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BUSINESS IN CONTEXT, 8th EDITION – TEACHING MANUAL CHAPTER ONE THE CONCEPT OF BUSINESS IN CONTEXT

This chapter explains the ‘Business in Context’ model that is used throughout the book. All four contexts are identified; environmental, organizational, strategic and functional, referred to as ‘activities level’ context. In addition, two theoretical framework outlines are offered; systems and contingency. Both frameworks have been used to develop the ‘Business in Context’ model. The model can be used to analyze individual firms and entire industrial or business sectors. A useful exercise for students is to nominate a particular sector, firm or organization known to them (it could be their college, university or their department) and get them to develop an analysis using the ‘Business in Context’ model.

Discussion questions and answers Below you will find suggested answers to the discussion questions set at the end of every chapter. It must be stressed that these answers offer guidance only and are not intended as ‘model’ answers. It is important that students think for themselves and many of the questions require them to apply the knowledge they have gained from the book to a specific context. We recognize that such contexts may vary for different groups of students. It is more important that students think of the issues in the industry, business or even national context that is most relevant to them. In some cases, a specific answer cannot be given but, where this happens, suggestions are offered for tackling the question.

The five environmental variables, five organizational variables and five business activities have been identified in the model. By necessity, these represent broad categories. What are the possible elements that might be considered under the various headings used in our model of business? Environmental context Economy (The natural environment and its impact on the economy could be considered here or under a separate heading, in addition to the five elements identified in the book. This could be a useful starting point to get students to think about the utility of the model.) • Level of activity • Economic structure • Economic change • International finance and currency exchange • Nature of labour markets • Competitive structures • Globalization • Multinationals The state • Political ideology • Political change • Government economic policy • Legislation • Level of intervention and types of intervention • Nature and role of bureaucracy • Interest groups • Supranational organizations and globalization Technology • Product and process technology • Changing use of technology in organizations • Information technology • Digital and social media technology • Scale and nature of technological change • Technology and the global economy • E‐Commerce • Impact on organization structure • Impact on labour markets and jobs Labour • Behaviour of labour markets • Composition of the labour force For use with Needle/Burns, Business in Context 8th edition (9781473786707) © 2023 Cengage Learning EMEA

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Changing nature of jobs and the labour force Role of trade unions Alternative forms of employee representation

Culture and institutions • National differences • Sub‐national and sub‐cultural differences • Globalization, convergence and culture • Business practices and management styles in different cultures • Impact of culture on business success • Transfer of ideas and practices across cultures • Non‐cultural bases of national differences, such as the nature of government, legislation, education system, financial systems, stock markets, etc. Organizational context Goals • Types of goals • Mission statements • Goals and strategy, goals and operations • Goal conflict • Goals and performance • Business ethics Ownership • Ownership and control • The notion of agency • Types of ownership • Ownership and performance • Public versus private ownership Structure • Types of structure • Influences on structure • The link between strategy and structure • Structure and performance • The flexible firm Size • • • •

Issues related to large versus small firms Size and structure Size and business performance The small firms sector and its role in the economy

Organizational culture • Influences on culture • Types of culture • Influences on performance • Issues of cultural change • Limitations as a management control device Business activities Innovation • Invention • Research and development • Design • Entrepreneurship Operations • Converting inputs (information, materials, finance, technology, people, etc.) into products and services • Production • Delivery • Supply chain management Marketing • Market research • Product design • Creating different products for specific markets • Promotion and advertising • Pricing • Distribution and methods of reaching the customer • The transformation in marketing resulting from digital and social media technologies Human resource management • Creating a staff profile to meet the strategic needs of the firm • Recruiting, selecting, training and rewarding staff • Retaining staff • How people are rewarded and motivated • Employment relations • The role of human relations in achieving strategic goals Finance and accounting • Raising funds (Financial accounting) • Managing income and expenditure (Management accounting) • Financial reporting For use with Needle/Burns, Business in Context 8th edition (9781473786707) © 2023 Cengage Learning EMEA

