ASSIGNMENT 1 FRONT SHEET Qualification BTEC Level 5 HND Diploma in Business Unit number and title Unit 18: Global Business Environment (530) Submission date Date received (1st submission) Re-submission date Date received (2nd submission) Student name Phạm Long Vũ Student ID GBS200309 Class GBS0907B Assessor name Mr. Do Minh Tuan Student declaration I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism. I understand that making a false declaration is a form of malpractice. Student’s signature: Grading grid P1 P2 M1 M2 D1 Summative Feedbacks: Resubmission Feedbacks: Grade: Assessor Signature: Internal Verifier’s Comments: Signature & Date: Date: Contents I. Introduction ............................................................................................................................................ 8 II. Main body ............................................................................................................................................... 8 1. Define the concept of globalization .................................................................................................... 8 a. Economic dimension ........................................................................................................................ 8 b. Political dimension........................................................................................................................... 8 c. Social dimension .............................................................................................................................. 9 d. Cultural dimension........................................................................................................................... 9 2. The key industry-specific drivers for globalization based on Yip’s model ......................................... 9 a. Market drivers ................................................................................................................................. 9 b. Cost drivers .................................................................................................................................... 10 c. Competitive drivers ....................................................................................................................... 10 d. Government drivers ....................................................................................................................... 11 3. International trade laws and the impacts on MNCs ........................................................................ 11 4. Global economics .............................................................................................................................. 12 a. PEST model .................................................................................................................................... 12 b. International expansion entry modes ........................................................................................... 13 5. Global supply chain ........................................................................................................................... 13 a. Global sourcing and distribution ................................................................................................... 13 b. Global production .......................................................................................................................... 15 III. Conclusion ............................................................................................................................................ 15 References I. Introduction When I was an intern at a Vietnamese investment consulting firm, I was requested to help my team with the creation of a report for a possible Vietnamese customer that examined the effects of globalization as well as its dynamics, strengths, and problems for the Vietnamese company and its industry. This is done to persuade potential European business partners to work with the Vietnamese company as it enters the Vietnamese market. Walmart needs to leave the Chinese market to access the Vietnamese market, which presents difficulties for Tiki and other e-commerce companies. The major goal is to compile data and associated data from many sources, analyze it, and then develop an appropriate strategy that includes the required components. II. Main body 1. Define the concept of globalization a. Economic dimension Political globalization, cultural globalization, and the broad word "globalization" are the other two key characteristics of globalization that are frequently discussed in academic literature. Economic globalization is one of these dimensions. Example: Economic globalization is exemplified through free trade agreements like the Trans-Pacific Partnership and the North American Free Trade Agreement. Economic globalization is greatly influenced by multinational firms, which have operations in two or more nations (Lutkevich, B. 2021). b. Political dimension Political globalization is the process by which international factors have a greater impact on political choices and actions. Example: Political globalization is the term used to describe the persistence and cascading effects of political ties across nations. Another example of this form of globalization is the establishment of multinational organizations like the UN, NATO, and WTO that discuss and govern worldwide trade and politics (Multiplier. 2022). c. Social dimension The exchanging of information and ideas beyond national boundaries is referred to as social globalization. Social media and the Internet are at the center of this in the modern world. Popular worldwide movies, books, and television shows could serve as good instances of social globalization. Example: Social globalization is the exchange of information and ideas across national boundaries. The Internet and social media are at the center of this in today's world. Internationally well-known movies, literature, and TV shows could serve as good instances of social globalization (tutor2u. 2021). d. Cultural dimension Cultural globalization is the extension and intensification of social ties through the global transfer of ideas, meanings, and values. The widespread consumption of cultures that have been spread via the Internet, popular culture media, and worldwide travel characterizes this movement. Example: Western media companies have operations in numerous other nations around the world. Around the world, the foodservice industry is dominated by fast-food chains from Western nations, like McDonald's. Establishing a Mexican