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Corporate Issues Among Multinational Organisations - Term Paper Example

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The present paper will analyze the various types of business problems faced by multinational corporations in the contemporary world. The writer will conduct a critical literature review on existing theory. Furthermore, the writer identifies and discusses particular issues…
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Corporate Issues Among Multinational Organisations
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?Research and Identify Literature Introduction In the contemporary business world, the scale and the scope of operations of the corporate business firms have increased to a great extent. With such high scopes of competitive advantage, these modern firms have taken active initiatives to expand their scale and scope of operations beyond their domestic territories. This is because by exploiting their core competences in the foreign economies, these corporate firms have been successful in attaining economies of scale in business operations. These corporate business firms that have accepted internationalization as an integral part of business and operate worldwide in different marketplaces are known as multinational corporations. Through operating in various economies in the world, these companies have not only enhanced their brand value but have also done the same for the living standard of many individuals worldwide. However, it cannot be ignored that internationalization of business increases the overall risks of the corporate firms in the modern world. The essay will analyze about the various types of business problems faced by the multinational corporations in the contemporary world. Critical Literature Review Comparing and Contrasting Theories Concepts and Research Findings The business challenges and opportunities faced by the multinational corporations in the contemporary world are increasing rapidly overtime. Especially after the emergence of globalization and liberalization, the developing countries have turned out to be the emerging economies in the world. In China, by the year 2003, about 41000 foreign investors had set up their business operations (Weisert, 2001). With the benefits and help provided by the World Trade Organization, the country has also rendered several opportunities for these new foreign companies operating in their economy. However, inspite of these lucrative opportunities, most of them set up their business in China through joint ventures or mergers. For instance, Siemens has set its business firm in China long back in 1982 through a representative’s office (Fryxell, Butler, and Choi, 2004). Coca-cola is another company that operates in China through a joint business with a company which provides similar facilities in Tianjin (Weisert, 2001).These economies (emerging ones like, China) have significantly helped to increase the opportunities of multinational corporations. However, it is also observed that with these growing opportunities, the risks of these firms are also increasing over time. A detailed analysis shows that the extent of challenges faced by these giant organizations is unlimited. The context of this essay will focus on only one of these issues which are faced by these corporations. The human resource challenges that are faced by the multinational business firms would be discussed in this essay in details. McKinsey Company in Shanghai has reported that the scope of hiring skilled analysts in China is very low (Farrell and Grant, 2005). Ford in Geelong Australia has claimed to cease its manufacturing unit in the country because the nation’s high currency value have forced the employees to demand for higher wage rates that has excessively augmented the operating cost of the company. One of the most important operations that are executed by any multinational corporation is human resource management. Noe, et al. (2006, p.5) stated that human resource management is that segment of an organization which helps to recruit and develop officials in an organization and also facilitates in sufficing an organizations objectives. The use of human resource management model by the multinational corporations has increased in order to reduce the difficulties in of human resource management (Chen and Wilson, 2003). The practice of standardization of human resource management has been abolished because the impact of environmental and structural changes in the multinational corporations has heightened overtime (McGraw and Harley, 2003). Individuals from different economies differ in terms of their culture and conceptions regarding the precise nature of the business organizations. This diversity between the different economies has generated in strategy conflicts among the multinational corporations in cases where international standardization had been used (Daft, 2007). Localization in the human resource management has evolved over time for reducing the problem of standardization in human resource management. However, it has been found that though the processes of localization in the human resource management have helped in lowering a firm’s cost, it has raised one big issue. Multinational firms nowadays face severe difficulties while hiring qualified managerial staff through recruitment process. The problem or difficulty is more severe in the emerging economies in the world. It is true that standardization of the human resource management helps a firm to reduce the cost required to manage the overall factors of production. Such financial reserves can be used by the company when faced with other severe business challenges like currency risks and recessional crisis. However, at the same time it cannot be ignored that human resource in firms is an important factor of production. Therefore, the issue of human resource management is crucial and it must also be localized not standardized owing to the different economies with the different corporate cultures. Strength and Weaknesses