Global Business Perspectives
Durga93
GBE4lecture1.pptxThe Global Business Environment
LeCTURE 1
Challenges and responsibilities
The business enterprise in focus
What does business exist to do, and how?
Summary of contents
The enterprise: purpose and goals
Stakeholders and responsibilities
It starts with entrepreneurs
The company
Business functions
The multinational enterprise (MNE)
Corporate governance
Overview of the global environment
Challenges and responsibilities
Conclusions
What does the business exist to do?
Business covers any economic activity which provides goods or services in exchange for some payment
International business covers business which straddles two or more countries
The business enterprise can be:
For- profit - aiming to generate wealth
Not-for-profit - serving a social cause
Social enterprise – a blend of the two
Stakeholders
The stakeholder is any individual, group or even society in general, that affects or is affected by an organization’s activities:
Directly; employees
Indirectly; workers in outsourced manufacturing
Corporate social responsibility (CSR) recognizes the wider role of business in society
Sustainability: Business should be carried out in ways which do not jeopardize future generations to fulfil their needs
Stakeholders - home and abroad
The entrepreneur
The entrepreneur starts up the business, usually as a sole trader, responsible personally for the legal obligations of the business
The vast majority of the world’s businesses are small-to-medium size firms (SMEs), which range from micro-enterprises of only one person to those employing up to 249 people
The born-global firm envisages itself as a global player from the outset
The entrepreneur can opt to run the business as a franchise, an agreement by which the business owner trades under the name of an established brand
What aspects of the environment foster successful entrepreneurs?
Societal factors
Legal and regulatory factors
Available finance
Infrastructure
Educational opportunities and achievement
Focus on innovation
Level of technology
Ease of setting up a business
Ease of employing staff
Efficient and inexpensive court procedures
Ease of obtaining business loans
Abundance of private investors
Government loans to SMEs
Cheap and reliable utilities, e.g. electricity
Internet & communications
Transport
Business premises
Forming a company
Registering a business as a company establishes it as a separate legal entity
The company’s owners, or shareholders, enjoy limited liability for the company’s legal obligations
Companies may be:
Private – owned by ‘insiders’, whose shares are not traded publicly, or
Public – listed on a stock exchange, and whose shares (or a portion of them) are publicly traded
The initial public offering (IPO) is the company’s first offering of shares to the public
Functions within the enterprise
Finance and accounting – control of revenue and outgoings
Operations – process of producing and delivering a product
Human resource management (HRM) – managing people
Marketing – satisfying the needs and expectations of customers
Research and development (R&D) - innovation
Business functions
The multinational enterprise (MNE)
The MNE is made up of a parent company which owns or controls other businesses, both subsidiaries and affiliate businesses, in different countries:
Corporate governance
The highest level of decision-making in the company is its
corporate governance
A company board of directors may be:
A single board (one tier)
Two tiers, headed by a supervisory board, where stakeholders such as employees are represented alongside shareholders’ representatives
The company is headed by a Chief Executive Officer (CEO), who reports to the board
The board consists of both executive directors (who manage the company) and non-executive directors (who are independent)
Single-tier board of directors
Dimensions of the environment
The PEST analysis
The PEST analysis takes in:
Political environment, such as structures and processes of government; often includes the legal environment
Economic environment, including types of business activities and companies; also includes the financial environment
Social environment, including cultural factors
Technological environment, including innovation levels and protection of intellectual property (such as patents)
An addition: the ecological environment, which includes environmental protection and responses to climate change
The multi-layered environment
Local community – direct impacts in production and environment
Country – impacts of laws, regulation, political policies and national culture
Region – impacts of neighbouring countries, including economic and political ties
World – global issues such as climate change, human rights and global finance
Social responsibility
Governance
Sustainability
Human needs
Societal goods
Legitimate political institutions
Fair and effective regulation
Anti-corruption
Sustainable business
Climate change
Interlocking challenges and responsibilities
Interlocking challenges and responsibilities
Business goals – Innovation, social responsibilities and sustainability
Shareholder value vs. stakeholder concerns
MNEs and globalization – global supply chains and outsourcing present challenges for human rights and sustainability
Role of governments and regulation at national level
Conclusions
Diversity among business enterprises: size, goals, organization, global aspirations; the business engages with a variety of stakeholders in different locations
The entrepreneur usually starts as an SME and a private company
The MNE, with subsidiaries and affiliates, predominates in international business
Conclusions (cont’d)
Corporate governance involves the company’s decision-making at the highest level
Directors and company boards hold ultimate responsibility to shareholders and other stakeholders
Multiple dimensions of the business environment – summed up in the PEST analysis
Layers of the environment from local communities to global impacts
