Global Business Strategy

ASSIGNMENT OF UNIT 7.
2 GLOBAL BUSINESS STRATEGY

ATHE Level 7 Diploma in Strategic Management
Submitted to: Teacher Sahazad
1
Archana Rai, ID: 102952
Table of Contents
UNIT: 7.2- GLOBAL BUSINESS STRATEGY...................................4
INTRODUCTION....................................................................... 4
ACTIVITY1: Your line manager has asked you to analyse the
international
business
environment
for
your
chosen
organisation and produce a report for him which includes......4
Activities 1- a, b, c...............................................................4
Business environment............................................................4
PESTLE analysis- The Macro Environment..............................4
Figure of PESTLE analysis.......................................................5
Economical Factors............................................................6
Socio- cultural Factors.....................................................7

Technological Factors.........................................................8
Political Factors...............................................................5
Legal Factors..................................................................9
Environmental Factors......................................................10
Porters Five Forces analysis-The Micro Environment...........10

Threats of new entrants........................................................11
Threats of substitute product and service..............................11
Bargaining power of customer...............................................11
Bargaining power of supplier................................................11
Competitive rivalry with in organisation (Riley, 2012).............11
Figure of Potter Five Forces................................................11
Activities 1, d.......................................................................12
Activities 2: a, b, c PowerPoint presentation.....................13
Activity 3: identification of the legislation/regulation and
guidance relating to corporate social responsibility for
organisations.......................................................................13
From Power Point Presentation: Activity 2, a.......................13
Business Ethics....................................................................13
In the international business setting, facing the most common
ethical issues involving......................................................14
2
Employment practices........................................................14
Human rights.....................................................................14
Environmental regulations..................................................14
Corruption.........................................................................14
Moral obligation of multinational corporations (social
responsibility)...................................................................14
From Power Point Presentation: Activity 2, b..........................17
Conflict.............................................................................17
Common task that produce conflict........................................18
Conflict can classify in two ways:...........................................18
Constructive and Destructive................................................18
Common causes of conflict.................................................19
Factors causing conflicts between nations, there by affecting
International Business..........................................................19
Factors causing conflict in International business................20
Conflict Resolution................................................................20
From Power Point Presentation: Activity 2, C.......................21
Legislation...........................................................................21
Employment law................................................................21
Consumer protection..........................................................21
Competition law.................................................................21
CONCLUSION........................................................................23
Bibliography...........................................................................24
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UNIT: 7.2- GLOBAL BUSINESS STRATEGY

INTRODUCTION: Global Business strategy is concerned with the
important long term policy decision of international firms operating across
fronting in the world economy. It can be defined as the business strategies
engaged by the businesses, companies or firms operating in a global
business environment and serving consumers throughout the world.
Global business strategies are closely related to the business developing
strategies adopted by business to meet their short and long term
objectives. The short term goals of the business would be related to
improving the day-to-day operations of the company while the long term
objectives are generally targeted towards increment of the profit, sale and
earning of the company in the long run ensuring growth and stability of
the business and dominance over the national or regional market. (Gillies,
1997)
ACTIVITY1: Your line manager has asked you to analyse the
international business environment for your chosen organisation
and produce a report for him which includes.
Activities 1- a, b, c
Business environment: It is directly related to the organizational
activities and its success. Environment needs to be indentifying of
targeted place before start the business. There are two techniques that
are used to examine the business environment within which an
organisation is operating:
1. PESTLE analysis
2. Porters Five Forces analysis
PESTLE analysis- The Macro Environment
The macro environment is typically segmented for the reasons of analysis.
Organizations do not have any control in the macro environment. This
analysis commonly referred to as a PESTLE analysis. It is very important
that an organization considers its environment before beginning the
marketing process. In fact, environmental analysis should be continuous
4
and feed all aspects of planning. PESTLE analysis provides a framework for
investigating and analysing the external environment for an organisation.
PESTLE stands for "Political, Economic, Social, Technological, Legal and
Environmental" and it is used for business and strategic planning,
marketing
planning,
organizational
change,
business
and
product
development and research reports. This analysis tool helps to find out the
current status, market growth, direction, potential, and position of an
organisation in relation to their external environment and current role. By
understanding these external environments, organizations can maximize
the opportunities and minimize the threats to the organization. (Alok
Goyal, 2009)
Analysing the business environment of McDonaldss by using
PESTLE analysis, it is one of the globalized fast food company in the
world.
Figure of PESTLE analysis

