Pearson

Higher Nationals in
Business

Unit: 18 Global Business Environment

Higher National Diploma in Business

Brief Number: 1&2

Issue 1
 Higher National Diploma in Business
Assessment Brief

Student Name/ID Number Muhammed Rashad.A

Unit Number and Title 18 Global Business Environment

Academic Year 2018-2020

Unit Tutor Jabir. M

Assignment Title Drivers and challenges for globalisation

Issue Date 22/04/2020

Submission Date 10/9/2020

IV Name & Date Abu Thahir

Submission Format

The submission is in the form of a 10-minute individual PowerPoint presentation and 5 minutes allocated
for questions. The presentation slides and speaker notes should be submitted as one copy. You are
required to make effective use of PowerPoint headings, bullet points and subsections as appropriate. Your
research should be referenced using the Harvard referencing system. Please also provide a bibliography
using the Harvard referencing system. The recommended word limit is 1,500 to 2,000 words, including
speaker notes, although you will not be penalised for exceeding the total word limit.
 Unit Learning Outcomes

LO1 Analyse the key factors which drive globalisation.

LO2 Determine the strategic complexities associated with operating in a global environment

Assignment Brief and Guidance

Scenario

You are an advisor for the board of directors of ‘{MAHINDRA, INDIA} a fast- growing company
The company has also expanded into Mozambique, Canada, Gabon and Australia, and hope to
expand into other countries soon.

A new CEO has taken over the organisation and has asked you to produce a presentation to
the board of directors to advise them on the concept of ‘Globalisation’ and the challenges this
creates for global businesses trying to enter new markets.
You are required to investigate and explain the key factors that drive globalisation as well as the
key challenges this creates when operating globally. This will be presented by using a PESTLE
analysis to guide you and show analysis of cultural, economic, political and social dimensions.
The presentation should include the following:
1. An introduction to the concept of globalisation.
2. An explanation on the driving factors of globalisation.
3. The significant impact of digital technology upon globalisation.
4. Complete and present a PEST/LE analysis of the organisation.
5. Explain the challenges of globalisation and the strategic challenges this represents for the
organisation.
6. Provide recommendations on how to overcome these challenges.

*Please access HN Global for additional resources support and reading for this unit. For further guidance and support on report
writing please refer to the Study Skills Unit on HN Global www.highernationals.com

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 Higher National Diploma in
Business
Assessment Brief
Student Name/ID Number MUHAMMED RASHAD.A

Unit Number and Title 18 Global Business Environment

Academic Year 2019-2020

Unit Tutor Jabir. M

Assignment Title Impact and Strategic Direction

Issue Date 22/04/2020

Submission Date 10/09/2020

IV Name & Date Abu Thahir

Submission Format

This should be written in a concise, formal business style using single spacing and font size 12.
You are required to make use of headings, paragraphs and subsections as appropriate, and all
work must be supported with research and referenced using the Harvard referencing system.
Please also provide a bibliography using the Harvard referencing system. The recommended
word limit is 2,500 to 3,000 words, although you will not be penalised for exceeding the total
word limit.

Muhammed Rashad Global business environment 19/9/20 4

 Unit Learning Outcomes

LO3 Evaluate how operating in a global market influences an organisation’s structure, culture
and functions.
LO4 Evaluate the influence of globalisation on organisational decision making and strategy.

Assignment Brief and Guidance

Scenario

As a advisors of [MAHINDRA ] (refer to Assignment 1) you have to evaluate the impact that globalisation
has on organisational structures, cultures and functions. As part of your research you have to
investigate how globalisation affects decision making and strategy within a global business.
This will require that you consider theory (McKinsey’s 7S model, Hofstede’s Dimensions of
Culture etc) and factors that influence structures, culture and organisational functions in the
given business. You should relate to the given organisation and demonstrate how their strategy
and decisions have been influenced by the factors you have discussed.
The report should include the following:
1. An explanation of the structure, culture and governance of the organisation. Applying
McKinsey’s 7S model and checklist to illustrate an overview of the organisation.
2. An evaluation of how the above has been influenced by global operations and how the
organisation has adapted to operating in a global market. Applying Hofstede’s Dimensions of
Culture to demonstrate how the organisation has been influenced.
3. An evaluation of ethical and sustainable factors that the organisation has to consider in a
global market.
4. Assess how these factors have affected decision making in a global context.
5. Assess which strategic expansion routes the organisation took and analyse both advantages
and disadvantages.
*Please access HN Global for additional resources support and reading for this unit. For further guidance and support on report
writing please refer to the Study Skills Unit on HN Global www.highernationals.com

Learning Outcomes and Assessment Criteria

Pass Merit Distinction

LO1 Analyse the key factors which drive globalisation LO1 & 2

P1 Analyse key factors of cost, M1 Critically analyse the impact D1 Critically evaluate the global
market, environment and that key factors have upon the business environment, including

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competition that drive global global business environment in
commerce and trade. terms of benefits and challenges.

LO2 Determine the strategic complexities associated with operating

in a global environment
the opportunities and challenges
P2 Explain the complexity of faced by organisations.
M2 Critically analyse strategic
strategic challenges faced by
challenges in context of risk and
organisations when operating in
diversification strategies and the
a global environment supported
supply chain flow.
by specific examples.

LO3 Evaluate how operating in a global market influences an

organisation’s structure, culture and functions

P3 Evaluate the influences of

globalisation on organisational
M3 Critically evaluate global
governance and leadership,
market influences in application
structure, culture and functions.
to appropriate theories and LO3 & 4
P4 Evaluate the influences of models relating to organisational
ethical and sustainable structure and culture. D2 Critique strategies that can be
globalisation on organisational adopted by organisations
functions. operating in a global business
environment, making valid and
LO4 Evaluate the influence of globalisation on organisational decision justified recommendations of how
making and strategy they should adapt their
organisational structure and
P5 Evaluate the different ways
decision-making processes.
decision making can work
M4 Critically evaluate the key
effectively in a global context.
barriers in doing business
P6 Determine and articulate the internationally and make
various routes to recommendations on how they
internationalisation an can be overcome.
organisation may adopt, including
key barriers.

Muhammed Rashad Global business environment 19/9/20 6

 STUDENT ASSESSMENT SUBMISSION AND DECLARATION
When submitting evidence for assessment, each student must sign a declaration confirming that the work is their
own.

Student name: MUHAMMED RASHAD.A Assessor name: Jabir.M

Issue date: 22th April 2020 Submission date: 10th Sep 2020 Submitted on: 10th Sep 2020

Programme:

Higher National Diploma in Business

Unit: Business and The Business Environment

Assignment number and title: Assignment 1-Organisational type, function and structure

Assignment 2-Business environmental analysis

Plagiarism
Plagiarism is a particular form of cheating. Plagiarism must be avoided at all costs and students who break the rules,
however innocently, may be penalised. It is your responsibility to ensure that you understand correct referencing
practices. As a university level student, you are expected to use appropriate references throughout and keep
carefully detailed notes of all your sources of materials for material you have used in your work, including any
material downloaded from the Internet. Please consult the relevant unit lecturer or your course tutor if you need any
further advice.

Student Declaration
Student declaration
I certify that the assignment submission is entirely my own work and I fully understand the consequences of
plagiarism. I understand that making a false declaration is a form of malpractice.

Student signature: Date: 10th Sep 2020

Muhammed Rashad Global business environment 19/9/20 7

 Higher Nationals - Summative Assignment Feedback Form

Student Name/ID MUHAMMED RASHAD.A

Unit Title Global Business Environment

Assignment Number 1&2 Assessor Jabir.M

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LO1 Analyze the key factors which drive globalization

Globalization is a process of doing business worldwide, so strategic decisions are made based
on global profitability of the firm rather than just domestic considerations. A global strategy seeks
to meet the needs of customers worldwide, with the highest value at the lowest cost. This may
mean locating production in countries with the lowest labor costs or abundant natural resources,
locating research and complex engineering centers where skilled scientists and engineers can be
found, and locating marketing activities close to the markets to be served.

George Yip provides a framework for analyzing ‘drivers of globalization’. Yip’s globalization
framework sees international strategy potential as determined by market drivers, cost drivers,
government drivers and competitive drivers.

Market drivers. - Critical facilitator of globalization is standardization of market

characteristics. There are three components underlying this driver. First, the presence of similar
customer needs and tastes: for example, the fact that in most societies consumers have similar
needs for easy credit has promoted the worldwide spread of a handful of credit card companies
such as Visa. Second is the presence of global customers: for example, car component companies
have become more international as their customers, such as Toyota or Ford, have internationalized,
and required standardized components for all their factories around the world. Finally,
transferable marketing promotes market globalization: brands such as Coca-Cola are still
successfully marketed in very similar ways across the world.

Cost drivers. Costs can be reduced by operating globally. Again, there are three main
elements to cost drivers. First, increasing volume beyond what a national market might support
can give scale economies, both on the production side and in purchasing of supplies. Companies
from smaller countries such as the Netherlands, Switzerland and Taiwan tend therefore to become
proportionately much more international than companies from the USA, which have a vast market
at home. Scale economies are particularly important in industries with high product development
costs, as in the aircraft industry, where initial costs need to be spread over the large volumes of
international markets. Second, internationalization is promoted where it is possible to take
advantage of variations in country specific differences. Thus it makes sense to locate the

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manufacture of clothing in Africa or Bangladesh where labor is still considerably cheaper, but to
keep design activities in cities such as New York, Paris, Milan or London, where fashion expertise
is concentrated. The third element is favorable logistics, or the costs of moving products or
services across borders relative to their final value. From this point of view, microchips are easy
to source internationally, while bulky materials such as assembled furniture are harder.

Government drivers. There are three main factors here that facilitate globalization.
First, reduction of barriers to trade and investment has accelerated globalization. During the last
couple of decades national governments have reduced restrictions on both flow of goods and
capital. The World Trade Organization has been instrumental in reducing trade barriers globally.
Similarly, the emergence of regional economic integration partnerships like the European Union,
the North American Free Trade Agreement and the Association of Southeast Asian Nations
Economic Community has promoted this development. No government, however, allows complete
economic openness and it typically varies widely from industry to industry, with agriculture and
high-tech industries related to defense likely to be particularly sensitive. The liberalization and
adoption of free markets in many countries around the globe have also encouraged international
trade and investments. This of course includes the collapse of the Soviet Union and liberalization
of Eastern Europe, China’s free market reforms and market-based reforms in numerous Asian and
South American economies. A third important government factor is technology standardization.
Compatible technical standards make it easier for companies to access different markets as they
can enter many markets with the same product or service without adapting to local idiosyncratic
standards.

