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CHAPTER VIII

CHALLENGES IN MODERN MANAGEMENT

8.1 Modern Business Challenges

A. Globalization and International Competition

Globalization is a process of increasing connectivity between
communities, so that events that occur in one part of the world also have
an impact on other parts of the world. Each community member will be
increasingly impacted by events occurring in other communities. These
events are divided into three categories, namely social, economic and
political. This is possible because society is increasingly dependent on
other societies in the political, economic, cultural and social fields.
Therefore, society's worldview seems to make the world smaller because
people no longer feel isolated.
Globalization is the gateway to open cooperative relations between
one country and another. The integration process between countries takes
place on a global scale, giving rise to the process of market globalization
and production globalization. The globalization of markets and the
globalization of production is what creates international trade between
countries. Market globalization, also known as open markets, requires
international trade, especially in the form of exports and imports.
Countries that trade want their country to have a larger surplus, because a
trade balance surplus will increase their country's wealth (Ray, 2016).
Globalization is a phenomenon that cannot be avoided.
Globalization is not only associated with the economic sector but also with
the political sector, social environment and international relations (Wolf,
2014).
 Globalization as a process of shrinking the world, is related to the
ease with which people in one part of the world interact with other people
in other parts of the world. Globalization also means the compression of
space and time throughout the world. Globalization can also be understood
as a process of intensification of social relations on a global scale which
leads to increasing separation between space and time. To clarify the
meaning of international relations, you can see the different definitions put
forward by experts below:
1. Suwardi Wiryaatmaja,
MA, stated that international relations discusses political
conditions or issues in the international community in a narrow
sense, focusing on diplomacy and relations between nations and
other political units. International relations include all kinds of
relations between nations and national groups in the world
community.
2. Warsito Sunaryo
International relations is the study of interactions between types
of social entities, including the study of the relevant circumstances
surrounding the interactions. Certain social units can be defined as
states, nations or state organizations, as long as the relations are
international.
International relations theory is the study of international relations
from a theoretical perspective; This research seeks to provide a conceptual
framework for analyzing international relations. Holsti describes
international relations theory as functioning like colored glasses, so that
the wearer can only see important facts related to the theory. A realist may
completely reject facts that a constructivist considers important, and vice
versa. The three most popular theories are realism, liberalism, and
constructivism. The impact of globalization on international trade is as
follows:
 Positive impact :
 1. Global production can be increased.
2. Increasing the prosperity of society in a country.
3. Expanding the market for domestic products.
4. Can obtain more capital and better technology.
5. Provide additional funds for economic development.
 Negative impact:
1. The development of an increasingly liberal foreign trade system
can slow down industrial growth.
2. Can worsen the balance of payments.
3. The financial sector is increasingly unstable.
4. Worsens long-term economic growth.
The impact of international trade on the Indonesian economy is
that international trade has a big influence on the Indonesian economy.
Some of these influences are positive, some are negative. The following
are some of the impacts resulting from international trade (Walter: 2013)
1. Positive Impact of International Trade: Helping each other meet the
needs of countries Increasing business productivity Reducing
unemployment Increasing foreign exchange earnings for countries
Encouraging progress in science and technology
2. Negative Impact of International Trade Apart from the positive
impact, international trade also has a negative impact on the
Indonesian economy.
The following are some of the negative impacts of international
trade, namely:
1. There is dependence on importing countries
2. Society becomes consumerist
3. Shutting down small businesses
4. Low quality of resources
5. Inter-Border Payments Are Difficult and the Risks Are Great
B. Technology and Digital Transformation
 The increasingly rapid development of information technology
has brought the world into the digital era. Asromawardi (2016) defines the
digital era as a term used in the emergence of digital technology, the
internet, especially information technology. The emergence of information
technology has had an impact on various areas of life such as economics,
politics, socio-culture, defense and security. However, the economic sector
receives more attention because it is closely related to the lives of many
people, especially in the business sector.
Currently, information technology (IT) has become a very
important factor for companies or organizations throughout the company.
Companies or organizations view technology as something that can
support the achievement of the company's strategic plan to achieve the
company's or organization's goals, vision and mission (Septiadi, Kusnanto
and Supangat, 2019).
One of the perceived benefits of using information technology is
increasing the accuracy and timeliness of information, which greatly
facilitates SU's operational activitiesan institution or 'organization'. For
this reason, good information technology governance is needed in an
organization, starting from planning to implementation so that
organizational activities can run optimally (Hermanto, Mandita and
Supangat, 2016).
Technological developments have influenced the activities we
carry out daily, and have led to dependence on the use of technology itself.
Technological developments that are present in our midst also require both
individuals and organizations to carry out digital transformation. Digital
transformation is a process of adopting digital technology to change
existing processes so as to create new things or ways.
In other words, digital transformation is a change in a company or
organization that involves human resources, processes, strategies,
structures, through the adoption of technology to improve performance
 (Royyana, 2018). All involved need to manage and understand together
the digital transformation activities that will be carried out.
One of the goals of digital transformation is to change old ways to
be more efficient and productive, especially in running a business. For
example, business actors will find it easier to complete the marketing and
sales process of their products through digital technology. However,
digital transformation cannot be achieved as easily as imagined. In reality,
there are many strategies that need to be implemented well as well as a
number of factors that the business world needs to consider. Therefore, the
author wants to understand and explore the meaning and impact of
managing digital transformation for business.The term transformation
refers to changes in an organization that have a major impact on the
organizational structure itself.
Digital transformation is defined as the use of digital technology
that can radically improve and achieve expected business performance and
goals (Royyana, 2018). Digital transformation can also be understood as a
process that aims to improve an entity by making significant changes to its
characteristics through the application of information, computing,
communications and connectivity (Putri, Herdiana, Munawar, et al.,)
Based on research (Westerman et al., 2011), digital
transformation affects three main parts of an organization, namely
customer experience, operational processes, and business models. With
digital transformation, businesses definitely need infrastructure and
technology as well as platformsthe right rm to apply.