There are some factors influencing the business environment as shown
above in the figure which are in details as follows:
Political Factors: The international operations of McDonalds are

highly influenced by the individual countrys policies enforced by
each government. For instance, there are certain groups in India,
Europe and the United States that clamour for state actions
pertaining to the health implications of eating fast food. They have
indicated that harmful elements like cholesterol and adverse effects
like obesity are attributable to consuming fast food products.
Companys licence is controlling by local government. For instance,

5
there is impending legal dispute in the McDonalds franchise in India

where certain infringement of rights and violation of religious laws
pertaining to the contents of the food. The existence of meat in their
menus in India is apparently offensive to the Hindu religion in the
said market. McDonalds stores have to contend with the issues of
employment procedures as well as their tax obligations so as to
succeed in the foreign market like India. (Rouse, 2007)
A political factor includes:
Government policies
Government term and change
trading policies
funding, grants and initiatives
lobbying and pressure groups
Wars, terrorism and Conflicts
Elections and political trends
Internal political issues
Inter-country relationships
Local commissioning processes
Corruption
Bureaucracy
Analysis: The Company must also be acquainted with the law in order to
know what their responsibilities and their possible liabilities. Also
McDonalds should protect its workers by ensuring all the hiring,
compensation, training or repatriation in accordance to the Indian labour
laws.
Economical Factors: The economic environment is a direct

influence on all businesses. Exchange rate fluctuations will also play
a significant role in the operations of the company. The companys
international supply as well as the existing exchange rates is merely
a part of the overall components needed to guarantee success for
the foreign operations of McDonalds. The rate at which the
economy of that particular country grows determines the purchasing
power of the consumers in that country. Hence, if a franchise
operates in a particularly economically weak country, their products
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shall cost higher than the other existing products in the market,
then these franchises must take on certain adjustments to maintain
the economies of scale. However in case of India the company has
been able to maintain a constant level of prices for their products.
Economical Factor includes:
Local economy
Taxation
Inflation
Interest
Economy trends
Seasonality issues
Industry growth
Import/export ratios
International trade
International exchange rates
Analysis: Ideally before penetrating the market, the company must carry
out a well conducted market research, especially in the movements in the
economic environment which McDonalds had done before entering the
Indian market due to which the company has been able to bear the
frequency of the shifts in the inflation rate as well as the fluctuations in
the exchange rates which affects the operations of any company.
Socio- cultural Factors:
McDonalds has launched a sensibly
valued set of food that tenders a reliable level of quality for the
respective market where it operates. In the case of McDonalds they
establish a good system in determining the needs of the market.
The company uses concepts of consumer behaviour product
personality and purchasing decisions to its advantage which is
clearly evident in case of India as the company was quick in
removing their Pork, beef, and Mutton products from Indias menu.
For example, in India, a country in which the cow is sacred, the
menu features McVeggies instead of hamburgers. In Singapore,
customers can order a Chicken SingaPorridge; in Hong Kong, some
Seaweed Shake Fries. It is said to have a major influence on the
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understanding of the prospective performance of the organisation in

a particular market.
Socio-cultural Factors includes:
Demographics
Media views of the industry
Work ethic
Brand, company, technology image
Lifestyle trends
Cultural Taboos
Consumer attitudes and opinions
Consumer buying patterns
Ethical issues
Consumer role models
Major events and influences
Buying access and trends
Advertising and publicity
Analysis: McDonalds should obtain the relevant information from the

target market in addition to the individual customers of the organisation.
It is imperative that before a franchise is granted to a particular market, a
well drafted and comprehensive market research should be conducted
initially so as to establish the acts that would conform to good customs,
public policies, and morals of the said Countrys society. Similarly, the
company should find out the shifts in areas like the consumer behaviour
and purchasing patterns of the market. Also the company should
constantly survey and learn about local culture to better understand and
design the best product for them.
Technological Factors: McDonalds generates a demand for its

own products. The companys key tool for marketing is by means of
Online Facebook and Google ads, Collaboration with websites like
Snap deal and Times deal to promote sales in India, television
advertisements, newspaper, banners and hoardings. Following
different kind of marketing techniques and campaign such as Im
lovin it campaign, it has become endorsers for McDonalds
worldwide. (Van, 2012)
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Technology Factors includes:
Emerging technologies
Maturity of technology
Technology legislation
Research and Innovation
Information and communications
Competitor technology development
Intellectual property issues
Analysis: The Company must also look into the use of IT to enhance their
inventory operations. McDonalds use the internet to their advantage. The
cost-effectiveness,
interactivity
and
real-
time
effects
of
the
communications are a good way to find suppliers. It is also a good way to