Competitive drivers. These relate specifically to globalization as an integrated worldwide

strategy rather than simpler international strategies. These have two elements. First,
interdependence between country operations increases the pressure for global coordination. For
example, a business with a plant in Mexico serving both the US and the Japanese markets has to
coordinate carefully between the three locations: surging sales in one country, or a collapse in
another, will have significant knock-on effects on the other countries. The second element relates
directly to competitor strategy. The presence of globalized competitors increases the pressure to
adopt a global strategy in response because competitors may use one country’s profits to cross-
subsidies their operations in another. A company with a loosely coordinated international strategy

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is vulnerable to globalized competitors, because it is unable to support country subsidiaries under
attack from targeted, subsidized competition. The danger is of piecemeal withdrawal from
countries under attack, and the gradual undermining of any overall economies of scale that the
international player may have started with.

(Exploring strategy - K. Scholes, 2014)

Technology plays an important role in expediting the process of globalization. It is

conceived as a major facilitator and a driving force in the globalization processes. Technological
improvement has allowed companies to rapidly globalize their products. Multinational food chains
are able to reproduce and standardized their products across globe through fine connectivity
coordinated by technology. The development of containerized ships and air freight is considered
to be a key technological advancement in trade and commerce. Similarly, the introduction of
universal bar code has increased the movement and flow of goods worldwide. The creation of
personal computers and internet created electronic business (E-Business) and electronic commerce
(E-Commerce), which are used as a justification of recent techno-globalism. Financial sector is
also benefitted from technology through electronic banking. Electronic transfer of funds is
considered to be the first operating form of global electronic financial system. The modern era of
globalization is now experiencing ‘internet economies’ due to advancement in technology. Internet
growth is a key factor for developing interpersonal relationship across the globe. It is one of the
necessary components for social globalization, and without the invention of internet it would be
incomplete.

(Driving Factors of Globalization: An Empirical Analysis of the Developed and Developing

Countries - Business & Economic Review: Vol. 10, No.1 2018 pp. 133-158 - Ayesha Naz , Eatzaz
Ahmad.)

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The idea – globalization -has been under fire recently, blamed for everything from job loss to
income inequality to immigration -- a backlash that has flared up before (think Brexit or other
previous nationalist-type movements) but is now raging with the coronavirus and the fears that
come with seeing supply chains seize up, public events canceled, and governments move to close
borders and restrict travel.

Using digital technology has helped firms create global trading networks, new ways to work and
play, and more data than we know what to do with. Digital technology also brings us together in
new ways (think mobile apps, videoconferencing, and rich media), allows us to get insights never
before possible (think the internet of things, visualization, and AI-powered predictive analytics),
and is enabling massive disruption across the demand and supply chains of multiple industries
(think of the rise of platforms like Uber or global online marketplaces such as Amazon or Alibaba).
This all, of course, provides broad benefits to many but often at the cost of others, like the
steelworkers who lose their jobs to a cheaper competitor overseas. So digital is a contributor, but
not the only cause, of globalization. Digital can reduce friction in global trade by scaling online
B2B commerce or even transforming shipping with blockchain. But it also needs oversight and a
solid strategy (policy) to roll out effectively -- just like globalization.

Digital platforms that aren't exactly transparent in how they operate and don't always serve all
participants equally (do you really think Facebook's first priority is users -- or advertisers?), even
though digital platforms do indeed make it much easier to reach and engage with colleagues or
customers or trading partners. This duality has always been the nature of technology. It just
becomes more visible in election cycles or when there is a data breach or a global crisis like the
coronavirus. Yet as we adapt our routines, and ponder what is next, it's clear that digital
technology can be part of the solution in obvious ways, such as allowing us to work virtually
thanks to tools like Microsoft Teams or Zoom, and behind the scenes, by enabling new ways of
testing patients, analyzing and sharing data, and even helping to source needed materials or
information.

But global efforts require planful collaboration and shared goals, just like large-scale enterprise
tech initiatives. They also need clear communication driven by accurate, actionable data. Once

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officials in China shared the genetic code of the coronavirus, scientists around the globe could start
working on a vaccine and treatment plans. That's the power of globalization at work.

digital channels like marketplaces continue to open up new global markets for many sellers and
provide more options for buyers, in a time of crisis, they also provide alternatives if your local
shop is closed or out of stock. For businesses looking to find second sources for direct materials,
emergency supplies, or even specialty skills, the odds are there is a seller in one of the hundreds
of industry-specific marketplaces we track -- many of which are based in emerging markets.

(zdnet.com,2020)

We are witnessing the so-called Fourth Industrial Revolution, forged by new advanced
technologies, wherein the digital world and the physical-biological world combine to create
innovations that advance with a speed and on a scale with no comparison in the history of
humanity. This metamorphosis is radically changing the way in which individuals, companies, and
institutions relate to each other by rapidly moving towards a new phase of global cooperation:
Globalization 4.0.

Artificial Intelligence, Internet of Things (IoT), Block chain, and Robotic Process Automation.
Are the few examples of latest digital technologies? These new digital technologies do not just
contribute to the efficiency of the management process, but also create new business models that
were previously unthinkable. Industry 4.0, in fact, represents the very basis of a revolutionary
model of production and business management.

Artificial Intelligence: it is software that is programmed not to perform a specific and determined
action, but instead to learn how to react to an occurring event through an experiential process.
After coding and before it can work, this software needs to be trained; subsequently it will be able
to respond to new requests through simple cognitive procedures. we do not need to program the
software to recognize all invoice models, but instead teach them how an invoice is made.
Subsequently, the software will be able to recognize all types of invoices, regardless of the used
model.

Internet of Things: The Internet of Things (IoT) refers to objects that connect to the internet in
order to interact with other objects or with people. By objects, we mean complex objects, such as

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vehicles, domestic appliances, wearables (objects that are worn, such as watches, etc.),
smartphones, medical devices, and more.In concrete terms, the IoT adds the possibility of running
software and connecting to the Internet to these commonly used objects, allowing the exchange of
data and the consequent specific action / reaction.

Blockchain: . Blockchain is the technology that allows Bitcoin to work, but it is not born just for
this purpose. It is an ingenious system of concatenation (in otherwords, a chain) of information in
consecutive blocks (blocks). It is no longer possible to modify a datum without invalidating all of
the data subsequent to the modified one. This is the so-called immutability of information. This
property is of considerable interest in all types of transactions, both commercial and institutional.
Blockchain also allows the decentralization of processes by favoring disintermediation by central
bodies / organizations. It will play a very important role in the development of globalization 4.0.

Robotic Process Automation or RPA: RPA was born as a technology that mimics human-
machine interaction for the execution of repetitive tasks. Today it is evolving, with the acquisition
of cognitive abilities that allow the software to solve a decision-making process, even in presence
of unexpected events. This is possible thanks to the convergence of Artificial Intelligence with this
technology, which modifies the execution of problem solving from deterministic to probabilistic.

( dbi.srl. 2020)

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LO2 Determine the strategic complexities associated with operating in a global
environment

Mahindra & Mahindra

Mahindra & Mahindra Ltd., is a mobility products and farm solutions provider, is the
flagship Company of the Mahindra Group. Since assembling their first vehicle in 1947, they have
grown rapidly. Today, Mahindra offer a wide range of products and solutions ranging from SUVs
to electric vehicles, pickups, commercial vehicles, tractors, two-wheelers and construction
equipment. Mahindra commenced their exports in the 1960s, and today, their vehicles and tractors
can be found in all six habitable continents of the world. The Mahindra Group's operations are in
the key industries that form the foundation of every modern economy. Now they have presence in
11 sectors along with 22 industries and 150+ companies.

According to the farm equipment division head Rajesh Jejurikar words, while the company
is bullish on India, for growth, it is looking global, where the market for tractors and other farm
equipment is worth more than $150 billion a year. At home, the tractor market is just $6 billion,
while that for other agriculture equipment is even smaller. Mahindra was already the global No. 1
in terms of tractor sales, yet the company was addressing just the home and a few overseas markets.
As much as 95% of the division’s revenue came from tractor sales in India. That was a risk.
Mahindra had to look at ways of de risking the operation. Going global and expanding further into
farm mechanization from just tractors were among the options.

Mr,Jejurikar and the strategy team OF Mahindra put together a plan to target a piece of
the $150 billion global opportunity, more than $90 billion of that in the non-tractor farm equipment

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space. It predicts the non-tractor market will grow to $179.3 billion by 2023. They wanted to build
Mahindra as a global farm equipment brand. Taking a piggyback ride was one of the ways to
achieve that. Since 2014, Mahindra picked up significant stakes in three different companies —
Mitsubishi Agri Machinery, Sampo Rosenlew and Hisarlas— in Asia and Europe. It has also
scanned more than a dozen companies with which it could tie-up to gain technology and expand
market coverage. That was a new beginning and the work is still ongoing. (economictimes.com, ).
These are small deals, but the value they offer is big in terms of getting into new segments,
technology and geographical reach. In each of these, Mahindra has a strong board position
according to Jejurikar, this is a great way for Mahindra to build the brand globally. Mahindra
already has tractor manufacturing businesses in China, Japan and the US, and is planning to
entering markets like Brazil. Before taking a final decision we have to critically analyze the Brazils
business environment and how the decision will work based on the culture and other social factors.
After that need to plan a suitable strategy for entering in to Brazil.

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 Considering our plan to move to Brazil, it’s highly crucial to study the business
environment of Brazil. It will help us to know what are the challenges and threats we will face
while we are entering to Brazil. Also it will help us to find the opportunities for us. So it help us
to take better strategies for implanting our business in to Brazil. First of all the external
environment analysis need to conduct. So I choosing PESTEL analysis for this. It is a tool for
studying the external environment. So PESTEL give us a clear picture of how the political,
economic, social, technological, environmental, and legal factors will affect our plan which taking
Mhindra to Brazil.

Considering the political factors, the recent visit of Brazilian President as chief guest to
the republic day and also signing of bilateral trade agreements under the new framework of
economic and social partnerships promise a step forward in bilateral relations between the two
countries India and Brazil. Share close and multifaceted relationship at bilateral level as well as in
plurilateral fora such as BRICS, BASIC, G-20, G-4, IBSA, International Solar Alliance, Biofuture
Platform and in multilateral bodies such as the UN, WTO, UNESCO and WIPO also indicating
good political relation between India and Brazil. The two sides inked an investment cooperation
and facilitation treaty providing for a framework to increase trade and investment in high growth
areas. The two leaders have welcomed the signing of a social security agreement to facilitate
movement of professionals and business persons between India and Brazil. So it’s a big
opportunity to us considering the political relationship between India and Brazil. The mentioned
policies those signed recently also more likely to give us the security to our business in Brazil.
(manifestias.com,2020)

Political risk is again emerging as a major source of market instability in Brazil, Brazil's status as
the world's No. 2 COVID-19 hot spot, Bolsonaro's mishandling of the pandemic, his battles with
the Supreme Court and Congress, and cabinet resignations have thrust Brasilia firmly into
investors' line of vision. so the political risk as of now in Brazil is a considerable threat to our plan.
Because its decrease the government stability. But the government now trying to improve their
image with some new initiatives as of now. Also it may be change to positive if things are gone
well especially if a vaccine for covid 19 find. (nytimes.com, 2020)

Apex-Brasil also plays a leading role in attracting foreign direct investment (FDI) to Brazil,
by working to identify business opportunities, promoting strategic events and lending support to

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foreign investors willing to allocate resources in Brazil. All services provided to investors are free
of charge. So this type of organizations give us more opportunities to take step in to Brazil.

