had been very successful in the market of Australia as they had total revenue in the Australian Market nearing about A$19.01 billion. The National Australia Bank was established in the year 1982, and after that, they expanded their base to different regions of Australia, and they were successful. Later they also tried their luck in different countries of the world, but they were not successful. There were global market challenges which they couldn't face, and they suffered a massive loss while doing business in the worldwide market. (McConnell P. (2016) (Letts S. (2019)

Business Overview

National Australia Bank in the year of 1987 bought the Clydesdale Bank, National Irish Bank in the Republic of Ireland and Northern bank in Northern Ireland. NAB bought these banks, but it was a failed expansion strategy. In the year 1990 NAB went to England and purchased the Yorkshire Bank which is a 120-year-old bank, and NAB purchased Bank of New Zealand in the year of 1992 with their expansion continuing. In 1995 NAB forged into the market of USA and bought Michigan National Corporation Bank. Thus, after NAB purchased those banks, they had become quite successful and ventured as a leading bank in the world. (McConnell P. (2016)
But at the starting of the year 2000, the bank started to fall out as they have to sell out the Michigan National Corporation Bank to a Dutch bank around $1 billion as they have not been able to understand the US market properly and they have to sell the mortgage house "Homeside" which they purchased in 1998 as they sold Homeside with a loss of around $2 billion. In the year 2004 NAB sold both their Irish banks National Irish Bank and Northern Bank. In the year 2005, they submitted the Yorkshire bank under the Clydesdale Bank, making their only bank in Europe. But in the year 2007 again they started acquiring where they first acquired the USA privately held corporation Great Western Bancorp (GWB) for just A$1 billion. But in the year 2009, there was a significant drop in net after-tax profits (-42%) mainly due to the charges of the increased debt. So in the year of 2015, the bank sold Great Western Bancorp (GWB) for a loss of A$67 million. The only bank which left under their acquisition was Clydesdale which they sold off in the year 2016 with a loss expecting around A$4.2 billion. So the National Australian Bank had not been able to do their business in the overseas market, and they had been a significant failure in that market. (McConnell P. (2016)

Factors of Failure

Several factors have influenced the failure of National Australian Bank in the market which is discussed here

1. Lack of Planning: - The main reasons of failing in the global market is the lack of planning as the National Bank of Australia jumped into the foreign markets without any solid plan, and there was no complete research which made them suffer a massive loss in the international markets. Though they were initially successful in the end, they suffered a considerable loss.

2. Poor Communication: - Communication is a major factor in any business or organization. Entering into a global market requires that they communicate effectively with their partners and how they are going to do the business in that organization. National Bank of Australia should have hired local teams to communicate with their customers and increased their business aspects

3. Lack of Adaptability: - The inability of adapting the needs of the local culture is also another factor why the organization suffered such a massive loss in the global market. The National Bank of Australia entered the global market, but they failed to use the talent who would have enhanced their skills to attract the customers and make their business a successful one.

4. Poor Market Acceptance: - The next factor was that National Bank of Australia got a poor acceptance from the global market though they have collaborated or bought several banks from different regions, they were not so much successful in venturing the business and dealing with the customers (Edwards N. (N.D.).

Possible Opportunities

According to my point of view, the bank could have collaborated with the different bank instead of buying the banks. The National Bank of Australia could set up their headquarter base in their different where they could have an overview of the bank's proceedings, and they should have also employed some efficient people in the bank who could also look after the bank proceedings properly. Another thing they could have done to not engage in the mortgage business, which is also one of the causes of their downfall in their organization.

Conclusion:

In today's life, multinational organizations must need to deal with the complexities, risks and challenges of globalization. The managers act as the face of organizations and maintain the flow of production. To be productive and prosper, they also need to be well equipped with latest facilities and be aware of the possible hazards of global trading. Managers need to take all finance and business-related decisions based on international finance and monetary policies. While the managers of an organization decide to go global with foreign investment, they must consider all the possible factors because the financial strength of an organization highly depends on those parameters. Besides it, by doing successful globalization of business, managers can achieve a lot of facilities and accolades. It becomes equal profitable for the managers as well as for the company also. In this article, we have discussed all the possible concerns which managers should consider while taking part in global trade. We have also discussed the possible outcomes and opportunities an organization can achieve through globalization.

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