2. Take in turn an industry, an organization and a specific issue, and analyze each using the Business in Context model. There is no specific answer to this ‐ students should make sure they cover the various elements of the model ‐ environmental, organizational, strategic and activities. A variety of sources may be used: • Industry survey in such as the Financial Times, Wall Street Journal or The Economist. • Case study of a particular firm taken from a case study text. • Journal, magazine and newspaper articles (these can sometimes be found on the Internet). • Company reports. • Internet search (apart from the more critical newspaper articles from such as the Financial Times or The Guardian, information here can be somewhat bland or written as public relations for the firm in question ‐ students should be warned to use this with caution). • Using a library database. 3. What is the value of the systems and contingency approaches to an understanding of business? The value of both approaches includes: • Identification of the various factors which influence business processes and outcomes. • Recognition that businesses operate within a complex set of influences. • Awareness of how changes in the environment affect business. • Awareness of how business outcomes may be changed through the manipulation of input and process variables. • Understanding how business activities interact. Moreover, contingency theory adds the notion that organizations must adapt to prevailing environmental conditions in order to be successful. It should be recognized that both approaches have their critics. The main criticisms relate to the deterministic nature of both systems and the contingency approaches and that business actions can influence the environment as well as being influenced by it. Both systems and contingency approaches are discussed briefly on pp. 6–8.

BUSINESS IN CONTEXT 8th EDITION – TEACHING MANUAL CHAPTER TWO GLOBALIZATION

This chapter examines a number of different topics: • Definitions of globalization; its causes and drivers. • The development of globalization, particularly trends since the beginning of the 20th century. • Economic, political and cultural aspects of globalization. • Different perspectives on globalization, including the movement towards deglobalization. • The development of the multinational firm and different types of structural arrangement in the global economy. In doing this, a number of topics closely associated with globalization are covered. These topics are linked and include: • Global markets, global factories and global supply chains. • Off‐shoring and outsourcing. • The multinational and transnational organizations and explanations for their growth. • Alliances and joint ventures.

intended as ‘model’ answers. It is important that students think for themselves and many of the questions require them to apply the knowledge they have gained from the book to a specific context. We recognize that such contexts may vary for different groups of students. It is more important that students think of the issues in the industry, business or even national context that is most relevant to them. In some cases, a specific answer cannot be given but, where this happens, suggestions are offered for tackling the question. 1.

In what ways does globalization have an impact on either (a) your firm or a firm with which you are familiar, or, (b) your college? The answers are likely to be specific to certain firm or college, but they should cover the cross-border movement of goods, services, people, ideas, etc., alliances with firms or colleges in other countries. There should be some focus on how this has changed over the last ten years and the impact this has had on the daily experience of employees/students. A firm might have cross‐border supplies, markets, production arrangements, joint ventures, staff mobility and so on. A college may have cross‐border flows of students, staff, have alliances with other colleges, plus there may be ways in which globalization has influenced the curriculum.

Outline the main arguments put forward by the globalists, the anti‐globalization lobby, and the sceptics. Which view do you support and why? The main arguments are all presented on pp. 46–49 and summarized in Table 2.5, p. 46. Students must be able to cite specific examples and evidence to support their position.

Examine the key drivers of globalization. Which are the most influential? The key drivers are classified in the text as factors external to the organization, such as political change and technological change, and factors internal to the organization, such as cost and the desire to grow. These points are presented in detail in pp. 19–21. All the points mentioned are important and it should be acknowledged that many are interrelated. However, authors disagree on which is the most important. Bartlett and Ghoshal (1995) cite political change as the most significant driver, including the liberalization of China and the former USSR and Eastern bloc countries. Castells (1996) cites the developments in information and communications technology. Yip (2003) highlights market change. For use with Needle/Burns, Business in Context 8th edition (9781473786707) © 2023 Cengage Learning EMEA

These different reasons have probably been more important at different times. In the early days, the spread of rational knowledge plus market expansion with developments in capitalism were important. In the late 20th century, key changes have certainly included the opening of markets as a result of political change, technological innovations, especially ICT, the influence of the multinationals and the development of international regulations. However, in more recent years, cost has been a major driver, causing firms to seek low cost solutions, such as offshore outsourcing in lower wage market economies. 4.

Assess the contribution of developments in ICT to the growth of globalization. ICT has had a significant influence on the exchange of ideas, the spread of information and in enabling workers in different countries to collaborate on the same project without leaving their work stations. Examples include the use of the internet, the computer linked world economy and the internationalization of shares, and how workers in different countries can work together via email, telephone, video conferencing, and linked computer systems. A key factor here has been the networking of the global economy. ICT supports the coordination and control of the global factory, the global supply chain and both offshoring and offshore outsourcing in general. ICT has been especially important during the COVID-19 pandemic. Key arguments are presented on pp. 19, 22–27 and 50–51.