correspond with the respective McDonalds headquarters in every Country.
Legal Factors: The legal requirement is important because the

offenders will be fined or have their business prohibited from
operating which can be disastrous. Muslim countries require their
meat to conform to the Halal requirements of the law. In the same
regard, those that operate in countries in the European Union should
conform to the existing laws banning the use of genetically modified
meat products in their food. This was prime reason which forced
McDonalds to eliminate beef, pork and Mutton out of Indias product
menu. Other legal concepts like tax obligations, operating hours,
business registration, labour and employment laws and quality &
environment certification (such as ISO)and quality requirements are
only a few of important elements on which the company has to take
into consideration. Otherwise, smooth operations shall be hard to
achieve. (Van, 2012)
Legal Factors includes:

Current legislation
Future legislation
International legislation
Regulatory bodies and processes
Employment law
Consumer protection
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Health and safety regulations

Money laundering regulations
Tax regulations
Competitive regulations
Industry-specific regulations
Analysis: As a certified fast food operator, there are many regulations

and procedures that McDonalds should follow. McDonalds should protect
its integrity and consumer confidence by ensuring all materials and
process are as claimed or must followed.
Environmental Factors: The climate and physical terrain of a

country are important environmental conditions which have a
significant effect on the demand and the type of product made
available. Prior to entry into a new market, it is very important for
McDonalds to consider the physical terrain and climate in the
appraisal. Altitude, relative temperatures and humidity are some of
the climatic conditions that can affect products in foreign markets.
Being
environmentally
friendly
is
another
important issue
to
consider. Environmental groups forced McDonalds to reduce its use

of plastic and Styrofoam packing. While McDonalds internal market
research
shows
that
environmental
issues
will
have
neither
a positive nor negative impact on sales, they have agreed to work

with the Environmental Defence Fund, an environmental pressure
group, to reduce unnecessary and harmful waste. Several civic
groups in India have made actions to make the McDonalds
franchises in India aware of the rather abundant use of Styrofoam
containers and the resultant abuse of the environment.
2012)
Environment Factors includes:
Environmental regulations
Ecological regulations
Reduction of carbon footprint
Sustainability
Impact of adverse weather
10
(Van,
Analysis: The Company should find out the environmental regime that
governs the operations in every market. It should also monitor the waste
disposal of the company. McDonalds should minimize the use of
Styrofoam materials and plastic cups to make the environment healthy.
(The Happy Manager, 2010)
Porters Five Forces analysis-The Micro Environment
The micro environment is also known as operating, competitive or task
environment business. It consists of companys immediate environment
that affects the performance of company. It becomes from internal part of
the company .Factors in the micro environment are largely within the
control of the managers. In this way, organisations can be much more
proactive in dealing with the task environment than in dealing with the
macro environment.
The Micro Environment normally refers to Porter Five Forces. Competitive
intensity of McDonalds can be determined with Porters five forces. Porter
five forces is business strategy formed by Michael E.Porter of Haward
business school in 1979.he determined five forces which actually
determines attractiveness of the market and competitiveness. These five
forces are
Threats of new entrants

Threats of substitute product and service
Bargaining power of customer
Bargaining power of supplier
Competitive rivalry with in organisation (Riley, 2012)
Figure of Potter Five Forces
1) Threats of new entrants: Entry to a restaurant Business is very

difficult. It is hard to make a prominent brand name. There is high
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research and development costs and high cost of entry. Strong

