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Globalisation involves an economic integration process of the whole world whereby free trade barriers are removed. Capital mobility is allowed in addition to free diffusion of information and knowledge across the globe (Parker, 2005). Globalisation can be described as the increasing behavior of the world whereby it moves towards being a single market with interdependent production, consumption of similar goods, and response to similar impulses. It is manifested by the increase in world trade in terms of the output proportion and the explosion in FDI (Foreign direct investment). As a result of golobalisation, there has been increased integration in capital markets, with over 1.3 trillion dollars crossing the world’s foreign exchange markets every day (Steger, 2017).
Benefits of Globalisation
One of the benefits that are associated with globalisation is the access that it brings to new cultures. It has made it easy to access culture practiced in different countries all over the world, which includes access to foreign music, food, and movies. This has been enabled by the free flow of information, goods, people, and art to and from different parts of the world. Businesses have been promoted to cross borders and access markets; thus, they can expand their operations and source for new needs in different countries and regions of the world (Parker, 2005). Also, globalisation has enabled the increased spread of innovation and technology. It has made constant connection among countries, resulting in quick travel of technological; advances and knowledge all over the world. Access to advanced technology and expertise has been key to expanding global businesses and opportunities, especially for companies operating in countries and regions with a low level of technology and less access to knowledge, opportunities, and markets. Another benefit associated with globalisation is its contribution to ensuring that product costs across the globe remain low. Companies all over the world are enabled to find ways of producing at low costs. Besides, there is increased competition in the global market, which creates a wide range of consumer choices and brings down products’ prices. Increased competition from organisations that have expanded their business to the global scene has been of significant benefit to the consumers who have been provided with goods and services of a higher quality and at competitive prices. Also, businesses worldwide can gain market access in new environments all over the globe; as such, they can gain access to revenue streams that are diverse and reach new customers, which they may not be able to find in their existing markets.
One of the significant challenges is international recruitment, which is quite problematic to the business’s human resources teams (Edwards and Rees, 2006). There are challenges in creating plans to interview candidates who are far away from the business’s headquarters. There is also a challenge in understanding competitive offers for benefits and salaries concerning the market demands in different countries. Furthermore, challenges arise in the management of immigration of the employees. The laws that deal with immigration in other countries keep changing, and there are significant difficulties in securing employee visas in some countries. Organisations interested in global operations must engage professionals and experts who understand and have experience at very high costs to avoid breaking laws or engaging employees in ways that may be considered illegal, which may be a huge blow to their reputations chances of succeeding in foreign countries. Besides, business organisations with international operations incur export fees and tariffs on their products, making it expensive to carry on with their business operations globally. There are also challenges in compliance and payroll for businesses when expanding globally (Edwards and Rees, 2006). Management of operations in multiple markets is difficult as compliance is needed in tax and employment laws that keep changing. Globalisation could also cause a loss of diversity globally, which could be due to the mix of many cultural identities; thus, the company might lose track of its leading cultural origins.
The basis for modern globalisation is the increased technological applications. The increased demand for technologies and their utilization is one of the most significant drivers of the globalization. This has contributed to high productivity due to the invention of production means that are more efficient and thus need larger markets. The applications of technologies have also brought efficiency in distributing services and goods therefore ease more than foreign markets and resources, which is essential for the globalisation (Wood and Willberger, 2015). The restrictions installed by governments have been significantly minimized; therefore, machinery, capital, and workers flow freely across nations. Moreover, services that aid in international business have been developed, including shipping, credit and banking management, and insurance, which has dramatically eased global trade processes. Also, consumer pressures have grown significantly, creating better products and services that they cannot find in the local markets. As such, the increased competition in the global scene has prompted more businesses to desire a share in the worldwide market, thus opening new frontiers in the foreign market. Governments have also changed their policies and political situation changes, which has promoted political stability in many nations. They have introduced favorable policies that support communication and transportation facilities, thus creating efficiency and attracting more businesses to the global scene. The cooperation across countries has also expanded, thus more consultations and economic treaties that promote international trade (Dwyer,2015). Overall, the availability of markets and resources has been a critical driver as businesses utilize their production capacities to go global as they are in a position to produce more than the local market demands.
