Analysis Of Challenges And Opportunities In A Global Environment

Challenges and Possible Opportunities

Discuss about the Analysis of Challenges and Opportunities in a Global Environment.

The need for expansion remains one of the most crucial objectives for any business organization. In addition to dominating the domestic make, certain organization desire to explore wider markets which cause them to work on projects which involve venturing into the foreign markets (Amoako, 2003).  Internationalization of operations is always accompanied by a number of challenges which could be attributed to the dynamic nature of the foreign market areas. According to Cairns and Sliwa 2008), the dynamic nature leads to occasional changes in the consumer preferences, prices of products, variations in customer and supplier bargaining power as well as changes in both the company and host country policies. In order to have a good grip of the foreign markets, it is therefore vital for business organizations to put in place the right strategies. These strategies are always aimed at enhancing the competitive levels of the company within the global environment. Additionally, when companies put in place the right approaches to operation, they are likely to enhance sustainability and hence be able to stay relevant in such environments despite the noted challenges. This essay highlights and discusses some of the challenges faced by business organizations and managers while operating in a global environment. The discussion shall also entail some of the opportunities that may be established within the global fonts which the business organization could take advantage of in order to achieve international success. The study derives illustrations from Qantas Airways which one of the leading multinational corporations not only in Australia but in the world. Through the review of literature as the main qualitative approach to data collection, the discussion shall therefore focus on some of the challenges faced by the mentioned company in its bid to gain international stability in the ever changing global environment.

In a bid to ensure the stability of its market base, an organization needs to conduct a thorough feasibility test and hence establish some of the possible obstacles to global development (Cantwell and Narula, 2004). At the same time, it is a fact worth noting that the challenges to international development may not have a holistic solution in the near future due to the fact that they take various trends as days go by. However, a good understanding and projection of these challenges could play a crucial role in helping managers come up with the most effective counter measures.

To begin with, one of the most common challenges to operating in a global environment is the aspect of changes in the political atmosphere as one move from country to another. While some countries enjoy a relatively stable political environment, there are those areas characterized by political turmoil which in turn cause instability in a number of aspects (Calof, 2009). For instance, the political atmosphere within a given country largely influences the nature of governance. The government structure and the leadership approaches in turn influence the kind of policies put in place to control a number of aspects within the country which also includes control of international investors, business practices as well as product prices just to mention but few. The policies implemented by a government, for instance the ones meant to govern business operations, play a pivotal role in defining the business environment both for the local as well as the foreign investors. Consequently, stringent government polices tend to minimize the scope of operations for the foreign investors which proves to be one of the challenges to associated with operating in a global environment.  According to Caves (2006), the policies may require the organization to employ only a given number of foreign employees. This implies, before venturing into the global market, the organization has to identify and initiate the locals employees into the businesses’ mission and vision, an aspect which is not only time consuming but also involves the use of a lot of resources. It can therefore be deduced that a bad political atmosphere leads to an unstable leadership structure characterized by unfavorable business policies which act as obstacles to smooth operations in a global environment (Cox, 2007). However, in markets where the policies are conducive, the foreign investors are accorded an opportunity to expand their operations since these regulations are supportive enough for business growth. Variations in political trends from one country to another explain why Qantas Airways continues to struggle in a bid to establish its base in certain countries across Europe, Asia and in Africa.

Secondly, there is the aspect of infrastructure. In most developed countries, the level of infrastructural development is at a relatively advanced stage.  This implies that there is easy movement of people and resources from one place to another due to the good network of roads and other forms of transport (Dicken, 1998). Operating in such environments is quite a manageable task for the international organizations. For instance, the good transport systems in most countries Europe, America and Asia explain why Qantas has been able to enhance sustainability in these areas. Additionally, the good communication systems have remained pivotal in enhancing communication between the organization’s management and its clients in addition to the communication aspects involving aerial operations, traffic control and flight control just to mention but few (Dunning, 2003). The good infrastructural developments in these countries have offered a perfect opportunity for Qantas Airways to establish its operations in these global environments. However, the level of development of roads and communication systems remains a challenge in most developing countries especially in Africa and some parts of Europe. The poor transport management systems hinder the free movement of customers and employees to and from the airport. For instance, poor road systems lead to the occurrence of jams which may occasionally result in inconveniences especially when the clients are unable to catch their flight on time (Flyvbjerg, 2001). Consequently, the airways have lost some of its clients to alternative modes of transport as a result of such challenges.

