- /It Is A Well-Known Fact That One
It Is A Well-Known Fact That One
It is a well-known fact that one of the most important elements of strategic management is the analysis of the external environment and market monitoring. Threats that wait for the company, and the opportunities that are provided to the enterprise – all this is present in the business environment. The biggest challenges for any business are external in nature – companies are threatened by contestants in the industry, unreliable suppliers, legislation that varies indifferent countries and can change rapidly, some ecological and social cataclysms and many others surprises. This fact determines the exceptional need to analyze the external environment within which the company operates by identifying a number of factors that affect the possibilities for its development. For this purpose, a technique called T.E.M.P.L.E.S. (Technology, Economics, Markets, Politics, Laws, Ecology / Environment, Society) is used. In this paper, the accent is made on the external environment, particularly the effect of technologies and disparity on international companies.
The first part of this essay will be devoted to the inequality of technological distribution in the modern world and how companies are deal with it. There is a global misconception that technology development contributes to the meritocracy in our world. Technologies become more and more accessible to a wide range of people, which equalizes their life chances, and hence the quality of life. Nevertheless, according to the research conducted by the World Bank, the Technical Revolution is increasing the global inequality (Benkler, 2016). The research showed that only well-developed and rich countries would get all bonuses from the innovative technologies. The main reason lies in the so-called innovation gap – a combination of differences in the level of innovation excellence
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of sectors of one country in relation to sectors of another (Ake & Blumenstock, 2014; Graham, C., & Nikolova, 2013). This gap, in turn, is dependant on investments, and, therefore, on the economic development of the country in general.
In fact, when talking about globalization, often increased attention is paid to the erasure of geographical boundaries, intercultural contradictions, cultural and communicative differences. However, globalization reveals problems not just in creating technologies within different parts of our world but, what is more important, in the adoption of already existing technologies. In their research Comin and Hobija (2010) testing the models of adoption the technologies related to transportation, telecommunication, health care, electricity, and IT by comparing the year of invention and the time when it was adopted in the specific country. The results showed that the average lag of time was 47 years (Comin & Hobija, 2010). Of course, the research proved that quite predictable leaders were the United States and the United Kingdom. However, the most significant part of this research was the derivation of the law – the lower the per capita income of the nation, the longer the lag in adoption technologies will be (Nobel, 2012). These results once again prove the conclusions in the report of the World Bank: “The digital revolution can give rise to new business models that would benefit consumers, but not when incumbents control market entry” (Reader, 2015). These outcomes are widely used by multinational companies in their operation.
As it was mentioned at the beginning of this essay, international business enterprises constantly monitor the technological environment on the global and local (country) levels. In general, the technological environment of business
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characterizes the capabilities of society regarding technology and technological processes that can be used in business. The use of high-level technologies ensures the competitiveness of goods. Of course, their implementation requires a trained workforce, although it reduces the need for the number of employees, which help companies to reduce costs. However, the business focus of international companies while monitoring technological environment is paid to the level of technological development of the country. If a community is at the low level of development of science and technology, the company is difficult to satisfy the needs in high-quality goods independently. That is why companies who operation on the international level prefer to divide different parts of production or service in different countries or separates the locations of production and where main sales of products occurred.
There can be a situation, when the level of technological development of the country, the technological state of the national social production limits business opportunities for the company, creates national technology corridor of its freedom. This makes the company’s managers look for advanced technologies in other countries (Harland et al., 2005). At the same time, the modern tendencies make it possible to say about the traditional division of work in the global meaning. International companies reproduce the so-called World-systems economy, where there is the core – countries which are advanced in producing and exporting. Around this core, the periphery – countries used as suppliers of raw materials and workforce and possible markets are concentrated (Bata & Bergesen, 2015). In business, an analogy can be drawn between this world-system theory and picture when the industrial capacity is located in African of Asian countries, while
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IT departments and head offices of multinational corporations in the United States or Europe.
Without doubts, previous analysis proved that disparity of technological spread affects the behavior of international corporations. At the same time, technologies provide much more opportunities and find new applications. The majority of firms constantly monitor new technologies, products, and innovations that can be used as a strength for competition in the sphere. New trends in the technological and scientific process implemented by companies mainly aimed at improving customers satisfaction (new designs, new construction of models). Even though all of the mentioned influence the strategy of the organization, the biggest role is played by technologies in the new strategies of functioning.