Bolsonaro has generally pursued a free-market agenda and has sought approval from Congress to
simplify the tax code and reform Brazil’s unsustainably costly pension system. So the free market
agenda and simplifying tax code are very positive thing considering our move. It help us to avoid
more tax burden wile operating in Brazil.

Government policies have aimed for agriculture to have fleet modernization programs that require
a national content of 30%, an accreditation index of 50% and the remaining 20% with qualitative
items (i.e. the technological content of the product, innovation effort, level of exports and technical
qualification of the employees and added value). The accreditation system inhibits the import of
ready-made products but does not limit the import of parts and components, which can account for
up to 70% of the total cost of the product. Moreover, this policy allows high-tech components,
pieces and parts of the world’s major players to be imported but requires that part of the
manufacturing and assembly be done in Brazil. The incentive programs for mechanization rely on
subsidies from the National Treasury, and the purpose of this government policy is to maintain the
competitive characters of the national industry by discouraging the import of ready-made products.
The import rate of agricultural machinery is 14%; however, unique products without Brazilian
counterparts may require an aliquot of 2% to the government, a mechanism called extra tariff in
Brazil. In 2017, the total disbursement of government incentive programs for agricultural
machinery totaled R$ 12.8 billion (equivalent to approximately US$ 4 billion); for 2018, a growth
of 15% over 2017 is expected. The import of agricultural machinery is very small due to the public
policies described above and the variety of products offered by the industry. In the government
program for small farmers called PRONAF, there are 3,428 products registered in the category of
planting, crop treating and harvesting, and imports are restricted to machineries that have no
significant sales volume or, as a rule, have very specific features that are not offered by the
industry. The sale of agricultural machinery in Brazil is strongly influenced by the prices of
international commodities such as soybean, maize, citrus and coffee.

One important reason for Brazil’s constant need for investments is the fact that the country
currently invests about 2 per cent of its GDP in infrastructure. However, an investment of at least
3 per cent of GDP would be necessary just to avoid the depreciation of the existing infrastructure.

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 Considering the legal factors, Brazil’s robust investment protection legislation, enforced
by an independent judiciary and a fair regulatory environment, which provides security for
investors. (Staff et al., 2020). Property rights are generally enforced, although the system for
mortgage registration is uneven. The judicial system is generally independent but burdened by a
huge backlog of cases. Elected in part because of public outrage at corruption scandals, the
Bolsonaro government sent an anticrime package to Congress in February 2019 to consolidate
gains in the fight against rampant corruption and take on organized crime. Starting a business,
getting electricity, and obtaining credit have become easier, and Brazil scored slightly above the
regional average on the World Bank’s 2019 Ease of Doing Business survey. Rigid and outmoded
labor regulations undermine employment growth, but President Bolsonaro has pledged to reform
the labor code. The new government has also pledged to cut subsidies

Considering the economic factors of Brazil, Brazil’s economic freedom score is 53.7, making
its economy the 144th freest in the 2020 Index. Its overall score has increased by 1.8 points, led
by dramatic increases in scores for government integrity and investment freedom. Brazil is ranked
25th among 32 countries in the Americas region, and its overall score remains well below the
regional and world averages.

Brazil’s score this year marks an encouraging turnaround after 15 years of steadily declining Index
scores. It means that Brazilians can begin to hope cautiously that their economy will continue on
an upward trajectory and escape eventually from the mostly unfree category. Brazil’s economy
continues to recover from the deep 2015–2016 recession and achieved GDP growth of slightly
more than 1 percent in 2018.m (heritage.org,2020)

Corporate tax rate is high compared to other countries with 34%, considering G20 Brazil has
the highest corporate tax. Unemployment rate also high with 13.3 % Brazil is the 106 least corrupt
nation out of 180 countries. Their public sector corruption point is 35 out of 100 which means
highly corrupted public sector. Agribusiness is one of the main activities in Brazil and contributes
significantly to the Brazilian economy. This fact led to even greater investments and developments
in the market of agricultural machinery and implements in the country.The agricultural machinery
industry of Brazil is dominated mainly by local machinery manufacturers, and Brazil is the sixth
largest exporter of machinery units. The Brazilian agricultural machinery market is expected to
grow at a compound annual growth rate, CAGR, of 6.68% in 2018-2023.

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 Considering the social factors, The 5.3 million rural properties cover an area of 350 million
hectares and house a population of 207.6 million inhabitants, with almost 85% of the Brazilian
population living in cities (IBGE, 2017). With a population of more than 180 million and covering
almost half of South America in land mass, Brazil is the world’s fifth largest country in terms of
both area and population. Brazil also currently has a high urbanization rate, with around 80 percent
of Brazilians living in urban areas. The social factors like high food demand, land availability,
agronomic technology, population change, excessive urbanization level and lower labor resource
availability are indicating a very suitable social environment for investment in agribusiness. The
social factors of Brazil is highly beneficial to us as part of our plan to operating in Brazil.

Considering the technological factors, According to the Brazilian Automotive Industry

Association (ANFAVEA, 2018), the machinery industry in Brazil today is prepared to support a
highlevel mechanization process and to decrease the number of tractors/seed planters/combines
and other types of equipment per hectare. Extensive and highly mechanized crop systems, such as
soybean and corn, have been established to attend to the farm chronogram at different levels of
technology. In addition to a large machinery production capacity, the Brazilian industry has also
invested in advanced technology, mainly in tractors and combines, to save time and fuel, lower the
level of fatigue and reduce cost. Currently, agriculture 4.0 (Adam, 2016) is being presented to
Brazilian farmers and involves the integration of digital technology, by which farm machines can
communicate with each other and related farm management systems.

With a population of more than 180 million and covering almost half of South America in land
mass, Brazil is the world’s fifth largest country in terms of both area and population. Brazil also
currently has a high urbanization rate, with around 80 percent of Brazilians living in urban areas
that has caused significant social and environmental issues to arise both in and around these cities.

Brazil’s rainforest areas, which are the country’s crown jewel, has also unfortunately experience
extensive deforestation of these regions over the last several decades as a result of the expanding
agricultural industry of this country. Soy and cocoa are two of Brazil’s biggest cash crops,
therefore the proliferation of farmlands to accommodate the demands of these products has wiped
out large swaths of rain forest. According to the World Wildlife Fund (WWF), 90% the Atlantic

Muhammed Rashad Global business environment 19/9/20 36

Forest ecosystem in southern Brazil has been wiped out due to the cocoa boom of the 1970s.
Various political factors have been found to contribute to this rise in deforestation, such as the
election of Michel Temer in Brazil, who has cut funding for environmental monitoring and
enforcement. In addition to the increase in agricultural demands by foreign countries, particularly
the U.S., the ongoing dry conditions of the Amazon increase the risk of forest fires in this area that
subsequently results in land degradation and deforestation.

Waste disposal, particularly in urban centers, is another major environmental problem in

Brazil that has caused major protests to arise in 2013. During this time, a study conducted by a
Brazilian sanitation trade organization found that Rio de Janeiro generates half a billion tons of
garbage each year, which is equivalent to the same amount of waste produced in Shanghai, China;
a city that is also facing a waste disposal crisis. A recent order by Brazil’s Supreme Court in July
of 2018 that prohibited the construction of landfills in protected areas, since approximately 80%
of Brazil’s current landfills are located in environmentally protected areas 5. The decision is
expected to not only apply to future businesses, but also current ones that will be forced to stop
their operations and restructure their waste disposal procedures.

A clean future for Brazil will largely depend on the ability of the government to manage and
properly shape its clean technology policies. The country is said to have a labyrinth of regulations
that are hostile to innovation and foreign investment; however, visionary companies and the
perseverance of the public appear to make this future of Brazil a promising reality. (Brett Smith,
2020)

under internal and global scrutiny, the Bolsonaro administration in Brazil is facing strong pressure
to reconsider its controversial environmental agenda. Although deforestation was a problem long
before Jair Bolsonaro assumed power in January 2019, the future of the Amazon Rainforest is
clearly threatened under the current government.

Invest in research and technology for sustainable agricultural practices, particularly those
that use already-deforested land. Numerous studies have already proven that Brazil can meet
global food security demands without further destroying the Amazon Rainforest. Yet if farmers
are to respond to these increasing agricultural demands in a sustainable way, they must have greater
access to technology. One solution is investing in climate-smart agriculture: an integrative
approach to farming that considers sustainable agricultural productivity, resilience against

Muhammed Rashad Global business environment 19/9/20 37

climate change, and a reduction in greenhouse gas emissions. Climate-smart agricultural programs
were recently implemented in Brazil: the MAIS Program (Modulo Agroclimático Inteligente e
Sustentável), which supports family agricultural production in the Jacuípe Basin, has already
shown positive results. Additionally, data-enhanced remote sensing technologies properly
administer water, fertilizer, and pesticides to increase productivity.

Challenges of globalization

International Recruiting
tech leaders cited international recruiting as their most common challenge. Recruiting across
borders creates unknowns for HR teams. First, companies create a plan for how they will interview
and thoroughly vet candidates to make sure they are qualified when thousands of miles separate
them from headquarters. Next, companies need to know the market’s demands for salaries and
benefits to make competitive offers. To ensure successful hires, HR teams must factor in
challenges like time zones, cultural differences, and language barriers to find a good fit for the
company.

Managing Employee Immigration

tech leaders agreed it was one of their top challenges. Immigration laws change often, and in some
countries, it is extremely difficult to secure visas for employees that are foreign nationals. The
U.S., for example, is getting stricter with granting H-1B visas, and Brexit makes the future of
immigration to the UK uncertain.

Incurring Tariffs and Export Fees

For companies looking to sell products abroad, getting those items overseas can be expensive,
depending on the market.

Payroll and Compliance Challenges

Another common global expansion obstacle is managing overseas payroll and maintaining
compliance with changing employment and tax laws. This management task gets even more
difficult if you’re trying to manage operations in multiple markets.

Loss of Cultural Identity

The success of certain cultures throughout the world caused other countries to emulate them. But
when cultures begin to lose their distinctive features, we lose our global diversity.