Thirdly, the aspect of customer bargaining power in addition to the common changes in consumer preferences may acts as another challenge to operating in a global environment.  As stated by Freeman (2010), the unexpected changes in the consumer needs make the global environment quite unpredictable and may easily result in the company losing its customers to a rival supplier. The customer’s bargaining power involves the standards forwarded by the clients with respect to their ability to pay for the services. When the clients bargaining power exceeds the minimal requirements stated by the organization, the final return on investments is likely to be low. Consequently, there would be a need to strike a balance between the client’s bargains and the prices stated by the company. This ensures that both parties gain at the end of the day. The absence of this balance is the root cause of losses incurred by a company. At the same time, the consumer needs keep changing as one moves from one environment to another. These needs may be attributed to changes in weather, economic status and complexity of flights just to mention but few. When the clients present needs that are beyond the organization’s strength to achieve, there is the likely occurrence of low consumer satisfaction which in turn reduces loyalty. Low customer loyalty is a major challenge to the stability of a foreign organization’s market base. On the other hand,  good business-consumer relations enable a close knit between an organization and its customers. This makes it easy to establish the client feedbacks as well as their changing needs.  Qantas Airways may harness this opportunity to maintain a competitive edge by predicting the changes in consumer preferences and hence adjusting its products and services to fit these needs.

The fourth challenge is the presence of competitors in the global market. Qantas Airways, despite being one of the largest industries in the world faces challenges from other effective service providers including Airbus and Singapore Airlines just to mention but few. Additionally, there is also the challenge of the emergence of smaller airlines which offer similar services but at relatively lower prices with the aim of capturing as many clients as possible (Friedman, 2006). The presence of other service providers in the global environment goes a long way in increasing its capacity and instead decreasing the profitability. For instance, when a market comprise several organizations offering the same products and services, customers are likely to weigh and hence pick the most affordable alternatives (Harrison, 2011). This becomes a challenge to international organizations especially in cases where the level of customer loyalty is low. The organizations therefore divide the market and a company gets its clients depending on the level of competitiveness and the effectiveness of the strategies implemented.

In order to attain and retain global dominance, it would be crucial for the organization to put in place the most effective strategies. The strategy here ought to involve a careful analysis of the impending challenges and taking advantage of the possible opportunities in bid to cut a competitive edge in the dynamic global market.  One of the core approaches ought to be the conduction of a thorough feasibility test. This approach enables the organization to have in depth understanding of the nature of the foreign market, the variations in the clients’ cultural and social attributes as well as the changes in economic levels (Hartt and Durepos, 2012).  A good understanding of each of these aspects would therefore enable the organization to come up with the right counter measures aimed at curbing the challenges and increasing sustainability.

There is an inevitable need for flexibility in the approaches of operation within a global market. For instance, there customer preferences keep changing from time to time based on a number of factors. It would therefore be vital for Qantas Airways to occasionally alter its products and services in order to fit the changing client needs. This could be achieved by altering the product prices, making the planes more spacious and adjusting the fight departures. By studying the trends in the consumer behavior, it is possible to identify their specific needs. The company can then focus on satisfying these needs which leads to customer loyalty and hence market stability despite the high level of competition (Harvey, 2007). Furthermore, the international organization needs to monitor the political trends, the nature of governance and hence the nature of the government policies. Before introducing new products, like new flight schedules, new planes and higher capacity carriers, it would be vital for the organization to know the effects that the current policies would have on such new projects. Good policies allow for innovation and development while stringent ones hinder effective development. Consequently, Qantas Airways can focus its operations in global environments which are characterized by supportive government polices of international organizations (Johnson and Turner, 2010).

Conclusion

The study above reveals a number of challenges which could be associated with managing a business in a global environment. These include changing customer preferences, government policies, level of infrastructure as well as the presence of competitors. As a result, business organizations intending to remain relevant in the dynamic corporate market ought to stay aggressive with its strategies and approach to management. Implementing the right business practices would enhance organizational sustainability in the global environment.

References

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Calof, J. (2009) ‘Adapting to foreign markets: explaining internationalization’, International  Business Review, 4(2), pp. 115-130.

Caves, E. (2006) Multinational Enterprise and Economic Analysis, 2^nd Edn., Basingstoke: Palgrave Macmillan.

Cox, D. (2007) Risk taking and information handling in consumer behaviour – an intensive of two cases’ in Cox, D. (ed.) Risk taking and information handling. Boston, MA: Harvard          University Press

Dicken, P. (1998) Global Shift: Transforming the World Economy, 3^rd Edn., New York: Guilford Press.

Dunning, J. (2003) Multinational enterprise and the global economy, Addison-Wesley  Publishers, England, Viewed 7 April 2016.

Flyvbjerg, J. (2001) Making Social Science Matter: Why Social Inquiry Fails and How It Can Succeed Again. Cambridge: Cambridge University Press.

Freeman, R. (2010) Strategic management: a stakeholder approach. Cambridge: Cambridge University Press.

Friedman, T. (2006) The World is Flat: A Brief History of the Twenty-First Century, California: Farrat, Straus, and Giroux.

Harrison, A. (2011) ‘International Entry and Country Analysis’, A lecture programme delivered   at technical university of Kosice, viewed 7 April 2016.
Hartt, C. and Durepos, G. (2012) ‘Markets, organizations, institutions and national identity: Pan American Airways, postcoloniality and Latin America’. Critical Perspectives on International Business, 8(1), pp. 14 – 36.

Harvey, D. (2007). A Brief History of Neoliberalism, London: Oxford University Press.

Johnson, D. and Turner, C. (2010) International Business, 2^nd Edn., London: Routledge.