Treatment Of Culture Towards More Balanced -Myassignmenthelp.Com

Question: Discuss About The Treatment Of Culture Towards More Balanced? Answer: Introduction International trade, in recent decades has seen an unprecedented growth and Globalization has played a major role in this. Owing to the phenomenon called globalization, the exchange is business has been visible in almost all the countries of the world. The trend has largely contributed to the economic growth of many developing nations by operations the gates of employment to millions of unemployed youth. With great opportunities however, international business brought with it, many impending risks as well. As defined by Kot and Dragon (2015), international business risks refer to the possibility of unfavorable occurrences that a company might encounter while expanding internationally. While international business provides immense profit to a certain company, it also comes with endless risks. Many risks are encountered by multinational companies in operating their business in regions other than their native place. The rise in competition has further escalated the risks and an issue fa ced by the MNCs. Pharmaceutical companies in particular is affected by the risks associated with international business. One of the most prominent effects in recent times, on international business has been the exit of Britain from European Union. The given report provides a thorough analysis of the impacts of international business risks on pharmaceutical companies. The report would specifically analyze the impact on one aspect of the companys global operations, which is its cross-cultural management. The multinational company chosen for the purpose is GlaxoSmithKline. The company is based in Britain and has operations in countries spreading across Asia, America and Europe. The report tries to present elaborately, the importance of cross-cultural management in international business mainly pharmaceutical. The major risks concerning international business include political risk, exchange risk, credit risk, market risk and cultural risk and transport risk. Dinu (2015) has however identified four major risks that MNCs face in business operations. These are commercial risk, financial risk, country risk and cross-cultural risk. In the report, four major risks shall be explained political, commercial, exchange and cross-cultural. Risks associated with international business International business, as already mentioned is abound with risks that confront all transnational or multinational companies. In the pharmaceutical industry in particular, these risks exert an added influence. Jaberidoost et al., (2013), mention that pharmaceutical companies, since they deal with products that are deemed sensitive and cautionary, have to pay extra care while doing international business. However, the focus of this report is to analyze the impact of the risks in the global operations of the company. The major risks as already mentioned include, Political risk Political risks surface due to the unpredictable political incidents. Unstable political environment arising from dangerous political actions; result in increased difficulties for MNCs to operate smoothly. Uncertainties also loom large on the stability of the government that rules a certain country. It thus becomes extremely difficult for a firm to operate smoothly and generate revenues. According to Musacchio, Lazzarini and Aguilera (2015), strict regulations and unprecedented government influence deters the quality of business and leads to increased cases of corruption. Corruption and malpractices especially in the said industry has severe consequences as it concerns human lives as well. One prominent example of political instability affecting international business is Brexit (Pharma.elsevier.com, 2018). Pharmaceutical companies in particular have significantly faced the wrath of Brexit as they are forced to end their operations in Britain since European business is no longer allowed to continue. Exchange risk While doing business in a foreign country, the company has to exchange its currency since each country has its own system of currency. The currency of one country is exchanged in another country at certain rate. This rate of exchange fluctuates at regular interval thus causing loss in business. The case is similar for pharmaceutical companies as well. Often the pharmaceutical companies are faced with the problem of higher expenditure and lower profit owing to exchange risks. Kim and Park (2014), argue that the fluctuating rates of currency exchange hamper a company largely because it disturbs their business planning which they have to redesign in order to meet financial requirements. Commercial risk It refers to the risks associated with fluctuations in the market of a country where the company has its operations. These risks arise when the multinational company makes wrong decisions in choosing partners and executing strategies. MNCs must realize the differences in doing business in alien lands with distinct rules and regulations. The severe competition in the global market demands frequent transformations in business strategies. In case of pharmaceutical companies, as pointed out by DiMasi, Grabowski and Hansen (2016), these commercial risks negatively affect the reputation and thus result in reduced revenues. Cross-cultural risks It is one of the most common risks that affect international business. Operating in a foreign land with a diverse workforce requires exceptional knowledge of multiculturalism. Culture is an aspect that holds great value to any nation and any violation of this result in huge loss for the company. It is one of the reasons most companies nowadays have dedicated a separate department to monitor these issues. Pharmaceutical companies have also employed similar strategies to tackle cross-cultural issues. In views of Ahammad et al., (2016), cross-cultural management is very important in case of pharmaceutical MNCs because any negligence in the timely management might result in conflicts. These conflicts in turn may cause heavy loss to the company. Impacts on pharmaceutical company The previous section briefly highlighted the impact of international business risks on pharmaceutical companies by pointing out certain concerns that confront this industry. In this section, those impacts shall be further explained with evidences from credible sources. Pharmaceutical companies are responsible for manufacturing and selling medicines and other related items to patients and prescribers across the globe. Political instability causes these companies to abandon or abort their operations that not only cause loss to the company but also to the receiver. The company has to be extremely cautious while dealing with medicine and vaccines