This study will analyse Vodafone group plc, a multinational company dealing with telecommunications and originated from Britain. The global headquarters of the company is in London, England (Vodafone, 2020). The company operates in Europe, Asia, Africa, and Oceania. It is highly ranked at number four among global mobile operators. It is ranked among the largest telecommunication services providers in the world as it connects more than 650 million people. The most current data shows that the company operates in 24 countries. Also, it has partner networks in additional 41 countries. Its enterprise division, Vodafone Global, provides IT and telecommunication services to 150 countries corporate clients. It is listed with market capitalisation of $38.65 billion making it among the top listed in the market. One of the key drivers of globalisation that is specific to Vodafone are the technological drivers. Technological advancement has been key to the facilitation of globalisation. The progress in technology has been a major force that has enabled this process. Breakthroughs in technology play a major role in compelling businesses to adopt a global approach as they enable the expansion of the market size and cause an increase in economies of scale. Also, due to technological advancements, the cost of communication and transportation is significantly reduced across the world which encourages sourcing of inputs and raw materials globally. As such, this study will pinpoint 5 key drivers of globalisation that are specific to Vodafone Plc. And examine their benefits and challenges.
1.1 An Analysis of the Key Drivers of Globalisation
This study will examine five key drivers of globalisation; 1) Technological; 2) Political; 3) Expansion of cross-national cooperation; 4); Costs; and 5) Increased global competition. In turn, the benefits and challenges of this drivers would be analysed in terms of Vodafone Plc.
The advancement in technology has enabled increased efficiency in production, thus the productivity of businesses has significantly increased. This has enabled firms to produce large quantities of services and products so to allow them to look for markets in the international avenue. Also, they can transport and distribute their products easily and efficiently due to advanced means of communication and transport which promote global business. For example, as stated by Uhlemann (2018), “mobile wireless technology has been in development for decades, with the first generation (1G) introduced in the late 1970s and fielded in the early 1980s. Since then, new generations of technology and wireless standards have been introduced every decade or so, culminating in our present state of transition between 4G and 5G capabilities, (p.7). As it can be seen, especially for a company like Vodafone Plc., not only their globalisation, but also their existence depends primarily on the company’s ability to constantly evolve decade after decade.
Restrictions on movement of workers, capital, products, and machinery across nations have been significantly reduced by governments. This has led to liberalisation of resource movement and trade across borders to meet the demand by different people in different countries thus causing growth in cross border trade. Also, Governments have been using politics to try and help their local telecommunication companies to expand abroad, as it brings political benefits to the countries and at the same time harms the ambition of other governments to enter new markets (Uhlemann, 2018).
– Expansion of cross-national cooperation
International cooperation has been necessary because of the need of various countries to achieve their national interests. Solving problems with an approach that is multinational has brought in advantages to nations and has promoted trade across borders. As it could be seen from Uhlemann’s (2018) description about the battle for 4G and 5G networks, network security concerns have been used to try and trip specific companies owned by countries to enter new markets, while at the same time, through the European Union joint laws and regulations, companies within the EU have seen favorable grounds for expansion across Europe.
The global movement of services and goods has been greatly encouraged by the cost and the value of goods to the consumers in different parts of the world. This has been because of cost to the economics of various trades and industries.
– Increased Global Competition
The increase in competition around the globe has made the market share in the international market to be incredibly attractive to every business, thus attracting more business to the international level. This has turned the world into a village market where businesses are able to access customers in different parts of the world thus promoting globalisation. As described by Uhlemann (2018), the introduction of the new technology of 4G few years ago was used as an opportunity for Chinese companies to enter the global market, while other companies have missed out on expanding to new markets like Huawei, and at the same time was ‘suffocated’ by them. As stated by Uhlemann, “Transitions between wireless technology generations before 5G also had substantial commercial, competitive, and security implications for first-movers”, (p. 8). For example, for telecommunication companies like Vodafone it is important to rely on its own cable and fiber IT infrastructures when trying to expand. The inability of such company to do so would bring long-term harm to its global reach, as where Vodafone Plc. would not be able to become the leader, there will be another company that will fill the spot. In the second decade of the 21st century, it would be logical to forecast that perhaps most of the planet will be fully covered by network connectivity as investments in this aspect could be clearly seen that are increasing.
2.0 An explanation on the Complexity of Strategic Challenges Faced by Global Businesses
The strategic challenges faced by global businesses could be classified in different categories so to explain their complexity. The classifications that the challenges can be put on is the business risks, diversification, and global supply challenges (Communication and Director Magazine, 2020).
a) Regulation and Legislation Changes.
