Globalization and Organizational Processes
Discuss about the Organizational Operations of Global Companies.
The concept of globalisation has been defined by OECD as the geographic dispersion of service based and industrial activities which include, sourcing of the factor inputs, distribution, production and cross-border networking process of the organizations. Globalization has thereby proved to be a process where the economies of various countries are highly interdependent on each other and are integrated in nature as well. The globalisation based process is dynamic in nature and changes the organizational processes on a regular basis. The process of the globalisation is considered to be deeply integrated between the different countries and the regions of the world (Bende-Nabende 2017). This method further involves higher amounts of trade across the borders of the various services and goods. The development of the various global brands is able to serve the markets in the lower-income, middle-income and the higher-income based countries of the world. The organizations also start making higher use of the offshoring and outsourcing of the production process. The migration of labour also increases in the process between the various developed and the developing countries (Van Hoa and Harvie 2016). The spending of organizations on the infrastructure of the company and innovation based capabilities have also increased after the implementation of globalisation. The globalisation process has made the economies of different countries much more interdependent in nature. Globalisation has thereby proved to be process which has enabled various countries in the world to increase their shares in the world trade (Intriligator 2017).
The report will be based on the analysis of the ways by which globalisation has affected the different organizational processes and the ways by which they operate in the market. The increase of the outsourcing related activities of the global or multinational organizations and their effects on the profitability of the companies will be analysed in the report in detail. The company that is taken into consideration for this analysis is Walmart which is an American retail organization and has its operations in many countries of the world. The impact of globalisation on this organization and the challenges that have been faced in the process will be analysed in the report (Petschow, Rosenau and von Weizsäcker 2017).
Walmart Inc. is an American multinational organization which operates a chains of discount stores, hypermarkets and the grocery stores in the various areas of the world. The headquarter of Walmart is located in Bentonville, Arkansas and the company was established by Sam Walton in the year 1962. Walmart owns more than 11,718 stores in around 28 countries of the world and has its operations under different names. The countries in which Walmart has its operations are, the United States, Canada, India, Japan, Chile, Argentina and Brazil. The business operations of Walmart are controlled by the Walton family. The largest share of the entire sales of Walmart is received from the United States.
Impact of Globalization on Walmart
The main impact of globalisation on the business organizations is related to the high levels of competition in the various industries. The competition is mainly based on the cost of the services and products, the adaptation with technologies and the target market of the company. The low cost production of organizations can further lead to the increase of their share in the market. The contemporary world is affected by the environment, society and the business organizations. The process of globalisation has been able to link the neighbourhoods, cities, countries and the regions closely together (Berdiev and Saunoris 2018).
The people and organizations from the different countries are intertwined with each other due to the effects of globalisation. The economic integration on the global basis has affected the world economies in the current business environment. The globalisation based process has taken place for hundreds of years and has speeded up from the last few years. The positive effects of globalisation on business organizations are related to the services and products and the target markets which can help them to increase share in the market. Another major effect of globalisation on the organizations is related to the rising level of usage of technology. The internationally and entrepreneurial oriented organizations have thereby gained the help of various technologies for exploring new opportunities of business (Zajda 2015). The e-commerce based platforms that are provided to the companies have helped the companies in increasing their reach in the different countries of the world. The levels of employment in the third world countries have also increased due to the increase of globalisation and the outsourcing activities of the multinational companies.
Globalisation has however caused some negative effects on the business organizations. The fluctuations in prices across the different operational areas of the company is caused due to the increase in the globalisation based activities. The outsourcing activities that are performed by the global organizations have negative effects on the jobs of the internal employees or the people of the country where the company is operating currently. The companies have increased their outsourcing activities for the purpose of obtaining cheap labour from the developing countries (Oliver 2017).
Walmart has received the topmost rank among various organizations among global retailers by the Fortune Magazine in the year 2010. The company has its operations in the retail which experiences increase in demands on a periodic basis. The process of retailing is the final step related to the marketing of the products that are manufactured by the organizations. The store retailers of the company are those who have their inventories located in the various physical locations. The non-store retailers on the other are those who do not possess any physical location. However, the process of marketing used by both the types of retailers is the same (Colander 2017).
