Leadership: Globalization in the World Market - Term Paper Example

Leadership: Globalization in the World Market Introduction Description of the main question in point Peter Drucker defines leaders as “someone who has followers”, and in the context of the question we will look at some common attributes which all the universal leaders should possess in order to be effective and desirable, not only on a domestic level but also on an international level. The reason for this consideration is the ever increasing globalization in the world market. There are hardly any organizations which are untouched by globalization today. Globalization impacts the strategy, culture and structure and it has develop a crucial need of internationally competent leaders and it is now considered a success factor for multinational companies. Describing a Leader We can multiple definitions for leaders; Warren Bennis defines leadership as a capacity to translate the visions into reality, Bill Gates mentions “ as we look into the next century ahead, we will see leaders are the ones who are in power” [Kev13]. Leadership in essence is a process of influence which has to maximize the effort for others towards the achievement of a goal. [Kev13]. Describe the environment that makes the leadership global The world today has an uncertain economy and it has long term trends which relate to demographic advances and greater individual choice and rising sophistication in customer service and all of these factors contribute in making it a difficult challenge for organizational growth. The result of any business depends on the leaders who can work at the peak of their potential on a global level. In the past we have witnessed organizations cutting costs, laying off the staff and eliminating unprofitable liabilities. To make sure that growth and competitiveness is maintained it is crucial to invest in leadership talent which can perform in international environment. In a nutshell we can safely say that globalization requires the businesses today to have the leaders who can manage effectively in multicultural organizations.[Cha]. The aim of the report The aim of this report is to present the critical aspects of leadership particularly in context of a global vs. a domestic leader and evaluate which attributes are essential to make a good leader.This is especially important in the universal contexts and how successfully those attributes operate in the business environment. The understanding of a concept is determined by the essential traits and attributes exhibited by a person. There are a number of definitions which we can find on leadership and a number of cases we can study. This report particularly aims to clarify the confusion between the leadership in a global context and leadership in a domestic context. We will look at some common traits for every leader, and then we will study a comparative analysis which highlights the important difference in traits in domestic and international leader. The differences are not only theoretical distinctions, but they are the differences in mindsets, capabilities and cultural awareness. This report will analyze those behaviors which differentiate the mentioned factors. Global leaders have to deal with greater complex issues as most of the researchers believe, this report will analyze those complex issues by providing some examples. What refers to a domestic leader and what refers to a global leader? First of all we need to set up clear definitions for a domestic leader and for a global leader. A domestic leader operates in the business and economic environment in the local context, keeping in view the local government policies, business policies, business prospects and opportunities. While a global leader is gaining increased importance and is a part of an emerging class of professionals, who are adept at operating international multicultural context. These leaders have wide knowledge base about the world and an interest in people. Their visionary initiatives know no boundaries and they know the impact their actions can have on a global level. It is also said that global leaders can be made, and they are not just born. They need to cultivate a particular way to look at the world, and think about the problems and opportunities in pursuit of solutions to those. Research also suggests that a few common attributes for global leaders are that they have a global mindset which allows them the connection across the boundaries, they are entrepreneurs who can create new solutions and seize the new opportunities and they are global citizens. Paul Meyer, who is the co-founder of mobile health services company Voxiva is a perfect example of a global leader. He was born in USA and grew up in California, Egypt, Tunisia and Washington. After his education he started working for Bill Clinton’s presidential campaign and he ended up with a job which led him to South Asia, South Africa, Bangladesh, Uganda and Tunisia. He found a series of organization there which included the first internet service provider in Kosovo and his services enabled the war affected families to reunite. Then then shifted his focus towards creating a technology