Even though each company seeks for unique strategy and therefore tries to use technologies to ensure the competitive advantage, some of the practices are universal. One of the most known and spread across the multinational companies is outsourcing – the process of substitution some activity to another company that usually is specialized in that type of tasks (Harland et al., 2005). In general, the outsourcing market can be divided into two main segments: outsourcing of intellectual services (information processing, research, development of projects, programming, and other technical works) and industrial outsourcing. Industrial outsourcing is the production and delivery of blanks, hardware, and components (Orton-Jones, 2016), and, on the other hand, is the performance of some auxiliary functions and operations to ensure the production (accounting, warehousing, repair and maintenance of equipment, advertising, cleaning of premises, logistics). In the scopes of this paper, it can be assumed that intellectual outsourcing is practiced between countries in the core of the world-system, while industrial outsourcing depends both on
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the location (periphery) and availability of resources and division of technologies (Wallerstein, 2015). The important issue that should be addressed corresponding the use of outsourcing is the factor contributing to its development. It means that the availability of a modern highly effective communication environment (communication, computerization, and transport) that provides a fast and reliable exchange of financial, material and information flows, along with a high level of specialization of various enterprises in the production and services allows the outsourcing be as popular in the modern business.
Going deeper into the question of reasons and spread of outsourcing, the complexity of business processes that create an extreme overload of companies should be mentioned. The latter, in turn, is caused by the need to further promote the growing flow of goods or services to the market with limited resources in the face of dynamic changes in market conditions. The introduction of computer and information technologies into the business and enterprise management was the consequences. At the same time, the complexity of the implemented information systems has increased and, accordingly, the saturation of enterprises with hardware and software showed the growth, which has led to an increase in the staff of specialists in their support (Su, Levina, & Ross, 2016). As a result, it turned out that it is more efficient to ensure the operation of such systems by making a complete transfer of IT infrastructure to external services, and this was the basis for the active development of the IT outsourcing market (Su, Levina, & Ross, 2016). In this regard, the role of online reference and information services and electronic business relations systems (e-commerce, partner search, advertising, etc.)
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is growing. IT-outsourcing companies, thanks to the global Internet network, have the opportunity to be introduced to the markets of other countries, so new multinational companies specialized in the outsourcing of IT arise.
Along with the raising number of companies that propose intellectual outsourcing in the result of technological development, companies have greater opportunity to develop in a diversity of directions. It means that the supply of various innovations is a great opportunity for some start-up on the international level. On the other hand, multinational corporations receive the possibility to expand and create new business direction. Moreover, technologies provide opportunities for better communication within the corporation, allowing the real-time meetings without a physical presence in one place.
In the last part of this paper, it should not be forgotten that technology, as well as business as a whole, should be considered from the ethical point of view. Numerous researches have been conducted to understand what is the relationships between technology and values. Three main positions were gathered and explained by Ian G. Barbour (1993), who noticed that technology could be apprehended as a liberator, as a threat, or as an instrument of power (Barbour, 1993). The first perception states that technologies deliver benefits to people, making their life easier and maintaining the equality. The supporters of the second vision insist that development accomplished with significant human costs: monotony in a mass society, depersonalization and manipulation, reduction of jobs, and increased economic inequalities at the global level. Finally, the theory that stands in the opposition for the both previous ones believes that technology is neutral in nature. Only the fact who owns makes innovations either negative or positive,
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which means that technology gives unlimited power over the consumers to the business. Nevertheless, whatever theory the owners of business corporations adhere to, its usage affects the environment in which people exist. Regarding this, multinational corporations face a serious challenge – to ensure ethical and responsible implementation of technologies considering the characteristics of each region (including traditions and legislation) where it operates. In these conditions, experts believe that some dilemmas can be distinguished, including energy dilemmas and climate changes. From the one point, technological leap requires a greater amount of energy resources and at the same time, may negatively affect an ecological situation. On the other hand, “… technological changes that can play a vital role in the global, and particularly the emerging economies growth” (Laszlo, 2015), which means that more and more international companies start to pay attention to this spheres, which can be useful and profitable as well.
In conclusion, it should be stated that technologies and its development have a significant impact on the global level, especially on the operating of the multinational companies. Technologies define not only the direction of business development and improve the communication between parts of international companies, but they also affect the overall strategies of each company and business in general. No less important is the impact of technological development in the structuring the overall global world-system, by benefiting some regions as opposed to others. Moreover, technologies radically change the business value system and therefore dictates the future not only of the international business but the whole global society. your essay in here…
I’m a freelance writer with a bachelor’s degree in Journalism from Boston University. My work has been featured in publications like the L.A. Times, U.S. News and World Report, Farther Finance, Teen Vogue, Grammarly, The Startup, Mashable, Insider, Forbes, Writer (formerly Qordoba), MarketWatch, CNBC, and USA Today, among others.