challenges affecting the future business environment
The past few decades have seen the growth of the global business environment, with more companies joining in the global environment. The growth of the global business environment was facilitated by technological advancement, globalization, and treaties being made between countries. Since countries cannot produce everything and become independent, the majority of countries are dependent on other countries. Therefore, the global business environment has grown extensively, with there being an increase in the number of international corporations, each conducting their business activities across several countries. Despite the growth of the global environment, several challenges are affecting the future business environment and are often referred to as global forces.
Global forces have considerable impacts on businesses, especially those in the global environment. The issues affecting the global business environment are either political, economic, or environmental. However, the current issues mainly affecting the future of the global business environment include low pay and the corona pandemic. Low pay and corona pandemic have substantial impacts on the future of the global business environment, positively and negatively affecting business activities around the world.
The Global Business Environment
The global business environment is the environment in various countries where international businesses operate in. There exist several factors in the global environment that affects businesses, including political, environmental, and economic issues. Some of the issues may include government policies, financial crises, and harsh natural occurrences such as tsunamis. Additionally, there are also global forces affecting business activities around the global either positively or negatively. The forces have the power to expand businesses by providing favorable environments for expansion and gain higher profits. On the other hand, some forces can cripple companies, making them bankrupt, to the point of facing closure. There are those companies that cannot withstand the challenges and end up facing closure. Therefore, the global business environment is dependent on several issues, and some have effects on the future of the global business environment.
Low Pay
One of the issues that impact the future of the global business environment is low pay. Low pay is the situation where one’s pay is way below the National Minimum Wage (NMW). According to the Office for National Statistics, of the total employee jobs in the UK, approximately 16.2% were low paid (Smith, R., 2019, 4). Low pay can also be defined as earnings that are relatively lower than the needs of an employee. Over recent years, there has been an increase in the number of low pay employees, especially in countries like China. Even though a country like China is among the largest economies in the globe, several individuals are earning below the minimum wage. However, low pay is present in the global environment, and the wage difference between the high pay and low pay is growing bigger.
Low pay is a factor that influences the future of the global business environment.
The Corona Pandemic
The current corona pandemic is currently hitting the global business environment hard, affecting the different sectors of the economy. The transport and tourism sectors are the worst hit with the epidemic since the majority of countries have imposed travel restrictions to try and combat the virus. The coronavirus is a novel virus discovered late last year in Wuhan, China. The virus is a respiratory virus that spreads through getting exposed to droplets of coughs or sneeze from an infected patient (World Health Organization, 2020). Furthermore, one can be infected when coming into contact with contaminated surfaces and then touch their mouth, nose, or eyes. On the other hand, the virus leads to serious health complications, with individuals having a weak immune system succumbing to the virus. The pandemic has, therefore, lead to the majority of nations together with organizations such as the World Health Organization (WHO) to take strict measures to try and stop the spread of the virus. The measures have affected various businesses and also the global business environment in general.
The corona pandemic will affect the global environment, declining global trade since it makes countries that were dependent on other countries to be independent. Over the years, as globalization increased, countries became interdependent. The majority of countries around the world heavily depended on China for a wide variety of products and services. Therefore, with the pandemic, the majority of states today are considering producing the products that they had earlier depended on other countries, especially on China. Governments are now encouraging and promoting both public and private sectors to promote manufacturing to become independent. Therefore, the corona pandemic is affecting the global business environment as it will lead to countries being independent, discouraging international corporations.
The global economy will also be damaged as a result of the pandemic. As countries and governments restrict movements, the demand for goods and services will also fall. The restrictions are aimed to try and contain the spread of the virus around the world. The pandemic has worst hit the transport and tourism sectors as there being temporary travel restrictions across the majority of countries around the globe (Duffin, 2020). Consequently, there will be no tourists, meaning there are neither tourist flights nor visitors to luxurious hotels. The various players in the industries have, therefore, been forced to send their employees to unpaid leave to reduce incurring more losses. Thus, the travel restrictions due to the pandemic will lead to the collapse of the economy, affecting the global business environment.
The epidemic will also affect the financial markets, crashing the stock markets and other financial institutions. The financial markets already felt the effect of the pandemic as they incurred huge losses. The majority of stock markets in China have already experienced massive losses, with some markets already crashing because of the pandemic. Currently, there has been temporary closure of some financial markets due to the enormous losses they have incurred over the few months. The financial markets will take a long period to recover, therefore, affecting the global business environment.
The pandemic will also affect the growth of the global economy, which would take longer to recover. The global economy is expected to decline or, at some point, stagnate. The recent months since the virus was discovered, there has been a reduction in production and, to some extent, suspension of production. Companies like Apple have already suspended their production, which was majorly in China. Such suspension of production will lead to the stagnant growth or even decline of the economy. The suspension of production will also mean that employees will also be sent home during the pandemic, and consequently, no stagnation or deterioration of the economy. Furthermore, there will be no creation of new jobs, meaning that the economy will remain stagnant as there will be no more new jobs or more wealth.
On the other hand, the corona pandemic will affect the global business environment, promoting ecommerce. Since governments and other health stakeholders are encouraging individuals to stay at home and to avoid crowded places, the majority of individuals are now adopting the use of online shopping. The majority of individuals are making use of online retailers such as Amazon as a way of avoiding shopping in the markets. There has been an increase in online shopping, and some of the businesses are also diversifying to provide ecommerce services. It is estimated that the pandemic will lead to the adoption of online shopping and even an increase in the number of online retailers in the global market. Therefore, the epidemic will contribute to the growth of ecommerce, affecting the global business environment.