Body
Globalisation is considered to be the process in which companies are expanding their business and starts operating at international level. It is crucial that companies finds better strategies in their expansion process. With the heavy use of technology in various industries, the process of globalisation fastened. The global environment for business has changed after the end of Cold War. It was also an era where the all the countries have opened the market for external companies to come into their country. Bipolar world have now changed into an open market. It was reason that some of the Big economies in the world have emerged especially like India which became a brilliant service market (Kõlves, Milner and Värnik, 2013). There were many companies which started to expand into the regions that were previously considered to be as the untouchable for investment. Due to economic recession after 2008, the business environment further changed all across the globe. This change in the global environment has derailed the process of globalisation to some extent. European and American market was highly influenced by this recession and the effect of it could be easily seen on the countries like U.K. Many countries of Europe have not been able to recover from this recession even till today (Meardi, 2012). This research highlights the change in the globalisation after the end of the cold war and the end of recession of 2008.
The cold war was a phase where the world was divided into bipolar fragments. In this most of the countries have chosen sides. This bipolar world has imposed many kinds of trade restrictions on each other. It did not allow the companies to expand in the economically beneficial markets. UK was one of such market where many new companies wanted to come but due to pressure from the other sides it was not easy to expand. After the cold war got over in the 1990, the world started to disintegrate and it provided huge amount of opportunities to the companies to move to the other nation (S?ahel, 2013). One of the first and primary reasons was that government of many countries have started to make bonds with each other. This relationship fostered better political environment for the companies to expand. Internet mediums were the key to success in the overseas market. Companies started to have more control over their business units in other parts of the country. Companies found deep routes into the market through the process of internationalisation. Managers of the companies could monitor their operation from different parts of the world sitting in their headquarters. With the advancements in the technology that are interconnected companies became more competent in their international operations (Apsite, 2011). It was a time when most of the big multinational firms emerged.
This continued till 2008, when the economic recession came. It has affected the global business scenario where the investors became more reluctant towards the investments in new regions. It was found that companies which were having more capital were the only ones which actually thought of expansion. In this recession, there were many countries that got affected and hence companies started to find the market that are stable and may not lose their strength in the coming years (Hutchinson, 2018).
Issue 1
After this recession companies became more watchful towards the emerging markets. It was not easy for the developing nations to attract investment especially when it comes to long term sustainability of the companies (Basu, 2016). Due to intense competition, it was necessary that companies do not make any bad decisions. This was due to the fact that any mistake from the side of the companies in the investment plans could lead to long term loss for the firm in terms of name in the market.
Most severe effect of the competition was on the European countries as no big organisations wanted to expand into these nations. With the bankruptcy of Greece, the story became more complicated. The banks were not ready to give loans to the countries that were falling short of paying their debts. UK is a developed nation still faces challenges in terms of the attracting new investors (James, 2013). The global crisis for UK become more significant when the companies started to find countries that is having lower operational income. The most severe impact was on the small scale business units as they did not have enough of resources to fight this recession. Since the countries like UK have large amount of companies that are of smaller scale and it provides job to huge number of people.
Government started to focus on nationalism and did not allow companies to invest in new countries rather they started forcing their local firms to invest in their country only. Internal investment was promoted by the countries. Apart from this companies also generated the feelings of nationalism and protectionism (De Vogli, 2011). This protectionism did not allowed companies also to make huge investments outside the country. This has brought scepticism towards the globalisation. Due to the burden on the economy of UK, government took many reforms so as to stabilise the economy. One of the biggest decisions that government of UK took in this regards was Brexit. This allowed them to free them from European Union and hence their policies could be made as per their choice. Since England has to pay a huge amount of money for the development of the counties that were not performing so well in the union (Nolan, 2015).
European Union was a borderless area in terms of trade. This allowed the companies to do trade without any restrictions. With the decision like Brexit companies will face challenges in doing trade. The new tax barriers will be imposed in the area. The terms of negotiation with the European unions will decide the future of the companies. It might be possible the companies will have to look for the new trade routes (McCann, 2016).
These days companies are trying to invest in the market that is having lower operational cost. This is a serious challenge for the economies like UK which is having higher operational cost. Companies are also trying to exempt the new tax barriers among different countries. Social changes can also be noticed in terms of the fact that people are also looking for the products that are made inside the country (Daugbjerg and Swinbank, 2011). This over protectionism towards the products that are made in the country have demoralised the companies at international level to invest in UK. Government is also focusing towards the growth of the small scale firms.
Apart from this UK is a technologically advanced nation but are not working towards the innovation which has created a disruption in the market. This demotivates the companies to invest in this market. On the other hand smaller countries have developed many types of new technologies that attract the companies towards investment. In the process of cost cutting, companies find the countries that are having low labour cost, high amount of resource, low operational expenditure, higher market growth possibility, huge target section. Since UK does not have the lower operational cost and neither the lower labour cost hence companies become reluctant to come for investment (Blockmans, 2016). The case of Tata acquiring Corus is a perfect example of the fact that investments in UK market could be a challenge for the companies in financial terms.