Muhammed Rashad Global business environment 19/9/20 38

Foreign Worker Exploitation
Lower costs do benefit many consumers, but it also creates tough competition that leads some
companies to search for cheap labor sources. Some western companies ship their production
overseas to countries like China and Malaysia, where lax regulations make it easier to exploit
workers.
Immigration Challenges and Local Job Loss
Many countries around the globe are tightening their immigration rules, and it is harder for
immigrants to find jobs in new countries. This rise in nationalism is mainly due to anger from the
perception that foreigners fill domestic jobs or at companies moving their operations abroad to
save money on labor costs.
Global Expansion Difficulties
For businesses that want to go global and discover the benefits of globalization, setting up a
compliant overseas presence is difficult. If companies take the traditional route of setting up an
entity, they need substantial upfront capital, sometimes up to $20,000, and costs of
$200,000 annually to maintain the business. Additionally, global businesses must keep up with
different and ever-changing labor laws in new countries. When expanding into new countries,
companies must be aware of how to navigate new legal systems. Otherwise, missteps lead to
impediments and severe financial and legal consequences. (Globalization Benefits and Challenges,
2020)

Muhammed Rashad Global business environment 19/9/20 39

 Considering the external environmental analysis and challenges of globalization, we
have to face many risks and challenges while operating in Brazil. We can find many
challenges from the PESTEL analysis or external analysis. Considering the PESTEL analysis, high
political risk or political instability of Brazil is a major challenge we have to face. Current
bolosnaro government facing a lot of problem. , Bolsonaro's mishandling of the pandemic, his
battles with the Supreme Court and Congress, and cabinet resignations etc. This also making the
market instable. But the government now trying to improve their image with some new initiatives
as of now. Also it may be change to positive if things are gone well especially if a vaccine for
covid 19 find. So an opportunity also there. Bolsonaro has generally pursued a free-market agenda
and has sought approval from Congress to simplify the tax code and reform Brazil’s unsustainably
costly pension system. So the free market agenda and simplifying tax code are very positive thing
considering our move. It help us to avoid more tax burden while operating in Brazil. Bolsonaro’s
attitude towards businesses and investors is a good opportunity if the political risk decrees.

Next major risk or challenge based on PESTEL is government policies towards import and
export. Government policies have aimed for agriculture to have fleet modernization programs that
require a national content of 30%, an accreditation index of 50% and the remaining 20% with
qualitative items (i.e. the technological content of the product, innovation effort, level of exports
and technical qualification of the employees and added value). The accreditation system inhibits
the import of ready-made products but does not limit the import of parts and components, which
can account for up to 70% of the total cost of the product. Moreover, this policy allows high-tech
components, pieces and parts of the world’s major players to be imported but requires that part of
the manufacturing and assembly be done in Brazil. The purpose of this government policy is to
maintain the competitive characters of the national industry by discouraging the import of ready-
made products. The import rate of agricultural machinery is 14%; however, unique products
without Brazilian counterparts may require an aliquot of 2% to the government, a mechanism
called extra tariff in Brazil. The import of agricultural machinery is very small due to the public
policies described above and the variety of products offered by the industry. In the government
program for small farmers called PRONAF, there are 3,428 products registered in the category of
planting, crop treating and harvesting, and imports are restricted to machineries that have no
significant sales volume or, as a rule, have very specific features that are not offered by the
industry. So exporting our products to Brazil is not work. We have to build our own manufacturing

Muhammed Rashad Global business environment 19/9/20 40

facilities in Brazil. Acquiring or partnering with a similar Brazilian brand is a good solution as far
as this concern. So we can also get all the advantages of the national policies of Brazil towards the
agricultural and equipment industry. In 2017, the total disbursement of government incentive
programs for agricultural machinery totaled R$ 12.8 billion (equivalent to approximately US$ 4
billion). Also it’s a great opportunity considering Mahindra’s overall strategy. Because it helps to
build new farm machinery portfolio for global markets and get modern farm mechanization
technologies into India. Brazilian market is much technologized with having great products and
technologies.

Next major challenge we have to face is environmental issues. Brazil’s rainforest areas, which
are the country’s crown jewel, has also unfortunately experience extensive deforestation of these
regions over the last several decades as a result of the expanding agricultural industry of this
country. Waste disposal, particularly in urban centers, is another major environmental problem in
Brazil that has caused major protests to arise in 2013. During this time, a study conducted by a
Brazilian sanitation trade organization found that Rio de Janeiro generates half a billion tons of
garbage each year. A recent order by Brazil’s Supreme Court in July of 2018 that prohibited the
construction of landfills in protected areas, since approximately 80% of Brazil’s current landfills
are located in environmentally protected areas. The decision is expected to not only apply to future
businesses, but also current ones that will be forced to stop their operations and restructure their
waste disposal procedures.

Considering we are working in agricultural industry, we will also responsible for the
deforestation. Because it’s further increase the momentum of agriculture expansion. As of now
brazil is facing lot of voices and threats from all over the world. Because of the deforestation and
forest fires in amazon forests. So MNC’s and other major companies working in this industry also
facing challenges by this issue, they are facing pressure from all over the world and environmental
organizations. We are also will face this challenge. But we can overcome with this challenge
through Invest in research and technology for sustainable agricultural practices, particularly those
that use already-deforested land. Numerous studies have already proven that Brazil can meet
global food security demands without further destroying the Amazon Rainforest. Yet if farmers
are to respond to these increasing agricultural demands in a sustainable way, they must have greater
access to technology. One solution is investing in climate-smart agriculture: an integrative

Muhammed Rashad Global business environment 19/9/20 41

approach to farming that considers sustainable agricultural productivity, resilience against climate
change, and a reduction in greenhouse gas emissions. Climate-smart agricultural programs were
recently implemented in Brazil: the MAIS Program (Modulo Agroclimático Inteligente e
Sustentável), which supports family agricultural production in the Jacuípe Basin, has already
shown positive results. Additionally, data-enhanced remote sensing technologies properly
administer water, fertilizer, and pesticides to increase productivity. So it’s a great opportunity for
us to invest in research and technology that promote and help sustainable agricultural practices in
Brazil. We can develop new portfolios and products with this technology’s. It will give us a great
advantage in the market in the context of sustainability. We can focus it as our CSR practice. We
can see this CSR practice as a key aspect of our strategy. Because CSR can help enhance our
company’s legitimacy.

Next major challenge we need to face is related to human resource management and HR
practices such as recruitment, employee emigration etc… while operating in brazil, most of our
employees must be local peoples, how we are going to handle this people is a big challenge we
have to face. The cultural difference between India and Brazil very crucial. Because we can’t
handle Brazilians with same method we using in India. Also the organizations structure and how
we structured and programing our internal environment must be suit to Brazilians culture. So first
of all we need to well understand our internal environment and then the cultural difference. So we
can setup an effective strategy and plan for Brazil. So it’s an opportunity for us to make our
business in Brazil effective and productive.

Muhammed Rashad Global business environment 19/9/20 42

LO3 Evaluate how operating in a global market influences an Organization’s
structure, culture and functions

7s model
This framework can be used to examine the likely effects of future changes in the
organization, or to align departments and processes during a merger or acquisition. The model
categorizes the seven elements as either "hard" or "soft": The three "hard" elements are strategy,
structures (such as organization charts and reporting lines), and systems (such as formal processes
and IT systems.) These are relatively easy to identify, and management can influence them
directly. The four "soft" elements, on the other hand, can be harder to describe, less tangible, and
more influenced by your company culture. But they're just as important as the hard elements if the
organization is going to be successful.

Strategy: this is your organization's plan for building and maintaining a competitive advantage
over its competitors.

Structure: this how your company is organized (that is, how departments and teams are structured,
including who reports to whom).

Systems: the daily activities and procedures that staff use to get the job done.

Shared values: these are the core values of the organization, as shown in its corporate culture and
general work ethic. They were called "superordinate goals" when the model was first developed.

Style: the style of leadership adopted.

Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of the organization's employees. (mindtools.com,2020)

Mahindra’s Face On the international front for the tractor business, Mahindra will focus
on strengthening its presence in existing markets of USA, South and Central America, Africa and
neighbouring markets in Asia. Your Company will continue its efforts to grow and draw synergies
from the global alliances and acquisitions. farm Sector's strategy is aligned to improve the state of

Muhammed Rashad Global business environment 19/9/20 43

farming by democratising technology, especially for marginal and small landholding farmers.
They continue to invest in modern tractor technologies and offer tractors with category first
features, thus creating new benchmarks in India. They also offer matched implements with crop
specific mechanization solutions to boost farm productivity. End to end farm mechanization is an
important focus area for Mahindra and continue to pursue in-house development as well as
alliances in this space. Some notable alliances are in the domain of horticulture sprayers and potato
planting technology. Several pilots for precision farming technologies are underway. Mahindra
continue to leverage their global acquisitions and partnerships to build farm machinery portfolio
for global markets and bring modern farm mechanization technologies into India.

Considering the strategy of Mahindra, the key elements of their strategy includes are
strengthening the product portfolio, strengthen research and development, refresh and update
existing products and technology capabilities. Technology focus areas are around gasoline engines,
emission, safety, connected vehicles and electric vehicles. In addition, Mahindra pursuing
expansion in overseas markets. Establishing on-ground presence and building the brand in key
focus markets remain the priorities of Mahindra

Mahindra’s . Farm Sector's strategy is aligned to improve the state of farming through
democratizing technology, especially for marginal and small land holding farmers. End to End
Farm Mechanization is an important focus area, and Mahindra is pursuing in-house development
as well as leveraging alliances in this space. Some notable alliances are in the space of horticulture
sprayers and potato planting technology. Several pilots for precision farming technologies are
underway.

Mahindra continues to leverage its global acquisitions and partnerships to build farm
machinery portfolio for global markets and get modern farm mechanization technologies into
India. These technologies are developed in the global centers of excellence. Mahindra Mitsubishi
Agriculture Machinery ("MMAM") in Japan, is the center of excellence for rice value chain.
Sampo Rosenlew in Finland, is helping address the global combine harvester business. Hisarlar
and Erkunt Traktor Sanayii A.S. (Erkunt) in Turkey are helping to strengthen the presence in the
strategic market of Turkey which is the 4th largest tractor market in the world by volume. Mahindra
& Mahindra's Farm Equipment Sector (FES) acquired 11.25% stake in Switzerland based
agritechnology firm, Gamaya, SA. This strategic association will enable Mahindra to develop and

Muhammed Rashad Global business environment 19/9/20 44

deploy next generation farming solutions that are easily accessible to the global farming
community. Mahindra intends to remain ahead of the competition by offering continuous product
upgrades, introducing superior technology and by offering a complete range of farming solutions
to boost farm productivity.