brands already in competition make it more difficult such as
McDonalds, Pizza Hutt, Dominos etc. New entrants face a very high
competition in the start of the business. (MacDonald, 2013)
2) Threat of substitute product and service: The substitutes in
this industry are very high. People can choose variety of products
they can either choose Burger King, KFC, Indian Cuisine, Indian local
shops, Indian Vegetarian restaurants. The same situation is faced by
McDonalds in USA and all over the world.
3) Bargaining power of customers/ buyer: Bargaining power of
customers refers to pressure a customer can exert on a business to
get good quality of food, good customer service and low price.
Bargaining power of customer in this industry is low. As McDonalds
provide a standard service, one price strategy and quality of food.
Customers have low bargaining power throughout the world in food
industry.
4) Bargaining power of supplier: Bargaining power of buyer in this
industry is low. Situation can change if the main ingredients are not
available. But with McDonalds simple menu and working with many
suppliers, they are not facing a big threat. So the bargaining power
is relatively low.
5) Competitive rivalry with in organisation: Fast food restaurant
industry is very competitive. The competition is as high as all the
organisations want to get hold of customer base. Food industry all
over the world has the same criteria because there are many small
businesses
operating
in
abundance
and
also
top
brands.
McDonalds knows about the customers taste and preferences all

over the world. So they started Mccafe (morning breakfast).so
McDonalds is providing quality food from early morning till late
night in order to get competitive edge in the market. (Van, 2012)
Activities 1, d
Globalization is the worldwide integration of economic, cultural, political
religious and social system. MacDonalds is one of the globalized fast food
12
companies; it has about 31,000 restaurants in 118 countries out of 193

countries in the world. All franchises company are profitable because of its
image, service, quality, price and brand name. Another reason why
franchises have become so popular is the simple fact that they can be
found all over the world. When tourists are in an unfamiliar city, especially
when the culture is different from their home town, they may feel
uncomfortable with trying new foods. Luckily for them, in most major
cities, it is still possible to find a fast food chain that also has restaurants
back where they are from. One of the main reasons why they are so
profitable is that their business structure is focused around having
consistent performance standards that aim to provide the customer with
the service they need every time they visit any one of the companys
store or restaurant. For example, when customer walk into a McDonalds,
they always expect their menu, trademarked McFlurries, fries and burgers,
and of course the popular Happy Meals. Along with the food, they know
that the service will be quick and easy so they can get their meal and go
on their way. With some variations, this is basically what all fast food
restaurants aim towards, because they know it is what the customer
wants. MacDonalds was challenging and changing their plan to move
forward during the greatest recession of 2008 globally. McDonald's
decided to close the three locations that it had in the island country of
Iceland. The Krona, the currency of the country had collapsed and lost 80
percent of its value. This all about the effect of the globalization that
MacDonalds
organizations
are
getting
opportunity
to
franchises
internationally wherever they want. They normally do the research

globally to find out the demand of market, location, economic, political
situation, culture and custom so that they will place their business if they
found a suitable environment to start the business. (UK Essays, 2013)
Activities 2:
You are now required to give a presentation to a
group of managers on the importance and nature of Corporate

Social Responsibility to organisations operating internationally.
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Activities 2: a, b, c PowerPoint presentation

Activity 3: identification of the legislation/regulation and
guidance relating to corporate social responsibility for
organisations
From Power Point Presentation: Activity 2, a
Business Ethics: Business Ethics is a specialized study of moral right and
wrong. It concentrates on moral standards as they apply particularly to
business policies, institutions, and behaviour. Business ethics is a
system of moral principles applied in the commercial world. It is a
whole new scientifi c area because it combines law theory and
politics as much as philosophical and historical documents. Ethics
become a term very fl exible and have many diff erent aspects.
Business ethics provide guidelines for acceptable behaviour by
organizations in both their strategy formulation and day-to-day
operations. An ethical approach is becoming necessary both for
corporate success and a positive corporate image.
Especially nowadays ethics in business are obligated because
many businessmen are only interested in making money despite
the ethical costs or the harm they would probably cause to people
or even to nature (environmental pollution)
Many of the ethical issues and dilemmas in international business are
rooted in the fact that political systems, law, economic development, and
culture vary significantly from nation to nation. (Daniela, 2010)
In the international business setting, facing the most common
ethical issues involving
Employment practices
Human rights
Environmental regulations
Corruption
Moral obligation of multinational corporations (social responsibility)
Employment
Practice:
ethical
issues
may
be
associated
with
employment practices in other nations. When work conditions in a host

