Globalisation is a form of business activity that involved in an international movement. The business world now a day shows that most businesses globalised their activities, in which globalisation was mostly used to produce final goods at the lowest cost just like Subway, Dell, Ikea and other big company (Russell & Taylor 2014, p. 10). Typically the system consisted of different sources around the globe, in which they develop their supply chain management in order to produce product demand at its best value and to survive the competitive market (Streeten 1999). In today's world, trading globally plays an important part within corporate world. It provides a firm role when it comes to knowing the value of chain process. As we know the value of chain was first introduce by Michael Porter. Since then, businesses have used this theory to operate strategically in order to use a sustainable competitive advantage against the competition and company's objective (Sorensen 2012, p281). In this essay, it aims to examine the impact of globalisation on the business value of chain and to evaluate based on its considerations from a competitive advantage, financial, technological, HR, cultural, political, economic and corporate social responsibility.
Value chain was first introduce by Michael Porter back in the 1985. This theory suggested by Porter that this can add value to the product or services that your company are offering to satisfy customer demand. He introduced global strategy for the purpose of either cost leadership or for global differentiation. This theory consist of an overall flow of activities within your company that includes sales and marketing, outbound and inbound logistics, services and the supporting activities like procurement, HR management, technological development and infrastructure. This Value of Chain was used to gain a competitive advantage with the competitor. That gives the company an urge to provide the best product comparable to rivals. It is important that company have a great understanding on this matter to enable them to create a global value of chain. As this focuses on company systems on how they can provide a product that gives satisfaction to the consumers (Sorensen 2012, p281-p285).
After the GFC, businesses and even individual consumer like to diversify when it comes to financial consideration. Because of this depletion from GFC, it made hard to accumulate financial help with stakeholder. Managing cash flows was not easy and need a well careful consideration when it comes to financial decision making and for long term financial growth. Financial stability is the main reason and important resources within the business. Business closure happened when business is insolvent. Insolvent is when business are unable to pay its debt when its fall due. Due to GFC, banking sector were uptight when it comes to lending money to debtors. Business times newspaper state that according to Public Bank Bhd financial globalisation could benefit emerging market.This global financial consideration can benefit the bank in a way that there will be an increase and development on the stock exchange by diversifying capital market structure, this will change the economic value of banking sector and that will help emerging business to broaden their SCF to operate well with financial stability. Supply chain finance can help business to survived in cash flow basis and can help business in times of financial difficulties. With financial chain globalisation,there will be more competitive financial provider options. Therefore, interest rate and borrowing cost will reduce to enhance competition. Global financial consideration can provide businesses a broad choices in financing which can reduce banking cost as mention earlier providing they meet basel accord bank agreement. During GFC consequences was still imply that when you are more risky borrower the interest rate are more higher compare to borrower who pay debts on time. Overall, this global financial consideration can benefits both parties in terms of financial growth. As what the business times state “Financial globalisation encourages financial innovation and spurs economic growth” (Business Times 2003, pB7).
In the technological side of business, it is important that business has joined the global developing strategies by adopting ICT. In fact according to Australian Retail Association, Information and Communications Technologies can increased the supply chain efficiencies with minimal human error. There was no conclusion that this new technology can sharpen your business. But this can definitely improve business system accuracy and fast way communication to produce high-quality standard services. With adaptation to global technologies in terms of data integration, this can provide precise communication. There are plenty of technologies that can be used to helped a smooth enterprises businesses activity like ERP, CRM, MYOB, SCM, etc. And in recent years, development in e-commerce has accelerated. E-commerce is the companies selling approach and has represented global integration. E-commerce has been used by successful retailers to globalise its growth strategies. Like the success of Amazon, Alibaba, EBay and other businesses that use E-commerce was great helped with their business success. In fact, according to 2013 report from Development of Global E-Commerce Industry - businesses that used e-commerce had a potential growth of up to 20% plus an additional of 40% market size for your business. According to Global Retail E-Commerce 2014 report, e-commerce sale has reached to almost $12.8 billion. It shows that around the globe, the consumer has increasingly done shopping online. Based on the above figure and the creation of e-business environment this justifies that variables are increasingly and technology has rapidly influenced business to strategies globally for growth enhancement and opportunity (Indvik, L. 2012).
One of the best example of competitive advantage, financial and technological global strategic consideration is The Walt Disney company. This company has a huge name in an entertainment industry. The story behind this successful business around the globe was the best lesson to learn and perhaps one of the best intrapreneurial example of how you should strategies your business. Walt Disney had attempted a lot of ways to strive his dream and failed many times. Back in 1920s before the empire of Walt Disney company, his artwork with the help of other animator was buyback and paid by famous Margaret Winkler and Universal Picture. Then after, due to conflict of interest, Universal Picture stole Walt Disney animators except his best friend Mr. Iwerks and to add up the Oswald copyright was also taken away from him. After that he swear to himself that he will only work for himself. He then find his own distributors. Due to passion and positive attitude he then produce more innovative entertainment, in fact Disney was the first person who created a colour cartoons and first animated film. Later, the amusement has been created with the help of capital funding from Walt life insurance and later in 1955 capital funding was offered in public. The point is, the success of the business wasn't from an inherent tangible asset but a constant innovations-competitive advantage, a great value chain strategies and passion. The Walt Disney Studio has operating well even after the downturn (Tayllor et.al. 2015).