eatery in Montreal, Canada (Reed, H. 2022). a. The key industry-specific drivers for globalization based on Yip’s model Market drivers The makeup of distribution networks and the characteristics of consumer behavior have an impact on market globalization's key drivers, including shared consumer wants, global customers, global channels, transferrable marketing, and lead nations. The five global strategy levers are all impacted by these forces. The demand for a good or service can frequently be increased or decreased by a variety of different factors, just as human behavior frequently depends on a variety of different factors. There are several demand drivers that are frequently used in the retail sector, though their applicability may differ for various products and even for consumers: Price, Weather, Promotions & Discounts, Location, Queues, Special Circumstances and Events, Convenience, Sales Channels, Footfall, Competition, Consumer Income Levels. Walmart and Tiki: -Globally identical consumer wants do exist, however given that customers are moving from globalization to glocalization today, localization of the products cannot be neglected. -Despite the existence of global distribution channels, the nature of the items dealt with still favors local and national sourcing. -Once more, the company's guiding principles and policies include marketing. But local tastes and inclinations are considered in marketing. -There are developed nations like Germany, France, the U.S., and the UK. b. Cost drivers Except for research and development costs, which are marginal but must be tailored to each market, cost drivers favor globalization. In industries where margins are razor thin, economies of scale are crucial. The cost of transportation does not deter centralized sourcing and warehousing. Walmart and Tiki: -Costs associated with R&D are notably lower in this sector. -Scale economies are quite important. -Costs associated with transportation do not deter centralized production (sourcing/warehousing). -A variety of nations in which to locate the production. c. Competitive drivers Government globalization factors, such as advantageous trade policies, compatible technical standards, shared marketing laws, government-owned rivals and clients, and host government concerns, are influenced by national government regulations and have an impact on how all global strategy levers are used. Walmart and Tiki: -Although the home country's high number of imports and exports cannot be disregarded, the other operational countries' import and export volumes are rather small. -key international markets' interconnection in terms of competition. -The regional market now has foreign rivals. d. Government drivers In this approach, country drivers exhibit a shift toward localization. Although they are gradually being lifted by the WTO and are coming under increasing pressure from business and markets, there are still a few small trade barriers in place. Walmart and Tiki: -Low trade barriers, but they are being legally and quickly erected by the market and industry. -Inconsistent national norms. -Preserving national institutional and cultural norms. 2. International trade laws and the impacts on MNCs International trade law: The appropriate laws and customs for managing trade between nations are included in international trade law. However, it is also referred to as trade between private sectors in legal writings. The impacts on MNCs: Economic environment: The decision of where to locate a multinational company's operations is influenced by local tax rates. While some nations charge international businesses higher corporation taxes, others treat both foreign and domestic investors equally. Additionally, the financial system is crucial to the atmosphere of global trade. Multinational corporations can now raise funds more easily thanks to the banking sector's globalization. International corporations made investments in new markets because of the macroeconomic environment's stability. Culture – Social environment: People control the hiring of employees and the operations of businesses. Therefore, to forecast and manage their relationships and activities, businesses must consider the differences between social groups. In many nations around the world, differences in people cause differences in business activities. Because of this, managers and businesspeople are compelled to comprehend both the local culture and the cultures of all other nations. Political environment: Political and legal aspects of the environment that affect how multinational corporations operate Legal requirements will vary depending on the company, and global corporations must abide by these requirements. Natural environment: The importance of raising environmental awareness is growing. International corporations must strive to provide environmentally friendly goods and services; corporate operations must not harm the environment or have a detrimental impact on society. Competitive environment: The type, scope, and strategies used by competitors to gain an advantage in the market will all be determined by them. The interaction of variables such as the number of businesses competing, the expansion of the industries, the fixed cost structure, and the degree of product diversification determines the level of competition (ocd. 2020). 3. Global economics a. PEST model PEST Analysis is a measurement tool used to evaluate marketplaces for a specific product or industry over a specific period. Political, Economic, Social, and Technological aspects are referred to as PEST. Organizations can make wiser business judgments when these aspects have been thoroughly examined (Mark Fairlie. 