14
nation are clearly inferior to those in a multinationals home nation, what

standards should be applied? Those of the home nation and host nation
while few would suggest that pay and work conditions should be the same
across nations, how much divergence is acceptable? For example, while
12-hour workdays, extremely low pay, and a failure to protect workers
against toxic chemicals may be common in some developing nations, does
this mean that it is OK for a multinational to tolerate such working
conditions in its subsidiaries there, or to condone it by using local
subcontractors? MacDonalds company is applying all the policy and
procedure to maintain the employment practice as home country and host
country. MacDonalds does not allow working more than contracted hour
and giving career opportunity to all races, sex, ages and culture. (Frank B.
Cross, 2009)
Human Right: Beyond employment issues, questions of human rights
can arise in international business. Basic human rights still are not
respected in many nations. Rights that we take for granted in developed
nations, such as freedom of association, freedom of speech, freedom of
assembly, freedom of movement, freedom from political repression, and
so on, are by no means universally accepted. One of the most obvious
examples was South Africa during the days of white rule and apartheid,
which did not end until 1994. Among other things, the apartheid system
denied basic political rights to the majority non-white population of South
Africa, mandated segregation between whites and nonwhites, reserved
certain occupations exclusively for whites, and prohibited blacks from
being placed in positions where they would manage whites
MacDonalds value and respect all the employees who work at McDonald's
restaurants. The majority of McDonalds restaurants around the world are
owned and operated by independent business men and women. Both our
company and franchised-owned restaurants work hard every day to treat
McDonald's employees with dignity and respect. Employees are paid
competitive wages and have access to a range of benefits to meet their
individual needs. In addition, employees who want to go from crew to
15
management can take advantage of a variety of training and professional

development opportunities. (MacDonald's, 2011)
Environment
Pollution:
Ethical
issues
arise
when
environmental
regulations in host nations are far inferior to those in the home nation.
Many developed nations have substantial regulations governing the
emission of pollutants, the dumping of toxic chemicals, the use of toxic
materials in the workplace, and so on. Developing nations often lack those
regulations, and according to critics, the result can be higher levels of
pollution from the operations of multinationals than would be allowed at
home. For example, consider again the case of foreign oil companies in
Nigeria. According to a 1992 report prepared by environmental activists in
Nigeria, in the Niger Delta region,
Apart from air pollution from the oil industrys emissions and flares day
and night, producing poisonous gases that are silently and systematically
wiping out vulnerable airborne biota and endangering the life of plants,
game, and man themselves, they have widespread water pollution and
soil/land pollution that results in the death of most aquatic eggs and
juvenile stages of the life of fin fish and shell fish on the one hand, whilst,
on the other hand, agricultural land contaminated with oil spills becomes
dangerous for farming, even where they continue to produce significant
yields.
McDonalds has also been active in educating its customers about the
companys
environmental
activities
and
positions.
McDonalds
is
committed to protecting the environment for future generations, and that

it believes that business leaders must also be environmental leaders.
McDonalds has also reduced the weight of packaging in its sandwich
wraps, hot cups, and napkins, removed corrugated dividers in some
shipping cases, and switched to bulk containers wherever possible.
McDonalds tries to use recycled materials whenever possible. For
example, it is one of the largest users of recycled paper in the U.S.
However, packaging that has direct contact with food, which constitutes
16
approximately 42 percent of McDonalds packaging, is strictly regulated

by the FDA not to contain post-consumer recycled materials. Therefore,
McDonalds strives to increase the recycled content for non-food
packaging, such as corrugated boxes, which must be made of 35%,
recycled material according to a 1990 mandate. In addition, it uses
recycled paper for non-food items such as Happy Meal boxes, carry-out
drink trays, and paper towels. (Anon., 1995)
Corruption: corruption has been a problem in almost every society in

history, and it continues to be one today. There always have been and
always will be corrupt government officials. International businesses can
gain and have gained economic advantages by making payments to those
officials. A classic example concerns a well-publicized incident in the
1970s. Carl Kotchian, the president of Lockheed, made a $12.5 million
payment to Japanese agents and government officials to secure a large
order for Lockheeds TriStar jet from Nippon Air. When the payments were
discovered, U.S. officials charged Lockheed with falsification of its records
and tax violation.
Moral courage: Companies can strengthen the moral courage of

employees by committing themselves to not retaliate against employees
who exercise moral courage, say no to superiors, or otherwise complain
about unethical actions. For example, consider the following extract from
Unilevers code of ethics: Any breaches of the Code must be reported in
accordance with the procedures specified by the Joint Secretaries. The
Board of Unilever will not criticize management for any loss of business
resulting from adherence to these principles and other mandatory policies
and instructions. The Board of Unilever expects employees to bring to
their attention, or to that of senior management, any breach or suspected
breach of these principles. Provision has been made for employees to be
able to report in confidence and no employee will suffer as a consequence
of doing so.
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Corporate Social responsibility: power itself is morally neutral. It is

