Globalisation and Its Effects on Organisations - Essay Example

Globalisation and Its Effects on Organisations Introduction Globalisation can be regarded as a worldwide movement towards financial, trade, communication and economic integration (Schenk, 2011). It successfully helped the world to transform nationalistic and local perspectives into a broader outlook through transfer of services, goods and labours across the national borders. Over centuries, globalisation had an evident existence and has become more polished with the passage of time. Globalisation has caused various beneficial alterations in the economic systems. This presented opportunities for companies worldwide to utilise intellectual capital, resources and labour, which in turn improved the pace of business, rendering it more competitive and profitable. There were also development in factors of production and in the way they could be availed. The details of globalisation and its effects on organisations all over the world will be thoroughly discussed in this essay. Detailed Study Globalisation has created the best opportunities for all companies worldwide by increasing the level of employment and profitability of companies drastically over few years. Companies are able to utilise labour, capital and resources to the best of their ability. They also effectively changed their ways of operation than that in the past. Organisations not only introduced office automation, but at the same time, incorporated various improvements in techniques of management. They started to stress more on the division of work and labour. As a result, greater emphasis was put on centralisation, decentralisation, control, co-ordination, culture and communication. With the essence of globalisation, there was development in the structure of organizations. Centralisation became the choice for most companies as this helped them to co-ordinate and control easily, reduce all sorts of duplication, perform consistently, incorporate necessary changes in the system effortlessly and accordingly fulfil goals and targets (Doole and Lowe, 2008). There were various other opportunities that globalisation has brought along in the form of labour available at the cheapest possible price (Blanco and Razzaque, 2011). The developed countries extensively took advantage of cheap labour available in the developing countries for manufacturing their products at lowest possible prices and then sell them at high margins. Countries like, U.S.A., also began with the revolution of outsourcing. Outsourcing enabled them to reduce the level of unemployment in various countries as well as receive the services at least possible cost (International Labour Organisation, 2004). The developing countries benefit equally in the form of high levels of employment and remuneration as per denomination of the developed country. Globalisation had paved way for migration of labours to different countries (Luetge, Koslowski and Homann, 2013). This allowed companies to enjoy abundance of labour, reduce unemployment and enhance the standard of living of people (Gibbert and Durand, 2006). In organisations, there were innovation in form of office automation, followed by rationalisation and eventually the concept of Total Quality Management (TQM) surfaced. Later on, a new approach called Business Process Re-engineering (BPR) had become prevalent, which increasingly considered processes, rather than functions and hierarchies (Schenk, 2011). There was also introduction of the concept of production line and it was associated with scientific management, enabling mass production (Hakansson and Waluszewski, 2007). Additionally, there were introduction of various approaches for the purpose of production, which remarkably helped to enhance quality of the products. Following TQM, there were gradual introduction of other quality control measures in the manufacturing process; these are: Challenges of Globalization Cultural Differences Globalization can bring challenges and opportunities for the multinational companies simultaneously. One of the biggest challenges of globalization is overcoming the differences in the culture that multinationals companies face when they are operating across the national borders. It is very crucial to understand that key to successful globalization lies not only focusing on the economic aspects but also the cultural aspects. One of the basic challenges of the cross-cultural differences that are often faced by the multinational companies in their operations is the barriers it create it intra-firm communication and product standardization (Khanna and Palepu, 2013). If the employees within an organization cannot communicate with each other efficiently then this hampers the overall productivity of the company. The biggest challenge for the human resource departments of the company is to create a global community of employee. In the report published by the Human Resource Management 2008-09 it has been stated that uniformity in the recruitment process is extremely important for the companies to gain competitive advantage over the competitors (Gorelick Milton and April, 2004). It has been observed that if the multinationals send overseas employees in foreign countries to train the employees then it may often lead to paradoxical results if the linguistic barriers between the countries are very strong (Vaidya, 2006). Often nationals have been seen to perform efficiently in communicating with the local employees and achieving better results. Most of the