8. 2 Leadership and Managerial Skills

A. The Role of Leaders in Facing Challenges

The current global situation is characterized by an appreciation of
stability which has led to various paradigm shifts, an appreciation of
change. This requires consistent leadership on the basis that everyone
wants change for themselves.
Community leaders transform into different conditions that have
superior and predictable characteristics over time and demonstrate
adaptive behavior that must be responded to positively by society.
Changing situations can capture phenomena that change over time so
rapidly that the leadership environment takes place in such a way that
everyone understands who the followers are. Leaders must always be
ready to face current changes, trying to realize that there is no need to
overreact.
Similarities between the concepts of empowering leadership and
control. Transformation as leadership Treatment that is too rigid and strict
is not popular and the concept of leadership only creates problems whose
origins are unknown in the desired society, but can also destroy Indonesia
which was initiated by Ki Hadjar, the encouragement and innovation that
Dewantara needs. Apart from that, development is also explained
organization.
On the other hand, in terms of subordinate authority, there is
empowerment that allows him to truly integrate the processes of all
members who participate in leadership administration, thereby fostering a
sense of ownership and commitment regarding the ability to succeed in the
organization. Leading is not difficult.
Third, competition leads to cooperation. The current global
situation shows that competition between individuals in organizations is
changing and emerging, sometimes motivating some members,
howeverthe new resource management model has a negative impact on
other members.
Otherwise, people in the organization will feel defeated. For this
reason, special attention must be given to various parties who feel that
they have won together thanks to the work they have participated in.
 Daniel C. Kielson on the team. (Safaria, 2004) explains Article four,
focusing on products andthese changes.
B. Required Managerial Skills
Katz and Starrat emphasized that there are three types of
management skills that leaders must master, namely thinking skills,
technical skills and soft skills. First, conceptual skills, specifically the
ability to see and understand problems, issues or the organization as a
whole and the ability to coordinate and integrate all its interdependent
parts for the benefit or activity of the organization.
This competency is understanding and proficiency in carrying out
management functions, including the processes of planning, organizing,
delegating, controlling, evaluating and problem solving. Theoretically, this
concept is very simple, but many managers and supervisors are still unable
to differentiate between technical and conceptual skills.
Skills.
Likewise, in organizations, managers who have good conceptual
skills will be able to think long term and interpret the abilities of
individuals in the organization in various management functions such as
decision making, resolving conflicts and complex problems, developing
strategies and policies.
Second, technical skills, especially the ability to apply certain knowledge,
methods or techniques in certain areas of expertise. These skills are the
understanding and ability to carry out specific activities related to a
particular field or job.
Third, social skills, namely the skills to manage oneself and
communicate with other people based on the values adhered to in life,
including thought patterns (states of mind), belief systems, emotional
maturity and trust. a person's self-confidence. Soft skills are intangible, the
skills cannot be measured but their impact can be felt and the level of
quality a person can achieve or not.
8.3 Ethics and Social Responsibility of Business.

