Thursday, May 16, 2019
Globalisation Process Essay
The business world is becoming more and more global. As a result of this, more companies, such as Costa Coffee and Dyson, have castrated their strategies in relation to the markets they target or where they produce. Does the progressively global constitution of business mean that all in all organisations pauperization to change their strategies significantly to achieve high profits? Justify your answer with reference to Costa Coffee, Dyson and/or other organisations that you k this instant.Globalisation is the mathematical process by which the world is becoming progressively interconnected as a result of significantly add sell and cultural exchange. It has also increase the production of goods and services. The biggest companies (such as McDonalds, Starbucks, Costa Coffee, Tesco, Dyson) are no longer matter firms, but multinational corporations with subsidiaries in many other countries. The aim of this essay is to justify whether organisations need to change their strateg ies significantly to achieve higher profits as a result of the increasingly global nature of business.As a result of globalisation, the world has become a smaller place however this is a potential benefit for companies that are looking to expand because communication, trade and travel are becoming increasingly easy. Many countries, especially the BRICS economies are undergoing industrialisation, giving Western companies the cheaper infrastructure they need to expand. If the business does the market auditing efficiently and they target the right market, with the cheap infrastructure and more potential customers, there are minimal reasons why the business would not achieve higher profits. So having said that, businesses like McDonalds are a perfect example that higher profits are a result of changing their strategy to affect more to the market they target. Originating from America, McDonalds are currently market leaders in 96% of the markets they do business in they operate in 119 c ountries on 6 continents, with everyplace 33,000 restaurants worldwide, employing over 1.7 million people. (http//www.mcdonalds.ca/ca/en/contact_us/faq.html)They first expanded internationally when they opened in Canada in 1967. The international section of McDonalds has become increasingly more important to the companys overall success. As of this past year, non-US ground restaurants account for over half of the companys $40 billion in revenues. Foreign restaurants instanter account for about 60% of McDonalds total profits. Since coffee has become a necessity in a persons every day routine rather than a luxury, McDonalds has prize this is an opportunity to increase their product portfolio. With the majority of McDonalds customers being business men and women, coffee is an increased purchase amongst their sales, therefore they have recently announced they will be opening up a McCafe in the UK, having already been opened in Australia since 1993, theyll be selling a variety of co ffees other than your standard black, white, latte and cappuccino. As a consequence, for companies like Costa Coffee and Starbucks, this means that McDonalds will continue to add to the markets they are in and become increasingly intense competitors. So the increase use of necessities globally in spades has an impact on a businesses strategies. McDonalds have had to identify a persons every day need, and cleverly made it as sort of a luxury item because its overbold it will be new to McDonalds. As a result of their new investiture, the McCafe generates 15% more revenue than an ordinary McDonalds.On the other hand, Globalisation is proven to have had a negative effect for some other businesses such as Tesco. This is a business that has strived to expand internationally, and as a result, they struggled/failed as they couldnt easily adapt to the market change. Tesco has expanded into many other countries over the years, but as the BRICS economies are becoming increasingly attractive, an opportunity to venture into these economies seemed to be a come up star for Tesco. Tescos eye on the prize meant that they took their eyes off what made them successful in the first place- their UK stores. Ultimately, expansion into China, India and Thailand has left what was their cash cow UK stores to currently become their problem child. Losing focalisation on their original investments meant that they slipped behind in terms of stores, service and innovation. http//www.bbc.co.uk/news/magazine-17767565 In addition to their struggles to offer the success of their UK stores, focus on China, Thailand and India had a massive impact on their competitors such as Asda, Sainsburys, Lidl and Aldi.During the clip that Tesco foc employ on the new move, it was an opportunity for its competitors to steal Tescos 30% market share Sainsburys brought in By Sainsburys and Asda brought in Chosen By You. When Tesco realised their mistake and focused their trouble on their UK stores, they i nvested in the Big Price Drop Flop but the 500m campaign only damage their branding image, as customers thought the quality of their products had dropped. It was a clear step by step process for Tesco losing its place in the market. All of this is a result of changing their strategy by expanding overseas into a better economy, and that is a result of Globalisation. Overall, Globalisation has so far cost Tesco to invest in a new economy, invest in strategies to save their place in the market, and has now cost them a 1bn investment making their UK stores a warmer look and feel. Its safe to say that Globalisation has definitely not achieved higher profits for Tesco, only slandered them.Overall, Globalisation has effect on all businesses whether positive or negative, but it does not necessarily make them achieve higher profits due to a changed strategy. In my opinion, its not Globalisation itself that makes a business achieve higher profits, its how the business takes advantage of the situation, and there are other internal factors involved that make a business achieve increased profits. Tesco could have easily become more successful if they balanced out their investments, keeping the UK stores as a cash cow while they invested in their rising star in China, and also kept their attending on their main rivals Asda and Sainsburys. Sometimes a business does not need to change its strategy, an investment into the BRICS economies could potentially mean more money is required.Having said that, some businesses already have the infrastructure they need to reserve their businesses over in the UK and it would seem moronic to expand overseas, especially if the business is maintaining profits. Although McDonalds has taken advantage of Globalisation, and used their strategy efficiently to become successful and to be as big as they are now they are one company in a million. They are not proof that just because they managed to successfully adapt to the market, expansion int o other countries is not guaranteed success, as proven by Tesco. So no, not all businesses need to change their strategy significantly due to Globalisation, in fact, some businesses dont need to change their strategy at all.