Global organisations are needed to be highly alert in case of any changes to avoid conflicts with governments and authorities in the countries and regions where they operate which may be detrimental to business operations. These changes have the potential of inflating the operational costs of the business or end up bringing changes in the competitive environment. Vodafone’s business was recently affected by the regulations of the European union which required that travelers phone bills should be cut. Different regulations and laws exist in the different countries in which global businesses operate. This poses a significant challenge as various laws in different countries and jurisdictions are different hence need to be keen to avoid legal problems with authorities of the countries in which they operate. Vodafone’s’ geographic reach is broad therefore the company faces a great challenge in complying with a requirement range that is extensive and different in various countries that it operates in (Kalkan,2008).
b) Corruption, Fraud, and Theft
These challenges may be caused by economic conditions that may be depressing. Majority of global companies do not have certain strategies of dealing with this risk as most of these incidents are either not reported or undetected. Global businesses are also keen to avoid the fallout that may be brought by such incidents, to avoid the wrath of the regulators. For example, corruption, fraud, or theft scandal would significantly harm the reputation of Vodafone Plc, as one of the key strengths of such global companies is their reputation. As such, companies who expand globally must be cautions to not create favorable grounds for such occurrences, as well as to develop methods of detection and prevention, thus remain untouched by scandals of this sort which can bring devastating harm to the organisation. After all, Vodafone Plc. does not operate solely across the world, but has many partner companies over which it could not place 100% supervision.
c) Political and legal challenges
The political challenges may include upheaval, war, and terrorism which is a global businesses’ significant concern. Significant challenges are being posed by political situations that are being experienced by various countries all over the world. This has been a great potential risk for assets and people that work for various global businesses. This has been the cause of worry and concern for global businesses as they have fears of disruptive impacts of instability on the supply chain of their business, or disruptions that may be caused by sanctions or terrorism acts. Example, in 2012 there were fears in Vodafone that the possible exit of countries from the eurozone due to economic conditions would lead to devaluation of the currency the countries which would have vin turn led to revenue reduction and impairment of the company’s assets. These organisations need to have risk management plans that are detailed in preparation to counter any form of disaster strike
d) Challenges in overdiversification and high level of risk
The businesses may earn returns that are below average due to overdiversification as this may negatively affect the quality of the investments that global businesses make. Portfolio volatility may lower the business returns, in addition to investors selling low after they buy high due to investors allowing their emotions to control them. Also, diversification brings in challenges as it creates a situation in which investors loose attention or focus on their businesses. This quite often happens in situations where some global businesses are being managed by someone else who may not be keen in running the business. For example, as stated by Vodafone Plc. to expand their reach on top of the companies that they already own and operate in 25 countries, they are partnership agreements with local operators in 48 countries (Vodafone, 2020). This shows that the company operations have significantly increased throughout the years.
e) Global Competition
Another challenge that faces businesses that operate globally is the global competition from other businesses all over the world. The businesses need to have highly efficient supply chains and run them well to remain competitive. As mentioned by Vodafone Plc as of 2020, they are the largest mobile and fixed network operator in Europe. In addition, the company has the world’s largest IoT connectivity provider, while their M-Pesa technology platform in Africa allows them to provide services for 42 million people. The globalisation of the company perhaps proves to be vital for not only its development, but also remaining competitive and stronger that their main competitors locally, some of which are yet to enter the process of globalisation, thus threaten Vodafone’s position at the leader in the industry.
2.1 A Critical Analysis on the Strategic Challenges Caused by Globalisation on Risk, Diversification Strategies, and Supply Chain
Vodafone has been affected by legal issues in various countries that it has launched its operations. An example is the legal battle that the company was involved in for a whole decade against the government of India due to taxes in the Hague among other challenges that the company has had with various governments. Besides, operating in large scale and in several countries poses a great risk to the company as it makes it hard to follow up on every aspect of the business thus a danger of ignoring some important business aspects. Also, it faces a risk of being affected by the risk in foreign exchange fluctuations as it operates in various countries. The company has been an international enterprise from a long term and has experienced the effects of currency volatility. Also, the company’s operations are always in danger of being affected by the political environments it operates in. The company is under consistent pressure to comply with a requirement range that is extensive in the supervision and regulation of its licensing, telecommunication services and networks operations, construction among other activities that it is involved in globally. The company’s business is in danger of being adversely affected by pressures by regulatory and political institutions especially in periods of recessions. Moreover, Vodafone is at a risk of experiencing risks that relate to cyber threats. The company has faced such an attack before in 2013 targeting its telecommunication services in Germany where a server was intruded and financial information that was sensitive to its German users was accessed. Also, Vodafone faces stiff competition all round the world from global telecommunications giants such as Orange, Liberty global, Tata communications, Telstra, Deutsche Telekom, Telefonica, and others. The company must keep up with the high level of competition which is quite a challenge as failure to keep up might lead to the company losing its clients (Kouvelis et al., 2011). For example, in India the company has lost a significant number of users in one of the world’s largest market due to competition from Jio which has been growing due to better connectivity and competitive prices.
