Unit 43-LO1 Analyse the opportunities and threats for firms exposed to an increasingly globalized environment-BTEC-HND-Level 4& 5
Course: Pearson BTEC Levels 4 and 5 Higher Nationals in Business
An increasingly globalized environment has created new opportunities for firms but also many threats. Companies need to be aware of these risks that come with a globally connected world, in order to protect their company from potential problems. This article will explore the opportunities and threats that arise from globalization.
The first section will outline how globalization provides companies with an opportunity to expand internationally which can lead to higher sales and profits as well as lower production costs due to economies of scale. However, this is not without risk where some countries may reciprocate by lowering tariffs or taxes on imports thus leading to a reduction in domestic demand for those products made locally; furthermore, there may be social unrest if other countries feel they are being exploited by multinationals who have moved their manufacturing plants there.
The second section will examine how a globally connected environment also brings with it an increased risk of fraud and violence being committed against companies via the internet, such as phishing and hacking; therefore greater precautions need to be taken in order to avoid this happening.
The third section will explore how global outsourcing can provide significant opportunities for firms by allowing companies to cut costs by exploiting lower labor rates in countries with cheap labor, such as China; however, this is not without its risks where these countries may experience inflation and therefore higher labor costs which would make them less competitive.
The final section will examine how a globalized and interconnected economy brings both opportunities but also threats to the environment through companies producing goods and services for the global market. Therefore, companies need to become increasingly aware of their environmental responsibilities and how they can contribute to reducing pollution in order to preserve the environment on a global scale.
The global context for small business and entrepreneurship:
Global expansion and opportunities for entrepreneurs and small businesses
There are many reasons why entrepreneurs and small business owners all across the globe should continue to pursue global expansion opportunities. For one, as an entrepreneur, no day is the same. And that can be a good thing! So when days start to feel a little too similar or feel like they’re not challenging enough, it can be beneficial for both you and your company to take on new tasks from time to time so you don’t get bored. But since often there aren’t any breaks in between these different tasks, doing them elsewhere could allow everything to flow more smoothly with even less pressure on you back here at home.
The other reason is that growing your clientele means more investment potential if someone wants in on what you’ve created. And when you’re willing to expand your clientele, that often means being located in multiple places at once, which is the mark of a successful entrepreneur.
Challenges and threats of globalisation for entrepreneurs and small businesses
The difficulty of globalizing a small business can be reduced by building trust among peers. The building that trust could happen in a number of ways including operating with transparency and achieving consistency in the company’s practices.
Entrepreneurs also need to understand that any conflicts that arise from doing business overseas are more likely to lead to time-consuming and costly litigation. Factors such as diverging legal cultures, greater linguistic and cultural barriers, misunderstanding about other countries’ laws and regulations, lack of mutual enforcement agreements, limited recourse for dispute resolution such as lawyer-client privilege or qualified jurisdiction – all these factors greatly complicate international trade relations.
When entrepreneurs are operating globally it is important to have the ability to speak accurately about their product or service in languages other than their native tongue. This will allow them to communicate effectively with their buyers, suppliers, and investors when they are not speaking the same language. It can also help with avoiding misunderstandings and prevent fraud or stealing of intellectual property.
Growth of (local and global) competition
The growth of competition in the world is a sign of progress. Competition can give people increased motivation toward excellence, and many big corporations have grown from nothing by competing to provide consumers with what they need.
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Closer to home, each new Wal-Mart that opens creates more than 10 jobs for residents and encourages localities to build new schools to account for the increase in population which they bring with them.
The rise of the ‘born globals’
The rise of the “born globals” has been stark in recent years. The term can be a catch-all for Westerners who have traveled on various missions that distance them from their homes, and this practice has become increasingly popular in the era where globalization is no longer a trend but an active political force.
Globalization used to be thought of as just a fad, or word that outlined our coming together after the tragic events that occurred during World War II. But now it’s no longer just about words at all; globalization is now something tangible and really present in our lives every day – evidenced by increased trade relations between nations around the world and practices like outsourcing that result in companies sending jobs to other countries instead of hiring more people in this country.
The rise of the “born globals” is significant because they no longer see themselves as Americans, or Italians, or French. They might have been born in their home countries, but they were raised globally – and that’s a fact that we haven’t fully grasped yet.
E-commerce is a tool that allows you to compete with the big players for a global audience. You can be anywhere in the world and tap into customers all over the world almost instantly, provided you have access to reliable internet connectivity and stable electricity.
Large companies like Amazon, Alibaba, eBay, or Shopify have vast experience in eCommerce that makes it easier for them to provide good service to their international audiences than independent small enterprises. However, these large corporations don’t offer any protection from countries with tight customs laws; your goods can be held up at customs without notice or swiftly confiscated depending on how strict they are about imports (this applies to all countries).
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When considering where to sell overseas products through eCommerce it’s important to make sure your product is not illegal in the country you are sending it to.
The application of data protection and Cybersecurity
Data protection and Cybersecurity is a demanding job that requires a large knowledge of data laws, a sense of regulatory safeguards as well as the ever-evolving cybersecurity technology to stay one step ahead of attempts by malicious actors to breach and steal data. The experts with this specific capacity are able to put together cyber policies for organizations, manage systems security, install hardware solutions such as firewalls and penetration testing.
Recognition of rules and regulations
The key to understanding rules and regulations is an understanding of the underlying goals that these systems are trying to achieve. Without such an understanding, it’s easy for people to break the law without really meaning to because they don’t understand what it is they’re trying to accomplish by doing so.
For example, parking tickets are designed by cities as a way of designing the drivers’ behavior, which means when you get one, think about how you might not want other cars parking there in order to avoid getting any more!
The good news is if you take a deep dive into some regulation or rule area that interests you, before long not only will your better understand them but also be able to explain them!
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