The areas a global business must manage to survive
We live in a dynamic world where information and knowledge rule. Every move of a business should be a combination accurate decision making based on intensive research. This is especially true for those businesses who have a global presence and who have not only survived but also created an international brand name. The world of business has always been very challenging and demanding. To add to that, there are a lot of issues which a business faces, and all of them have to be dealt with very carefully to deliver successful results. The business world is a constantly evolving one, and is one which invites new concepts and interpretations almost every day. To cope with the modern fast-paced world it is important that we keep abreast of innovations, and also adapt ourselves to them. Not just for mere survival, but for growth as well.
Information technology and the exponential advances in communications have created hitherto unknown avenues. Almost half of the businesses that exist today either did not exist half a century ago, or people were not even aware of the potential of those business ventures. There are various types and grades of businesses, and there is no single model of business that can fit every business. For example, some businesses are research and development based, some are consumer oriented and some are production orientated. Whatever business the organisation is in, it is imperative that a business model is developed and nurtured which understands the particular needs of the business.
Why does no single model fit all businesses? The answer is that every business has a separate history, a separate background. There are family run businesses, private owned businesses, public owned businesses which can be start-ups or established, joint ventures or sole ownership. Each and every type of business comes with its own set of challenges and demands. A business which has an effective set of policies, as well as an effective leadership, will be able to rise above any limitations.
What are the challenges faced by businesses in today’s world and the areas they need to manage?
- Recruitment of the right talent
The level of education, as well as the knowledge resource, is available and at an all-time high, yet a lot of businesses are facing a huge crisis in finding competent and ‘fit-for-the-job’ talent. Why is that? Finding the right talent, nurturing the talent and then protecting it from potential flight is challenging. In order to have a sustainable growth, one which aims at creating a brilliant future for the company, it is crucial that right people for the right job are hired, trained and then retained as well. Creating competency is not an overnight project, it takes time and patience. Only when a business takes a very calculated and effective approach towards a right hiring and retaining strategy will they be able to create a competent organisation.
- Financial management
The financial management of the business is what keeps it running and expanding. Without a proper financial set up a business would not be able to stay afloat let alone develop. It is imperative that the top leadership makes sure that all the accounting processes (cash flow, credit and debit records, invoicing etc.) are correctly managed.
- Compliance and regulation
Markets are evolving and technology is becoming more and more advanced with each day. This calls for much more sophisticated rules and regulations. For instance, no one had ever heard of the concept of cyber crimes or online money laundering even thirty or forty years ago. The rulebook has to be constantly updated and the business has to strategically evolve to meet these kinds of dynamic pressures. Compliance requirements are much more severe than previously and it is crucial to follow them.
- Customer service
It would not be an exaggeration if we start with a clichéd line ‘Customer is the king’. Practically speaking, what is a business which does not have customers? For starters, it would not be a business. Even non-profit organisations need customers. But how do you get people to buy your product? How do you coax them to come back to buy your product or service again and again? Many believe that the answer lies in the quality of the product coupled with sound customer care. If you could reach out to your customer as well as they can reach out to you, with their queries and grievances at any given time, you would definitely gain. When customers have multiple choices with almost the same specifications, they would usually go for a company which has a good after sales service. So you cannot ‘sell and forget’ instead you need to pitch in with good after sales service to retain customers.
- Maintaining a good reputation
It is very important to have a rock solid positive reputation amongst your customers. It affects areas from customer recruitment and retention to employee morale and turnover all of which ultimately affect sales. There are many more avenues available to express displeasure over the quality of product or service in today’s world than ever before. A good reputation is easy to lose and difficult to restore.
- Adapt, adapt, adapt
A business that knows when to change and how to adapt to a changing business environment survives. For instance, typewriters became redundant after the advent of computers. Businesses that manufactured typewriters had to think of a new strategy or a new product in order to survive. It is not only the survival of the fittest, but the survival of the smartest.
- Information explosion
Information is very easily available nowadays, so much so that it has become imperative to sieve the important items from the mass. It is true that our grandparents did not have to worry about terabytes of information; the world of business was much simpler in the past. But now the scenario has changed totally. Not only sieving through the available data, but also making use of the data, and most importantly, protecting the data from outside, is a huge aspect of today’s business.
- Monitoring business performance
Every business needs to monitor how it is doing in order to check that it is on the right path and to make any corrections if necessary. The main indicators are:
- Internal process quality
The products and services offered by the business need to be of the right standard and any diversion from the set norms can disrupt the whole chain. The customers prefer consistency and would rather go for another brand than stick to an inconsistent product. Continuous checks on product quality are therefore important.
- Employee Satisfaction
Employee satisfaction is the key to retaining good ones, especially those vital to the business. If an organisation wants to find out how happy its employees are, one good way is to look at the absenteeism records.
- Financial performance
Financial performance is a key indicator of the health of the business. The cash flow of a business is not just about the money in and out, it also monitoring all the main financial performance indicators.
- Satisfied customers
Happy customers are ‘I will be right back’ customers, literally. If you can keep your customers happy you can be rest assured that they will keep coming back for your service or product. Customer satisfaction surveys help, but the best indicator is sales.
- Looking into the uncertain future
If it was easy to predict market trends or scenarios, every business would have done well. The bitter truth though is that market conditions can change overnight. Both internal, as well as external factors, can make or break the situation. It is very important that contingency measures are planned in advance to meet any kind of future emergency. Leadership plays a very vital role in these situations, steering the business through any turbulent waters.
- Expansion policy
When a business wants to expand there are global opportunities, but these need suitable strategies. They must cover exploring new markets, new market scenarios, a new set of rules and regulations, etc. The important point here is to ‘think global, act local’, which means that although the business may not belong to that particular country, it should adapt itself to local sensibilities. McDonalds is a very good example of this. The business has adapted itself to the local environment and has therefore been able to expand profitably, something many businesses struggle to do.
- Benefits of scale and scope
Global businesses have many advantages of scale which small businesses lack. They can use infrastructure which they or their partners own. Also, various other factors such as the procurement of raw materials, as well as research and development, work to their advantage. But it is also inevitable that as the businesses grow in size, their functioning becomes more and more complex. This results in an increase in costs and slower and more complex decision making. For big businesses, there is a tendency to move towards standardisation of all factors across all the markets. This can be detrimental to the businesses for the simple reason that local elements and local needs differ by location, and one size does not fit all.
- Diversification of risks
A global operation provides a geographically diverse portfolio, which can limit risks, but it can also mean the business is not sensitive enough to individual markets. Each market has its risks. Political situations, the exchange rate of the currency, costs of raw materials and cost of labour, etc., all differ from one location to another and the risks associated with each of these factors will vary.
Global markets are open to those who can take advantage of the opportunities they present. However, businesses need to always remind themselves that there are significant issues which they have to constantly manage to ensure their survival.
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