Challenges Faced by Walmart
After the establishment of Walmart, the company has taken part on the globalisation process by spreading the business operations in various other countries of the world. The process of product standardization is used by the company in its operations in the entire world. The products that are offered to the domestic and the global customers of the company are similar and they are customized according to the country where it operates. The products that are provided to the stores by different suppliers are also not customized. The main concept that has been applied by Walmart in its areas of operations is “Think globally, act locally”. The company mainly offers all types of household products and furniture based products as well (Dorn and Schinke 2018).
The new concept that was introduced by Walmart in the 1983 was based on the opening up of new concept stores which are named as the Walmart Discount Stores. The products offered by the company are similar in the various areas of its operations. However, the services that are provided to the customers of different stores are totally different from each other. The major strength of Walmart in different countries is based on the low prices of the products that are offered to global customers. The supply chain management based activities of the company have been the major reason behind the success of the company in all the global operations. The various systems like, customer relationship management and radio frequency distribution which helps the company to keep track of the inventory and the customers (Sundar 2017).
Walmart has also launched Wi-Fi systems in the stores and free bus service to the customers. These activities of the company have helped in the creation of strong communities in the various areas of its operations. Walmart has also been able to develop effective communities in different countries. The opportunities that have been provided to Walmart with respect to the globalisation based activities have been used by the organization to the highest levels (Berden, Bergstrand and Etten 2014). The global expansion of Walmart is mainly based on the political environment of the countries and has been affected by the changes that have occurred in the countries where it operates. The major strength that has been gained by Walmart in the global operations is based on the loyalty levels of the customers who are considered to be a major part of the business process of the company. The focus of the consumers has thereby shifted from the retailers to the brands of various product (Gozgor and Ranjan 2017).
Conclusion
The other major factor that is related to the impacts of globalisation on the operations of Walmart is based on the changes that have occurred in the technological environment of the company. The prices of the products of Walmart are set in such a manner which have helped the company to enter the global markets easily. The globalization related factors have further led to the expansion of Walmart in other areas of the world which include India and China. These emerging markets have provided huge opportunities to the company to expand its business operations (Shahbaz et al. 2018).
The production based costs of the company have also been reduced due to the availability of low-cost labour in these countries of the world. The growth potential of
Walmart has also increased due to the high demands of its products in the Asian countries. Walmart has become one of the largest private employers in the United States and many other countries as well. The analysis of the entire operations of Walmart has thereby depicted that the company has been affected in a positive manner by the globalisation that has occurred in the environment (Auer, Borio and Filardo 2017).
Walmart is considered to be the largest retailer of the world and the costs related to the supply chain of the company have been reduced with the help of reduction in the wages of outsourcing the jobs. The low priced products that are offered by Walmart sometimes have hidden costs for the workers of the company. The workers deal with the products of Walmart group, however, they are subcontracted under the other logistics organizations which provide them low wages for the functions that are performed by them. The contracting process of labour has become a common process for the different organizations that operate in the modern global environment. The contracted labour of Walmart lie at the bottom of the entire process that is based on the complex hierarchy of employees (Nadrag and Bala 2014).
The workers of the company who are present at the bottom of the supply chain mainly conduct jobs that are physically tiring in nature. In spite strenuous load of work, the wages that are provided to them are quite low. The workers are not provided with the extra benefits which include health care based schemes and other major facilities as well. The major country which has provided major outsourcing based opportunities to Walmart is China. The operations of Walmart are outsourced to China and most of the merchandize that are offered to the customers are made in the country. Walmart has been sourcing labour largely from the various Asian countries (Gangopadhyay and Chatterji 2017).
References
This has further reduced the costs related to the production based process of the company. The sourcing activities of the multinational companies from China has been applied by various global organizations. Walmart had played a leading role for the process of outsourcing labour from countries like China. The wages of the workers in these areas were also reduced in the process and the procurement based costs were reduced further. The headquarters of global outsourcing of Walmart was shifted from city of Hong Kong to Shenzhen in China in the year 2002. The suppliers of the company with their base in China were pushed for low prices and the workers were made to provide their services in the factories at low prices (Cole and Woodrow 2014).