of the Research There are various strengths and weaknesses of this research. The above context of for the research findings and the theoretical concepts are made after scrutinizing the views of several research scholars. Thus, the content and the data collected in the research are authentic. However, the research made in the essay is qualitative in nature and based on secondary data. The researcher has not used any quantitative tool for the research and the context of the research could not be done on the basis of data collected from primary sources. Arguments After the literature had been gathered and analyzed, the researcher has come forward with some key factors concerning the issue. Short of Talent Although the emerging economies in the world provide a large pool of young workforce participation rate, the level of literacy in these economies is comparatively less. Thus, while expanding their operations in the emerging economies, the companies have to face a lot of difficulty while hiring proper skilled officials through the recruitment process. Though these economies provide huge markets for the products and the services of the multinational corporations, the talent possessed in these economies are limited. Social Environmental Differences In certain economies of the world, the strong socialistic principles of the countries have augmented the proportion of the workers in the public sectors. These employees are less hard working in nature and they instigate less competition in the labour market for the employees of the multinational corporations. Rather the various types of rules and regulations imposed by the public authorities over the rights of the workers in these economies reduce the powers of the multinational corporations over its workers. Compensations and the Benefits The unremitted growths of the economies in the global market have posed the wage rate hike as a promising factor in the labour market. The multinational corporations operating in different economies have always faced the difficulty in increasing the wages of the employees. Failures to suffice the demand for the required wages by the employees on the part of the companies have resulted in a rise of resignations in these firms. It has also reduced the level of motivation of the employees. Limitations There are various limitations for this analysis: Shortage of Talent The scarcity faced by the multinational corporations to recruit skilled officials in the emerging economies, have reduced over time. The emergences of many art and science colleges in these countries have provided scopes for training the labourers efficiently. This has helped the labour force easily mitigate the requirements of the foreign companies. Social Environmental Differences In the modern days, most of the countries operate on the basis of free market principles. These principles have helped to reduce the powers of the public authorities in the economies and have relaxed the regulations which are to be followed by the multinational corporations. The free market principles have helped these companies imbibe high competition in the labour market. This has helped to augment the skills and the contribution of the officials in these companies (Pablos, 2004) Compensations and the Benefits The globalization of the financial markets in the world economy has helped to increase the level of credit availability of the corporate firms. This in turn has helped them to increase the wage rates and compensations of the employees in their different business branches. Such increased financial opportunities which are given to these workers have helped these firms to provide better motivation of their employees (Matuszek, Dennis and Schraeder, 2008). Conclusion Today the human resource management is primary for business operations for almost all the multinational corporations. The scale and scope of opportunities available to these business firms have nullified its negativities. Managing workforce is no longer difficult for a firm if it applies efficient business strategies and methods to recruit new workforce in its organization. The challenge of recruiting qualified staffs can be reduced by companies through effective recruitment processes. Companies like Vodafone and Apple Inc., manage more than 6000 thousand labour forces worldwide with the help of good recruitment and human resource team. Thus, the impact of the issue of human resource management largely depends on the quality of work done by the multinational corporation’s recruitment and human resource team. Reference List Chen, S.H. and Wilson, M., 2003. Standardization and Localization of Human Resource Management in Sino-Foreign joint Ventures. Asia Pacific Journal of Management, 20(242), p. 397-408. Daft, R.L., 2007. Understanding the Theory and Design of Organizations. Natorp BoulevardMason: Thomson South-Western. Farrell, D. And Grant, A., 2005. Addressing China’s Looming Talent Shortage, McKinsey& Company, Shanghai. Fryxell, G.E., Butler, J. and Choi, A., 2004. Successful Localization Programs in China: An Important Element in Strategy Implementation. Journal of World Business, 39, p. 268–282. Matuszek, I., Dennis, R. S. and Schraeder, D., 2008. Mentoring in an increasingly global workplace: facing the realities and challenges. Development and Learning in Organizations, 22(6), p.18 – 20. McGraw, P. and Harley, B., 2003. Industrial Relation and Human Resource Management Practices in Australian and Overseas-owned Workplaces: Global or Local? The Journal of Industrial Relations, 45(1), p. 1-22. Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.A., 2006. Human resource management: gaining a competitive advantage. New York: McGraw-Hill International Edition. Pablos, P. O., 2004. Knowledge flow transfers in multinational corporations: knowledge properties and implications for management, Journal of Knowledge Management, 8(6), p.105 - 116. Weisert, D., 2001. Coca-Cola in China: Quenching the Thirst of a Billion. The China Business Review, p. 52-56. Read More
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