International Company Visit: Frankfurt Stock Exchange
Today, globalisation has brought undeniable change in almost all the states across the globe. In both middle income and developed countries, globalisation is viewed a propulsive factor for sustaining and enhancing the growth of multinational organisations. According to Bakan and Yildirimci (2015), the more the world is being unified, the more businesses are changing their operating forms. As internationalisation is becoming a key factor for competitiveness, in Germany and British, the aspect of foreign direct investment (FDI), global markets opportunities, and business acquisitions have been key factors influencing the growth of businesses in the international market. Denisia (2010) asserts that for international companies, global markets and element, such as FDI, work together, as the two components mean companies are trading in an environment characterised by the concept of foreign currencies and higher exports, which are both sources of income and profitability.
Similarly, German companies have been focusing on gaining a position in the world leading markets, as organisations in the country know the advantages of trading in these platforms. Morrison (2008) reveals that the growth of German’s companies in the international market has provided the market with a load of engineering skills and machinery knowledge, which has played an essential role in the development of the global market. For this reason, many German companies have found themselves operating in developing economies and the world’s largest foreign market with higher demand. Thus, as internalisation for German’s companies has become a new trend, this essay focuses on presenting reflective findings in relation to a visit in one of the leading stock exchange organisation in Germany. For a detailed presentation, this paper will be laid into several sections. In the first chapter, I will present the overview of what I learned in the company visit, the method that I used to reach for a better understanding of the business, and the resources I applied to study the enterprise in the tour. Finally, I will discuss the relationship between the visit findings and the theoretical framework.
Overview of the Company I Visited (Frankfurt Stock Exchange)
Deutsche Borse Group or Frankfurt Stock Exchange is one of the world’s biggest firm in the exchange industry. It is located in Germany, and its headquarters are found in Frankfurt or Rhein-Main. From the tour I identified that the company works ethically by organising markets that are featured with integrity, honesty, and safe for clients investing capital and raising money. To do so, Deutsche Borse Group ensures that the functioning of the markets that it operates on have clear rules and operate under strict supervision for the benefit of all participants as well as the reputation of the organisation. Regarding the company’s responsibility to the global segment, Deutsche Borse Group maintains its integrated model of business operation. In essence, Deutsche Borse Group has continued to make sure that the portfolio of its product and services has a wider basis in the market than that of other organisations around the world. For this purpose, I observed the company concentrates on covering the entire chain of capital exchange through monitoring the execution of trading orders, clearing, and netting transaction activities, under the guidance of the world’s exchange market information. In addition, the company understands the significance of setting standards that will guide its leadership and staffs in the course of facilitating its mission. As such, Deutsche Borse Group has instituted basic company standards with its scope of operation with its superior risk management and the innovative security management so that it can ensure that customers from different parts of the world use their capital without any challenges.
When I arrive at the company headquarters, it was easier to identify that the key products and services that Deutsche Borse Group offers include the admission of securities for listing. This is done by execution of trades in the international markets, overseeing the securities, and clearing the securities in the financial market exchange for its clients. I also recognised that the company is also known for its information technology (IT) services, listing of market data across the world, and fostering innovations where the organisation provides various services for expanding companies and investors in Germany and other parts of the world. As Deutsche Borse Group continues to grow, it has maintained a large group of employees with data showing that as at 31st December 2016, the company had 5,176 employees working in different departments (Deutsche Borse Group 2017). Moreover, the firm is also represented globally, as the organisation has some branches in areas such as Landon, Moscow, New York, Hong Kong, Chicago, Beijing, Tokyo, among other areas where it is focusing on serving as many customers as possible. Finally, as the company continues to venture into the global markets, the organisation is mostly focusing on merging and acquisition as the most prominent strategies that will make it more internationalised and competitive.
The Issue Raised from the Company Visits
In international organisations, market research is an essential factor for development and growth (Al-Shatanawi, Osman, and Ab Halim 2014). This became an ultimate point during my visit at the Deutsche Borse Group. The company carries out its research aimed at improving its services and understanding the stand view of its stakeholders. In reference to Young and Javalgi (2007), research in international firms allows companies to learn about consumers’ behaviour and translate the perspective of various stakeholders into actionable business practice. Upon the visit at Deutsche Borse Group, I came to know that in global companies, research is carried out through dialogues, where stakeholders are interviewed concerning the enterprise performance and what they think about the interest of the enterprise. To demonstrate this point clearly, I used the example of Deutsche Borse Group. In every two years, Deutsche Borse Group does an internal survey to examine difference views of its stakeholders, the interest of the employees working in the company, as well as to identify the areas of action for change and improvement. It was surprising to learn that, for effectiveness, the company hires an external researching group that compares the findings of the enterprise with its internal materiality analysis. Eventually, this showed me that the surveys in international businesses ensure that they are well positioned, as they get an opportunity to keep in touch with stakeholders’ behaviour trends and understand the factors that are affecting their performance (Young and Javalgi 2007).
