Management in Wider Environment - Research Paper Example

Management In Wider Environment Introduction During the past few years the situation on the global market underwent significant changes. International economy greatly affected the activity of modern organizations. In the process of globalization they had to undergo serious changes in order to remain successful (Dowling and Welch 2004). Many organizations became multinational and had to review their management to win the new market. It is essential to consider the advantages and difficulties globalization brought, because different scientists have quite different opinions. In every country there are many supporters and opponents of globalization. Some scientists value the prospect of financial flexibility and the opportunity of global market entry (Dowling and Welch 2004). However, people realize that the influence of globalization on worldwide activity can be different. This influence became the focal point of economists’ attention (Kim 1999). Modern market is remarkable for its high competition that is why it is a top-priority for every organization to maintain a competitive advantage and gain leadership. As the question of management of multinational organizations has become the main concern of many economists, the given paper will discuss the management of multinational organization and provide the real example. Globalization and its effect on the national economies. The influence of international institution and EU membership. Definition of Globalization As there are many opinions about the globalization and its impact it also has many definitions. Baolian (2004) presents two scientific definitions of globalization. The first is: Globalization is the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology”. (Baolian 2004) This definition is focused on the interdependence of the countries as the main drive of globalization. The second definition presented by Baolian has different wording but the same meaning: Globalization is the present worldwide drive toward a globalized economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments. (Baolian 2005) These definitions are correct, however, the main distinctive feature of globalization is that it creates cultural diversity at the workplace. Some scientists consider globalization to be closely connected to history. There are a lot of debates relating to the role of the organizations, leaders and authorities in the process of globalization. This process consists of many aspects and influences all the areas of countries’ life. The alterations in one area stimulate the changes in other areas. The impact of globalization on different spheres In the sphere of economy globalization implies international trade that stimulates people’s travelling, visiting other countries and making investments. People receive the opportunity to purchase the goods and to have services they did not know about before (Dowling and Welch 2004). Organizations receive the opportunity to sell the goods produced by companies. More and more people use the chance provided by globalization to find jobs overseas and increase their standard of living. However, movement of people is usually not fully approved due to the disadvantages it brings to many countries, which loose qualified specialists who move to another states to find a job. Moreover, the investments also bring disadvantage, because it makes the countries accept the rules that are contradictory to its national principles (Dowling and Welch 2004). The influence the globalization has in the sphere of politics is the formation of global principles concerning international trade. A lot of institutions and even new currency were created in order to facilitate the regulation of international organizations’ activity. Globalization brought a lot of changes to the area of technology. Technological progress is one of the main drives of globalization. Many changes were made in order to facilitate the communications between business partners. International communication brought a necessity in creating new rules of effective communication. Today every person should possess the skills of effective cross-cultural communication in order to have a success in any sphere. New international companies appear every day and attract employees. However, as an example it would be essential to present the multinational company with long history. The benefits of European membership for United Kingdom a) Single Market The Single Market that appeared as a result of the European Union’s politics brought a lot of advantages to the United Kingdom. The UK Gross Domestic Product became higher, the level of unemployment dropped, the foreign direct investment increased. Due to the new laws new products became available while the costs for goods decreased. The advantages can’t be considered only from national perspective: there are noticeable benefits for organizations, individual customers and workers. b) Competition Due to the internal market appearance a lot of measures were taken in order to stimulate competition. The European Union’s policy reviewed a lot of practices, which represented obstacles to competition such as monopolies, unneeded supervision etc. The company Unilever and its view on globalization Unilever is a multinational company. It specializes in food, drinks and personal care goods. Unilever has more than 170,000 employees and had the income of more than €40 billion in 2008. The attitude of the company towards globalization is reflected in the report titled The Impact of Globalization--A Perspective from Unilever. In the document the organization stated that it considers globalization to be fundamentally a process of rising trade and industry integration, stimulated by the technological progress that provided information availability and multicultural communications. This in its turn stimulated the movement of finances, people’s travelling, new products availability. Thus, Unilever considers the impact of globalization to be positive, because it provided the company with the great opportunities and helped its international activity. Moreover, according to Unilever, globalization stimulated the discussion of problems of poverty and environmental protection. The report also declared about the organization’s plans and its activity directed on entering foreign markets ("Unilever tells UK's House of Lords it sees globalization as important for