A. Business Ethics
Various training, education and research activities are carried out
to help business people create good products and run business operations
smoothly. To obtain a good product, entrepreneurs can use all modern
scientific and technological tools. Apart from that, business people can
utilize economic and management theories to run their business smoothly.
In the past, you could only rely on natural talent, but today it is almost
impossible for professional managers to acquire sufficient skills without
special training. The economy is an important part of society. Almost
everyone is involved.
We all buy goods or services to be able to live or at least live
more comfortably. And we ourselves are involved in the production of
goods or the provision of services that other people need. The subsistence
economies of the past are now no longer found.
In fact, it could be said that the more advanced a society is, the
greater its dependence on each other in the economic sector. Business is an
absolutely necessary element in modern society, it is also an essential
social phenomenon. Business cannot be separated from moral rules.
Creating a code of ethics is a powerful way to institutionalize
ethics into a company's structure and activities. When a company has its
own code of ethics, it has several advantages over companies that do not
have a code of ethics. The benefits of a company code of ethics can be
explained as follows.
a. A code of ethics can increase a company's credibility because
ethics is part of the company culture.
b. A code of ethics can help eliminate gray areas in the field of ethics.
c. A code of ethics can explain how a company views its social
responsibilities.
 d. Codes of ethics provide opportunities for companies and the
business world in general to regulate themselves (self-regulation).
However, this description of the company's code of ethics is too
optimistic if it does not also highlight the main weaknesses of efforts to
institutionalize corporate ethics. Creating a code of ethics is clearly not
enough to solve all company moral problems. Therefore, it is not
surprising that the company's code of ethics has also come under criticism.
The company's code of ethics remains useful in establishing clear
and firm ethical standards for all employees and the scope of corporate
social responsibility. All we need to do is find ways to ensure the
effectiveness of our code of ethics. The following factors will help you run
a successful business: 14
a. The Code of Ethics must be developed with the input of all employees
to reflect the agreement of all parties to be bound by it.
b. Careful consideration should be given to which areas and topics should
be covered in a company's code of ethics.
c. The company's code of ethics must be revised from time to time and
adapted to internal and external developments.
d. The most important thing is that the company's code of ethics is
consistently enforced by implementing sanctions.
B. Corporate social responsibility
Corporate social responsibility is the company's moral
responsibility to society. Of course, the moral responsibility of a company
can be directed at various things, including the company itself, its
employees, and other companies.
When talking about social responsibility, he emphasizes moral
responsibility towards society, including the environment around the
factory and the wider community. CSR means acting ethically, obeying
the law, and acting while contributing to improving the economy while
improving the quality of life of employees and their families, as well as the
quality of local communities and society as a whole.
 Schernerhorn said CSR is about the concern of business
organizations to act in their own way to protect their interests from
external public interests.
Companies integrate care Corporate social responsibility is the
social responsibility carried out by companies in their business activities
and interactions with stakeholders, based on the principles of volunteerism
and partnership. Even though the main purpose of starting a business is to
make a profit, companies must not ignore their responsibilities, especially
towards environmental and social issues.
It is not permissible for a company to achieve its goal to gain
profit alone, without taking into account the interests of other parties,
whether affected or not. Most companies strive to be accountable to their
stakeholders, initially focusing on five main groups: customers,
employees, investors, suppliers, and the communities in which they
operate. Companies can select other stakeholders who are relevant or
important to the organization and seek to meet their needs and
expectations.
Several levels of CSR activities are based on the level of
difficulty of implementation, namely compliance with the law, community
development, internalization of externalities such as waste disposal,
comprehensive CSR.
Sustainable Business and Corporate Social Responsibility (CSR),
for example creating sustainable livelihoods for local communities through
the development of social entrepreneurship. There are four CSR models or
patterns that are commonly implemented by companies in Indonesia:
a. Involvement involves companies implementing CSR programs
directly by organizing their own social activities or donating to the
community without intermediaries.
b. Second, through foundations or social entrepreneurial
organizations, companies establish their own foundations under
their company or group.
c. Third, partnerships with other parties, where the company
collaborates with social institutions/non-governmental
organizations (NGOs/NGOs), government agencies, universities,
or mass media, both in managing funds and implementing CSR
social activities.
d. Fourth, support, join a consortium in which the company is one of
the founders, is a member, or supports a social institution
established for a specific social purpose.
1. Keraf believes there are four areas that are considered and
accepted in what is called corporate social responsibility.
Company involvement in social activities that contribute to the
benefit of the wider community. Bring a positive image and
economic benefits to the company. This increases public
acceptance of the product's existence.
2. Whether in business or social activities, we comply with legal
requirements applicable to society and ensure that our business
operates in a healthy and orderly manner.
3. Respect the rights and interests of stakeholders or parties
related to the company's business activities.
4. These four areas must be balanced because they are at least
carried out by the company and are a consideration for the
smooth running of the company's business activities.

Of course, if a company excels in one area, disparities will arise

in other areas which can hamper the implementation of business
activities. CSR is related to the way businesses act towards individuals
and groups in the environment. These groups and individuals are
called organizational stakeholders. Stakeholders in organizations
include individuals, groups and organizations, so they have an interest
in the organization (Buchari Alma: 2014).
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