2.2 A Critical Evaluation of the Global Business Environment
Companies who operate globally inevitable face not only advantages, but also many disadvantages along the way. As such, both categories must be examined:
a) Advantages of Operating Globally
As Parker (2005) described, one of the advantages is that the business gets an opportunity to access new markets. This means that the company can build a large customer base outside its home country, which has a limited number of customers. Also, there are added opportunities for gaining access to untapped markets. Besides, taking business operations to a global level gives the business access to specialised talent, which may be hard to find in the local market. This is possible because of the access that is available to new potential workers with unique skills who otherwise the business may not have had access to. Moreover, global operations open up doors for businesses to expand their operations. There are chances of experiencing further expansions as the companies appeal to different audiences. The companies can bypass its competitors as it accesses markets that competitors may not be aware of. As such, global companies can have regional centers and offer reliable services to clients outside their countries. This helps the businesses minimise their operational costs and avoid complications that may arise when serving clients outside of their countries (Okoro, 2012).
b) Disadvantages of Operating Globally
One of the disadvantages is that a business that wishes to expand its operations globally must meet the establishment costs and sometimes the termination costs that are relatively high. Also, the company will need to build infrastructure, send up an entity, and pay workers, which is time-consuming and expensive (Okoro, 2012). The business will also have to deal with governments in other countries, thus requiring it to hire HR experts with international experience, tax accountants, and lawyers to understand the operations in those countries. The firm also faces the risk of compliance considering the complications involved with new market entry. The business is required to adapt to regulations in new countries that are different from those in its home country, thus risk of failing to comply. Besides, diverse cultures and operations in other countries may be different, which poses a considerable challenge. Different languages used may also be problematic as it may negatively affect business transition and expansion. Moreover, the management of employees from other countries will require outsourcing of administration and HR support (Patel et al., 2012). The business will need to employ people with expertise to ensure legality and compliance and avoid negative implications. For businesses that desire to take their operations to the global stage, it is critical to be aware of the benefits they stand to gain, and the disadvantages associated with the expansion plans. As much as there are opportunities with going global, there are also many challenges that may be detrimental to the expansion plans of a business. However, organisations may opt for more straightforward ways, such as going global, without having an entity set. This option gives the companies all the advantages and at the same time cushions them from the hassles involved. Thus, considerations need to be made on what a business that aims to expand globally is prepared to tackle and what cost the firm is ready to pay to globalise its operations.
3.0 An Evaluation of the Influences of Globalisation on Organisational Governance and Leadership
Globalisation creates a demand for better transparency and accountability as the governance design is influenced at the subsidiary and parent levels of global businesses. Aspects such as the market discipline, accountability systems design, ownership concentration, executive composition, auditing standards, and financial disclosures are significantly affected by international interactions. It could be stated that higher standards are expected to be upheld in the global scene. Also, the use of resources in the global industries is better managed and controlled using better standards, thus ensuring that they are utilised to sustain the global demand. Global organisations require leaders who have vast business knowledge, sensitivity to cultural standards and experience, awareness, integrity, courage, and commitment. Leaders must also carry out international business management roles with professional and personal integrity, determination, and good ethics. Also, management is affected by globalisation of a business as it now involves considering a higher level of competition, a larger market, and international employees’ employment (Lee and Carter, 2011). Moreover, there is an effect on leadership as there is a requirement for consideration of standards and customs in various countries. The leaders needed to run global businesses need to be highly aware of the international social, political, and economic scene.
