GLOBAL AWARENESS

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Global Awareness Erving P. Pena Salt Lake Community College

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Abstract This document outlines the importance of global awareness as it relates to businesses. Influential factors such as social, cultural, political, economic and environmental are explored. The main informational resources were derived from on-line documents, and reports. There are subcategories that go into further detail. Ultimately, it is proven that businesses wishing to be successful will ultimately need to be aware of the global situation. Research continues in as the international market begins to change. This change comes from the exposure to technologies, opening up parts of the world that had previously not been able to enter the market. The conclusion emphasizes the importance businesses should place on global awareness, and how the factors stated above will need to be taken into consideration. Keywords: social, cultural, political, economic, and environment

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GLOBAL AWARENESS. More and more, Global awareness is becoming essential for business survival. Never before in the history of humanity, has the utilization of technology allowed individuals in different parts of the planet to exchange information instantly. The technological developments allow for transactions to be placed in real time with no need to be present at any specific location. No longer is the physical an obstacle. As such, those that wish to be successful in business will be exposed to a diverse population of individuals and businesses. Ignorance is fatal in this era. One must be informed and knowledge about the social, cultural, political, economic and environmental factors that have an effect on the types of businesses and markets in a given area. It is a very competitive world, information is going to be the best tool in ones belt, to land that deal, contract, client, investor, and/or customer. Global awareness is vital to success in any market for any business. Social Any business owner wanting to sell a product or services has to be aware of the Social Factors that might influence the product being sold. Retail business provides a great example of how the following are considered and how they help shape business with regards to Social Factors: Retailing Based on Age Range Retailing Based on Family Size Retailing Based on Income Retailing Based on Buying habits. (Bruce, n.d.)

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It is no surprise that Age would play a big role in the type of product or service a place can provide. For retailers Based on the age of buyers, retailers can decide and control what kind and how much inventory they order for their outlets. This will also help them determine how to market, promote and display their products in ways that are most appealing to their target audience. (Bruce, n.d.) These same factors are taken into consideration by companies that range from the Auto makers to services like daycare or a nail salon. Family Size, Income, and Buying Habits are just as important to consider. When cash flow for businesses is dependent on family size, the cost of products and inventory of luxury or higher-end items are reduced. The demographics of a region, such as average income, attract businesses that are best able to provide a product or service that can be afforded by residents within the target area and allow the business to turn a profit. Business must also address the ever changing buying habits of patrons. One day they like the product, then something new comes along and the old product is abandoned. As a result, it is extremely important that retailers stay on top of their games when it comes to keeping the most trendy, reasonably priced products on their shelves. (Bruce, n.d.) Culture Culture is huge. Every group of people has a distinct culture. From Nations down to different streets in neighborhoods, culture can vary vastly. Businesses need to be aware of how to market to these cultures and also be aware of what sensitivities there might be. Americans tend to be more accurate and pay more attention to details regarding the legal part of the business, requiring longer contracts, with many terms. Other cultures which function on mutual trust are satisfied with shorter contracts where are established, in a succinct form, the

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responsibilities and mutual obligations of parties. (Junior, Meyer, & Patrick, 2006) With this in mind, the way negotiations are done can differ from culture to culture. The top ten ways that culture can affect international Negotiations: 1. Negotiating Goal: Contract or Relationship? 2. Negotiating Attitude: Win-lose or Win-Win? 3. Personal Style: Informal or Formal? 4. Communication: Direct or Indirect? 5. Sensitivity to time: High or Low? 6. Emotionalism: High or Low? 7. Form of Agreement: General or Specific? 8. Building and agreement: Bottom up or Top down? 9. Team Organization: One leader or Group consensus? 10. Risk Taking: High or Low? (Salacuse, 2005) Another major factor with regards to the culture of a region or groups is the religious influence. This will affect products, services and employment. Religion also affects the type of products that consumers buy and the seasonality of some purchases. Religious restrictions are also imposed to individuals affecting their capacity for work as well as their availability for work journey. (Junior, Meyer, & Patrick, 2006) There is a myriad of cultural factors that play a role on how business operate. Some of these factors include but are not limited to: Language, Long breaks dominant in Spanish cultures, Family being served first in Arab cultures, importance of material goods, inter-relationships, and even how and agreement is concluded. Becoming familiar with the culture is vital.

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Political The political environment of a region dictates what the codes, zones, and any other legalities related to business are. This will affect what signage can be used or even if it is legal to sell the product or service the business wishes to provide. A major legal issue that business must be cognizant of is Labor Laws. Since paying someone a wage will need to be considered in any business, it is important to know what the laws are to make sure the business complies. Any change in labor laws can mean a change in expenses for a business, and these expenses can be significant for small businesses without large cash reserves. A change in the minimum wage, for example, can cut directly into a small company's profitability. (Ingram, n.d.) Costs that are also considered are disposal of products. The public is big on Recycling and tend to favor organizations that demonstrate a conscious effort to manage the waste they produce. The Waste Electrical and Electronic Equipment (WEEE) regulations are designed to reduce the amount of electronic waste going to landfill sites. Businesses must obey these environmental laws. However, a company that goes further by taking other measures to minimize its environmental impact will be seen more favorably by consumers. (Jessops, n.d.) The list continues. What kind of business structure will it be? An article written by Rachel Fields (Fields, n.d.) titled, Legal issues to consider when starting your business. She goes on to describe that a business can be any of the following, and be subjected to different sets of laws: Sole-proprietorship, partnership, limited partnership, corporation, s-corporation, or Limited Liability Company. A business will also need a business license and tax registration. Some businesses will need Non-Disclosure Agreements. Zoning is going to have the largest impact on