On the other hand, the visit was educative because I learned more about pricing in international enterprises. Based on literature presented by Sousa and Lengler (2009), in moist of the global companies, pricing of the products and services is based on standardised strategy, as the model helps international organisations to penetrate the export market and increase their performances in the global market. From the visit, I realised that in Germany, many companies’ pricing of products and service is among the core factors that influence their performance in the global market. In reflection to Deutsche Borse Group, I can confirm that the real price in exchange programs is announced immediately the price of the security has been determined on the exchange market.
Moreover, I observed that for German’s international businesses that are trading in the exchange market, when adopting a certain price for their products and services, significant investment together with market research is necessary. As such, with my visit focusing more on Deutsche Borse Group, I was able to find out that the company has different categories of prices with regards to its product in the market. For example, the Deutsche Borse Group has a class of variable prices, in which for this type of price to implemented, research is done mostly on the ongoing basis for actively traded stocks. Sousa and Lengler (2009) cite that throughout the research, international business uses their resources to sustain a massive investment that will guide them when it comes to the implementation of standardised prices for their products and services.
Contradicting Issue from the Company Visit
Although the visit was fascinating for me, it was hard to understand why the company has failed to merge with some international organisations conducting business in the exchange market. From this case, I believe that it has been difficult for Deutsche Borse Group to join with other international companies involved in the trade market. Straub (2007) posit that it is relevant for foreign companies to consider embracing amalgamation as a strategy that will ensure that the corporation grows progressively in the international market. Although Deutsche Borse Group is hoping to merge with Landon stock exchange, it seems that the company is not yet ready to amalgamate with other businesses, which can be viewed as a challenge to the organisation (Deutsche Borse Group 2017). As I understand that both businesses have tried to execute merging before, I was not able to come up with clear ideas what made the two exchange companies fail to reach an agreement regarding working together in the trade market. For example, in my research, I found that both Deutsche Borse Group and London Stock Exchange has held talks about merging for three times, but it has not been successful for either party. Since I know that merging is a strategic decision, I would be doing more research to know why it is problematic for Deutsche Borse Group to unite with other firms in the same line of business operation.
Reaching Better Understanding of the International Business
Personally, I think that for one to understand more about global business, research about the company, its mission, vision, market, and customers are necessary. Investigating multinational organisations can be done through the secondary survey or primary survey. At the same time, I believe that using these two techniques can not only help a person know more about the company but generate some recommendations regarding what the company need to do for competitiveness and effectiveness. From a personal perspective, to understand international business, I will first consider doing a search about the company by reviewing its website, as this will help me know its locality, purpose, structure, and its performance in the market it is serving. Upon understanding significant information about the company through an online survey, I will consider visiting the organisation where I will learn more about it through observation and interviewing people working in the company.
One of the things I would want to know more about the international businesses is the challenges they face in the global market. Wijen and Tulder (2011) suggest that for a company to operate in the global market, government regulation can be a major challenge. In this context, it seems that multinational firms are prone to regime laws, which makes businesses invest heavily in strategies concerning expansion and strategies for sustainability in the foreign market (Tulder, Verbeke, and Voinea 2012). My visit to a Germany-based international company gave me some insightful information about how some global companies deal with the issue of regulation in the market. Based on the research that I did about Deutsche Borse Group, I learned that the enterprise operates in a highly regulated financial market, with both political and regulatory authorities aiming at ensuring that the company does not influence its clients in any way (Deutsche Borse Group 2017). For Deutsche Borse Group to adhere and working according to the regulations set by the authorities in the international market, the company bases its performance on the aspect of customer interest, efficiency, transparency, as well as securing the financial market in a legal manner. Furthermore, it was interesting to understand the structure of an international company, especially a company participating in the exchange market. Literature shows that the structure of an enterprise competing in the global market is defined by the concept of task coordination, control system, and the business culture (Aswathappa 2010; Clarke; 2012). For the company that I visited, it seems that international companies use divisional organisational structure, with the Chief Executive Officer (CEO) being the top most leader in the structure.
