Questions answering 2053 - Essay Example

Globalization and Multinational Companies Globalization Globalization is such a vast concept that it is almost impossible to define it in a few words. However based on the repetitive attempts of researchers a working definition has emerged (Held and McGrew, 2007). It is defined as the growing interdependence between nations based on factors like increasing trade in goods and services, flow of capital, human resource and information technology (Held and McGrew, 2007). Multinational companiesMultinational corporations refer to business enterprises that operate in more than one country.

A refined attempt to describe the MNC would mean management of foreign direct investment made by a firm in more than one geographical location. The firm is incorporated in one country and opens foreign subsidiaries in the countries (Cullen and Parboteeah, 2013).Relation between globalization and MNCThe existing literature identifies that globalization can take two different forms namely forced globalization and participative globalization (McCann and Acs, 2011). MNCs enter the globalization through the avenue of participative globalization.

The opening of companies in foreign land has received huge boost during the past three decades and this is entirely because of globalization. It has been estimated that multinational companies comprise two-third of the global trade (McCann and Acs, 2011). Crossing BorderReduced cost of production, expansion of market for products and earning higher profits are driving forces to expand business. The cost of labour is considerably lower in the developing countries compared to the developed countries and this motivates firms to relocate production.

When domestic markets become saturated it becomes imperative to capture other consumers and foreign expansion is a lucrative option for companies (Dunning, 2012). Cultural DifferencesDifference in cultures is perhaps the most formidable challenge that has to be faced by companies in their quest for expansion. Management of interpersonal relationships in the MNCs require integrating the national culture of the managers and employees (Sweeney and McFarlin, 2014). Additionally MNCs requires modifying their products and services according to the niche taste of the masses depending on the country.

For instance, when New York Fresh Deli opened franchises in Dubai, vinegar had to be removed from the salad dressings as it was considered as spirit in Dubai (Guffey and Loewy, 2010).Human Resource ManagementAccording to Hofstede (2011) culture can be treated as mental software that affects the way in which a person thinks or behaves. Effective management of human resource is important for the MNC’s as people are often exposed to cultural differences and faces it difficult to adapt to the foreign environment.

The structure of organization of the MNCs is a key factor which determines the ability of the company to foster cultural differences by taking considerable effort to manage ethical diversity.Standardization or Adaptation?There is a growing debate on the strategies that should be adopted by the companies when they are deciding to expand. One of the most popular approaches is the globalization approach which implies that companies should be able to think at a global level where the core strategies should be standardized and act as a local company by adopting its tactics.

This takes care of the differences between the national cultures and allows a company to satisfy the masses (Vrontis, Thrassou and Lamprianou, 2009).Meeting ChallengesThe challenges to the MNCs are formidable and differences in culture, business policies and tactics needs to be addressed for becoming successful. Most of the multinational companies are dealing with these challenges by standardizing only the core culture of the organization but differentiating their products or services according to local preferences.

Thus maintaining a balance between flexibility and adhering to core company culture is the formidable task for all MNCs (Vrontis, Thrassou and Lamprianou, 2009). Reference ListCullen, J. and Parboteeah, K.P., 2013. Multinational management. Connecticut: Cengage Learning.Dunning, J.H., 2012. International production and the multinational enterprise. London: Routledge.Guffey, M. E. and Loewy, D., 2010. Business communication: Process and product. Cengage Learning.Held, D. and McGrew, A. G., 2007.

Globalization theory: Approaches and controversies. Cambridge: Polity.Hofstede, G., 2011. Dimensionalizing cultures: The Hofstede model in context. Online Readings in Psychology and Culture, 2(1), pp.8-21.McCann, P. and Acs, Z.J., 2011. Globalization: countries, cities and multinationals. Regional Studies, 45(1), pp.17-32.Sweeney, P.D. and McFarlin, D.B., 2014. International management: strategic opportunities and cultural challenges. London: Routledge.Vrontis, D., Thrassou, A. and Lamprianou, I., 2009. International marketing adaptation versus standardisation of multinational companies.

International Marketing Review, 26(4/5), pp. 477-500.