Considering the structure, Mahindra & Mahindra is a conglomerate. Conglomerates are large
parent companies that are made up of many smaller independent entities that may operate across
multiple industries. Many conglomerates are thus multinational and multi-industry corporations.
Each one of a conglomerate's subsidiary businesses runs independently of the other business
divisions; but, the subsidiaries' managers’ report to the senior management of the parent
company. (investopedia.com,2020). Considering Mahindra & Mahindra, currently Mahindra
present in 100 plus countries with 22 industries of 11 sectors. So Mahindra has lot of subsidiaries
such as Mahindra, Mahindra aerospace, M&M financial Limited, Mahindra systech, tech
Mahindra, Mahindra ugine steel etc. considering the farm equipment division, M&M Ltd,
Mahindra north America, Sampo Rosnlew, Mahindra Australia, Mahindra tractor swaraj, erkunt
traktor sanayii as, and mitsubishi Mahindra apicultural machinery co,ltd are the companies part of
the farm equipment division of Mahindra. (investopedia.com, 2020)

The main managerial body of Mahindra include the directors, Mr. Anand G. Mahindra –
Executive Chairman, Dr. Pawan Goenka – Managing Director and Chief Executive Officer. Dr.
Pawan Goenka was appointed as the Chief Executive Officer with effect from 1st April, 2020. Dr.
Anish Shah – Deputy Managing Director and Group Chief Financial Officer (appointed with effect
from 1st April, 2020). Mr. Rajesh Jejurikar, Executive Director (Auto and Farm Sectors)
(appointed with effect from 1st April, 2020). Mr. Narayan Shankar – Company Secretary. And
Mr. V S Parthasarathy ceased to be the Chief Financial Officer of the Company with effect from
1st April, 2020... Considering the farm equipment sector, we can say that the structure is divisional
structure. A divisional structure is formed when an organization is split up in to a number of self-
contained business unit, each of which operates as a separate profit center. This may occur on the
basis of product or market or a combination of the two. With each unit tending to operate along
functional or product lines, but with certain key functions (eg-finance) usually at company
headquarters. In the case of Mahindra farm equipment division, the main decisions are all came
from the 10 director’s executive body of Mahindra & Mahindra. Then there is a separate executive

Muhammed Rashad Global business environment 19/9/20 45

director for farm equipment sector, Mr. Rajesh Jejurikar. Also the main functions such as finance,
strategic direction etc. are controlled by separate directors. For example there is present Dr. Anish
Shah – Deputy Managing Director and Group Chief Financial Officer. So the farm equipment
sector is following a multi divisional structure.

Considering the system, Mahindra maintains adequate internal control systems

commensurate with the nature of its business and size and complexity of its operations. These are
regularly tested for their effectiveness by Statutory as well as Internal Auditors. Mahindra’s
Internal Financial Controls are deployed through Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"),
that addresses material risks in Mahindra’s operations and financial reporting objectives. The
framework is a combination of entity level controls (including Enterprise Risk Management, Legal
Compliance Framework, Internal Audit and Anti-Fraud Mechanisms such as Ethics Framework,
Code of Conduct, Whistle Blower Policy, etc.), process level controls, information technology
based controls, period end financial reporting and closing controls.

Further, the Internal Control Systems have been designed to provide reasonable assurance with
regard to recording and providing reliable financial and operational information. In the highly
networked IT environment of the Company, validation of IT Security receives focused attention
from IT specialists and Statutory Auditors. The Chief Internal Auditor reports directly to the
Chairman of the Board. The Internal Audit function develops an audit plan for the Company, which
covers, inter alia, corporate, core business operations, as well as support functions. The Audit
Committee reviews the annual internal audit plan. Significant audit observations are presented to
the Audit Committee, together with the status of the management actions and the progress of the
implementation of the recommendations.

The Audit Committee reviews the adequacy and effectiveness of the Company's internal control
environment and monitors the implementation of audit recommendations. During the year, the
Company has taken steps to review and document the adequacy and operating effectiveness of
internal controls. Nonetheless, Mahindra recognizes that any internal control framework, no matter
how well designed, has inherent limitations and accordingly, regular audits and review processes
ensure that such systems are reinforced on an ongoing basis. Mahindra’s Management has carried
out the evaluation of design and operative effectiveness of these controls and noted no significant

Muhammed Rashad Global business environment 19/9/20 46

deficiencies/material weaknesses that might impact financial statements as at the Balance Sheet
date.

Considering the soft elements such as style, staff and skill, the Group's Human
Resources Philosophy is guided by the three Rise Pillars of Accepting No Limits, Alternative
Thinking and Driving Positive Change, and the Group's aspiration of being among the top 50 most
admired global brands by 2021, by enabling people everywhere to Rise. key strategic initiative
that needs mentioning is integrating Employer Branding and Employee Experience initiatives with
the Employee Value Proposition so as to create a uniform One Mahindra experience for all
employees.

Mahindra’s Focus continued on the Talent Management, Leadership Development processes and
Performance Management System, which included: development centers, e learning, up skilling
programs, action learning projects, individual development planning, and leadership lifecycle
program.

Mahindra Research Valley ("MRV") functions as the crucible for innovation and technology for
Auto and Farm Divisions of the Company. The technical talent working on these technologies, is
crucial to sustain a competitive edge in the global and domestic market. To cater in-house
technical talent with a differentiated focus, a separate framework called Tech Ladder was
introduced. Tech Ladder is a unique way of differentiating the technical talent from the general
management in terms of performance management, talent management and capability building. It
puts a high focus on developing deep technical expertise. The first step of technical ladder was
achieved by creating unique competencies, which combined technical skills, leadership behaviors
and cultural nuances. These were deployed in performance management discussions and capability
building initiatives. Specific developmental goals were incorporated in individual's KRA to
facilitate capability building of niche technical skills through right exposure, and action learning
projects.

The Mahindra Leadership University ("MLU") is a strategic initiative to support the Group in its
journey of being one amongst the Top 50 most admired Global brands by 2021. MLU is a learning
and development initiative at Mahindra that caters exclusively to its employees and partners and
is not an accredited educational institution or university. The word 'University' is inclusive in

Muhammed Rashad Global business environment 19/9/20 47

nature and encompasses all learning under one umbrella brand, powered by the united LMS,
MLU's Digital Learning World. MLU converges upon building both leadership and domain
capabilities through its various academies, with each academy being headed by a Chairperson and
supported by business leaders and functional leaders from across the Group as academy members.
All learning content within Mahindra is hosted under respective Academies.

Another one is reflective conversation. Reflective Conversations ("RC") continues with the aim to
make Mahindra a Reflective Organization, thereby enabling the Company to grow towards the
Group's aspiration. To ensure cultural transformation and sustenance, the ecosystem for the
practice of Reflective Conversations is being strengthened with more focus on building a pool of
internal RC trainers, half-day refresher sessions on key RC skills, role-modelling by leaders, and
a coaching certification program titled 'Mahindra Certified Reflective Conversationalist'
("MCRC"). The MCRC program has been certified by the International Coach Federation ("ICF").
High potential executives have benefited from executive coaching extended to them by MCRC
participants.

The MCARES survey is administered to our employees, with a 90% response rate annually. After
survey, key insights are generated through statistical analysis of the data which enable action
planning at 3 levels – Sector/Business level, Function/ Department/Plant level, and work group
(team) level.

The Transformational Work Culture initiative that aims to create an engaged workforce with
an innovative, productive and a competitive shop-floor ecosystem, continues to grow in strength.
Some examples of the programs put in place include: rise for associates, industrial relations skills,
for frontline officers, cultural diagnostics projects, transformational work culture projects e-
compliance, e-portal for reward and recognition of associate’s code of conduct for associates. The
Transformational Work Culture Committee ("TWCC") leads the design and implementation of
these programs. In an endeavour to improve quality, reduce cost, ensure safety and improve
productivity, mahindra's shop floor associates generated on an average 18 ideas per person.
Mindset transformation training for cell members and union leaders titled "Nayi Soch - Naya
Dristikon", and various skill building programs aligned with digitisation at workplace.

Muhammed Rashad Global business environment 19/9/20 48

The sustained efforts towards building a transformational work culture resulted in zero production
loss in the FY2019-20 and helped create a collaborative, healthy and productive work
environment. The Mahindra Skill Excellence initiative with a holistic approach to enhance the skill
and capabilities of shop floor associates is receiving good participation across manufacturing
facilities. The cornerstones of the Company's employee relations approach are: Proactive and
employee-centric shop floor practices; A relentless focus on transparent communication of
business goals through monthly Plant Head communication; An effective concern resolution
mechanism; and The firm belief that employees are the most valuable assets of the Company

Considering shared values, Mahindra focused on their main 5 core values such as
professionalism, good corporate citizenship, and customer first, quality focus and the dignity of
the individual. Taking professionalism as their core value Mahindra always sought the best people
for the job and given them the freedom and the opportunity to grow. They are supporting
innovation and well-reasoned risk taking. But will demand performance. Mahindra’s goal is to be
among the top 50 most admired global brands by 2021. To achieve this ambitious target Mahindra
building their human capital through practices and policies that nurture talent, foster stronger
bonds and create future leaders across their businesses. Mahindra two-tier HR approach, one at the
Group level and the other at the Business level, enables them to align policies and undertake
bespoke employee engagement initiatives throughout the Company. Considering good corporate
citizenship, as in the past Mahindra will continue to seek long term success. Which is in alignment
with the needs of the countries they serve. Mahindra keep to do this without losing their ethical
business standards as part of this core value.

Next one is customer first approach. Mahindra believe that they exist and prosper only because of
the customer. So they will respond to the changing needs and expectations of their customers
speedily, courteously and effectively. Next one is qu ality focus. Quality is the key to delivering
value for money to mahindra customers. So they will make quality a driving value in their work,
in their products and in their interactions with others. Considering dignity of the individual, they
valuing individual dignity, uphold the right to express disagreement and respect the time and
efforts of others. And also mahindra promising that they will nurture fairness, trust and
transparency.

Muhammed Rashad Global business environment 19/9/20 49

Hofstead cultural dimensions

Considering Mahindra’s decision that going to Brazil, understanding the cultural difference
is very important. Current organizational culture and overall organizational behavior is dependent
on Indian culture. When we going to Brazil, the national culture of Brazil will affect our overall
business culture and structure. Continuing with current culture and management structure and style
will affect performance in Brazil because of the cultural difference. So we need to understand
Brazilian culture and how both cultures are different. So we can take right decisions in managing
business in Brazil and improve performance and quality of the business.

When we step in to a foreign culture. Things suddenly seems different. And we don’t want to
cause offense by using hofstedes cultural dimensions as a starting point, we can evaluate our
approach, our decisions, and our actions based on a general sense of how people in a particular
society might thing and react. Hofstede identified 5 dimensions that could distinguish one culture
from another.

1. Power Distance Index (PDI)

Power Distance Index refers to the degree of inequality that exists – and is accepted – between
people with and without power.A high PDI score indicates that a society accepts an unequal,
hierarchical distribution of power, and that people understand "their place" in the system. A low
PDI score means that power is shared and is widely dispersed, and that society members do not
accept situations where power is distributed unequally. According to the model, in a high PDI
country, such as Malaysia (100), team members will not initiate any action, and they like to be
guided and directed to complete a task. If a manager doesn't take charge, they may think that the
task isn't important.