The wages that were paid to the workers in the Chinese factories were lower than their normal living standards in the country. The working hours in these factories were also quite high and the employees and managers has placed many complaints related to this. Therefore, it can be said that Walmart had made good use of the various outsourcing based opportunities that were provided to the company by the emerging countries like China (McCann and Acs 2015).
The domestic and international business of the Walmart has seen negligible amount of increase in the year 2013. The company has closed down more than 20 stores in China and the 26 stores in Brazil. The response that has been shown by several countries to the products and services of Walmart have not been successful for the proper operations of the company. The major challenges have been faced by Walmart in the major Asian countries like, India and China. This indicates that the international efforts made by Walmart in these countries have not been accepted by the consumers of these countries (Andersson and Andersson 2017).
The lack of high response from the customers of Walmart from India and China have highlighted the dilemma of the management of the company based on the ways by which they need to understand the local customers in the countries in which it operates. According to the previous discussion it is evident that the company has been offering similar products in all the countries of its operations in the world. The different suppliers of the company have provided similar products to the customers. The company has not into consideration various factors like the choice and the preferences of the customers of the areas where the company operates (Žarkovi? and ?etkovi? 2014).
The expensive looking stores of the company that have been built in the emerging countries have been a setback for the successful operations of Walmart in these countries. The bulk purchase based activities are not famous in the Asian countries as the customers in these areas prefer fresher products. The company thereby faces the challenge of convincing the potential customers regarding the freshness and the quality of food that are offered to them. The various scandals that have occurred in China regarding the quality of food have been the major reason behind the lack of customers in the retail stores of Walmart in the country (Le Heron 2016).
The contrast levels that are present in the ways by which the organization needs to view the customers of United States and the customers of China have not been considered by the management in a serious manner. The company has been challenged by the local customers in other countries like South Korea and Germany which had led to the exit of the company from these areas. The customers of the countries have therefore been affected the policies that have been implemented by Walmart (Woolgar, Thrift and Tickell 2014).
The main issues that have been faced by Walmart in its Asian operations are based on the lack of understanding of the political, cultural and the economic environment of the countries. The American retail organization is thereby trying to understand the culture and customs of various Asian customers. The preferences of the customers in Asian countries in the different cities as compared to the American customers who tend to have similar choices. The organization has therefore tried to understand the customers of these areas and offer them with the products that are suitable for their needs (McCann and Acs 2015). The huge growth potential that is provided to Walmart by China has been the major reason behind the entry of the company in this country.
The management of Walmart is thereby trying to capture the market in such a manner which will help the company to create a strong position in the Asian countries like China and
India. The company has also aimed at analysing the needs and the demands of customers so that the products can be provided accordingly. The designs of the stores of Walmart have also been changed in some countries to attract the customers who are not comfortable with the expensive stores of the company (Kübler and Kriesi 2017).
The major recommendations that can be provided to Walmart regarding the ways by which the company can mitigate the globalisation based challenges are as follows,
- The managers need to analyse the preferences and demands of the customers so that they can be provided with the best products at the lowest prices.
- The external environment in which the company is planning to start its operations needs to be analysed carefully so that the choices of the potential customers can be analysed successfully. This will enable Walmart to provide the best products and services to the customers.
- The company needs to change the ways of providing service to the customers and engage the local community in the services. This will help in the attraction of customers towards the store.
Conclusion
The report can be concluded by stating that globalisation has caused many changes in the successful operations of the organizations in the modern business environment. The profitability and the revenues of the company are affected by the ways by which the various organizational operations are conducted. The detailed analysis of Walmart has depicted that the company has been able to form successful strategies for its operations in the global areas. The company has however been successful in some of the areas and the has faced major challenges in some countries like China and India. The various steps that have been taken by the company to face the challenges in an effective manner have also been analysed in the report. The recommendations that are provided to the company are related to the ways by which the management of the company can reduce the challenges that are faced due to the change of preferences of the local customers of the country. The analysis of the customer preferences can thereby be helpful for the company to take advantage of the opportunities that are provided by the globalisation based situations in the modern environment.