When it comes to corporate social responsibility, some businesses have take advantage of the worker most especially to the third world country. An act of degradation has been circulating and thanks to Fair Trade Organisation and other Human Rights Organisation these have been lowered since then. In a poor region of third world country, workers face the sad reality that they get paid a small percentage of money who work hard and benefited the businesses with a huge amount of profit. The negative impact of globalisation in regards between CSR and vulnerable human being is a huge concern when it comes to the effect of globalisation. This does not only concern with human rights but also it can affect climate change (Brett, A. 2011).
Cultural and HR Consideration
In terms of cultural workforce, it needs a unique form of diversity management according to Russell. There may have some issues when it comes with cultural globalisation chain. There may have some language barrier or cultural beliefs or geographical difference. This culture diverse system was a challenging role within the business. This can also broaden work environment perspective (Russell & Taylor 2014, p.333). The impact of globalisation in human resources and culture must accomplish well. International recruitment and hiring employees globally can helped businesses to fill the necessary needs and can bring diversity to organisation. Expanding your recruitment internationally gives you lots of option and can find best skills and talent that you are able to find around the world. International business has rapidly growing for the past decade and global employment has been considerable strategic employment within the business. But there are some pros and cons existing when in comes with culture and human resource chain. The con is that; it can lose culture identity as mention above. However, these globalisation can is cost effective towards the business and as well as can add value to country's GDP growth (Shastry, G. 2012).
Political and Economic Consideration
Because of this globalisation, the economic and political consideration has been associated with the growth of the country. As mention earlier, this globalisation has a great impact on economies, especially to developing countries. Through foreign investment, economic growth has improved not only will increase employment opportunities but also have improved to its country GDP. But most important, this create more innovative ideas in order to compete with the trends (Webb et. al. 2008). This shows that corporations who expand their business globally can take the advantage of having a wider choice of a supply chain as well as have a huge impact on companies value of chain. But the problem with this globalisation is the competition of goods sold within the country. Demand for local goods may decrease due to foreign competition that ends up hurting the local businesses. Just like what happening to Australian car manufacturing. According to Motoring, Holden sales had dropped due to significant number of competition in the car industry. There are more cheaper alternative imported car that beats the cost of Holden cars. Government had dropped down the imported tariff and AUD value were low. And that encourage more foreign car investor to enter the Australian market. Not only that there is high competition when it comes to car demand. The most significant problem when it comes with costing is the labour in Australia are nearly four times higher compared to foreign investors. This concluded and announce by CEO of GM last December 2013 that Holden closure will happen this year (2016) due to unsustainable market (Motoring, 2013).
If this globalisation is failed by the government, the local citizen is unable to benefit the countries owned resources and more local business will close down due to high competitive market. But will definitely benefit the country economic growth.
The emerging globalisation can impact on both local and international business in negative and positive ways. The advantage of this globalisation system is great but the unintended effect can hurt mostly local businesses as well as its people. The main reason to globalise business strategy is to expand business opportunity and some positive factors considering the technology, competitive advantage, financial flows and cultural effects. The impact of globalisation on value chain can add value on business management strategies. The advantages of value chain globally are due to efficiency in resources and easy to access and more efficient value system. This can also create a more competitive advantage towards cost and brand differentiation with your competitors. This can improved quality product and services, reduce costs and can influence economic growth. This globalisation has expanded its trading across the globe and the competitive advantage strategies getting more and more active. Due to global competition, the market industry tends to offer a lower cost on supply/product to enable to compete and sustain its business. It also mentions in this paper that there is a great impact on foreign capitalisation. The dependant of human resources on developing country has increasingly changed. Also, the culture of its nation has an impact in the sense that the new culture of work environment seems adapted quickly and create a new perspective of cross-cultural attitude and behaviour. In addition, the impact of technology has also a huge help in the 21st century. This can manage the business efficiently and able to deliver accuracy, transparency and time consuming.
On the other hand, the negative effects of globalisation can and have affected local business, its people, unsecured job and change of its identity. The negative impact of globalisation of value chain can change someone's life around. It may create job opportunity to other country but there's also an increase of unemployment to local country. To top it up this globalisation can also lead to exploitation because of cost effective consideration. Also because of this globalisation of value chain, this can vary the price of goods that can cause hardship to local business to sustain and maintain its ROI. As to culture, this can also give a negative impact by forgetting its own identity. When it comes to technology it is the most powerful effect of globalisation that no one in corporate should ignore. This rapid growth of technology development must exercise well as this tend to destroy businesses due to hacker, scammer and theft as company information can easily access provided its low security.
The bottom line on these globalisation impact in the value chain is either a negative or positive impact. Corporate world should maintain its standard to the highest for a better rate of success.
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