based business that addressed the pressing human problems as his previous innovation helped the war drifted families. Myer has been the receiver of Massachusetts Institute of Technology’s Pioneer Award and their Humanitarian of the year award. [Mic03]. Paul Meyer truly presents the attributes of a global leader. He has international experience and he had the ability to turn his experience into a value creating business that not only served his organization but added value to the entire technological marketplace. He was able to manage resources on an international level, he had the ability to identify the key success factors and exploit the best available market. We will look into more examples in our comparative discussion. The differences and the similarities in global and domestic leader The leaders on global and domestic levels can have similarities as well as their differences. For the similarities they need to possess some universal set of skills to qualify as true leaders. Those attributes can be in their leadership style or in the personality. An article by Harvard Business Review defines 7 ways of leading which are: opportunist, diplomat, expert, achiever, individualist, strategist and alchemist. The article mentions that these 7 ways of leading has their contribution in making a highly effective leader and they are present in certain proportions in the personality of every leader. [Dav05]. Other similarities in the common traits are listening, empathy, healing, awareness, persuasion, conceptualization, foresight, stewardship, commitment to the growth of people and building community. [Lar10]. The traits which are common in every leader are ability to inspire action, being optimistic, having integrity, having confidence, ability to communicate and the ability to be decisive. [Pet]. Forbes believe the following 10 traits to be highly effective in a good leader; honesty, ability to delegate, communication, sense of humor, confidence, commitment, positive attitude, creativity, intuition and ability to inspire. [Tan12]. However since the environment of both types of leaders operate in has some differences, some changes arise in their leadership style as well. The difference arises in four areas of activity which are: 1. Multiplicity, which is the number of issues they have to deal with are greater in global leadership. 2. Interdependence, among a cluster of stakeholders, political and social factors and environmental systems. 3. Ambiguity, in terms of casual relations, identifying global needs and goals 4. Flux, in terms of transforming the system quickly. Ghemawat (2008), who is a professor at Harvard, identified a few categories like understanding for cultural, political, administrative, geographical and economic factors which leads to the distinguishing of global leaders. While a global leader may also engage in similar activities, it is the scale of complexity, the context of the environment and the activities which sets them apart from their domestic counterparts. [PSI]. Looking more into the traits of a global leader Cultural issues linked with leading internationally The increase in globalization, with expanding attention on rising markets, present corporate guides with a tremendous challenge in advancing the leaders needed to run worldwide associations. An excessive amount of multinational organizations — especially Japanese, Indian, German, and some American ones — still amass crucial choices in the hands of a little assembly of trusted guides from their home nation. They hire technical specialists, local experts, and country managers from emerging markets but rarely promote them to corporate positions. Rather, they prepare future worldwide leaders from the central command country by sending them on abroad arrangements. This approach worked generally well for organizations offering standard items in improved markets, however as multinationals move into verifiably worldwide associations depending on rising markets for development, it’s a long way from satisfactory. So as to adjust to nearby societies and market needs, organizations should move to decentralized decision making. That presupposes advancing numerous guides equipped for working anyplace. To comprehend this, we should look at what leading worldwide organizations are doing. Geographic, political and administrative factors and the challenges faced by the leaders To settle on quality choices, organizations require a differing set of guides who have profound comprehension of their nearby clients, particularly those in rising markets. The CEO must be interested in individuals of all national inceptions. Atlanta-based Coca-Cola is a leader in geographic differences. As early as the 1960s, the organization was controlled by South African Paul Austin. Since that time, Coca-Cola has had Cuban, Australian, and Irish CEOs, expediting today's CEO, Turkish-American Muhtar Kent. Over the previous decade two Swiss organizations, Nestle and Novartis, have made memorable movements from Swiss-overwhelmed sheets and official authority to a differing set of nationalities. Both now have non-Swiss greater parts on their sheets and a few products based