a) Corporate Governance
To be competitive, organisations operating globally must adapt their corporate Governance, structure, functions, and culture accordingly in terms of their leadership, socio-cultural and political environment, and the countries’ economic background (Lecture notes, W3, S1). As explained by Becht et al., (2003), Corporate Governance is the method by which a company is being governed, how it is being structured, and how it functions. Corporate Governance’s primary purpose is to bring long-term success to the organisation by implementing practical and entrepreneurial management. As such, adequate corporate governance must consist of a particular set of principles, such as fairness, transparency, accountability, and responsibility, which protect shareholder rights and analyse the organisation’s performance. Those principles also highlight specific governance roles and responsibilities to ensure that laws and regulations are followed appropriately. Therefore, the effects of globalisation on corporate Governance could vary from the demand of better management leadership, a need for more accountability and transparency, and requirements for better resource management to tackle the eventual global economic crisis.
b) How globalisation influences the organisational Structure
As Lasserre’s (2017) global strategic framework explained, it would be viable to say that expansion to the worldwide scene requires a localised business model to overcome a challenge in the business’s leadership and organisation. Globalisation has affected the organisation structure as global companies need to ensure that they change to a system that can effectively bring international operations. Global organisations also need to change their production methods and their distribution methods to fit worldwide. Besides, a business that serves global customers must use a structure that meets their global scale needs (Lasserre, 2017). Moreover, the structure should be designed considering the high level of competition in the worldwide scene and ensuring that it is responsive to global customers. The distribution of authority and power is significantly influenced by globalisation. Control is decentralised and distributed to different managers and heads in various regions where its business is being carried out. Also, the levels of power in the organisation are further increased.
c) How globalisation influences organisation culture
The culture of organisations is affected by globalisation. The global business must appreciate the international customers’ diversity, thus adapting to the changes that may need to be made on their culture. Also, companies may be required to adjust to diverse ways of serving their customers in foreign countries that may differ from how they may be accustomed to in their everyday operations in their home countries. Adaptation of these foreign cultures gives the global businesses an opportunity of competing with other companies in the countries that they expand their businesses.
d) How globalisation influences organisational Functions
Global businesses are forced to change the technology they use and upgrade to newer technology to operate effectively. Also, their production methods must change to adapt to the new markets they venture into. As an example, for Vodafone, it could be given the adoption of new network generations, i.e., movement from 4G to 5G currently. Moreover, the treatment accorded to the employees is influenced by the practices they find in their new business environment as it is different from the environment they were operating in previously. Besides, the business operations that expand to the global scene are affected as they have to move operations to countries that they will be operating to ensure more efficient services are provided to the international customers. The organisations’ methods in distributing goods and services will also be affected as they expand to the global markets.
3.1 a) How ethics affect the Organisational Functions
Ethics that are adhered to in different countries impacts global businesses as their operations and management aspects are influenced. These include marketing, human resources, development, and research. The ethics role is different from one country to another as well as from one culture to another. The organisational functions of multinationals are affected as ethics in other countries influence the services and goods they can offer. Also, the methods they use in production will be significantly determined by the ethics in each country. Moreover, the treatment accorded to employees and the employee and employer or leader relationship is greatly influenced by ethics upheld in a particular country (Patel et al., 2012). Corporate social responsibility that a business wants to engage in in a specific country or region will also be affected by the ethics in that country.
b) How global sustainability affects organisational Function
Sustainability entails resource preservation and ensuring that business operations are carried out in an ecologically responsible manner in the long run. Global businesses are affected by governments, citizen groups, and NGOs in their operations through legal and social pressure as they are required to use environmentally friendly practices in running their operations. They are necessary to minimise harm to the environment, and ensure natural resources are not depleted. As an example, Vodafone Plc. Has stated that they are taking steps to reduce the negative environmental impact on the planet by reducing their greenhouse gas emissions by 50% by 2025. The method by which they plan to do this is by attempting to purchase 100% of their electricity only from renewable sources in the next 5 years, and in turn, to reuse, resell, or recycle 100% of their redundant network equipment (Vodafone, 2020). The distribution of authority and power in global organisations results in mutual control, thus enabling the prevention of infringements in individuals’ freedoms and rights as power is well framed in the international setting.