how power is used that matters. It can be used in a positive way to
increase social welfare, which is ethical, or it can be used in a manner that
is ethically and morally suspect. Consider the case of News Corporation,
one of the largest media conglomerates in the world, which is profiled in
the accompanying Management Focus. The power of media companies
derives from their ability to shape public perceptions by the material they
choose to publish. News Corporation founder and CEO Rupert Murdoch has
long considered China to be one of the most promising media markets in
the world and has sought permission to expand News Corporations
operations in China, particularly the satellite broadcasting operations of
Star TV. Some critics believe that Murdoch used the power of News
Corporation
in
an
unethical
way
to
attain
this
objective.
Some
multinationals have acknowledged a moral obligation to use their power

to enhance social welfare in the communities where they do business. BP,
one of the worlds largest oil companies, has made it part of the company
policy to undertake social investments in the countries where it does
business. (Hurst, 2004)
Being a responsible corporate citizen, MacDonalds firmly believes in
giving back to the communities it operates in. They love to provide
support and encouragement to the people who need it the most. Their
entire restaurant contributes to their local community and every year they
help set up and supports numerous educational, sporting and charity
program designed to help a wide range of people. MacDonalds has a
proactive approach to charities and sponsorship. MacDonalds believe
these help inspire and support the people of Pakistan, especially the
underprivileged ones, to live a better life. They are dedicated delivering
great experience through their ongoing community support program.
(MacDonald, 2013)
From Power Point Presentation: Activity 2, b

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Conflict:
When disagreements and friction arise in the course of
interaction because of opposing interests or cultural differences. Many

chances for distorted, confused, or missed messages may occur.
Negotiation and diplomatic skills is increasingly important for solving
conflict. American managers spend 20% of time on conflict issues; its
higher for international environment than national.
Conflict over MacDonalds religion: McDonalds crop, which is angering
Israels religious leader because its burgers violate Jewish Dietary laws by
mixing cheese and meat, is also drawing ire over its employment practice.
Sometime conflict comes around the business environment in the same
way McDonalds have been face with some of the conflict such as:
McDonald's has agreed to pay a $10m settlement after Hindus living in
the United States started legal action against the fast-food giant. The
lawsuits said the company had failed to disclose that it had used beef
flavouring in its French fries, In a leaflet produced by London Greenpeace
it accused McDonald's of paying low wages to its workers and exploiting
children in advertising campaigns. (Chicago Tribune, 1997)
Common task that produce conflict:
Foreign labor strikes
Negotiate with overseas vendors, clients, & partners
Lobby governments
Mediate relations with outside pressure groups
Managing diverse employees
Conflict and business
Not always bad
Can be productive exchange
Key is to understand role of culture
Conflict can classify in two ways: Constructive and Destructive

Constructive:
In can introduce different solution
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Power relationships can be clearly defined

It may encourage creativity and the testing of ideas
It focuses attention on individual contribution
It brings emotion out into the open
It can release hostile feelings
Destructive:
It may distract attention from the task
It may result in disintegration
Looser may go into denial
Damages co-ordination
Common causes of conflict:
Language
Poor translation or limited skills
Lack of understanding cultural norms
Inappropriate behavior
Decision-making
Centralized or Decentralized
Cultures propensity for conflict
Avoid or accept
Factors causing conflicts between nations, there by affecting
International Business:
insecure or inequitable access to resources,
competition between social groups for political power,
Incompatibilities between groups with distinct value systems
Personal differences in global issues
Role incompatibility
Power based Domination
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Political Instability
Threat for Security
Terrorist activity
Inter communal violence
Abundant availability of valuable resource located in particular area
oil, water
Environmental Stress :
Climatic change change in rainfall
Resource scarcity decline in water supply,
agricultural productivity,
Poverty
Environmental related Migration
Factors causing conflict in International business:
Business can cause conflict over control of the resource or area.
Business can cause conflict over the right to participate in decision
making and share in benefits
Companies can be a target of conflict.
No clear cut goals
No clear cut agreements and contracts
No ethics followed
Misleading communication
Improper communication
Corruption
Difference on values among the partners Value differences
Dealing with the laws, policies and political authorities of more than
one nation
Unexpected changes in currency rate affects the international
business deal
21
Conflict because of cultural differences:

Competition
Share in benefits
Domestic political pressure
Conflict Resolution:
Avoidanceignore altogether
Accommodation
Compromise
Collaboration
Competitionface head-on
Negotiate (Suder, 2008)
From Power Point Presentation: Activity 2, C

Legislation:
The way in which a business can operate is controlled by legislation. Laws
can be imposed by the UK or European Union courts and government.
Legislation mainly acts as a constraint on business. The main areas of
legislation that affect businesses are:
Employment law
Consumer protection
Competition law
Employment law: This is aimed at protecting the health, safety and

rights of employees. The main employment laws that a business needs to
consider are:
Health and Safety at Work Act 1974: Employers must provide safe
premises and machinery. They must ensure that workers health is not
affected by their work. The key costs and benefits of the Health and
Safety at Work Act for a business are:
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Adds to costs to businesses that need to train staff and spend

money maintaining the standards set out.
But may reduce cost in the long term because of a reduction in staff
absences and not having to pay compensation for injuries.
Good health and safety record is a good way of encouraging

recruitment of good workers.
Equal Pay Act 1970: Employees who do equal work or work of equal
value must receive the same pay as workers of the other sex.
Sex
Discrimination
Act
1975:
Employees
cannot
be
sexually
discriminated in employment, training or recruitment.

Race Relations Act 1976: It is illegal to discriminate against someone
on the basis of race, ethnic group or colour.
Employment Protection Act 1978: Employees must be given a written
contract of employment. It protects against unfair dismissal (without good
cause) and says that redundancy pay must be paid if the worker has
served more than two years and their job is to be abolished.
Employment law imposes additional costs to the business because they
have to spend additional money on training, recruitment and pay. Like the
Health and Safety Act there are also benefits if the workers feel they are
treated fairly and there is more security, they will be more motivated.
(Emerson, 2009)
Consumer Protection: This is aimed at making sure that businesses act
fairly towards their consumers especially since consumers are
sometimes in a much weaker financial position. The main consumer
protection legislation is:
Sale and Supply of Goods Act: this states that goods must be of
satisfactory quality)
23
Trade Description Act: goods and services must perform in the way
advertised by the business
Consumer Credit Act: this protects the consumer when borrowing
money or buying on credit. Consumer protection imposes additional costs
to businesses since they have to comply with the laws. If they do not
comply they risk fines and ultimately being put out of business by the
courts of law.
Competition law: Competition law aims to ensure that fair competition
takes place in each industry. Governments believe that greater
competition leads to lower prices, better quality goods and a wider variety
of products.
Competition
Commission
(CC) and
the Office
of
Fair
Trading
(OFT) investigate any business that has more than 25% of the market
share, especially if it merges with another business. They may feel that
the business has too much power and can set high prices and provide
poor quality products. The CC and OFT has the power between them
either to fine these businesses, or prevent the merger taking place. The
OFT can also fine businesses who fix prices or prevent other businesses
from trading in their market. Most recently they investigated the
car industry and warranties
offered by leading electrical retailers.
(Emerson, 2009)
McDonald's is committed to conducting business ethically and in
compliance with the letter and spirit of the law. This commitment is
reflected
in
McDonald's
Values.
Inherent
in
each
value
is
their
commitment to be ethical, truthful and dependable and this is reflected

through our Standards of Business Conduct which serves as a guide to
making good decisions and conducting business ethically.
Each year McDonald's employees certify that they have read and will
abide by our Standards of Business Conduct. Employees also complete
regular training on the Standards and various laws, regulations and
24
company-specific policies. In addition, McDonald's and its employees in all

countries must comply with the Foreign Corrupt Practices Act (FCPA). In
general, the FCPA prohibits parties or political candidates for the purpose
of obtaining or keeping business or improperly influencing government
action. Included in the anti-bribery prohibition is a corrupt payment
through a third party. (McDonald's.com, 2013)
CONCLUSION
Global Business Strategy: Global Strategy' is a shortened term that
covers three areas such as global, multinational and international
strategies. Essentially, these three areas
refer to
those strategies
designed to enable an organisation to achieve its objective of international

expansion.
Important
of
GBS
From
company
perspective, international expansion provides the opportunity for new

