What is global dynamics
Global dynamics is a general term for describing interactions. It also describes the development or changes in the global environment. In business organizations nonetheless, this term refers to the interactions and changes transpiring in the global business environment.
Focusing exclusively on global dynamics means that a business prioritizes concerns related to its global affairs. It does this by primarily directing its attention and resources aimed at mitigating issues relating to interactions and changes transpiring in the global business environment.
The Problem of focusing on Global Dynamics
Focusing on global dynamics can be problematic. It predisposes a business to deprioritize the local external environment and its internal business situation. Nevertheless, global dynamics is an important factor to consider in business decisions, especially in developing and implementing strategic plans. This is especially true for businesses with substantial exposure to the global business landscape. Several studies have revealed that along with business-specific dynamics, global dynamics is a key driver of global leadership success. Both global dynamics and business-specific dynamics have been recognized as business leadership capabilities.
However, global dynamics constitutes about two-thirds of these capabilities. Thus, it is a primary driver of global leadership success (Black and Morrison, 2014). A review of several studies and models showed similar conclusions. The organizations that want to have a better global business perspective must have leaders that can understand the social, political, technological, and environmental forces that are shaping global affairs (Smith and Cockburn, 2013). These facts suggest that global dynamics has become very critical for businesses. Whether they have existing global exposure or not, they need global dynamics.
In this day and age of globalization and cross-national interactions, global dynamics gives businesses a competitive advantage. However, focusing exclusively on global dynamics can be problematic. Too much attention and resources directed toward global dynamics can leave a business unable to attend to other concerns and issues. Remember that business-specific dynamics remains a key driver in global leadership success. These dynamics include issues and situations concerning the country where the business operates. It can also be about the industry or sector and market in which it competes. It can also be its internal affairs (Black and Morrison, 2014). Hence, to become successful in the global landscape, it is also crucial to be able to respond to the challenges in non-global settings.
Analysis Tools
There are several established analytical tools and models. These have also considered a wider and far-reaching approach to identifying and responding to different issues affecting a business.
SWOT Analysis
For example, SWOT Analysis remains one the very popular analytical tool used by organizations. This tool provides a model for understanding the internal and external situation of an organization. It does this by enumerating and examining its internal strengths and weaknesses. It also includes external threats and opportunities (Sarsby, 2016).
Extensive use of this analytical tool might consider several things. These are internal factors, immediate external factors, and global environmental factors that can affect the business.
PESTEL Analysis
PESTEL Analysis is another analytical tool that evaluates the external environmental situation of a business.
It does so by identifying and examining the effects and degree of influence of different factors. These are political, economic, social, technological, environmental, and legal factors (Rao, Rao, and Sivaramakirshna, 2008).
Again, expansive use of this analytical tool can include political, economic, social, technological, environmental, and legal factors that are present in the wider global landscape.
Nonetheless, these analytical tools encourage businesses to observe and explore their business situation as it concerns different landscapes.
They allow these businesses to have a wider perspective. At the same time, it serves as a reminder that it is important for each organization to focus on different facets that are affecting its operation as well as its viability and longevity.
Company Examples that Focused on Global Dynamics
There are many different examples that can better illustrate the problem by focusing exclusively on global dynamics.
Beverage Company
Take note a fictional multinational food and beverage company as an example.
While this company operates in a global landscape, specifically in different global, regional markets, it is still important for it to direct a considerable amount of attention towards its internal and local external situations. The company might be focusing too much on the global dynamics involving the global food and beverage industry that it might have forgotten that the need to improve other facets of its business operations.
Some examples are the sustainability of its existing workforce, the efficiency of its financial management, relationship with its suppliers and customers. It may also be the effectiveness of its different business and manufacturing processes. In addition, too much focus on global dynamics might also leave the company unable to respond to local or region-specific dynamics. The situation in the North American regional market might be different from the situation in the Southeast Asian regional market. General market information might suggest that there is a global financial crisis. But in specific countries or regions, this might not be entirely the case.
This situation exemplifies the need for a company to look at its situation from various perspectives. The different analytical tools encourage businesses to remain responsive to different factors and issues from various internal and external sources. It is also critical for a business to observe and explore every corner of these sources. It helps to retain the capability to understand its complete situation.
Small Local Business Organizations
Another example of how focusing on global dynamics can be problematic involves small business organizations with no considerable global exposure.
The aforementioned discussions have repeatedly mentioned that global dynamics is important for organizations with global exposure. It is also equally important for those planning to participate in the global business landscape.
However, this is not very important for organizations that are operating within a limited area or are competing within a small market. A local service company such as a law firm or an accounting agency should not be too concerned about global dynamics. While they might reference developments and changes transpiring in the global business landscape, they should focus their attention on their immediate external environment. It is also worth mentioning that the entire global landscape does not represent specific localities or markets. As mentioned, information and forecast about the global environment might be either favorable or unfavorable. But it does not give a complete representation of what is transpiring in the more immediate environment.
Conclusion
It can be concluded that while global dynamics has become very important for businesses, it is not the only factor that determines business success.
Global dynamics is very critical for organizations with global exposure or are planning to participate in the global business landscape. However, focusing solely on this can leave any organization unable to understand its complete situation. Global dynamics might give the bigger picture but it does not provide more specific details. Specifically, it does not detail the internal situation or the immediate external environment of the business. In other words, it provides the bigger picture, but it does not mean that gives the clearer one. Thus, focusing exclusively on global dynamics leaves an organization shortsighted of what is really happening.
Take note also of the fact that global dynamics is not for everyone. There are businesses that do not need a lot considerable amount of attention or resources on examining global dynamics. This is especially true for business organizations with a limited local operation and market scope.
References
Black, J. and Morrison, A. J. 2014, The Global Leadership Challenge, 2nd ed., London, Routledge
Rao, C. A., Rao, B. P., and Sivaramakrishnan, K. 2008, Strategic Management Policy, New Delhi, Excel Books
Sarsby, A. 2016, SWOT Analysis, England, Leadership Library
Smith, P. A. C., and Cockburn, T., 2013, Dynamic Leadership Models for Global Business: Enhancing Digitally Connected Environment, PA, Business Science Reference
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