business and people”). The globalization and the changes it brought influenced Unilever Company positively. EU membership provides the opportunity for organization to benefit from all the laws and organizations specially created in order to facilitate the international business activity. The main of them are General Agreement on Trade and Tariffs and World Trade Organization. Many states intentionally eliminated the barriers for international trade and made the control not so strict in order to provide more business opportunities. This was done by many countries’ authorities in order to improve the economic situation and improve the standard of living ("Unilever tells UK's House of Lords it sees globalization as important for business and people”). The needs to adopt and the benefits of adopting policies of environmental awareness and maintaining the environment. The responsibilities of the organization and regulatory forces affecting the organization at national, EU, and global levels The importance of managing science in the process of adjusting to new economic environment Managing multinational organization implies the application of well-known management techniques taking into account the specificity of the multinational organization activity and making the improvements in order to amend the company’s activity. Every multinational organization requires careful approach and readiness to overcome the difficulties met during the process of making necessary amendments. It is evident, that the management science can provide the supervisors with a lot of useful material that can help them build new tactic in order to advance the company’s showings and adjust the company to the new economic environment. Notwithstanding that multinational organizations usually represent giants, which have considerable market share, their progress and future trends should be improved by the individual supervisor. Nevertheless, in order to make the right conclusions and to build the most winning strategy it is necessary this supervisor should know all the aspects of multinational company’s activity, main processes and the influence of the external environment. However, even if a supervisor has such information he can’t understand it properly without the help of management science (Sparrow 2004). The opportunities of globalization the companies can benefit from To make necessary amendments in order to benefit from the changes brought by globalization it is necessary to define the opportunities it provides. The opportunities of globalization are: 1. To establish large-scale economic activity in order to benefit from new technologies like Internet, which provide unlimited communication opportunities and are cheaper than used before ; 2. To attract more customers. International economic activities are more convincing and attract more customers who think that if the product is successful overseas, it must be good; 3. To set up new production line with global international trademark much faster and without difficulties. The main tasks of multinational company are to strengthen comparative advantage, to create new outlook, to learn the new environment and to take active part in the process of integration. However, in order to have a success it is necessary to remember that globalization requires global way of thinking, but local activity. It is not very easy for the companies to adjust to the new environment, because they usually acted at restricted markets. New international economy is to eliminate motionless businesses and to replace them by new ones, more appropriate for new economic environment. Sparrow stated: Over the course of the past decade, in many countries (especially in the developed world), savers have increasingly diversified their portfolios to include foreign financial assets (foreign bonds, equities, loans), while borrowers increasingly turn to foreign sources of funds, along with domestic ones. While flows of this kind to developing countries also rose sharply in the 1990s, they have been much more volatile than either trade or FDI flows, and have also been restricted to a narrower range of 'emerging market' countries. (Sparrow 2004) Unilever's adjustment to the new conditions The chairman of the company Unilever Niall FitzGerald stated that business activity in the unrestricted and at the same time stable market conditions represents the main drive for economic development necessary to struggle with poverty. According to him the poverty is the most serious threat to harmony, social equality, rights and business activity. He also mentioned that global activity can help to eliminate "sadly poor conditions" people from developing states live in ("Unilever tells UK's House of Lords it sees globalization as important for business and people”). Speaking about the organization's adjustment to new conditions, FitzGerald made stress of the company’s activity in 2001. He stated that this period was characterized by more demanding and distressed economic conditions. The events of 9/11 made many companies including Unilever to review their position in considering the issues of economic progress. According to FitzGerald, 2001 was a period of development for the company Unilever: …Unilever's portfolio of leading brands grow by 5.3% for the year with an operation margin, before exceptional items, of nearly 14%, compared with 12% in 2000. Cash flow from operations increased to 7.5bn [euro], up almost a billion more than the previous year. The year was also the first year of operation of its new divisional structure of Foods and Home and Personal Care (HPC). Throughout the year, says the company, the HPC division worked on developing its new network of global technical centres--designed it is said, to bring big innovations to more markets more quickly ("Unilever tells UK's House of Lords it sees globalization as important for business and people”). Managing diversity and providing the health and safety of the workforce. Managing diversity In view of the fact that the most difficult task of the transnational structure is to organize its activity through various cultures and traditions, the function of management should not be undervalued (Sinclair 1994). It helps the organization to create the necessary approach to the issues and understand its position at the market. It is necessary to make each employee understand his function and contribution into the company’s activity. The problem