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The Impact Of Globalisation On Business.

5138 words - 21 pages

1. INTRODUCTION.Advancement in transportation and information technologies has opened up the world to lucrative business opportunities. Many companies no longer confine their business domestically but reach out globally in search of better profits. When a company conducts business across national boundaries, it is participating in international business.International business paves the way for globalisation. Ball et al. (2004) found that globalisation can be defined in many ways but broadly globalisation occurs when an entity (government, company, NGOs, etc.) carries out an activity (economic, political, technological, etc.) in a host country.Globalisation has impacted the way many companies performed their business. New strategies are required to identify the opportunities presented by globalisation. Companies need to understand the forces that drive them towards globalisation. Most importantly, the companies must be prepared to meet the challenges of globalisation.This report presents globalisation in the context of a global strategy. It assesses the impact of the global strategy on the Texchem Group of Companies (Texchem), a company based in Penang. Texchem is founded in 1973 by its current Chairman and Chief Executive Officer, Dato' Seri Fumihiko Konishi. Today, Texchem is well diversified into the business of trading, manufacturing and services with divisions in the packaging, industrial, food, family care and venture industries ( 2003).Currently, Texchem's globalisation efforts are concentrated around the Association of South East Asia Nations (ASEAN) countries and China (Chiew 2004). The organizational structure of Texchem is shown below. The group's investment holding company is Texchem Resources Berhad.(source: Texchem Resources Bhd, www.trbgroup.com/business_act_corporate_structure.htm)FIGURE 1: Texchem organizational structure2. FORCES DRIVING TEXCHEM TO GLOBALISE.Normally, a company's decision to globalise is influenced by a combination of several factors. These factors are the forces that drive a company to expand abroad. Each company has its own unique reasons to carry out oversea business activities since '...declining trade barrier and technological changes seem to underlie the trend towards greater globalisation...' (Hill 2003, p. 8) today.Texchem has mainly operated domestically apart from venturing into Singapore a year after its inception. It was not until 18 years later that Texchem started its globalisation exercise aggressively after building up its strength and reputation. Starting with Thailand in 1992, Texchem continued with Vietnam (1994), Myanmar (1997, Indonesia (2002) and China (2002). Now, Texchem is well represented in the ASEAN region (Texchem Annual Report 2002).Like any other companies, there were also unique forces that drove Texchem to globalise. Chief among them were:* Be a US$1 billion company.It cannot be denied that all companies are profit driven. After all the very existence of a company rest on the...

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