Unit 35 Global Business Environment UK College of Business Computing

Task 1

P1 Key factors of cost, market, environment and competitors that drive global trade and commerce

Globalisation can be characterised as a process under which the integration and communication between people, company and economy of the country with the rest of world. If glbaliusation wuill be discussed in context with businesses then it can be detrmined that it helps in economic expansion of an enterprise. In this, an environment is created in whuch investment is brought in from several segments so that growth and development can be achieved by them. The companies who are carrying out their operations in various parts of countries is known as Multinational companies (Crane and Matten, 2016). The idea of globalisation is basically supported by digital technology and transformation and then later on connects the economies of various countries under social and economic grounds. It has also been ascertained that here are various factors which compels an organisation to expand at an international level. It is very important for the companies to take all the factors very seriously then only they will be able to carry out their operations in an effective manner and desired results can be achieved. A brief description of key drivers of globalisation are as follows:

Cost: It can be defined as that factor in which the amount which will be paid by the organisation so as to expand themselves at an international level. It is necessary for every company to invest their time and resources in understanding the idea of doing expansion in an effective manner so that they can come to know about the machineries and resources that will be required by them so as to expand themselves at a global level (Doh, McGuire and Ozaki, 2015). The cost that will be incurred by the business are being separated into two forms such as direct cost and indirect cost. Direct costs relates to the factors like insurance, rent, inventories etc. as they have direct relation with the amount of units produced. On another hand, the indirect cost comprises of expenses which is not having any direct relation with the no. of quantities produced and the factors which are included in this are Personnel, administration and conveyance costs. But the most crucial reason to enter into global market is to increase the efficiency of the firms in terms cost. Through this company is able to build competitive advantage in the market and helps in presenting the products which is affordable to the customers as well.