Globalization as an Opportunity for Companies to Utilise Labour and Intellectual Capital - Essay Example

Globalisation Is an Opportunity for Companies to Utilise Labour, Intellectual Capital and Other Resources From Around the World to the Benefit of All Globalization Introduction The world is increasingly becoming interconnected into a single global village because of the advancements in technology. This is also becoming a trend nowadays because of the way the global market is filled with interdependent products and consumers making it necessary for companies and labor to traverse the world in search of one another. Globalization has however not started in the recent past, it has been a practiced by the people of the ancient times, when they even had trade routes, for example the famous silk route between China and Europe. Debate about the real benefits of globalization have over the past been quite strife. As much as people see the benefits of globalization, other people are also seeing the dark side and the bad side of globalization. The challenge and need of exploring and exploiting external markets makes globalization an option for companies to consider branching out to different geographical areas. This urge of exploring international markets is driven by the need to generate profit for their investors and also to provide enough competition to their rivals. All these can be achieved by increasing the global presence of a brand and company. According to Michie (2011), globalization creates more chances of doing business by introducing new markets and new trade areas hence it promotes companies trade. This is achieved by exploring the available resources of a country and exploiting the resources. Companies therefore are not only faced with the challenge of competing or developing their brand in a new market, they are also provided with an opportunity to sample from the available raw intellectual resources available. However, the various decisions that have to be made include issues of management and leadership, marketing, finance, acquisitions and mergers, operations among others (Hitt et al., 2011). Companies are known to apply and replicate their business models and processes throughout their corporation so as to maintain consistency. Consistency of a product creates a standard appreciated by clients making the product maintain its value (Sarin, 2013). When a company decides to venture into new markets, it might be forced to change its operation model to fit in with the demands of the new market. A good example is the global beverage making company coca-cola. Coca-cola has ventured out in the global market using different business models for different markets. According to Foster (2008), this has always been a challenge for the company because it seeks to maintain its parent product in markets which have different demands. The American market of coca-cola uses high fructose corn syrup which is cheaper than sugars used in other markets like Africa, this means that the cost of operating in America is different from that of Africa but the product has to come out as a standard coca-cola product. Companies that venture out in new global markets are also faced with the challenge of staffing (Storey, 2007). This is because they are in various markets which have different cultural perspectives from the ones in the parent company. Since the position of top management is normally retained by employees who have an experience in the company, it becomes difficult to adapt to direct the new employees because of the cultural barrier aspect (Crawley et al., 2011). This becomes a challenge to the company as it tries to adapt to the new operational environment causing a delay in operations. Despite the huge potential market in china, it has become very hard for most foreign companies to establish in that country. This is because of the very stringent measures that the People’s Republic of China has placed concerning matters dealing with intellectual property and intellectual capital. This acts as an impediment to globalization because most companies are not willing to disclose most of their intellectual property, especially not to governments. This is because of the fear of duplication of the patented property or forceful acquisition of the human capital and the intellectual property. This is the greatest challenge of globalization, because of the risk involved in exposing company’s blueprints to other people who might modify or steal that concept (Samli, 2007). The Chinese government has however loosened the grip on the stringent intellectual property laws so as to attract more foreign investment (Howell, 2004). However, intellectual capital can also be used for the advantage of the company. This includes transportation of concepts and human capital into new markets to come up with solutions for the market using locally available materials (Weick et al., 2013). This includes setting up of research and development facilities in different countries. A perfect example of this capability made possible by globalization is the Hyundai motor company. Hyundai has research and development facilities in six countries including Germany, Japan, India and Korea. It also has a design center based in California specifically for development of cars suitable for the American market (Ahmad, 2013). Globalization is definitely attracted by of sustainable raw materials and cheap labor (Calder, 2010). It is for this reason that Apple incorporation, an American company, manufactures its products from the Asian countries like Taiwan, Singapore, Malaysia, China Japan and South Korea. This is because of the availability of cheaper labor in those areas as compared to America (Wu, 2006). Some of the theories that have come up because of globalization include the theory about include the distribution of income and the poverty gap. It is said that as much as globalization is seen as a means of economic empowerment to the docile communities, it brings little or no impact at all in terms of bettering the people’s lives financially (Harrison, 2007). This is because of the poor pay that the workers receive. At first, it always seems like a help towards the community. After close scrutiny and analysis, it has always been found to be a burden to the community. This is because the people of that community become very dedicated to the new company, leaving no time for their families. The salaries and wages paid are always also insufficient to sustain a family. This is because they are exhausted after accounting for transport, accommodation and food. Some of these cultural differences and company culture are explained better in Hofstedes view on cultural dimension. According to Luger (2009), this study is now used as guide by companies before venturing into foreign territory. The five dimensions according to Dr Geert Hofstedes study carried out on IBM employees include Power Distance Index (PDI), Masculinity (MAS), Uncertainty Avoidance Index (UAI), Individuality (IDV) and Long Term Orientation (LTO). PDI addresses the fact about existence of inequality between people with power and those without. A high PDI shows that the inequality is high and accepted by the people of that community and that instructions and decision making is normally passed down the hierarchy. Hofstedes identified Malaysia as a region with high PDI. In region/company with low PDI, so much teamwork is involved because people consider themselves peers. IDV index show the connection between individuals and their community. Regions with low IDV indexes are much easier to market in because they are cohesive and they value each other. Regions with high IDV however people keep small circles, they do not share personal information and they respect each other’s time and freedom. People in these regions adapt easily to changes unlike the people in regions with low IDV. According to Hofstedes, Japan has a high MAS index than Sweden. This means that horizontal segregation is higher in Japan than Sweden. If a company is to open an office in Japan, it would need to appoint male leaders in order to increase its chances of success because of the high MAS index. However, opening an office in Sweden would require a balance between male and female employees because of the low MAS index in Sweden. Hofstedes cultural dimension indicated that UAI measures the level of anxiety felt by members of a society if faced by uncertain situations. High UAI communities are very conservative in nature. Regions which have people with a law UAI are very pragmatic and open to ideas and change. Lastly, LTO tries to identify a community’s commitment to traditions and values. A country with a high LTO values traditions, systems and long term commitments. These communities regard the elder people with so much respect and the men are the decision makers. Dealing with this community requires humility, loyalty and perseverance in order to be rewarded. However, communities with lower LTO normally do not believe in systems so much. They are spontaneous people who encourage creativity and diversification of ideas. Some companies also set out with the aim of conquering new markets but they end up being swallowed by the reality in the market. This is normally attributed to poor reconnaissance and market research about the new territory. Researches normally assist a company in making vital decisions about very fragile matters like marketing, branding and packaging of the product (Piepenburg, 2011). Conclusion Just like any other action, the issue about globalization has its positive and negative impacts on the companies. As a business model, globalization is advantageous to most businesses because it aims at exploiting labor, intellectual capital and other resources for the good of the business. This is because businesses aim at reducing their costs of production so s to increase their profit margins. This act is not for the benefit of all. It is for the business’s own benefit. A well thought of approach should be taken whenever a company is venturing to unfamiliar territories so as to avoid backfiring strategies and targets. References AHMAD, A. (2013). New age globalization meaning and metaphors. New York, NY, Palgrave Macmillan. http://www.palgraveconnect.com/doifinder/10.1057/9781137319494. Top of Form CALDER, K. E., & YE, M. (2010). The making of Northeast Asia. Stanford, Calif, Stanford University Press.Bottom of Form CRAWLEY, E., SWAILES, S., & WALSH, D. (2011). 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