Useful Resources to know about International Business
As mentioned earlier, to understand about International organisations, I applied both primary and secondary sources. However, secondary sources helped to broaden my understanding about multinational firms, as through the secondary resources I would even compare the company that I have visited with the literature on international businesses. What was interesting about the secondary sources that I used to learn about foreign companies is that I came to establish that for multinational businesses, the fast-growing market for them is the market in the developing countries. Here, I used the analysis that has been presented by Khanna, Palepu, and Sinha (2005), in which it is suggested that many companies are not embracing the emerging market due to lack of business element such as end-to-end independent business providers and talented employees who can work in the diverse environment. I concur with this argument; if international businesses do not consider investing in the emerging markets identified in the developing countries, they will not remain competitive for long (Khanna, Palepu, and Sinha 2005; Segal-Horn and Faulkner 2010).
From the secondary sources that I utilised to get more information about global companies, it was fascinating to learn that merging and acquisition of international businesses is a common practice. However, from the sources that I obtained on the subject of multinational companies, I was surprised to see that some of the emerging global companies are rewriting the rule of merging and acquisition (Chakravarty and Chua 2012). For instance, Kumar (2009) reveals that some of the international organisations that are exercising merging and acquisition are not prioritising on delivering their business value, which in turn, influence the market as well the industry line of their operation. If I look at the case of the Deutsche Borse Group, I see that the company has tried to merge with other businesses in the stock exchange market, but up to now, there has been no agreement with any company. It seems that Deutsche Borse Group wants to take over other businesses for long-term vision and to gain competence and skills so that the corporation gains a competitive advantage. As the company has not been able to reach an agreement with the business that it wants to merge with, I strongly feel that the company is somehow not pushing for the agreement according to the M&A rules, which has made the discussion about the agreement to fail being implemented.
Importantly, from the sources analysing the concept of international business, it is was interesting for me to realise that stock exchange companies are the most controversial institutions in the global market, especially in the financial department. Basing it on the analysis that was done by Lütz (1998), I now know that in some cases, the international traders working in the stock exchange market are sometimes viewed as stockbrokers, who will offer services through price-fixing for the benefit of the company and the dealers and not the clients. In some cases in countries such as Germany, the institutionalisation of international stock exchange businesses has been linked to people of a specific class, where only a particular group of people will benefit from the services of the organisations that are operated by a number of self-regulating committees (Lütz 1998). From this perspective, it is clear that despite the high level of ethics in the stock exchange businesses, some firms are focusing on exploiting the customers with strategies that will benefit the merchant class and the companies themselves. This was interesting because I did not think the stock exchange business could be controversial, as the trading activities in the sector are done under very high regulations.
Connection of the Visit with Class Work
In reflection on what I have learned in the class and what I gained from the company visit, in some ways, I can affirm that the growth of businesses participating in the international market has become unstoppable. Peng (2016) write that by 1980 majority of the Germany’s company were focusing on venturing into the global markets. This is true because more organisations operating in different sectors in Germany have successfully joined the international market with the aim of making more profits and gaining competitive advantage. Personally, I can relate the growth of Germany’s company in global markets to the increase of customers with the different needs as well the development of technology, which is being used in every sector. For example, at Deutsche Borse Group technology is highly embraced, as the company wants to fit in the digital market and share all sort of information with the available customers. In the tour at Deutsche Borse Group, I identified that the company use its website to register its clients in the international market, which is one way of improving communication in the business. In relation to what I have learned in the class, I see this as an important factor for Deutsche Borse Group, as it brings the company closer to the customers and be connected to as many clients as possible. Peng (2016) alludes that more than 100 companies in Germany are using SAP software to run activities that are happening in every region of the world. In addition, from the visit, I am now certain about what I have learned in class relating to the role of the economy of a country to the growth of international business. As Europe has a balanced economy, many foreign investors have flocked in the market with the aim of trading for profit and to create a stronger customer base, which will improve their organisations.
Conclusion
This paper discusses the concept of international organisations, as one of the areas, which is changing day by day. In Europe, business people has been focusing on making their companies global, whereby after reaching the second stage of business development, they modify the firms into multinational corporations. The increase of multinational enterprises, especially in the stock exchange sector has been essential to the business people, the customers, and foreign countries where investment is taking place. Global companies are playing an important to the development of the world economy, as the firms’ combines products with services, where customers would buy not only their brands but also maintain a contract with these businesses. Consequently, this allows organisations to generate an income stream from its sale and an income that they can use for several years while offering services to the customers in the market.
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