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any business. When you are selecting the location for your business, you will need to make sure it is properly zoned for the type of business you plan to operate. It is not okay to just assume that, if your business is of the same type as the one that is currently there, the zoning is appropriate. Zoning may have changed while the other business was operating, and that business might have been provided an exemption that won't be provided to yours. Economic The rules of business are practically the same anywhere in the world. There needs to be a consumer wanting what a business offers. In order for there to be a consumer, whether it be a business or an individual, will depend on the economy of a region. The main things to consider are: Consumer Confidence Employment Interest Rates Inflation (Hamel, n.d.)

Consumer confidence is a good indicator of how businesses will fair. When Consumer confidence is low, people tend to save their money. Confident consumers buy more and when Consumer confidence is high, there is more opportunity for business to start, and for those that are already established to grow. Employment cycles rise and drop with the economy. When the un-employment levels are high, demand for business products or services drop. When un-employment is low, and there are plenty of jobs, more people have money to spend. Going into business in a region with high employment rates means a business will have more chances of success.

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Because many times, businesses will need to be lent money for financial investments, the interest rates on loans will need to be taken into account. Higher interest rates result in higher total business expenses for companies with debt. High interest rates can also reduce consumer spending, because high rates make it more expensive for consumers to take out loans to buy things like cars and homes. (Hamel, n.d.) Inflation is the increase of prices. While the increase of prices may initially increase the amount of cash flow, it reduces how much consumers purchase. Inflation in prices are not usually accompanied with raises in wages, thus making it harder for individuals to buy. Environment The environment is a double edge sword. The Environment can affect a business, but the business can also affect the environment. Some crops only grow in certain areas. Some regions have weather patterns that affect certain businesses, and some businesses change the environment. In an article by Jacquelyn Jeanty (Jeanty, n.d.) titled Natural Environmental Factors That Affect Business, she highlights important environmental issues that need to be address: Environmental Regulations, Permit Requirements, Compliance Requirements, and Environmental Contaminates. Businesses must meet certain standards that help to reduce any adverse effects a company's activities have on the environment. As a result, natural environmental factors, such as clean water and clean air, dictate how companies conduct their day-to-day operations. (Jeanty, n.d.) Nature being part of the environment affects businesses in what products consumers demand and the availability of it. In areas with cold winter weather, business that sell items such as clothing need to be aware and provide winter products. Ski resorts depend on the influx of

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winter visitors for sells. In other regions, such as the plains and east coast, other weather factors are taken into account. Bad weather can cause business to close for prolonged periods of times. Not all environmental factors are from the natural environment. Some of the factors are regionally developed by the residence of that area. These factors include but are not limited to: Local Competition Talent pool Traffic Proximity to suppliers Regional support Travel convenience (Wiliams, 2012)

This applies to any business that might be entering a region for the first time. Information is vital to success. The reality is that business will also need to be interdependent. Businesses need other businesses as well. Conclusion Global awareness is becoming an essential part of business. Even regional businesses need to be aware of the global situation because it will affect them in one way or another. Technology will continue to be driven forward to make global business easier. With that said, business owners need to be aware of the realities that will impact business such as Social, cultural, political, economic and environmental forces. The drive to be successful and bring in profits is the catalyst for this awareness and will continue to be so.

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Works Cited
Bruce, O. (n.d.). Business & Society. Retrieved April 3, 2014, from eHow: http://www.ehow.com/info_8483338_social-factors-affecting-retail-business.html Fields, R. (n.d.). Business. Retrieved April 12, 2014, from AllLaw.com: http://www.alllaw.com/articles/legal/article15.asp Hamel, G. (n.d.). Business & Entrepreneurship. Retrieved April 12, 2014, from Azcentral.com: http://yourbusiness.azcentral.com/economic-factors-affecting-businesses-4557.html Ingram, D. (n.d.). Setting up a small Business. Retrieved April 12, 2014, from Chron: http://smallbusiness.chron.com/political-trend-affect-small-business-64909.html Jeanty, J. (n.d.). Business & Government regulations. Retrieved April 13, 2014, from Chron.com: http://smallbusiness.chron.com/natural-environmental-factors-affect-business-13235.html Jessops. (n.d.). Case Studies. Retrieved April 13, 2014, from Business Case Studies: http://businesscasestudies.co.uk/jessops/responding-to-changes-in-the-marketenvironment/introduction.html#axzz2yhlxHdkd Junior, V. M., Meyer, B., & Patrick, M. J. (2006). The Influence of Culture in International Business. Salvador: EnANPAD. Salacuse, J. W. (2005, March). Global Business. Retrieved April 11, 2014, from Ivey Business: http://iveybusinessjournal.com/topics/global-business/the-top-ten-ways-that-culture-canaffect-international-negotiations#.U0ge1FdX2kM Wiliams, T. (2012, October Monday). Startup Blog. Retrieved April 13, 2014, from 6 Environmental factors that may affect your business: http://taffywilliams.blogspot.com/2012/10/6environmental-factors-that-may-affect.html