2. Individualism versus Collectivism (IDV)

This refers to the strength of the ties that people have to others within their community. A high
IDV score indicates weak interpersonal connection among those who are not part of a core
"family." Here, people take less responsibility for others' actions and outcomes. In a collectivist
society, however, people are supposed to be loyal to the group to which they belong, and, in
exchange, the group will defend their interests. The group itself is normally larger, and people take
responsibility for one another's well-being. Central American countries Panama and Guatemala

Muhammed Rashad Global business environment 19/9/20 50

have very low IDV scores (11 and six, respectively). In these countries, as an example, a marketing
campaign that emphasizes benefits to the community would likely be understood and well
received, as long as the people addressed feel part of the same group.

3. Masculinity Versus Femininity (MAS)

This refers to the distribution of roles between men and women. In masculine societies, the roles
of men and women overlap less, and men are expected to behave assertively. Demonstrating your
success, and being strong and fast, are seen as positive characteristics. In feminine societies,
however, there is a great deal of overlap between male and female roles, and modesty is perceived
as a virtue. Greater importance is placed on good relationships with your direct supervisors, or
working with people who cooperate well with one another. japan has the highest MAS score of
95, whereas Sweden has the lowest measured value of five. Therefore, if you open an office in
Japan, you should recognize you are operating in a hierarchical, deferential and traditionally
patriarchal society. Long hours are the norm, and this, in turn, can make it harder for female team
members to gain advancement, due to family commitments. At the same time, Japan is a culture
where all children (male and female) learn the value of competition and winning as part of a team
from a young age. Therefore, female team members are just as likely to display these notionally
masculine traits as their male colleagues. By comparison, Sweden is a very feminine society,
according to Hofstede's model. Here, people focus on managing through discussion, consensus,
compromise, and negotiation.

4. Uncertainty Avoidance Index (UAI)

This dimension describes how well people can cope with anxiety.In societies that score highly for
Uncertainty Avoidance, people attempt to make life as predictable and controllable as possible. If
they find that they can't control their own lives, they may be tempted to stop trying. These people
may refer to "mañana," or put their fate "in the hands of God."People in low UAI-scoring countries
are more relaxed, open or inclusive. n Hofstede's model, Greece tops the UAI scale with 100, while
Singapore scores the lowest with eight. Therefore, during a meeting in Greece, you might be keen
to generate discussion, because you recognize that there's a cultural tendency for team members to
make the safest, most conservative decisions, despite any emotional outbursts. Your aim is to
encourage them to become more open to different ideas and approaches, but it may be helpful to
provide a relatively limited, structured set of options or solutions.

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5. Long- Versus Short-Term Orientation

This dimension was originally described as "Pragmatic Versus Normative (PRA)." It refers to the
time horizon people in a society display. Countries with a long-term orientation tend to be
pragmatic, modest, and more thrifty. In short-term oriented countries, people tend to place more
emphasis on principles, consistency and truth, and are typically religious and nationalistic. The
U.S. has a short-term orientation. This is reflected in the importance of short-term gains and quick
results (profit and loss statements are quarterly, for example). It is also reflected in the country's
strong sense of nationalism and social standards.

6. Indulgence versus Restraint (IVR)

Hofstede's sixth dimension, discovered and described together with Michael Minkov, is also
relatively new, and is therefore accompanied by less data.Countries with a high IVR score allow
or encourage relatively free gratification of people's own drives and emotions, such as enjoying
life and having fun. In a society with a low IVR score, there is more emphasis on suppressing
gratification and more regulation of people's conduct and behavior, and there are stricter social
norms. According to the model, Eastern European countries, including Russia, have a low IVR
score. Hofstede argues that these countries are characterized by a restrained culture, where there
is a tendency towards pessimism. People put little emphasis on leisure time and, as the title
suggests, people try to restrain themselves to a high degree.

Considering power distance, India scores high on this dimension, 77, indicating an
appreciation for hierarchy and a top-down structure in society and organizations. (Country
Comparison - Hofstede Insights, n.d.). In Indian context of management culture Real Power is
centralized even though it may not appear to be and managers count on the obedience of their team
members. Employees expect to be directed clearly as to their functions and what is expected of
them. Control is familiar, even a psychological security, and attitude towards managers are formal
even if one is on first name basis. Communication is top down and directive in its style and often
feedback which is negative is never offered up the ladder. Considering Brazil, with a score of 69,
. (Country Comparison - Hofstede Insights, n.d.). Brazil also reflects a society that believes

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hierarchy should be respected and inequalities amongst people are acceptable.so in case of power
distance Brazilian culture mostly similar to us. Both countries showing higher power distance. In
Brazilian companies there is one boss who takes complete responsibility. Status symbols of power
are very important in order to indicate social position and “communicate” the respect that could
be shown. So our current form of top down structure never will be a problem in Brazil. Even
though we need to consider that power distance of Brazil is little lower than us. So a hard
authoritative approach of management should be avoided. Considering individualism, India - with
a rather intermediate score of 48, is a society with both collectivistic and Individualist traits. the
collectivist side means that there is a high preference for belonging to a larger social framework
in which individuals are expected to act in accordance to the greater good of one’s defined in-
group. Considering Brazil culture, Brazil is more collectivistic with a score of 38. So it will not be
a big issue when we are going to Brazil from Indian contest. Even though taking more collectivistic
approach in management is right. Treating group wise than individualistic approach will be right.
So, individualism aspect will not be an issue while going to Brazil.

Considering masculinity, india scores 56 (Country Comparison - Hofstede Insights, n.d.)

on this dimension and is thus considered a Masculine society. India is actually very masculine in
terms of visual display of success and power. Masculine countries the focus is on success and
achievements, validated by material gains. Work is the center of one’s life and visible symbols of
success in the work place are very important. also there is a great overlap in male and female roles.
Most of the managerial positions are carried by men’s in Indian culture. Considering Brazil, Brazil
scores 49, (Country Comparison - Hofstede Insights, n.d.) a very intermediate score on this
dimension. Even though there is a feminine touch visible. Considering the intermediate score, the
fundamental issue here is what motivates people, wanting to be the best (Masculine) or liking what
you do (Feminine). So we have to sort out what exactly the people needs first. Or we have to recruit
people suites our management style. so the masculine factor also may not be a big problem while
we manage our business in brazil.

Next one is uncertainty avoidance, considering it, India scores 40 (Country Comparison
- Hofstede Insights, n.d.)on this dimension and thus has a medium low preference for avoiding
uncertainty. In India, there is acceptance of imperfection; nothing has to be perfect nor has to go
exactly as planned. India is traditionally a patient country where tolerance for the unexpected is

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high. But considering the Brazils context, with a score of 76 (Country Comparison - Hofstede
Insights, n.d.) Brazil scores high on UAI – and so do the majority of Latin American countries.
These societies show a strong need for rules and elaborate legal systems in order to structure life.so
when we operating in Brazil, we have to make clear structure in our organization. We need to give
proper information’s about tasks and goals without any hurdles. We need to set clearly defined
parameters. No clarity in tasks and goals will affect people’s performance in Brazil. So we can use
a rigid structure for managing.

Considering long term orientation, with an intermediate score of 51(Country

Comparison - Hofstede Insights, n.d.) in this dimension, a dominant preference in Indian culture
cannot be determined. Brazil also showing an intermediate score that 44(Country Comparison -
Hofstede Insights, n.d.). So considering the cultural comparison of India and Brazil, doesn’t need
a comparison based on long term orientation, because both countries are showing similar
characteristics in this dimension. So it will not be an issue while we going to Brazil. Next
dimension is indulgence. Considering it, India receives a low score of 26. Meaning that it is a
culture of Restraint. Societies with a low score in this dimension have a tendency to cynicism and
pessimism. Restrained societies do not put much emphasis on leisure time and control the
gratification of their desires. But considering Brazils score in this dimension, Brazil’s high score
of 59 marks it as an Indulgent society. In contrast to Indian societies People in societies classified
by a high score in Indulgence generally exhibit a willingness to realize their impulses and desires
with regard to enjoying life and having fun. They possess a positive attitude and have a tendency
towards optimism. In addition, they place a higher degree of importance on leisure time, act as
they please and spend money as they wish. So when we are going to Brazil we need take more
concern about the difference in indulgence of both countries. As indulgence society we need to
give more importance in freedom of speech in Brazil compered to our Indian organizational
culture. Also we need to encourage debate and dialogue in meetings or decision makings. And we
need to more prioritize feedback, coaching and mentoring. Most importantly we need to emphasize
flexible working and work life balance because of the higher importance on leisure time in
Brazilians compared to Indians.

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Sustainability and Ethics

Now day’s ethics and sustainability factors very important for organizations. We need to
follow ethics in our business and includes sustainable practices in our doing. Ethics pertains to
behaviors or actions that affect people and their welfare. For instance, a decision by managers to
knowingly sell a useful but dangerous product or to willingly bribe an official is an ethical decision.
In both cases, the decision has important consequences for humans. When we doing business in
international market the concept ethics enlarging to international ethics. International business
ethics refers to ethical problems faced by multinational managers as they do business with other
countries. International business ethics is different from domestic business ethics on a few fronts.
International ethics is more complex than domestic ethics because operations take place across
borders. Differences in culture and institutions mean that people may not always agree on what is
the right way of doing things.

Many MNCs are facing criticism for their practices. Some argue that multinationals exploit the
natural and human resources in the countries in which they operate. Companies such as Nike,
Reebok, and Gap have faced significant criticism because of their labor practices. Additionally,
because of their size and financial assets, multinationals have been criticized for using this power
to influence governments to get preferential treatment from the government. So MNCs are going
beyond their legal responsibilities and adopting corporate social responsibility programs.
Corporate social responsibility (CSR) is defined as the responsibility multinationals have to society
beyond making profits. That is, social responsibility means that a company must take into account
the welfare of other constituents (e.g. customers, suppliers) in addition to stockholders. Many
multinationals now see CSR as a key aspect of their strategy. Because CSR can help enhance a
company’s legitimacy.

Considering Mahindra’s plan that expanding business in to Brazil, they have also need to
consider this ethical and CSR practices. Most important global ethics issues multinational
managers face are labor rights, environmental pollution, and corruption/bribery. Mahindra &
Mahindra is a company that follows ethical practices and sustainable practices. Sustainability is
all pervasive at Mahindra. Over the years, it has percolated deep within the organization in a top-
down approach, encompassing both vision and execution, as well as measurement and disclosure.
As a result of Mahindra’s great sustainability practices M&M Ltd. received Bronze Class in DJSI's

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(Dow Jones Sustainability Index) Global Sustainability Yearbook 2020. There is a board comity
for corporate social responsibility in Mahindra. Which is set directions for promoting the CSR
agenda for M&M Ltd. and all Group Companies. Under this board there are CSR council and
sustainability council also presents. Building enduring businesses by rejunating the environment
and enabling stakeholders to rice is the core concept of mahindras sustainability frame work.
Considering people angle which is enabling stakeholders to Rise mahindra focusing on build a
greate place to work, foster inclusive development and make sustainability personal. Next one is
planet. Which is rejuvenating the environment. It is focusing on achieve carbon neutrality, become
water positive, ensure no waste to landfill and promote bio diversity. Considering profit dimension,
which is building an enduring business Mahindra focusing on grow green revenue, mitigate risk
including climate risk, make supply chain sustainable, embrace technology and innovation and
enhance brand equity. We need to follow this sustaibility approaches in brazil too.