2022). Political factors: Government policies have an impact on any retail store's sales and profitability. The economy, consumer spending patterns, and international trade rules are all impacted by these policies. Regarding these modifications, the business can do nothing more than follow them. Economic factors: A stronger economy enables customers to purchase the goods they desire. rather than simply purchasing what they require. It also indicates that more investors are showing an interest in the profitability that retail establishments provide. Only when the economy is expanding is this feasible. Social factors: The primary societal forces influencing the retail sector are consumer preferences. For example, individuals want to purchase goods in large quantities. This is the precise rationale behind Canadian store CostCo. Large numbers of food items, apparel, and electronics are available here. To prevent supply shortages, retailers besides CostCo increasingly bulk stock a variety of products. Technological factors: Different types of technologies are used daily in retail establishments. like a pointof-sale device. In addition, cash registers are used to manage money following a sale. It is customary for all stores. As technology develops, retailers adopt new hardware, software, and operating systems. For instance, smaller shops are switching to iPads or computers at the register. It operates quickly and simply. b. International expansion entry modes Walmart is a big company, which proves it has acquired other small companies in the US and other small companies in countries in Europe. Market penetration in countries other than the US has expanded Walmart's reputation as the most influential retailer now. Along with that, the acquisition helps to penetrate quickly and bring products to consumers faster. On the contrary, the acquisition cost is very high. Tiki is a large company in Vietnam, which proves that they have covered the whole of Vietnam. The cooperation and strategic alliance with AIA company to cooperate in a certain way for a certain time to achieve a common purpose. Along with that, the cooperation and strategic alliance with AIA company contributes to ensuring the prestige and quality of products for domestic consumers. 4. Global supply chain a. Global sourcing and distribution Supply Chain Management (SCM): The network of all the steps used to deliver a finished good or service to the client is known as a supply chain. All procedures that transform raw materials into finished commodities are included in supply chain management, which is the administration of goods and services. To optimize consumer value and obtain a competitive edge in the market, it entails actively streamlining the supply side operations of firms (Handfield, R. 2021). Distribution management system (DMS): A Distribution Management System (DMS) is a group of software programs created to monitor and operate the whole distribution network effectively and reliably. It serves as a decision support system to help the staff in the control room and the field operators monitor and manage the electrical distribution system. The main deliverables of a DMS are to increase service quality and dependability by decreasing outages, shortening outage times, and maintaining appropriate frequency and voltage levels (Hayes, A. 2022). Enterprise resources planning (ERP): Enterprise resource planning (ERP) is the integrated administration of key business activities, frequently facilitated by software and technology and occurring in real-time. ERP is commonly referred to as a class of business management software that allows a company to gather, store, manage, and understand data from several business activities. It is typically a suite of interconnected applications (Team, T.I. 2022). Customer relations management (CRM): Customer relationship management, or CRM, is a technique that enables businesses to access and interact with customers in a methodical and efficient manner. CRM also allows for the management of customer information, including account details, needs, and communications, to better serve customers (Hargrave, M. 2022). A content management system (CMS): A program called a content management system (CMS) is used to handle the creation, editing, and publication of web content by various authors. In a CMS, content is often kept in a database and presented using a presentation layer that uses a collection of templates (Fernando, J. 2021). We need to follow all the steps defined above to be able to complete a product. From there, business organizations can sell to the market to serve the needs of products for consumers. The steps are arranged as follows: ERP => DMS => CSM => CRM (order of supply chain management). Global sourcing is the practice of acquiring the components or raw materials used in a company's products from locations other than its country of headquarters. For example, Trade War: The US-China trade agreement from January is a positive move. Nevertheless, uncertainty continues to hang over the trade relationship, which is becoming more contentious. Supply chain moves away from China have accelerated due to persistent uncertainty. While production and sourcing expenses are rising, sourcing techniques are continually being reviewed. Brands, retailers, logistics service providers, and businesses along the supply chain continue to be harmed by the tariff war, which is still very much ongoing Matias (Figueiras. 2020). Multi - Sourcing Advantages: - More flexibility in times of disruption. - Negotiating lower rates by pitting one supplier against another. Multi - Sourcing Disadvantages: - Quality across suppliers may be less uniform. - Less influence with each supplier. - Higher coordination and management costs. Global distribution: The routes that goods and services take from a vendor to the consumer are known as retail distribution channels. These routes could be brief, direct routes that go from the vendor to the customer. They could potentially be lengthier and involve wholesalers, distributors, or other middlemen. The price of the product will increase as there are more middlemen involved. However, in some regions where direct sales are impossible or unfeasible, longer distribution networks are required. Therefore, market expansion such as Walmart or Tiki must be carefully considered (delrecruiters. 2018). b. Global production A business has the option of choosing local manufacture or going entirely local, getting its raw materials from abroad and producing the final product there. In their home nations of the United States and Vietnam, Walmart and Tiki employ this tactic. They also consider the advantages of manufacturing in that nation, such as the quality of the workforce, the infrastructure, the local telecommunications and utility infrastructure, the stability, and politics of the nation, while making judgments. III. Conclusion In this study, we found that globalization is one of the factors that determine retail success. There may be many competitors in the local market, but if you want to provide something fresh to modern customers in a better way, please let them have something underutilized. In the future, you must become international. This was done by Walmart. Tiki is a small company and will reach the world if it goes in the right direction. References Types of globalization (2021) tutor2u. 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