3.2 Globalisation and Culture
(a) Application of McKinsey 7S Model on organisational Structure in the case of Vodafone Plc
McKinsey model is a tool that is used to analyse the organisational design of a company. Its goal is to determine the effect that an organisation can achieve as seven elements that are considered key in an organisation. These fundamental elements are system, structure, skill, strategy, style, shared values, and staff. The model’s focus is on the detail’s interconnectedness. It categorises them into hard and soft Ss’, indicating a domino effect as one element is being changed, intending to ensure that a sufficient balance is maintained (Ravanfar,2015). The model can help design the structure of Vodafone to ensure that the company’s objectives are aligned with its business operations. Using this model, Vodafone can perform well and attain the maximum possible returns that it can derive from its business operations.
This element represents the way a firm is organised. It shows the organisation’s command chain and the relationships of accountability as shown in the company’s organisational charts.
This shows a well-curated business plan that enables the organisation to build an action plan that will guide it towards achieving a sustainable competitive advantage, backed by the company’s values and mission.
This consists of the company’s technical infrastructure and business that establishes its operations’ decision-making chain and workflows.
It forms the competencies and capabilities of an organisation that enables the achievement of the employees’ set objectives.
This shows the company’s senior employees’ attitude through how they interact and make decisions, which leads to establishing the company’s code of conduct, forming the style of management associated with the company’s leaders.
This element involves managing a company’s human resources and talent that relate to the company’s decisions that include recruiting, reward systems, and training.
This element plays a critical role in aligning all the other vital factors, thus maintaining an effective organisational design. Its focus is on values, mission, and objectives that form the organisations’ foundation.
Application of McKinsey 7s at Vodafone
Vodafone needs to align its strategy to allow flexibility in its operational cost and reduce its overall cost to gain a competitive advantage. Also, it will be critical to ensure that their focus is mainly on their customers.
The company can need to change its operational centers to make them leaner and tighter to be more effective and lead to achieving the company’s objectives.
It can help Vodafone change from using hierarchical structures that are absolute and using tight controls to drive its business and invest in a system with enriched authorities.
The company may achieve more by using a more effective chain of decision-making regarding its recruitment, rewarding, quality control, and promotions.
The company will benefit more by introducing a culture aligned with its values and mission statement to guide it towards the achievement of objectives.
The company needs to show more commitment to its employees by introducing training programs in multiple fields to be more resourceful and flexible. It will also gain many benefits by giving employees greater responsibility and autonomy to make them feel more trusted and valued.
Vodafone will need to focus on employee development in a progressive way to ensure they attain a higher level of skills and considerable skills to be of more value to the company.
b) Application of Hofstede’s Cultural Dimensions theory in the case of Vodafone Plc
The idea refers to a framework used to comprehend the cultural differences between countries and perceive how business operations are carried out in different cultures. It distinguishes between civilisations in other nations, their dimensions, and their impacts on the business setting. This theory applies to Vodafone as it operates in various countries with different cultures. By understanding the existing cultural differences, the company will implement the necessary strategies and make the right decisions on how to manage human resources effectively. This will involve finding effective ways to motivate employees, communicate with different stakeholders, and increase employee productivity (Taras et al.,2010). Hofstede’s different categories (Hofstede-insights, 2020)
It alludes to the existing degree of inequality between influential people and those who are not, and which is accepted. In cases where the index is high, society agrees with a hierarchical power distribution that is unequal. Every person understands and takes their position in society. This index can help Vodafone identify countries based on their PDI and apply more leadership efforts in those countries where the index is high.
This alludes to how strong the ties are between people in the community. If the IDV is high, the interpersonal connection between people who are not considered to be core family’s part is weak. Being aware of the IDV scores will benefit Vodafone, especially on its marketing campaign, to ensure the right movement is done in the right country based on how the people feel about their communities.
It alludes to role distribution between women and men. Masculine societies are characterized by less overlap between these roles, with expectations of assertive behaviour by men. In contrast, feminine associations redefined high overlap between the parts, and being modest is considered a virtue. Masculine societies perceive positive characteristics as fast and robust. They show success, whereas cultures that are feminine place significant importance on ensuring good relationships between employees and their direct supervisors and engaging with cooperative people. Knowledge of this score will enable Vodafone to understand the kind of society that the company is operating in and decide on what to prioritize.
It describes the ability that people must cope with anxiety. Highly scoring societies in uncertainty avoidance tend to perceive life as controllable and predictable. Vodafone can use this index’s knowledge to plan on how to approach various people in different countries depending on whether the index is high low to achieve the desired cooperation.