and possess deep knowledge regarding those as many vaccines and medicines are banned in some countries. According to Dadfar et al., (2013) however, pharmaceutical companies also have the opportunity to benefit from the political conditions prevailing in a country by exerting their influence through lobbying and such tactics. It needs to be mentioned that companies that have the capability to turn risks into advantages have the best chance to sustain in extremely risky environments and profit. Exchange rates determine the economic position of a country and each country makes increased effort to strengthen its exchange rate in order to yield benefits. Constant fluctuations in exchange rates are the result of the growing competition between countries to move ahead in the race. The pharmaceutical industry often fall prey to this fluctuating tendency and faces great loss. Hutson and Laing (2014), point out three particular impacts on pharmaceutical companies that may arise from risks in exchange rates. These are transaction exposure, translation exposure and economic exposure. Transaction exposure comes from the fluctuation effects of exchange rates that compel a company to change its strategies regarding making and receiving payments in foreign currencies in future. Translation exposure refers to the effects exchange rate fluctuations have on the combined financial statements of both original business and foreign subsidiaries. Lastly, economic exposure has an influence on the companys market value. The rapidly expanding market poses great number of opportunities for pharmaceutical companies in addition to all the risks. As per the views of Giuliani et al., (2014), commercial risks faced by pharmaceutical companies arise mostly from the emergence of local markets that present stiff competition to the global brands. The emergence of local markets poses threats in the form of local advantages enjoyed, no pressure of exchange rates, and exemption from taxes and so on. These advantages allow the local brands to gain at a better rate than MNCs. Chandra, Holmes and Skinner (2013) however argue that the most glaring impact of commercial risks on pharmaceutical industry is the significant cuts in healthcare investments in several countries. These reductions in healthcare spending result from slow economic growth and uncertainty. Pharmaceutical is one such industry that has, in one roof, a team of scientists, researchers, developers, system analysts, lawyers, managers and others (Forbes.com, 2018). Therefore, it becomes extremely complex for the management team to organize and manage the vivid workforce. Training in cross-cultural management has become an integral part of an organization because it ensures profit through effective cross-cultural communication. With such a variety of individuals working together in pharmaceutical industry, the effect of cross-cultural risks becomes more evident. Contractor (2013), states that the industry demands competence in cultural management because of the diverse group of people that work in it. In particular, the pharmaceutical MNCs are the most affected when it comes to handling cross-cultural workforce. The MNC culture demands constant interactions with people from various cultures and this often leads to miscommunication and poor results in turn. Overview of GlaxoSmithKline GlaxoSmithKlineis a pharmaceutical company based in Britain. The companys headquarters is situated in Brentford, London. The company was established in the year 2000 when Glaxo merged with SmithKline. However, this company is considered one of the largest pharmaceutical companies ranking sixth in the world. The company has been improved after Emma Walmsley becameits CEOin March 2017. She is the first female CEO of GlaxoSmithKline. According to the data published in the annual report of the company, its vaccines and drugs have earned more than 1.5 billion pounds in the global markets (Annualreport.gsk.com, 2018). On the other hand, the consumer products of the GSK such as Aquafresh, Horlicks, nicotine replacements and Sensodyne have earned more than 5.2 billion. The company mainly aims to introduce distinguished, high quality as well as needed healthcare products to more people throng their global business. First, the company has a wide portfolio of advanced and established medicinal products. The company recently focused on the development of new medicines to support respiratory and infectious diseases, immune-inflammation and oncology. It has conducted diverse research to explore these areas. The vaccine business of the company has an extensive portfolio through which the company reaches a considerable number of people through its innovative pipeline of vaccines. These vaccines aim to protect people of all age groups. It delivers more than two million doses of its vaccine each day to the patients living in approximately 150 countries. The third section of its business focuses on the healthcare business for the average consumers that develops as well as markets numerous brands possessed by the company. The brands are recommended by the expe rts that categorizes in the areas of oral health, respiratory, pain relief, skin health and nutrition. The company has proved to be one of the most innovative and best performing healthcare companies, which the patients trust. The company has three basic priorities such as innovation, performance and trust. The company invests in technical as well as scientific excellence to develop a more advanced supply of new products. This will meet all the requirements of the patients, consumers and payers. The company aims to achieve an industry leading growth by means of effective investment in its core business. In addition to this, the company aims to develop the people associated with the company and deliver the service flawlessly (Gsk.com, 2018). Including these, GlaxoSmithKlinecommits to ensure quality, reliability and safety in all sections of the process and products. The company is a modern employer that focuses to build trust through its approach for engagement in progressing global health. The company believes that the governance structure that the company follows, underpins its ability for delivering the Group strategy that can easily grow in a diversified business like its own business. This enables the company to deliver more products of value. Including this, this particular governance structures amplifies the operating model that the company currently follows. GlaxoSmithKline is transparent in its business methods. The company publishes details on its Board Committees along with non-Board Committees, its shareholder information, ethical conduct as well as services it provides, global compliance and the contact details for its UK or US offices. Despite these facts, the company has