The Impact of Globalization on Business Enviroment - Assignment Example

Globalization has dramatically changed the businesses landscape since the early part of 21st century. As per definition of the International Monetary Fund, Globalization is more of a relationship of interdependence of different nations all over the world. Many goods and services cross border and the flow of international capital has indeed reached even underdeveloped countries and emerging economies like India and the Philippines. Both countries are heavily competing for outsourced labor market because the market force in these countries can suit western language and culture. By itself, globalization is a change that stimulated millions of business transactions which offered millions of products and services that consumers from all over the world can choose from. This resulted to a very competitive market as cheap imports came in from big markets like China. However, the local economy of a less developed country bore the impact of these cheap goods especially if the goods were in direct competition against their products. In many countries with poor competitive advantage, this meant survival of the fittest as small shops would compete with huge retail giants such as Wal-Mart. Eventually, mom and pop stores closed as consumers trekked to bigger stores that offered variety. Another reality that globalization presented to business is the possibility of outsourcing jobs due to lower costs. Hence, many companies downsized creating collateral damage to stakeholders like employees. Furthermore, globalization has decentralized or debureaucratized organizations in order to create more efficient teams or departments that can be accountable for goals. Hence, the whole organizational that was once rigid had to change by removing structures and becoming an open system that can accommodate changes brought upon by technology. Even the speed and method of communication within organizations have changed as workers can now telecommute. All communication platforms such as electronic gadgets (mobile phones, notebooks, iPad) became instant necessities in a globalized wired world. Economic elements like international trade and integration of financial markets are not the only aspects to consider since human migration plays a major role in determining the success of globalization. As such, multinational sent many senior managers to different parts of the world; it meant adopting not only to a new set up but to local culture and language as well. In fact, many CEOs found it challenging to adjust to the business culture of the Chinese for a good reason – their value system and their language was all too foreign. Even medium-sized business owners had to overcome a lot of bureaucracy when dealing with Chinese suppliers when it comes to business practice. So aside from learning a new language, getting one’s message across a new culture had to be appropriate less the company risk a bad reputation. So, what strategies should managers develop in order to mitigate the harmful effects of globalization? First, cultural sensitivity should be a main concern when outsourcing jobs or sending managers abroad. One good measure would be to evaluate Hofstedes Cultural Dimensions to get a good overview of how a certain group of people measure up to certain elements such as Power Distance. If a company would like to make transactions in Saud Arabia, a high power distance score indicates that Arabs highly value hierarchical structures; hence, raising dissension against existing policies or rules may be viewed as not only rude but very radical as well. It is necessary for the local unit in this country to comply with all existing rules and expect much bureaucracy. A business that isn’t culturally sensitive will have some drawbacks. One, teams would not work together in a cohesive manner because the organizational culture does not recognize diversity. This would cause more turnovers that could be very costly since training involves costs. Second, the operations (especially HR) would be marred by issues such as absenteeism and tardiness due to lack of motivation. Third, loss of productivity equating to profit loss due to miscommunication. Another step that must be undertaken by the business is analyzing the organizational setup and hierarchy. After evaluation, they should create a structure that could fit two things – the goals of the organization (performance and profitability) and satisfaction of internal customers or employees. For example, teams can be created where power is decentralized and shared. This breaks down a large inflexible department into a smaller units that can adapt to changes. A team of designers for an animation company can be given autonomy to decide on important issues and report the changes to a person in charge at the end of the day. If all the minor changes would still need approval from the main headquarters, this would create a bottleneck in production and affect operations. Virtual conferencing can be a platform for communication so that all departments concerned from various locations are well-informed. Question 2 Students who have studied organizational theory are familiar with Leavitt’s definition of an organization as “ a particular pattern of structure, people, task, and techniques”. The larger the organization, the more complicated patterns develop. In fact, organizations are also considered by Katz as “a system within a subsystem”. There are some of the basic concepts about organization that apply whether an organization existed a hundred years ago or a new virtual business start-up in North America today. However the various forces that interplay inside Leavitt’s concept of organization have changed so much due to many factors – economy, political forces, historical developments, and now-globalization. For hundreds of years, many organizations adopted bureaucracy as a structure. In fact, most governments are still very bureaucratic until today. Max Weber’s bureaucracy was very timely then because countries were expanding after the Industrial Revolution. Likewise, developments in communication, transportation, as well as economy happened at such a fast rate so organizations became more complex. In his design, lines of authority are clearly established; plus, people in charge needed training or certifications to prove their credibility. Career advancement was based on merit, training, and other qualifications that can be considered as a very sound basis. Other concepts such as specialization, coordination, line of authority provided a rigid structure that guided how employees should behave in the workplace. While many advocates consider bureaucracy as efficient, there were also many critics who saw this type of structure as constricting, even dehumanizing. However, the existence of many businesses like UPS showed the beauty and sense of bureaucracy. It still follows its fifty-plus steps to deliver its brown boxes efficiently to customers all over the world. Obviously, parliamentary and presidential form of governments, even federal bureaus are set up in a bureaucratic system to serve the needs of the public. Globalization has changed the game for many businesses; hence, organizations must modify their structures. Modern structures that follow the matrix system are put into place that employ specialists within a group. It has its pros such as job security and friendly environment; however, it can also create much stress as well as having too many superiors for a project. This is highly recommended for organizations that have the following traits (adopted by Food Administration Organization): 1. Well defined work tasks 2. Strong communication lines 3. Good management skills 4. Flexible and willing to take risks Also, one of the most important consideration that must be made is delegation of decision making (whether for lower levels or higher levels only). In a matrix system, members of the lowest levels (clusters,projects, teams) are equipped with decision-making skills. Managers who want to succeed in post bureaucratic organizations face several challenges in a diverse work environment. Diverse not only in the sense of nationality or beliefs but also in terms of specialization, talents, and skills. Hence, managers will often encounter talented people together who may often disagree about a certain issue. Maangers can be effective in dealing with conflicts by helping members cultivate trust and respect to other members of team. The manager can place guidelines that can help the team achieve its objectives. Instead of criticizing a team member who is not performing well, assistance must be given first to enable that team member cope with the group. As mentioned, relationship building is crucial in this kind of organizational set-up. Barriers to effective debureaucratization can be resolved by two main soft skills – communication skills and interpersonal relationships skills. These two skill sets are the main requirements of a global economy for one good reason- transfer of knowledge and technology is critical. Hence, information dissemination is not merely sending missives but also making sure that your message is clear. Although devices like mobile phones and other gadgets can relay messages, the meaning behind those messages are often invisible. A good manager will successfully operate in this kind of environment if he can: 1. Filter the information that has to be transmitted; 2. Clarify any unresolved issues or even be proactive at potential problems; 3. Establish some routines where team members can interact with one another; 4. Seek to develop real relationships with his team that would foster productivity and inspiration; While there are many managers who are highly-specialized in technical skills, a poor EQ would be catastrophic to a matrix system. Openness increases accountability as well because people should be self-disciplined as they need less supervision in this type of set-up. However, fellow group leaders should also be well-coordinated since their tasks are cross-functional. It is imperative then that the top administration fully-orient the managers about the organizational structure as well as the existing structure. Overall, there is no perfect organizational structure because an organization is a living system where people change or evolve. Factor in the different forces in strategic management and you will see that a business has to operate by considering Porter’s five forces and balancing the internal mechanics of the organization. But at the end of the day, people should be the priority in a post-bureaucratic organization. Read More