sales and profits. In some cases, it may even be the situation that
profitability is so poor in the home market that international expansion
may be the only opportunity for profits. For example, For example, poor
profitability in the Chinese domestic market was one of the reasons that
the Chinese consumer electronics company, TCL decided on a strategy of
international expansion. It has then pursued this with new overseas
offices, new factories and acquisitions to develop its market position in the
two main consumer electronics markets, the USA and the European Union,
Clothing companies expand in order to take advantage of low labour costs
in some countries. (Gillies, 2002)
Bibliography
Alok Goyal, M. G., 2009. Business Environment. New Delhi: V.K.
Enterprises.
Anon., 1995. MacDonald's Environmental Strategy. [Online]
Available
at:
http://www.umich.edu/~nppcpub/resources/compendia/CORPpdfs/
CORPcaseA.pdf
[Accessed 20 Jun 2013].
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Chicago Tribune, 1997. Conflict over McDonald's Religion. [Online]

Available
at:
http://articles.chicagotribune.com/1997-0227/news/9702280342_1_shas-party-jewish-sabbath-mcdonald
Daniela, A.-., 2010. Ethical Issue in International Business.
[Online]
Available
at:
http://www.seap.usv.ro/annals/ojs/index.php/annals/article/viewFil
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Emerson, R. W., 2009. Business Law. 5th ed. New York: Library of
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Social
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About
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http://www.mcdonalds.com.pk/page/corporatesocial-responsibility
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Employee,
http://www.aboutmcdonalds.com/mcd/investors/corporate_govern
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Strategy.
http://www.tutor2u.net/business/strategy/porter_five_forces.htm
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http://www.the-happy-manager.com/tips/pestleanalysis/
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ASSIGNMENT OF UNIT 7.

2 GLOBAL BUSINESS STRATEGY

Socio- cultural Factors.....................................................7

Porters Five Forces analysis-The Micro Environment...........10

UNIT: 7.2- GLOBAL BUSINESS STRATEGY

Figure of PESTLE analysis

Political Factors: The international operations of McDonalds are

Companys licence is controlling by local government. For instance,

there is impending legal dispute in the McDonalds franchise in India

Economical Factors: The economic environment is a direct

Archana Rai, ID: 102952

Socio- cultural Factors:

McDonalds has launched a sensibly

understanding of the prospective performance of the organisation in

Analysis: McDonalds should obtain the relevant information from the

Technological Factors: McDonalds generates a demand for its

Archana Rai, ID: 102952

Technology Factors includes:

communications are a good way to find suppliers. It is also a good way to

Legal Factors: The legal requirement is important because the

Legal Factors includes:

Health and safety regulations

Analysis: As a certified fast food operator, there are many regulations

Environmental Factors: The climate and physical terrain of a

consider. Environmental groups forced McDonalds to reduce its use

a positive nor negative impact on sales, they have agreed to work

Archana Rai, ID: 102952

Threats of new entrants

Figure of Potter Five Forces

1) Threats of new entrants: Entry to a restaurant Business is very

research and development costs and high cost of entry. Strong

McDonalds knows about the customers taste and preferences all

companies; it has about 31,000 restaurants in 118 countries out of 193

internationally wherever they want. They normally do the research

You are now required to give a presentation to a

group of managers on the importance and nature of Corporate

Activities 2: a, b, c PowerPoint presentation

employment practices in other nations. When work conditions in a host

nation are clearly inferior to those in a multinationals home nation, what

management can take advantage of a variety of training and professional

committed to protecting the environment for future generations, and that

approximately 42 percent of McDonalds packaging, is strictly regulated

Corruption: corruption has been a problem in almost every society in

Moral courage: Companies can strengthen the moral courage of

Corporate Social responsibility: power itself is morally neutral. It is

multinationals have acknowledged a moral obligation to use their power

From Power Point Presentation: Activity 2, b

When disagreements and friction arise in the course of

interaction because of opposing interests or cultural differences. Many

Foreign labor strikes

Negotiate with overseas vendors, clients, & partners

Mediate relations with outside pressure groups

Managing diverse employees

Conflict and business

Not always bad

Can be productive exchange

Key is to understand role of culture

Conflict can classify in two ways: Constructive and Destructive

Power relationships can be clearly defined

Conflict because of cultural differences:

From Power Point Presentation: Activity 2, C

Employment law: This is aimed at protecting the health, safety and

Adds to costs to businesses that need to train staff and spend

Good health and safety record is a good way of encouraging