The global business environment is very diverse and adaptive to the various factors that constitute it. These global companies are surrounded by an array of changing perspectives in economic, geographical, social-cultural, political, technological and legal dimensions. It is therefore important to understand that ultimately the global business environment is constantly challenged by the change and shifts in theses perspectives. For corporations, businesses and organizations to achieve their goals, it is imperative to understand the kind of environment they are functioning in. This is in terms of location, market prices, legal policies, political climate, personnel policies and the system of distribution. This essay will focus on establishing the global business environment challenges that pose a threat to businesses all around the world.
Changes that Apple’s has made to its code of conduct in recent years
Apple Inc. is a global company which has made inroads in various countries where it supplies laptops and smartphones. Like any other company operating globally, Apple Inc. is faced with serious challenges which have facilitated a change in its code of conduct. Apple Inc. is basically committed to enhancing a safe working environment for its supply chain. In addition, the code of conducts tailored to ensure that its workers are treated with dignity and respect they deserve (Virginia’s Community Colleges, n.d).
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The changes made by Apple Inc. are related to labor and human rights, Supplier code of conduct, health and safety, Environmental impact and ethics. In the labor and human rights changes, Apple Inc. is clear that no worker will be discriminated on the basis of nationality, race, gender or any other basis of discrimination. The supplier code of conduct dictates that suppliers will treat workers fairly and not subject them human trafficking and spontaneous labor. More so the health and safety change is about ensuring that workers are working in safe and healthy environments which are not injurious to their health. The environmental impacts change about ensuring that the suppliers will minimize emissions of hazardous materials into the environment in their various processes. Additionally, the ethics reform is all about ensuring that the highest level of business integrity and practices are achieved in the line of business (Virginia’s Community Colleges, n.d).
Explaining the changes made by Apple Inc. to the suppliers
Suppliers are an integral part of Apple's Inc. lifeline and the changes initiated may affect them negatively if they are not adequately explained. Apple Inc. should help the suppliers to see the importance of conducting business that is beneficial to all the stakeholders and the environment they are operating in. This is important since all these aspects of business environment work together to ensure the smooth running of the business. These changes ranging from supplier code of conduct to ethics are very crucial, and failure to adhere to them can attract global reactions which may be detrimental to the overall profitability in Apple Inc. consequently reduction in profitability will translate to lowered demand for supplies which may force the suppliers to close shop. Therefore suppliers as part of Apple Inc. need to understand the importance of initiating and adopting such changes in the business environment.
Concept of Global Business Environment
The term global business environment refers to those external factors and forces that are beyond the influence of business enterprises, corporations, organizations, and institutions in the world arena. These external forces and factors ultimately play out either in favor or detriment of these businesses organizations. These forces and factors include social, economic, legal, political, demographic and technical factors and forces which can affect the business environment directly or indirectly positively or negatively.
Nature of the Challenges in the Global Business Environment
The world business milieu faces a myriad of difficulties which can be categorized as follows:
Technological Challenges
The global business environment can be said to be quite drastic and adaptable which in recent years have had to adapt to technological advancements so as to remain on the competitive edge. The technological advancements, innovations, and gadgets of modern times have created a platform of doing businesses online through e-marketing which should be a step in the right direction (Gupta, 2014). However, this has not been the case in the global business environment with the fact that most businesses and multinational companies have made inroads to various countries and continents. The challenge comes in that most of the business locations have not embraced the technological innovations due to lack of technological infrastructure in communication and transport. Therefore, these businesses find themselves performing their tasks manually which is time-consuming and unreliable which might contribute to losses. In addition technology at times is doomed to fail and when this happens delays, cancellations of sales, communication breakdown occurs which can be detrimental to the running of the business operations (Gupta, 2014). The technological challenge can be best understood when one considers the age of competitiveness where organizations are outdoing each other in the latest technological innovations. Business organizations have to continuously update their technological equipment if they are to remain competitive which can, in the long run, be an expensive and unmanageable affair
Political Challenges
Businesses in the global environment do not function in a vacuum but exist with a political location and framework which can be imperative in ensuring either the success or failure of that business. The political environmental of the country in which the business is located can either be favorable and conducive to doing business or be hostile to the extent that doing business is not possible (Carpenter et al., 2012). Businesses usually perform well in countries that have formulated policies and regulations that allow free movement of trade goods with fewer regulations, taxation, and restrictions. In addition, the political framework is about the political goodwill of the leaders in a country or region to allow investment into their countries. This is consequently facilitated by a peaceful environment since it would be difficult to conduct businesses in war-torn countries. Moreover, it is the political class that creates trade organizations and trading blocs such as ASEAN, NAFTA, and EU with the aim of reducing tariffs on imports and exports to ensure that businesses make significant profits (Carpenter et al., 2012). More so such trading blocs and treaties only tend to favor the member states but end up imposing penalties making business for non-members to be unfavorable and unprofitable. Businesses making inroads in new countries usually face the challenge of regulation in the country since most countries are keen on growing their parent industries which would otherwise be under threat if foreign companies are allowed in.