It alludes to the time horizon displayed by societal people. People in countries that are short term oriented emphasize more on principles, truth, and consistency and tend to be typically nationalistic and religious. In its operations in various countries, Vodafone will use the PRA to determine whether quick results are needed to motivate people or otherwise.
Countries that score highly in IVR encourage and allow their people free gratification of their emotions and drives. The knowledge of the level of IVR in various nations will be instrumental for Vodafone as they understand whether cultures are restrained or not, thus knowing what to expect and how to relate with people in particular countries.
4.0 Decision-Making in the Global Context
Decision making refers to a process that involves choosing between two or more alternatives to determine the best course of action to obtain a solution for a particular problem. It requires reasoning and deliberation to bring an end process, whereby human intellectual abilities are involved (Gibson, 2010).
a) An Evaluation of Different Ways Decision Making can work Effectively in a Global Context
One of the implications is that decision-making helps the organisation in utilising the available resources better, which is essential in ensuring that its objectives are achieved. As Gibson (2010) mentioned, these resources that are available for an organisation include men, materials, money, methods and markets, and machines. Also, the organisation can face challenges and problems due to making decisions that are correct and quick. The business can also grow as the resources are utilised better and the objectives are being met. Moreover, the business’s efficiency is increased due to the high returns that the company makes and the low costs that are incurred. Decision making also facilitates innovation as it leads to new ideas, new processes, and new products. Also, it motivates the employees because they get to implement rational decisions and end up benefitting them.
One of the methods is the command method, where one person makes the decision. The person may be the central figure of authority or a person to whom the power to make decisions is delegated. The consulting method whereby the individual with authority to make decisions conducts comprehensive consultations before making the final decision. Besides, there is the voting method where a group takes a vote to agree on the decision. Moreover, there is a consensus method where negotiations are held to come up with a compromised position. Also, there is the data-driven method where numbers form the basis of the decisions that are made. Research is carried over time, and considerations are made before the final decision is made (Gibson,2010).
-How to improve decision making in Vodafone
In the case of Vodafone, I would recommend that the company collects information that is adequate to be able to make decisions that are relevant to its business. Information should be collected from the company’s stakeholders and from its market worldwide. It is also critical for the company to use the available and most recent data when making decisions to ensure that the decisions made are relevant to the current operations and the everyday market situations. Besides, the company needs to involve experts when making decisions, especially on various technical issues, to ensure that every important aspect is considered and nothing important is ignored. This will be more effective, especially in making decisions about technological issues, market trends, and the company’s financial issues. Moreover, the company needs to ensure that all its stakeholders are involved in decision making to avoid conflicts and ensure that there is harmony in the endeavour to achieve its objectives, thus making the decisions made more relevant and useful. Also, decisions should be made to avoid delay and ensure their effectiveness at the earliest opportunity possible.
b) Ways (strategies) to enter global markets
One approach is direct exporting, where an organisation sells directly to a market that it chooses using its resources. As Lee and Carter (2011) found, organisations that use this strategy turn to distributors or agents once they are established to be their representatives in the markets. The second strategy is licensing which is an arrangement that is sophisticated where rights of an organisation are transferred to a product use are transferred to another through an arrangement that the two have agreed upon. Licenses may be for production or marketing, and it works better if the organisation that purchases the license controls a larger market. Another strategy that may be used is partnering, which involves strategic alliances that are sophisticated for manufacturing or co-marketing arrangements that are simple. It is quite useful where the markets that an organisation targets are in countries where culture is substantively different. The joint venture is another strategy that involves a partnership that takes a particular form by creating a third company that is independently managed. There is an agreement between two companies working together, but they make a new company to perform the tasks they agree upon. The fifth strategy is through purchase of a company that already exists in another country. This is usually suitable in cases where that company has a substantial market share, it is a competitor, or it’s the only way to access the market because of specific government regulations (Lee & Carter,2011).