The feelings of nationalism have also led the firm to hire people from the source country. On the other hand there is severe increase in the unemployment in various parts of the world. The governments are forcing the firms to make policies that support employment in the same country. Governments are also providing some kind of tax benefits to the companies that are doing so. UK government has made many policies that restrict companies from bringing external talents (Jones and Evans, 2013). It resembles with the current policies of the USA government where they changed their Visa policies so as to restrict the number of external talents coming into the country. It is seen that companies of UK hires a lot of talent from the Indian sub-continent which is increasing the unemployment of the local people. There is increase in the conflicts among the people from two different cultural backgrounds. The feeling of nationalism plays a very crucial role in it. This is a serious challenge for the company since they have to manage the internal environment at the workplace. Managing the cultural diversity along with managing the talent pool could be a challenge for the company.
All this has created a negative environment within UK economy which is having a direct effect on the operations of the firm and hence effecting the investments within the country. The problem is even bigger in the public sector firms which are directly under the control of the government. This is because the policies that are made by the government get implemented in the organisation in an appropriate manner and they are following it harshly (Lane, 2013). This is the reason why in the last few years the numbers of people that are from the other countries have decreased in the public sector firm in U.K.
Companies within UK are trying hard to find the ways to overcome the challenges related to this change in the business environment. The first thing that they are watchful about is the trade negotiations between UK and European Union. They are working on strengthening of the supply chain management so that they may not face challenges like gap in the demand and supply. At the same time they need to add on the numbers of suppliers from within the country. This is necessary for maintaining the regularity in the supply of essential products (Wills and Linneker, 2014). Since this will also provide UK with an opportunity to gain advantage over the other countries. It is crucial that companies examine the impact of Brexit on the supply chain routes. UK will be able to take their decisions independently which will help them in making of new political ties with other countries. This will enlarge the reach of the firms to new investors and suppliers from the countries that is having raw materials at lower cost.
Increasing uncertainty in the European market is a matter of challenge for the company. In such an environment, the biggest strain is on the resources of the company. It is crucial that company maintains the quality of the resources along with the quantity of the resources. In this nationalism there is also effect on the human resource management of the organisation. The recession also forced them to reduce their expenditure in terms of the management of resources (Porter, 2014). Companies also need to acquire the resources that can be used for the longer time period. In order to manage the operations in the changing global business environment, companies are taking use of the highly advanced technology in an appropriate manner. This not only helps in bringing effectiveness in the work process at the same time provide the flexibility in the business operations.
For example the technology such as predictive analytics would help the company in understanding the market condition of UK in the future. This is based on the trends in the UK market. Strategic planning would be crucial for the company in the long run as it would ensure the long term success of the firm. Since the future is going to become more uncertain hence the firms must have the stock of the resources for the coming few decades. In UK, the crude prices are going to be high and in future companies will have to find some other form of energy sources so as to meet their future energy demands. This is more crucial for the companies that are highly dependent on the conventional fuels (Independent, 2018). The most important thing that a company should do is that it must focus on financial planning as it is the most essential part of the firms operations. Profits that a firm generates are somehow dependent on the financial planning that a company does for its long term.
With the use of systems such as supply chain management, it is easier for the companies to manage the business process in an effective manner. There must be addition of new suppliers to the company’s stakeholders. Firms should add more and more stakeholders to the firm so as to lower down the impact of the business environment on the operations of the company (Sharma, 2018). For example if the company aims to add more numbers of investors in the pool, it will help the firm in the time of economic hiccups especially in the future investments.
It is crucial that company redefines their goals so as to make it achievable for the firm in the changing global business environment. Company also needs to make changes in the organisational structure so as to streamline the business operations. It will be beneficial if the companies include government as their essential stakeholder. This would help them in making policies as per their requirement to some extent. In order to reduce the difficulties in the business operations companies need to find more partners in the market (James, 2013). More partners will help them in gaining new competencies so as to do business in an appropriate manner. This will provide stability to the firm’s business as well as it will give competitive advantage to the companies over the other competitors. The feeling of nationalism can be countered by the organisation with the help of culture that is present in the country. Managers could build an organisational culture that incorporates a culture that is present in the country.
The companies that are from the local market needs to invest a lot of money on the national markets. Firm should hire people that are from UK that too of different age groups and different ethnicity. Since UK has a highly diverse society hence companies will not face any challenges in hiring these people. Companies should specifically define their target markets so as to ensure their success from the products. All the strategies specially the ones that are related to marketing needs to be defined focusing on these target segments only (Nolan, 2015). Companies these days are also using the nation based marketing so as to portray them as the local firm. Many companies that are operating in UK even do not show their nationality at the time of marketing itself. The tag lines or the positioning statement or are also made according to the customers in the local market.
Conclusion
On concluding this research it can be said that with the increasing effect of global interdependence of the country on each other, the challenges for the companies is also going to enhance. In this changing global business environment companies had to rethink about the challenges that are confronting their business. They must build strong relation with the governments in many parts of the world. Company should also look for the new partners which can provide them with new kinds of possibilities in UK itself (Daugbjerg and Swinbank, 2011). The government of UK will have to make their market as more open market that could attract more investors in the country. The post-recession period will be a challenge for UK in the coming years also and hence a more strategic planning is required by the firm especially in terms of financial resources.
References
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