outside Switzerland. Nestle’s official board speaks to ten separate nationalities, while 80% of Novartis executives originate from outside Switzerland. [Bil12] Keep tabs on qualities, not chain of importance. The qualities of auspicious worldwide guides today are not quite the same as customary progressive administrators. They require abnormal amounts of enthusiastic knowledge and self-mindfulness to unite individuals of distinctive societies and engage them to settle on choices without sitting tight for more elevated amount headings. Samuel Palmisano, IBM's director and previous CEO, distinguished that IBM's conventional progressive structure might not be adequate in the 21st century since it was overwhelmed by item and market storehouses. In 2003 he redesigned the organization into a "reconciled worldwide endeavor" dependent upon heading by qualities and coordinated effort, and utilizes uncommon rewards to enable guides to amplify IBM’s society all inclusive. Increase the span of initiative improvement. Collective associations like IBM's require significantly a larger number of leaders than the individualistic organizations. With compliment associations and decentralization of force, organizations should improve clever worldwide guides equipped for working mainly and internationally concurrently. IBM's previous head studying officer assessed that IBM will require 50,000 guides in some time to come. [Bil12] Unilever has more than 50% of its business in Asia, and that rate will build. The organization has attempted a major activity to improve 500 worldwide leaders in concentrated authority improvement projects to plan them for broadened parts. As per CEO Paul Polman, "Unilever's Leadership Development Program arranges our anticipated leaders for an inexorably unpredictable and dubious planet where the main accurate separation is the nature of initiative." To be successful in worldwide parts, leaders require experience working and living in different nations. Broad travel abroad is no substitute for living there, picking up familiarity with nearby dialects, and profoundly inundating in the society. German synthetic producer Henkel, whose executives originate from a different set of nations, demands they live in no less than two separate nations before being recognized for advancement. New techniques for improving worldwide leaders Improving worldwide guides requires a movement from keeping tabs on administration aptitudes to helping leaders be adequate in diverse societies by expanding their self-cognizance, enthusiastic brainpower, and strength. Senior member NitinNohria at Harvard Business School as of late sent 900 MBA scholars abroad to work with organizations in nations where they have not existed or lived up to expectation. Cultural issues forma a major part of challenges to the global leaders. We will explain the cultural failures of leaders through the example of Wal-Mart in Germany. In 1997 and 1998 Wal-Mart acquired two companies in Germany, named Werktauf and Interspar. During the expansion phase Wal-Mart also entered successfully into a number of international markets including Chili, Brazil, Canada, China and India. However, the cultural factors played a vital role in Wal-Mart’s failure in these expansions. The first issue arose in mismanagement when the practice of American employees didn’t fit into the context of German culture. This was evident when each employee in Wal-Mart had to participate in morning exercise before the shift and as harmless as it seemed the employees had to chant WAL-MART,WAL-MART! While Americans took it as a motivational tool to boost the energy and morale, Germans took as an annoying practice and it was put to an end. Clearly this exhibits an example for leaders that while one practice might be acceptable in one culture, it might not be taken positively in the other. Second issue arose with Wal-Mart’s ethical code, which caused much frustration. Thirdly, the feedback of employees was ignored. Upper management simply ignored the views of the employees and didn’t pay much heed to what the employees have to say. Every factor contributed to cause enormous outrage in the employees. Wal-Mart also failed to analyze the local market and specific consumer demands. Store merchandising was wrong and the habits of average German customer were not accounted for while deciding the inventory. One example of this was when the cashiers were told to always smile, however, in the German context it is not okay to smile at strangers. The German cashiers felt uncomfortable at their jobs. The cumulative result of poor leadership in Wal-Mart’s case resulted in serious impacts and the downfall of Wal-Mart in Germany was inevitable. The same situation could have been much better if the leader for Wal-Mart’s German operations understood the importance of cultural aspects in operating globally. Language as a part of leadership traits Errors, aggravations, feelings of exclusion and feelings of inferiority are every day challenges for non-local English speakers attempting to communicate in the dialect of worldwide business. What precisely happens and by what means can worldwide associations help workers come to be more viable in this intercultural dialect and its different correspondence styles? Boundless measures of skills, expertise and learning remain hidden in associations due to dialect and cultural obstructions. Native Spanish, German, Dutch, Turkish, Chinese or Indonesian speakers all endeavor to comprehend, talk and compose English. Local English speakers attempt to comprehend the numerous variants of non-native speakers.