numerous issues in its organizational culture that has led to business risks. Cross-cultural management It can be seen from the annual reports of most pharmaceutical giants that no company is safe from the risks of international business. GSK, one of the giants of the pharmaceutical industry, too suffers from the risks of international business. Managing global operations is a daunting task for any company including GSK (Tarasanski, 2017). Many facets of global operations are there that include other than cross-cultural management diversity in workforce, examining changing rules and regulations in other countries, updating global business information and so on. Stahl and Tung (2015), comments that the cultural dimension is the most significant part that gives an extra edge to any organization. The cultural management that determines the international business relations can be better understood by two of Hofstedes cultural dimensions that include power distance index and uncertainty avoidance. Power distance index refers to the culture of acceptance of superiority of others without qu estioning it. The country that scores high on this index demonstrates this quality. Uncertainty avoidance refers to the rejection of anything new and innovative. Countries that score high on this index are considered culturally closed that is they do not welcome change or anything new (Bondy and Starkey, 2014). GlaxoSmithKline is based in London where the culture is quite open innovations are welcomed and appreciated. However, in majority of countries where it operates, there is minimum acceptance of new ideas. Risks related to international business have huge impact on the cross-cultural management of GSK. Managing over one million employees in more than forty countries is evidently an operation that requires extreme skill, energy and time. According to Gollnhofer and Turkina (2015), political risks also contribute towards cultural imbalance in a company that is evident form GSKs case. The author put forth the case of Brexit, which were a political decision and its glaring impact on pharmaceutical companies in the UK. With the announcement of Britains exit from the EU, GSK is estimated to lose a good portion of its employees who hail from other European countries. However, Brexit is less likely to affect the revenues generated by GSK as the pound sterlings fall in link to the dollar is pro bably going to benefit the company, believed GSK officials. Focusing on cross-cultural aspect of GSKs global operations, although Brexit has affected its employee figures, it has certainly not hampered cross-cultural management in countries outside Europe. The company has directed its attention towards Asia, one of worlds fastest emerging markets of pharmaceutical that has the potential to yield unmatched profit. In order to rule the market however, GSK has to consider the risks related to government and industry regulations, societal regulations and most importantly, cultural regulations. Wang and Chung (2013), believes that the perfect strategy to win in Asia is to develop a workforce and an organizational culture that has the closest affinity to the regions culture. Cross-cultural aspect of global operations managed in GSK is further affected by the market risks faced by the pharmaceutical industry in the global market (Bremmer, 2014). Multinational companies have to go through lengthy processes to have access to an international market and then they have to adjust with the culture of that region. After going through all these, they have to focus on expenditure and revenue. With the emergence of local markets, these MNCs have to be always on their toes. Recommendations Although every firm faces business risks common to all, but multinational companies face risks that are unique and challenging, as already mentioned. In case of pharmaceutical MNCs like GlaxoSmithKline, the risks are further escalated by the industrys complex operations. In order to survive in the competitive global market, the company has to consider all the implications of the risks mentioned above. Cavusgil and Knight (2015), is of the view that the global economy is ever growing and multinational companies have abundant scope to develop given they mitigate the risks with proper strategies. Several ways are there to tackle risks while doing business globally. Some recommendations are given below that can be followed by GSK to manage business risks: It is recommended that the company should possess a legal base as an alternative if business processes are disturbed, by doing advance negotiation for compensation. Apart from that, the company can also opt for acquiring political risk insurance. It is recommended that the company should choose a production site that is low-cost so that wages could be managed easily in order to tackle financial risks. Currency risks can be managed by utilizing certain strategies such as option contracts and forwards and currency swaps. In order to tackle cross-cultural risks, GSK should develop advanced training for its employees to communicate properly with people from differing cultures. Managing operations in country that has a totally opposite culture is complicated and complex at the same time. Hence, the company must train its native employees. It is further recommended that GSK should adopt an alternative plan to retain its multicultural staff in case any political decision forces the company to sack them as it was seen in case of Brexit (Lavery, 2017). Conclusion It is thus evident from the above discussion that managing and maintaining international business in the face of such risks is very difficult. The report mentions one aspect of global operations for the pharmaceutical giant GlaxoSmithKline, which is cross-cultural management. It is a well-known fact that international business involves cross-cultural management and it is the most complex part of the company to manage. GSK boasts of more than a million employees working in over forty countries possessing different nationalities. In addition, the company disseminates medicines and vaccines to more than 150 million patients worldwide. Hence, it is evident from the facts that GSK deals with people from different cultures in its daily operations. The report elaborates the impact of international business risks that include political, commercial, exchange and cultural risks on GSK, which is a multinational pharmaceutical company. A brief description of the risks is provided in the report f ollowed by the types of international risks and their affect. The report further provides an overview of the company and its issues relating to cross-cultural management. The different risks and their influence on GSK have also been provided in the report. 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