-Factors to consider when making global business decisions
The organisation needs to consider how a move to the worldwide scene will impact its brand. Any decision that is reached should be aimed at strengthening the organisation’s brand. Also, the decision made should focus on ensuring that the global investments made give a good return to the organisation’s business. Besides, the organisation should consider how the decision will affect its resources to ensure that it will continue running its operations without unnecessary interruptions. Moreover, before making any decisions the company should consider the tax implications of the decision in relation to the benefit that the business will obtain from the investment in the global market. It is also especially important for the organisation to consider the regulatory framework in the countries that it is aiming to invest in as the regulations vary in different countries and regions and may have significant effects in running of businesses. It is also critical to consider the company’s infrastructure and the cost of establishing infrastructure in foreign countries. Infrastructure costs in case the company does not have the infrastructure in the country in which it is interested in expanding its business is a significant determinant in making decisions. Moreover, the existing workforce, the availability of the needed workforce, and engagement in different jurisdictions should also be considered in making decisions.
c) A critical evaluation of the key barriers to globalisation and recommendations to overcome them.
They originate from cultural values and social norms. They adversely affect the seeking of information and restrict access to sources of information and breed negative emotions. These can be overcome by accommodating differences in cultures, sharing knowledge, and communicating politely and clearly.
Those barriers include protectionism, where governments introduce policies that protect local businesses by restricting international businesses’ entrance. Global companies can overcome protectionism by acquiring domestic partners and building supply chains of their products locally.
This is a tariff that governments charge on imports of services and goods that it feels are being sold at a price lower than the fair market value. This can be overcome by building partnerships with local businesses and establishing production lines in the countries of operations.
The government uses them to protect the local businesses. These includes exchange rate differential and blocked currency. This can also be overcome by rationalising regulations and initiating regional agreements to promote trade between countries.
d) A critique of the strategies adopted when entering the global market and valid and justified recommendations of how Vodafone Plc should adapt its organisational structure and decision-making processes
From the finding Parker (2005) about exporting tendencies across various industries, it could be suggested that direct exporting enables the organisation to avoid middlemen, thus it is less costly and relatively simple. Also, there is direct contact with clients and the organisation retains significant control over its sales. On the other hand, it consumes more energy, money and time of the business and demands a higher level of responsibility. Another example is licensing, which requires a low amount of capital and its risk is low in terms of finances and the legal risks involved. It must be noted that some companies have been skipping the exporting phase regarding licensing (Parker, 2005). It has some disadvantages as the organisation retains a low level of control and there are possibilities of the licensee turning into a competitor. Partnering has an advantage to the business as both parties have a better position of expanding and achieving their goals quicker. This could be said that aligns with Vodafone’s method of globalisation as it is evident from their numerous partners across the world. Consecutively, partnership deals could enhance the services and products quality, giving the business an edge over competition. However, it has some disadvantages as there is a high likelihood of the organisation losing its employees to its partner and disagreements may arise that may lead to lawsuits. For example, as stated by Delmas-Marty (2020), “several offences, such as misleading advertising or some labour code offences, which trigger civil liability proceedings, allow for transformative lawsuits (p.4).
The most effective strategy that perhaps could be recommended in the case of Vodafone would be business purchase or acquisition. This is because the company has resources and the ability to acquire additional businesses and run them effectively. Also, in case of purchase the company would just need a minimum change in its structure of organisation to accommodate this change as compared to the structural changes that might be needed in implementing the other strategies. The company has succeeded in the past by acquiring European cable networks and Liberty Global’s Central a move that led to its transformation as the largest broad band player in Europe compared to other market players in the industry. Vodafone has had a record of securing deals continuously, one of these deals being the acquisition in Italy of various 5G assets and its expansion into India and South Africa. The company acquired India’s Idea cellular, which enabled to control thirty five percent of India’s market share, thus becoming the country’s leading firm. However, these acquisitions have negatively affected the company’s value of equity although the company is expected to gain more benefits from these acquisitions and the new markets that it will have control of due to the strategic acquisitions that it has made in various countries. Therefore, acquisition of other firms has been key to the growth and expansion of Vodafone to the global market which indicates that the company can maximise on this strategy to ensure further expansion of its global business.
A joint venture will also be a good strategy for the organisation as it brings in new expertise and insights and the business gins access to better resources. However, it has disadvantages as it the involvement is not qual, and it may involve a lot of planning and research to be effective. For example, it could be said that purchase has significant benefits as the business cashflow is immediate. Also, the business acquires existing contacts, goodwill, customers, staff, stock, and equipment. On the other hand, the initial investment is large, and the business may require huge investments to bring them to profitability. As such, it might be preferable to gain an entry into the global market using the business purchase method or the direct export method. Therefore, it is important to ensure that a significant level of control of the business is retained and the business does not have to wait long to access returns (Lasserre,2017).
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