Considering labor rights we need to proactive and take many steps to ensure that we do not
break labor rights laws. International Labor Rights Forum and the Fair Labor Association are both
examples of labor rights organizations that have defined labor standards and take care of enforcing
these standards. These associations have developed codes of conduct addressing issues such as no
child labor or no excessive overtime. These groups monitor plants and provide solutions to
alleviate problems and they also work with local communities to protect workers and their rights.
We should follow these organizations standards in our HR practices.

Next major issue we need to face is environmental issues. The use of natural resources like
land, water, air, forests, metals, minerals, energy & biodiversity is inevitable for organizations and
thus managing them prudently is not only a responsibility but also an obligation for all
organizations. Mahindra’s approach to utilizing natural capital is governed by the 3Cs –
conservation, continuous improvement and comprehensive disclosures. Their resource
management policy flows from a cohesive framework of well-structured processes and focused
interventions to rejuvenate the planet’s natural assets. So the interventions for facing natural issues
are reduction of green hous gases, conservation of energy, being water positive, reduction of waste
generated and promotion of biodivercity. We can use this practices in Brazil also. We need to
continuously working to reduce greenhouse gas emissions to zero and then ‘offsetting’ an
equivalent amount of any remaining emissions. For this we can use on- site solar power plant, set

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up Bio-CNG power plant and increase the adoption of wind power. In 2016, M&M became the
first Indian company to announce its internal carbon price of $10 per tonne of carbon emissions.
The move was in-line with business commitment to reduce its GHG emissions by 25% over the
next three years. At M&M, we have two- pronged approach to energy management. First,
maximizing the output from each watt of energy consumed and second, increasing alternative
energy in our total energy mix. In F17, Mahindra signed up ‘EP100’ campaign led by ‘The Climate
Group’, to double energy productivity by 2030. This is part of Mahindra’s contribution towards
achieving the climate goals agreed upon at COP21. This year, Mahindra installed 269 kWP Solar
Power Plant at a tractor ware-house, which will cater to 27% of their power requirement in Jaipur
plant. Mahindra can use this plan in brazil to. Considering being water positive, we can aim to
create more water than we are actually using for sustainable future through reduction, reuse, and
harvesting. We can implement our water management program – H2infinity in Brazil. It can make
our plant self-sufficient in water. Considering waste reduction we can focus on creating restorative,
zero- waste economic model in which resources are used to full capacity and natural systems are
regenerated. We can follow a zerowaste philosophy and manages waste at every stage - from
prevention to minimization, from reuse to recycling and from energy recovery and disposal.
Considering promoting bio diversity plan we can plant trees as much as we can.

One of the most critical global ethical issues facing multinationals today is corruption and
bribery. Considering Brazil, corruption represents a severe constraint to business in Brazil. Brazil
is currently being roiled by a number of large corruption cases. The clean company act is one of
the toughest anti-corruption laws in the world, but its enforcement is inconsistent. Under this act
bid rigging fraud in public procurement, direct and indirect act of bribery, and attempted bribery
of Brazilian public officials and of foreign public officials is illegal (ganintegrity.com,2020). So
businesses in Brazil need to follow this Brazilian company act. So we have to follow this rules for
keeping our ethics. Even though there is still corruptions are happening.

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 So, we are evaluated our internal environment by using 7s model. Which is a familiar
model and theory for analyzing internal environment of organizations. Even though it is impossible
to state that it is the best tool for internal analysis and strategic planning since it has got a lot of
limitations. The main limitation of the 7S model is its lack of specific drivers or measurement
categories. Although the seven core elements provide a high-level framing and the central notion
of shared values connects the soft with the hard elements well, it is difficult to identify the most
critical sub elements for each category or to aggregate them into a cohesive measurement.
Likewise, the connection with the external environment of the organization is completely missing
from the 7S framework. (MCKINSEY 7S MODEL, n.d.) Furthermore, this model ignores
elements affecting change from outside organization. In today’s complex business culture, external
factors are also important before taking strategic decision on change. And This model also lacks
empirical evidence to support its effectiveness especially for large scale business organizations.
Critics also question rigidity of the model as all elements are fixed and there is no room for
flexibility. (Tahir. U, 2019)

Similarly, the Hofstede’s Cultural Dimensions also have many criticisms. First, many people
argued that Hofstede’s model is too simplistic and that cultures cannot be reduced to a few
dimensions. It is impossible to understand culture of a nation correctly with such a simple method.
Understanding a country’s culture is indeed very difficult and takes long periods of training. And
the limitation about the data is that Hofstede’s data were from IBM managers. Life and dimensions
of an average person in a country may not be same as that of an IBM manager of that country for
sure. Hofstede’s model is also seen as static as it cannot detect how culture changes over time.
That is, the world is changing so fast and culture of countries are changing so rapidly. Hofstede’s
cultural dimensions may not necessarily be able to reflect such changes. And also, a great critique
for the model is that, the data for the model were collected in the 1970s and that the model is
literally outdated. (Praboteeah and B. Cullen, 2018)

So, taking a decision only based on this theories is not practical. That is, if Mahindra take
decisions according to the 7s framework and Hofstede’s cultural dimensions alone, there will be a
lot of differences from the expected cultural differences and effectiveness of the organization
system and strategy. Also the sustainability factors we have decided to practice may not be work
effectively. Most of them are what we are practiced in India. How it will work on brazil’s context

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is need more research. Therefore, a global business should take more actions and invest more
money to understand the cultural issues of the host country through many studies and check what
changes has to be made in the internal environment of the business to expand into that country.
Also, there should be proper analysis of the internal aspects of the company through many analyses
using different tools. There are many tools which a company has to consider to analyze the internal
and external environment of a company when going global. We can use the tools like SWOT
analysis, PESTEL analysis, Balanced scorecard, Porters Five Force analysis, Value chain analysis,
Resource Based View, Heptalysis analysis, Delta Model, VMOST analysis, CATWOE analysis,
ABCD analysis, etc. also we need more in depth research for deciding the final plan and decision.

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LO4 Evaluate the influence of globalization on organizational decision making
and strategy

After the evaluation of the internal environment and cultural difference, we need to evaluate
how this things will work on the global context. Means we need to evaluate that the current
situation of our company is enough or suitable for the Brazilian market. Considering what we have
analyzed from doing 7s model, the strategy we are following is very suitable for our entry to Brazil.
Because, the overall strategic aim of Mahindra includes continues to leverage its global
acquisitions and partnerships to build farm machinery portfolio for global markets and get modern
farm mechanization technologies into India. The advancement in Brazil’s farm equipment
technological market is very beneficial to us. We can acquire the technological knowledge from
Brazil and use it to develop a better product portfolio for Indian market and international market
including Brazil. Another part of their strategy is strengthen research and development. So we
have option to start a R&D facility in Brazil. So considering the strategic point of view it’s a good
decision that to invest in Brazil. We don’t need to follow a different strategy other than we are
usually following. Because the current strategy is very effective in Brazil’s context.

Next major thing we have to look is the system. Mahindra maintains adequate internal
control systems commensurate with the nature of its business and size and complexity of its
operations. These are regularly tested for their effectiveness by Statutory as well as Internal
Auditors. So it’s also need to follow on Brazil. Also we can use the current financial control system
that is Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Tread way Commission ("COSO"), so it can addresses material risks in
Mahindra’s operations in Brazil and financial reporting objectives. The framework is a
combination of entity level controls (including Enterprise Risk Management, Legal Compliance
Framework, Internal Audit and Anti-Fraud Mechanisms such as Ethics Framework, Code of
Conduct, Whistle Blower Policy, etc.), process level controls, information technology based
controls, period end financial reporting and closing controls. So it will definitely help to improve
efficiency of our performance in Brazil.

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 Considering Mahindra is a conglomerate, the decision of adding new division in to the
conglomerate need to be evaluated. Because the plan is start new farm equipment division in
Brazil. History has shown that conglomerates can become so vastly diversified and complicated
that they grow too difficult to manage efficiently. Layers of management add to the overhead of
their businesses and depending on how wide-ranging a conglomerate's interests are, management’s
attention can be drawn thin. (investopedia.com, 2020). So Mahindra need to make sure that the
efficiency of the control wouldn’t loss. a centralized reporting should be carried. The decision
makings should be well carried from the main director body and divisional directors. Considering
the farm equipment sector only, the structure is more like multidivisional form. Also Anandh
Mahindra saying that Mahindra & Mahindra is not a conventional conglomerate and Mahindra is
transparently more than the sum of its parts.

Considering the soft factors from 7S. The current transformational leadership style should be a
good addition in Brazil. Also our focus should continue on the Talent Management, Leadership
Development processes and Performance Management System, which includes: development
centers, e learning, up skilling programs, action learning projects, individual development
planning, and leadership lifecycle program. Which are the part of current transformational culture
and style of Mahindra. So it will be highly beneficial in creating effective human asset and which
also leads to overall effectiveness and performance in Brazil farm equipment division. Also we
can include the practices such as Mahindra Research Valley ("MRV"), The Mahindra Leadership
University ("MLU") and Reflective Conversations ("RC") etc… so this things will help us to
follow and keep our core value at Brazil.

Considering the cultural comparison with the use of hofstead cultural dimension, it’s showing
that the only major difference in between both Brazil and India is in uncertainty avoidance context.
Another dimensions of hofstead are almost similar between India and Brazil. So we decided to
give more proper information’s about tasks and goals without any hurdles. And decide to set
clearly defined parameters. With clarity in tasks and goals and also think to set a rigid structure for
managing. Because these societies especially Brazilians show a strong need for rules and elaborate
legal systems in order to structure life. Another dimensions of hofstead are almost similar between
India and Brazil. So we expecting that the practices we are going to implement in Brazil is same

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as Indian considering the other culture dimensions. But, it’s clear that the similarity in this hofstead
index doesn’t mean the cultures are mostly same. It’s also showing the weakness and inability of
the hofstead culture dimensions. Because there is high difference in between Indian and Brazilian
societies. So making decisions only based on the hofstead cultural dimension is very dentures. We
need to do a proper research and study on the cultural difference behavior of the Brazilians. In
conclusion, even though the decisions are based on proper theories and concepts, it requires proper
evaluation from the beginning of the business in the Brazil and wherever it seems to be not
effective in the business, it should be changed accordingly. Mahindra could only get a clear picture
of the Brazil culture and strengths and weaknesses of the organizational structure, system and
operations when it is entered into the market.