To what extent can you argue the case that large corporations have become as powerful as nation states? There have been several tables published (refer to for example Table 2.2, p. 30 with related arguments on pp. 29–31). The tables demonstrate that the sales value of some companies is greater than the GDP of many nation states. Critics consider such developments to be dangerous and undemocratic since companies are answerable only to their most powerful shareholders and ownership patterns may be spread across several countries. Counter arguments suggest that sales value and GDP cannot be compared in this way and that nation states wield considerably more influence through their ability to collect taxes, make laws and go to war.

Contrast the main features of a transnational corporation with those of a multinational. In some ways this is a potentially misleading question. It uses Bartlett and Ghoshal's distinction between international, multinational, global and transnational companies. Others feel that all the above are types of multinational and that Bartlett and Ghoshal's definition of a multinational is better called a multi‐domestic company. On that basis the main differences between a multi‐domestic and a transnational are that the former emphasizes meeting local needs via local production, whilst the transnational does this and focuses on the creation of global efficiencies as well. The transnational mixes centralization and decentralization and tries to create a cross‐border mentality around a corporate identity. Refer to the text pp. 33–34 for more detail.

Why have joint ventures emerged as a major organizational form in a global economy? What are the main criteria for the success of a joint venture? Reasons for joint ventures (refer to pp. 36–37): ‐ Survival in the face of competition. ‐ For market growth and new market entry. ‐ To assist in technology transfer. ‐ To access specific core competencies in the partner firm. ‐ To achieve synergy. ‐ Cost reduction. ‐ Reduce risk. ‐ Increase control of the supply chain. ‐ Gain competitive advantage through accessing the partner's local knowledge. Success criteria (refer to p. 41): ‐ Select the right partner. ‐ Strategic fit. ‐ Respect for each other's capabilities. ‐ Systems, cultural and personal compatibility. ‐ Commitment by both parties. ‐ Agree the formula for control of the joint venture and what to do in the case of a dispute. ‐ Agree on the criteria for performance measurement.

What are the main features and key strategic rationale for a global production system? Identify such a system in both the manufacturing and service industries. A global production system includes the fine-slicing of operations into a number of different components, creating the global factory (pp. 22–26) and the global value chain (pp. 26–27). This involves linked and integrated operations in several countries with networked systems of operation and information; the use of labour as a global resource; the creation of cross‐border teams and management and the development of new organization forms e.g. joint ventures, offshore production companies and contract outsourcing. The key features are set out in five points at the top of p. 24. The global factory and global supply chain have been made possible by the application of technology to enable the same quality products to be made in different locations, through the process of codification. There have also been developments in ICT to enable global coordination and control; access to lower cost labour; the development of cheaper shipping (via containerization) and lower cost airfares. The key strategic rationales include: ‐ Cost reduction – this is probably the main reason. ‐ Using specific core competencies around the world. ‐ Exchange of ideas and the creation of new ones. ‐ Technology transfer. A good example from manufacturing would include the automobile industry and companies such as Ford and Daimler Benz or computers as with Dell. From the service industry, examples could include insurance (e.g. AXA), accounting (PwC) and retail and distribution (Amazon).

Has de-globalization been taking place in the first quarter of the 21st century? Globalization has been affected by key political changes that have occurred in the first quarter of the 21st century, although their origins lie in the post-war 20th century. The changes (refer to p. 50) include: - A threat to liberal democracies in Europe and the USA. - The rise of China as a dominant world power. - Increased border controls. - The break-up of regional alliances. - The weakening of international organizations such as the WTO and World Bank. The result has been a less connected world than predicted. A key question is For use with Needle/Burns, Business in Context 8th edition (9781473786707) © 2023 Cengage Learning EMEA

the extent to which this is a temporary shift, similar to what occurred in the first part of the 20th century (refer to p. 18), or something that will be more longlasting. Students could also consider whether new forms of globalization are emerging and discuss issues such as the growing concern over climate change, the increasing power of large digital technology companies and the growth of cybercrime. 10.

What has been the impact of the COVID-19 pandemic from 2020 onwards on globalization? Key arguments are outlined in pp. 50–51. The pandemic has had a significant impact on the global movement of trade, capital, information, and especially, people. The impact is continuing with large variations between countries (for example events in China in late 2022). Therefore, students should be encouraged to seek up-to-date information.