[Tse12] The leaders face the major challenge of managing a diverse work force with varying languages across the globe. Similar concerns drove Hiroshi Mikitani, the CEO of Rakuten—Japan's biggest online commercial center- to command in March 2010 that English might be the organization's official language of business. The organization's objective was to turn into the most obvious web administrations organization on the planet, and Mikitani accepted that the new arrangement which might influence approximately 7,100 Japanese workers. The multibillion-dollar organization, a hybrid of Amazon.com and eBay was on a development spree. It had gained Priceminister.com in France, Buy.com and Freecause in the US, Play.com in the UK, Tradoria in Germany, Kobo ebooks in Canada, and established joint ventures with major organizations in China, Indonesia, Taiwan, Thailand, and Brazil. Genuine about the dialect change, Mikitani declared the arrangement to representatives not in Japanese but in English. Overnight, the Japanese dialect cafeteria menus were supplanted, as were lift indexes. Furthermore he expressed that workers might need to exhibit skill on a universal English scoring framework inside two years or they will risk demotion or even dismissal.[Ell].  Management Styles of Leaders Style of management is very critical in determining the roles managers have to perform in handling various situations. Moreover the management style can be described as overall scheme of leadership used by the management. Autocratic and permissive leadership are two highly distinct styles that can be fragmented into smaller subsets. These autocratic styles leadership possess characteristics in which leader dominates and takes the decisions individually. In turn the permissive style leadership gives its subordinates certain degree of freedom to take decisions, thus empowering employees to decide what is in the best interest for organization. Linking these two management style with the democratic (one in which subordinates are empowered to take decisions) and directive (one in which subordinates follow the instructions and exactly as they are guided) styles, four distinct ways of management come apart, which are namely: directive democrat, directive autocrat, permissive democrat and permissive autocrat. The directive democrats and autocrats closely supervise the subordinates, however the directive democrats as opposed to directive autocrats makes decision that encourage employee participation. The permissive democrats and autocrats gives its employees freedom to carry out the tasks as they wish to but the permissive autocrats as opposed to the directive autocrats takes decisions unilaterally. Conclusion We can safely conclude how important it is to understand global leadership in a global context, for every business’s success. We analyzed various leadership styles and looked at factors which can influence theses styles. We have looked the multiple examples where businesses failed because leaders did not follow the framework of the global leaderships. Change being the only constant, it is safe to say that the world of corporations is dynamic and ever evolving, hence global leadership is a phenomena that is gaining increasing importance. Without global leaders, the downfall of organizations which operate in various cultures is inevitable. Cultural and linguistic various other factors must be accounted for when expanding into new markets and heading any multinational corporation. This report has analyzed all those factors and taken real life examples to support the claims. In conclusion, it has been proven that global leaders must be close to the people and their culture if they are to make sound and profitable decisions for the company. Table of Contents Leadership: Globalization in the World Market Introduction 1 Description of the main question in point 1 Describing a Leader 1 Describe the environment that makes the leadership global 1 The aim of the report 2 What refers to a domestic leader and what refers to a global leader? 2 The differences and the similarities in global and domestic leader 3 Looking more into the traits of a global leader 4 Cultural issues linked with leading internationally 4 Geographic, political and administrative factors and the challenges faced by the leaders 5 Language as a part of leadership traits 7  Management Styles of Leaders 8 Conclusion 9 Works Cited 11 Works Cited Kev13: , (Kruse, 2013), Cha: , (Chally International , n.d.), Mic03: , (Michigan Business School, 2003), Dav05: , (R.Torbert, 2005), Lar10: , (Spears, 2010), Pet: , (Economy, 2013), Tan12: , (Prive, 2012), PSI: , (PSI Consulting, n.d.), Bil12: , (George, 2012), Tse12: , (Neeley, 2012), Ell: , (Kim, n.d.), Read More