References
Andersson, Å.E. and Andersson, D.E., 2017. Globalisation in stages. In Economics of Globalisation (pp. 95-112). Routledge.
Auer, R.A., Borio, C.E. and Filardo, A.J., 2017. The globalisation of inflation: the growing importance of global value chains.
Bende-Nabende, A., 2017. Globalisation, FDI, regional integration and sustainable development: theory, evidence and policy. Routledge.
Berden, K., Bergstrand, J.H. and Etten, E., 2014. Governance and globalisation. The World Economy, 37(3), pp.353-386.
Berdiev, A.N. and Saunoris, J.W., 2018. Does globalisation affect the shadow economy?. The World Economy, 41(1), pp.222-241.
Colander, D., 2017. Globalisation and Economics. In Economics of Globalisation (pp. 75-84). Routledge.
Cole, D.R. and Woodrow, C., 2014. Introduction to’globalisation: now’. Knowledge Cultures: A Multidisciplinary Journal, 2(4), pp.11-21.
Dorn, F. and Schinke, C., 2018. Top income shares in OECD countries: The role of government ideology and globalisation. The World Economy.
Gangopadhyay, P. and Chatterji, M., 2017. Introduction: Economics of Globalisation–Which Way Now?. In Economics of Globalisation (pp. 19-22). Routledge.
Gozgor, G. and Ranjan, P., 2017. Globalisation, inequality and redistribution: Theory and evidence. The World Economy, 40(12), pp.2704-2751.
Intriligator, M., 2017. Globalisation of the World Economy: Potential Bene?ts and Costs and a Net Assessment. In Economics of Globalisation (pp. 85-94). Routledge.
Kübler, D. and Kriesi, H., 2017. How Globalisation and Mediatisation Challenge our Democracies. Swiss Political Science Review, 23(3), pp.231-245.
Le Heron, R., 2016. ‘Globalisation’and ‘Local Economic Development’in a Globalising World: Critical Reflections on the Theory-Practice Relation. In Theories of Local Economic Development (pp. 115-134). Routledge.
McCann, P. and Acs, Z.J., 2015. Globalisation: Countries, cities and multinationals. Global Entrepreneurship, Institutions and Incentives: The Mason Years, 45, p.371.
Nadrag, L. and Bala, M., 2014. A study of the term globalisation. Linguistic and Philosophical Investigations, 13, p.641.
Oliver, P., 2017. The concepts of globalisation and culture. In Globalisation, Education and Culture Shock (pp. 24-34). Routledge.
Petschow, U., Rosenau, J. and von Weizsäcker, E.U., 2017. Governance and sustainability in a dynamic world. In Governance and Sustainability (pp. 39-61). Routledge.
Shahbaz, M., Shahzad, S.J.H., Mahalik, M.K. and Hammoudeh, S., 2018. Does Globalisation Worsen Environmental Quality in Developed Economies?. Environmental Modeling & Assessment, 23(2), pp.141-156.
Sundar, K.S., 2017. Globalisation dynamics and the working-class movement: An agenda for future. In Redefined Labour Spaces (pp. 62-91). Routledge India.
Van Hoa, T. and Harvie, C. eds., 2016. New Asian regionalism: responses to globalisation and crises. Springer.
Walmart.com. (2018). [online] Available at: https://www.walmart.com/ [Accessed 22 May 2018].
Woolgar, S.W., Thrift, N. and Tickell, A., 2014. Globalisation in Practice.
Zajda, J., 2015. Globalisation and its impact on education and policy. In Second International Handbook on Globalisation, Education and Policy Research (pp. 105-125). Springer, Dordrecht.
Žarkovi?, M. and ?etkovi?, J., 2014. Key challenges of future path of globalisation in global economy.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