companies only conduct superficial methods to overcome the cultural challenges by completely underestimating the linguistic divide. Later these become the cause of ineffective communication among the employees and errors in carrying out orders. Human Resource Management Human resource management becomes very important for the crucial functioning of the company that operates across various geographies. There are various challenges that need to be faced by the HR managers in coordinating the diversity of the workplace. This is because the diversity of workplace is not only related to the age, gender and capabilities but it is also dominated by cultural difference, ethnicity and religious belief (Gannon, 2008). The success of any organization depends on how effectively they can manage this diversity and foster integrated development which lead to the convergence of the global employee culture. Multinational companies operate in different countries, generally employee people from different countries, with various cultural and ethnic backgrounds. Most of the successful companies in contemporary times focus on “Think Global Act Local” policy in their HR departments. According to Cox (1993) one of the best methods to manage this diversity in the workplace is to scrap the ethnocentric view of the HR managers and replace them with the cultural perspective in which the company operates. The former relates to the decisions which the company thinks is best for the employees and imposing it upon them while the later relates to weighing the probable options that are suitable in the particular cultural perspective and taking actions on the basis of them (Luetge, Koslowski and Homann, 2013). The key reasons that have been identified as the main problems faced in managing human resource across the countries are (Gray, 2009): The differences in the labour costs across countries Differences in the culture and business practices of the countries Differences in the ethics and language between the countries Differences in stages of economic development of the country Owing to these differences the recruitment, training and managing employees across the countries becomes difficult and these are the challenges that comes with globalization Differentiation and adaptation It is now a common consensus that the companies which operate on a global scale must apply differentiated products by adapting to the cultural and economical differences between the countries. For instance it has been observed that McDonalds which has outlets in various continents have differentiated their products depending on the country in which it operates. In India the company had to strategically remove beef and pork from its menu as these items are considered to be ethically inappropriate for consumption. Chevrolet, an automobile giant operating across different countries had modified its models while launching them in middle income countries like India and China. They launch the expensive versions the higher income countries. This differentiation in the products is necessary to boost the performance of the company in various regions (Veder, 2008). Adopting companywide solutions to all the problems is bound to reduce the efficiency as the countries differ on various grounds. The best way to coordinate business in an effective manner is to encourage high-quality local problem solving. The approach is to decentralize the problem solving strategy and accommodate the local conditions in solving the global problems (Gibbert and Durand, 2006.). In order to survive in the business the multinationals need to balance the strategy of standardization and adaptation along with innovation. In a study that has been conducted for the serviced multinationals it has been found that these companies have to rely heavily on standardization as well as adaptation. It is expected that cost advantages are to be obtained from standardization and competitive advantages are to be gained from differentiation (Yusuf, Evenett and Wu, 2001.). Conclusion Thus, it can be concluded that globalisation has helped to bring about lot of changes globally in various organisations. These changes are all positive. It has led to office automation, introduction of TQM, six sigma and various models and outsourcing within the organisation (Marquardt, 2013). It is responsible for evolution of the world in the form of opening doors to technological and business advancements that had taken place in the last few centuries (Grey, 2009). Without globalisation, the world would not have progressed the same way as it has. Organisations also accepted the changes and made the world a better place to live in (Inoguchi and Marsh, 2007). The employment levels have drastically increased, positively affecting the standard of living of people at the same time. However, effective performance under the regime of globalization is also conditioned by effectively managing the cultural and the economical divide between the nations. The role of the human resource managers becomes important in coordinating the change. Evidences has shown that decentralized decision making with local considerations need to be considered by companies for success. Reference List Blanco, E. and Razzaque, J., 2011. Globalisation and natural resources law: Challenges, key issues and perspectives. Cheltenham: Edward Elgar Publishing Limited. Doole, I. and Lowe, R., 2008. International marketing strategy: Analysis, development and implementation. 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