Considering the ethical decisions we have made, we have decided to take CSR as a key aspect
of our strategy. This decision definably help us to enhance our brand legitimacy in Brazil. Also
will give us a big competitive advantage in the market. Because considering the sustainable
practices based on environmental context we have decided to practice is high beneficial, because
Brazil’s rainforest areas, which are the country’s crown jewel, has also unfortunately experience
extensive deforestation of these regions over the last several decades as a result of the expanding
agricultural industry of this country. So the decisions about sustainable practices is very beneficial
and appropriate. Considering overall decision making we need to do more accurate and in-depth
research and study. Even though the decisions are based on proper theories and concepts, it
requires proper evaluation from the beginning of the business in the Brazil and wherever it seems
to be not effective in the business, it should be changed accordingly.

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 Once a particular national market has been selected for entry, then we needs to choose how
to enter that market. Entry modes differ in the degree of resource commitment to a particular
market and the extent to which an organization is operationally involved in a particular location.
In order of increasing resource commitment, the four key entry mode types are: exporting-
contractual arrangement through licensing and franchising to local partners, as McDonald’s does
to restaurant operators. Joint-ventures- in other words the establishment of jointly owned
businesses. And wholly owned subsidiaries- through either the acquisition of established
companies or ‘greenfield’ investments, the development of facilities from scratch.

Two fundamental principles can help guide choice of market entry mode that is, the breadth
of competitive advantage in the target market. This determines whether entry into the market can
be done relying upon the company’s own capabilities, or whether it must draw on the capabilities
of local partners, for instance to access distribution channels or to manufacture locally. Next one
is Tradability, in other words the ability to rely on trading relationships, rather than the firm’s
own presence. Tradability is determined by two factors: ease of transport from home country to
target country, and the quality of legal protection in the target country. Legal protection refers for
example to the ability to enforce contracts, to safeguard performance standards or to protect
intellectual property such as patented technologies. Tradability is low where it is unsafe to trade
through market-based contracts with local partners.

(K. Scholes, 2014)

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 Considering exporting, Export is the baseline option, and is suitable where the product
or services are easily transported from country to country and where the home-based competitive
advantages are sufficiently broad to minimize reliance on local companies. This mode of entry has
a lot of advantages like we can select our foreign representatives in the overseas market and this
strategy helps us to protect our patents, goodwill, trademarks and other intangible assets. we can
utilize the direct exporting strategy to test our products in international markets before making a
bigger investment in the overseas market. Considering our case, Mahindra already started a little
exports to Brazil. So next we need a bigger investment as part of our current plan rather than
exporting. It’s also has its own dis advantages too. This strategy will turn out to be a really high
cost strategy. Everything has to be setup by our company from scratch. We need high breadth of
competitive advantage in the case of exporting. We need to rely upon the company’s own
capabilities, rather than on the capabilities of local partners. Brazil is technologically very
advanced than India. So in Mahindra’s case we can’t make more competitive advantage than
Brazilian companies with our current technologies we are using in India. Considering tradability,
Brazil is not promoting imports of agricultural equipment’s to their market. They are preventing it
with high taxes and duties. Because their domestic market already very advanced. So in both
principle vise (breadth of competitive advantage and tradability) exporting is not a suitable entry
mode for Mahindra‘s current plan.

Next mode is licensing or franchising. License or franchise- the product or service

where competitive advantages are too narrow to go it alone, but the legal environment is such that
licensees and franchisees can be relied on not to abuse their contracts, under-perform on standards
or steal the intellectual property. Taking this mode as our entry strategy has a lot of advantages
like, it help us for low cost entry into an international market. Licensing or Franchising partner has
knowledge about the local market. So the cultural and market awareness not become a problem.
Offers you a passive source of income. Reduces political risk as in most cases, because the
licensing or franchising partner is a local business entity and it is mode which Allows expansion
in multiple regions with minimal investment. This mode also has its own disadvantages too. We
Might not be able to exercise complete control on licensing and franchising partners in the overseas
market. So considering Mahindra, we can’t cope with small control with our partners especially
with our organizations structure. Also Mahindra is one of the best and popular brand in agri

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equipment business in the world. Licensees and franchisees can leverage the acquired knowledge
and pose as future competition for our business. It will also a great threat. Mahindra has a good
business in USA and other Latin American countries too. So there is a possibility for use our own
technology and knowledge against us as competition if the partnership may break. The
incompetence of licensing and franchising partners may risks tarnishing our brand image and
reputation in the overseas and other markets. It is also a big challenge or disadvantage while
choosing franchising and licensing as our entry mode. So this mode of entry is not suitable for our
current plan.

Next mode is Joint ventures. It is work where competitive advantages are narrow,
but local licensees or franchisees cannot be trusted with intellectual property or long-term
performance. A joint venture involving shared ownership gives the foreign company more direct
control and ensures that the local partner has an interest in maximizing the value of the common
enterprise rather than solely its own standalone interests. Also this mode has a lot of advantages
like, both partners can leverage their respective expertise to grow and expand within a chosen
market. The political risks involved in joint-venture is lower due to the presence of the local
partner, having knowledge of the local market and its business environment. This advantage is
very helpful in Mahindra’s plan. Because the political risk in Brazil is very high. Also there a lot
of government initiates and programs for the agricultural equipment industry. In 2017, the total
disbursement of government incentive programs for agricultural machinery totaled R$ 12.8 billion
(equivalent to approximately US$ 4 billion); for 2018, a growth of 15% over 2017 is expected. So
we can get the advantages from Brazilian government if we select this mode. And joint ventures
Enables transfer of technology, intellectual properties and assets, knowledge of the overseas
market etc. between the partnering firms. Considering Mahindra’s overall strategy of agricultural
equipment division, that is continuing to leverage its global acquisitions and partnerships to build
farm machinery portfolio for global markets and get modern farm mechanization technologies into
India. This advantage of joint venture is very beneficial for this objective. We can learn a lot of
technological expertise from the Brazilian venture and market. The fact that they are
technologically more advanced than India will increase the impact of this opportunity. But this
joint ventures has its own dis advantages too. Joint ventures can face the possibility of cultural
clashes within the organization due to the difference in organization culture in both partnering
firms. Also In the event of a dispute, dissolution of a joint venture is subject to lengthy and

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complicated legal process. But well understanding of culture and people behavior will help us to
avoid the cultural clashes. We are already done a evaluation of both cultures of Brazil and India
and we can research more deeply too. So it will help us to take decisions about how we need to
structure our organization and how we can effectively manage the communication and improve
efficiency and productivity of overall organization in the partnership. Considering the legal
dispute, Brazil is now welcoming more investments. Also the new signing of bilateral trade
agreements under the new framework of economic and social partnerships promise a step forward
in bilateral relations between the two countries India and Brazil. Agribusiness is one of the core
business in this agreement. So that’s also not a problem in considering this. So joint ventures is a
good mode for Mahindra to develop their agricultural equipment business in Brazil.

Wholly owned subsidiary is an attractive route where competitive advantages are

sufficiently broad not to depend on local partners, but where nevertheless transport difficulties rule
out simple export. Such wholly owned subsidiaries can be via new Greenfield investments (as for
example many Japanese car companies have entered European markets) or via acquisition strategic
acquisition), where the integration of a local firm completes the breadth of competitive advantage
required.

In case of green field investment or foreign direct investment, the reasons because we can opt
foreign direct investment strategy as the mode of entry into international business can include:
Restriction or import limits on certain goods and products. Manufacturing locally can avoid import
duties. Companies can take advantage of low-cost labor, cheaper material. So this mode has several
advantages like we can retain our control over the operations and other aspects of our business and
Leverage low-cost labor, cheaper material etc. to reduce manufacturing cost towards obtaining a
competitive advantage over competitors. In many case many foreign companies can avail for
subsidies, tax breaks and other concessions from the local governments for making an investment
in their country. Also this mode has its own disadvantage too. Like the business is exposed to high
levels of political risk, especially in case the government decides to adopt protectionist policies to
protect and support local business against foreign companies and this strategy involves substantial
investment to be made for entering an international market. So in the case of Mahindra, we can
use this mode because it can help us to overcome the high import duties of machinery and we get
full control of our business. Also Brazil supporting the 100% foreign direct investments too. But

Muhammed Rashad Global business environment 19/9/20 66

we will face high political pressure from government. Because aggri sector of Brazil is highly
competitive and lot of national companies also in there. So they are always try to protect national
companies. Also, the technological and advancement differences of Indian and Brazil markets is a
huge factor. So directly entering to the Brazilian market with our capabilities is not a good choice.
Because we can’t make a competitive advantage in the market fast. So this mode of entry is not
good in my opinion as far as Mahindra’s current plan.

Next option we have is strategic acquisition. Strategic acquisition implies that company
acquiring a controlling interest in an existing company in the overseas market. This acquired
company can be directly or indirectly involved in offering similar products or services in the
overseas market. We can retain the existing management of the newly acquired company to benefit
from their expertise, knowledge and experience while having our team members positioned in the
board of the company as well. This mode of entry has a lot of advantage like our business does not
need to start from scratch as we can use the existing infrastructure, manufacturing facilities,
distribution channels and an existing market share and a consumer base also our business can
benefit from the expertise, knowledge and experience of the existing management and key
personnel by retaining them. It is one of the fastest modes of entry into an international business
on a large scale. But just like Joint Ventures, in Acquisitions as well, there is a possibility of
cultural clashes within the organization due to the difference in organization culture. Apart from
that there mostly are problems with seamless integration of systems and process. Technological
process differences is one of the most common issues in strategic acquisitions. So the strategic
acquisition also a possible mode we can opt as part of the plan of Mahindra that is moving to
Brazil.

Considering this 5 entry modes, I can understand that only joint venture and strategic
acquisition will suit to us based on the two principles such as tradability and breadth of competitive
advantage. So we need to choose the best one from this two modes. According to the management
consulting Bain, they believe companies benefiting from the flexibility the joint ventures offering.
Joint venture partners can combine business units, assets or capabilities to generate economy of
scale. Also the survey shows joint ventures are delivering more long term value than mergers and
acquisitions. Joint ventures actually beats mergers& acquisition in terms delivering financial
benefits too. In a 20 year study from 1995-2015, the firm found that the value of joint ventures

Muhammed Rashad Global business environment 19/9/20 67

grew 20% annually which is twice the rate of mergers & acquisitions. (smartroom.com, 2020) so
joint venture is the most suitable entry mode for Mahindra in my opinion. Later they can make this
to a strategic aliens or subsidiary. Because joint venture is reduce risk more whereas the strategic
alliance is driven by the goal of maximization of returns. So the current political risk and pressure
considering the agricultural industry is high. So first we need to opt reduce risk that is form a joint
venture. Which will give us more legal protection and reduce the risk, then later we can change to
strategic alliance which maximizing the returns.

Muhammed Rashad Global business environment 19/9/20 68

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