Disclosure Of Term Globalization
Globalization is the phrase used to explain the growing interdependence of the world’s economies, cultures, and populations, brought about by way of cross-border change in goods and services, technology, and flows of investment, people, and information. In the current business world, most businesses prefer to globalize as they tend to increase profits. To understand the effects of globalization on organizational change, it is important to understand what the term organizational change refers to. In most cases, organizational change occurs when an organization improves its market share, transforms a major part of its operations, or by changing business procedures.
Starbucks is a global business enterprise that displays American values and plays a vital role in the change of the coffee industry. One of the most often traded products within the world except oil is espresso. As a company, Starbucks has globalized to acquire its goods, to find new markets, and to market its image. It follows the trends of globalization both in its business practices and in the ways it has fashioned its brand image. As a business, Starbucks has globalized to acquire its goods, locate new markets, and improve its well-established image. The company follows the trends of globalization whilst adjusting the organization’s procedures, to maintain its brand image. This company was chosen because of its competitive growth policies which clearly refer to the question, underlining the effects of globalization. Within a few years, the organization opened several shops worldwide in different countries. Globalization has altered the operations of Starbucks as the company increased its market share using predatory strategies. Globalization caused an extreme increase in profits which caused the company to expand rapidly into new markets. This also affects both external and internal stakeholders, such as managers or farmers(suppliers). Mostly, Organizational change that occurred due to globalization will have a positive effect on stakeholders. In this case, Stakeholders have enjoyed increased profits. Although there are also certain disadvantages to this situation. Globalization caused a company’s internal leadership styles to change as it operates in different countries. This had a huge effect on employer relations as leadership styles are adjusted by the culture of the host country. This argument can be stated as a disadvantage as employer relations and culture clashes play a crucial role regarding the survival of the business.
Indeed globalization creates huge opportunities for businesses to expand, but globalization may have the opposite effect on certain businesses. In recent years companies’ expansion in European countries opened huge problems for Starbucks in their cash flow management. The company had to adjust certain products by price skimming business strategy. Price skimming is a pricing strategy in which businesses set higher prices for certain products. After consumers are satisfied businesses lower the price to attract more consumers. Starbucks used this strategy in European countries as the cultures of communities are different worldwide making it difficult to attract consumers. This example clearly examines the effects of globalization on organizational change as the company had to change its business strategy.
To conclude, it is possible to state that Starbucks was successful in adjusting its business operations due to globalization as it is one of the leading coffee industries in the world. With certain difficulties over time, the company managed to keep its fashioned brand image.