Economic Challenges
Managers and administrators in any business organization are usually interested in making profits in their operations of activities. Therefore these managers and directors must consider both microeconomic and macroeconomic factors which have both short and long term effects on the day to day business operations. However, the global business environment is encountered by shifts in economic policies and climates which are as a result of inflation rates, tariffs, interest rates, currency exchange rates as well as the growth of foreign and local economies (Carpenter et al., 2012). Businesses which are located in countries with weak economic growth as well as poor economic policies are likely to suffer massive losses and may end up closing shop. These are usually the businesses in volatile countries which are not economically stable, or their economies are based on agricultural production as compared to those whose economies thrive on industrial goods. More so the business managers are always threatened by lack of critical labor in their parent country which may force them to outsource which can end up being an expensive affair. Consequently, most businesses find this challenging as it eats into their profits as well as the capital invested, making their businesses not to be viable.
Legal Challenges
Businesses around the globe operate in a legal framework which is used in guiding on the establishment, contracting, and tax remission among other business activities. The legal frameworks across the different countries are differently engineered, and there is not a single framework for all the global economies (Ortiz, 2004). The uniqueness of these legal frameworks across the countries can make it difficult to run businesses in international boundaries. This difference in legal terms and conditions which may usually differ from the ones of the investors can bring about complications in the running of businesses. Businesses determined to set up businesses in foreign countries must conduct a thorough investigation into legal requirements of the host country before making inroads. These ghost countries usually have policies on work permits, intellectual property rights, visa and passport validation, leases and recruitment and hiring of staff terms and conditions (Ortiz, 2004). Here the host country may want the foreign investors to hire the local expertise as opposed to bringing in staff from the investors' jurisdiction. If for example, the host country requires the required skill, the investor may have a hard time in convincing the host country of such facts. This has happened especially in developing countries where the foreign firms have had challenges with the host countries by bringing in external expertise (Ortiz, 2004). This, in turn, does not augur well with the locals who are afraid of capital flight from their country of the investors' countries. In addition, most countries do not offer a legal framework which is conducive for the foreign investors which are due to a lot of complex bureaucracies when it comes to mitigation of investors’ legal issues.
Social-cultural challenges
Business organizations, enterprises, and corporation exist to meet the needs of diverse populations in their target countries. Differences in preferences characterize these populations, buying and spending capabilities and aspirations. It becomes such a challenging task for businesses to meet the needs of all these groups of people exhaustively. As other consumers enjoy the products and services of business organizations, there are others who feel that their needs are not met and can go to great lengths in criticizing the business enterprise (Ortiz, 2004). Furthermore, cultural differences across the globe can pose a challenge in the way of doing things. There are countries where certain products are not acceptable, and therefore a business organization dealing with such products will find it challenging to make inroads. For example, accompany making miniskirts would not consider setting shop in the Middle East considering their religious affiliations.
Environmental Challenges
The environment is a major factor in the running of successful business globally. With the rising concerns on environmental conservation, businesses are finding themselves in a hot seat with the environmental agencies. Enterprises around the globe have to make conscious efforts on how to dispose of their waste (Carpenter et al., 2012). This is especially critical in the processing, production and manufacturing sectors which have contributed to a lot of pollution and environmental degradation over the years. Consequently, such business enterprises have had to face legal challenges with a threat to be closed down if they do not comply with environmental agencies policies on waste management (Carpenter et al., 2012). In addition, most of these businesses have been forced to take up social responsibility in ensuring that their operations do not hurt their environment which can be quite a daunting and expensive affair.
In conclusion, the global business environment with its diversity and great importance is faced with an array of challenges. These problems may be considered necessary in helping the management teams to come up with viable solutions. These challenges some of which are either direct or indirect are beyond the control of the management teams, and the only option they have is to mitigate their effects. The challenges range from technological, economic, political, social as well as environmental. It is necessary for new businesses to consider what it is up to before beginning any venture to reduce the challenges discussed.
References
Carpenter, M. A. Dunung, P. S. (2012 ). Challenges and Opportunities in International Business. Unnamed location: Creative Commons.
Gupta, A. (2014). Global Business Environment and International Challenges. Innovative Journal of Business and Management, 3 (2), 22 – 26 .
Ortiz, J. (2004). International Business Education in a Global Environment: A Conceptual Approach. International Education Journal, 5 (2) 255:265.
Virginia’s Community Colleges (nd). Apple Inc. - Code of Conduct (Ethics Statement. Retrievedfrom:https://sites.google.com/a/email.vccs.edu/bus100mlmuseappleinc/home/apple-inc-code-of-conduct