of diversity at the workplace is paid much attention by the board of Unilever Company. The board does its best to create working environment based on mutual confidence and respect. Each employee should understand his function and contribution into the company’s activity. The company guaranties secure working environment and respects the rights of employees. It maintains good relations between workers providing them with necessary consultations on cross-cultural relations. The board realizes that for successful managing multinational company it is essential to hire employees who can think and perform with international perspective. Every worker should be broad-minded and possess the skills necessary for successful activity in the company where workplace diversity takes place. The staff of multinational organization should be formed by well-qualified experts (Dowling and Welch 2004). The globalization can improve relations inside the company. Cross-cultural communication broadens employees’ horizon, makes them more companionable and their work more interesting. The most important task of the managers is to help employees overcome cultural shock and problems in communication by means of different seminars and training courses (Dowling and Welch 2004). The improvement of health and safety of the personnel The managers of the company protect workers’ health and safety and do their best to decrease the risk of injury. The opportunity to reduce the expenses connected with workplace injury prevention make supervisors pay more attention to this issue. In the old market conditions the great number of accidents happened due to the desire to get more profit, so the globalization influenced this issue positively. The equality at the workplace makes managers work closely with subordinates to make sure that they are fully protected and work in secure environment. Conclusion The process of globalization offers transnational organizations a lot of new opportunities providing them with financial flexibility and the opportunity of global market entry. This influence became the focal point of economists’ attention. Modern market is remarkable for its high competition, that is why it is a top-priority for every organization to maintain a competitive advantage and gain leadership. The appropriate management of multinational organizations has become a very important issue for their supervisors (Rugman. and Verbeke. 2003). The Single Market that appeared as a result of the European Union’s politics brought a lot of advantages to the United Kingdom and provided more opportunities for multinational companies. The chairman of the company Unilever Niall FitzGerald stated that business activity in the unrestricted and at the same time stable market conditions represents the main drive for economic development necessary to struggle with poverty. According to him, the poverty is the most serious threat to harmony, social equality, rights and business activity. He also mentioned that global activity can help to eliminate "sadly poor conditions" people from developing states live in (Eaton 2000). Globalization implies support of equal job and income opportunities and appropriate division of labor. Organizations change must be implemented by people with globalized way of thinking. For managing international companies it is necessary to hire professionals who can think and perform with international perspective. Every worker should be broad-minded and possess the skills necessary for successful activity in the company where workplace diversity takes place. The staff of multinational organization is formed by well-qualified experts. The globalization can improve relations inside the company. Cross-cultural communication broadens employees’ horizon, makes them more companionable and their work more interesting. The essential issue the managers should pay attention to is providing employees with the help in the process of overcoming cultural shock and problems in communication. It should be done by means of holding different seminars and training courses. Mockler ( 2002) states: Multinational companies try to implement new management approaches, which at times causes either creation of the totally new theories or contributes into the development of the short-term uncertainty on the market with the striving for long-term goals (an example with Hoechst). In any case, the necessity for adapting the existing approaches and understanding that for multinational corporations the issue of management is especially important must lead to creation of absolutely new approaches and notions, accounting the technological innovations which make the possibility of creating global business more real (Mockler 2002). The new market conditions offer a lot of opportunities for multinational companies. However, globalization process demands full alteration of the way of thinking concerning the function of different resources. In order to benefit from the new market conditions the multinational organizations should undergo necessary changes and establish appropriate cross-cultural relations. Bibliography Baolian, Desirée. (2004). Globalization: Culture and Education in the New Millennium. Berkeley. CA: University of California Press,. Kim, Pan Suk. (1999). Globalization of Human Resource Management: A Cross-Cultural Perspective for the Public Sector. Public Personnel Management Eaton, Jack (2000). Transnational Companies, Globalization and Industrial, Comparative Employment Relations. Cambridge, Polity Press Sinclair, Sparrow, Paul, Brewster, Chris and Harris, Hilary. (2004) “Globalization and HRM”, Globalizing Human Resource Management, Oxon, Routledge. Dowling, Peter J and Welch, Denice E. (2004). International Human Resource Management. London: Thoman Learning Mockler, Robert J. (2002). Multinational Strategic Management: An Integrative Entrepreneurial Context-Specific Process. International Business Press Rugman, A. & Verbeke. (2003). A. 'Extending the Theory of the Multinational Enterprise: Internalization and Strategic Management Perspectives'. Journal of International Business Studies, vol. 34 Harris, P.R. & Moran, R.T. (1987). Managing Cultural Differences. 2nd ed. Houston: Gulf. "Unilever tells UK's House of Lords it sees globalization as important for business and people”. 2002 (European News).(Unilever Group; United Kingdom)(Brief Article). Cosmetics International. Communications International Group. Read More