Effectiveness in the Global Organisation - Term Paper Example

Effectiveness in the Global Organisation Functions and management issues in a global business Organisations wanting to achieve success will not remain “static”. They will keep on moving ‘crossing boundaries’ both in the geographical sense as well as economically, to capture foreign markets and emerge successful. Thus, in the globalisation era, many organisations in various sectors want to expand their reach globally, across nations, thus earning tag of global business. As the global economy expands, as more products and services compete on a global basis and as more and more firms operate outside their countries of origin, the impact on global business functions becomes more pronounced (Briscoe and Schuler 2004). Before initiating the entry and also entering, firms will have to analyze the foreign country or its market, then set targets and formulate strategies accordingly. Even while looking at the factors that may help them to make a successful entry, firms should also pick out the obstacles that may impede their entry. Every foreign country will have distinct political, social and cultural aspects and this will give rise to key management issues for the global businesses. These issues will give rise clear risks, and it is the responsibility of the organisations to address these risks, to achieve success in the foreign markets and thereby achieve the tag of global organisation. One of the key management issues that will be faced in the initial stages, by an organisation in the global stage, is the recruitment of employees. Organisations operating as global organisation will have or need to have a diverse workforce. That is, organisations operating in foreign territories are forced or duty bound to recruit employees from the host country. These organisations set up their subsidiaries or units in other countries, to tap the human resources of the host country and thereby get advantages. So, it is normal or necessary for the organisations to give back to the people of the host country, mainly in the form maximum recruitment of local skilled and qualified people. This will be particularly visible when organisations enter diverse and large countries like China and India, which apart from having rich human resources, also has great market potentials. Employees from the parent country where the firm is usually headquartered or based are called Parent Country nationals (PCNs). The employees from the host country where subsidiaries are located are called host country nationals (HCNs). Finally, there will be employees from other countries called Third country nationals (TCNs) (Scullion & Collings 2006). Among these three groups of workers, at least the first two groups of workers will have to be recruited by the organisations in their global businesses. This recruitment procedure will clearly benefit the organisations by providing them surplus and some times cheap labour, and as mentioned above will fulfil their responsibility of giving back to the host country. Nike Corporation, world’s leading manufacturer as well as supplier of athletic shoes and apparels, is handling this management issue aptly. Currently Nike has over 500 factory or office locations in around 45 countries all over the world making it one of the prominent global organisations. Nike by recruiting employees from the local population is diversifying its work force further, thereby successfully implementing its Diversity program in a different way. Some times, there will be problematic management issues that organisations and its staffs stationed in foreign countries are discriminating the local employees on the basis of religion, race, caste, etc. In host countries, there will be different religions or cultures or castes, etc, and if the organisation and its foreign employees without understanding their uniqueness and importance; ignore it and not properly manage the employees, the whole organisation will come under fire. In such a state of pluralism, the potential for conflict disrupting the organisation is high. Therefore, it becomes necessary to encourage intercultural dialogue and promote cultural pluralism within the organisation. But in order to effectively achieve this, a study of how these people behave, as individuals, groups of individuals, as a society and as an organisation has to be carried out. Its aim is to foster relationships by achieving three goals: human goals, the organisation’s goals, and social objectives. Also, organisations should carry out cultural sensitivity training for its outside operations’ staffs. Importantly, if the organisations are not providing positive, optimum and safe working environment and conditions for the local employees, they could face serious operational and ethical risks. Organisations global aspirations will be mainly threatened with a negative image, if they are accused of exploiting the employees in their subsidiaries. To avoid this problem, the organisations should set code of conducts or standards on how to manage the local employees. Also, standard working conditions should be provided to the employees. Nike is one of the global companies, which is constantly facing criticism regarding this aspect of aptly treating its host country employees. However in recent times, Nike is taking steps to give good care to the employees in its foreign operations, particularly in Third World countries, thereby meeting ethical standards. That is, when “problems surfaced regarding the abuse of employees and unfair wages in the factories producing Nike athletic shoes, Nike took a number of initiatives to solve these ethical problems” (Altham 2001). Nike management as well as its contractors in those countries set up or followed a code of conduct or standards to take care of the employees’ health and safety aspects. Also, to improve the working conditions, “Nike also brought in auditing firms to monitor such issues as unfair wages, work schedules and child labor” (Altham 2001). Importantly, Nike carried out cultural sensitivity training for its contractors’ as well as outside operations’ foreign supervisors, so they become aware of the culture of the host’s country employees and manage accordingly. Apart from the above discussed operational issues, organisations could face management issues while marketing their product or services in the global market. That is, although organisations will try to offer products or services, which will be specific to countries, majority of the time they will offer more or less same products or services to all its global market. However, even while offering the same products, they will try different marketing strategies, with particular strategies for each country. Through this way, they can entice clients from all markets, achieve success and thereby earn the tag of global business. Thus, marketing strategies has to be formulated according to the market or prospective consumers and their needs or expectations, and this can be seen from the strategies of General Motors in U.S. and India. In the current scenario, American people mainly go for fuel efficient cars, which is slightly different from the Indian customers. Although, prospective Indian customers also focus on fuel efficiency, they focus more on style and comfort. American customers give more emphasis to fuel efficient vehicles. Thus, marketing strategies of GM vehicles in U.S. are mainly based on its fuel efficiency aspect. While in India, Chevrolet cars (GM operates only Chevrolet in India) are marketed using celebrities particularly movie stars to focus on the style factor. In U.S., GM wants to market its range of fuel efficient cars in a more effective manner, than the heavy trucks and SUVs. Mike DiGiovanni, Executive Director of global market analysis at General Motors, has this to say on GM’s shift in marketing, “will go for fuel economy and hybrids," instead of promoting trucks as the company has done in the past” (insidebrandedentertainment.com 2008). The other risk, the global organisations will face in the marketing sector, particularly in the advertising front is the lack of quality advertising agencies in local markets. For example, in China, the local advertising agencies are not equipped to handle the needs of the foreign firms. Any organisation wanting to achieve the tag of global organisation, cannot achieve it, if they cannot reach and achieve success in the biggest market of China. However, risks in coming up with optimal marketing strategies due to lack of ad agencies in China, could be a key management issue for the organisations. “Advertising agencies and media companies, which did little but complain about the lack of “good people” in China, are finding themselves in a development gap with their clients and advertisers” (Guérin 2005). Wal-Mart faced this exact challenge, as it was not able to hire an apt advertising agency to work on its stores’ advertising campaign. The other related challenge, Walmart faced in the advertising front is that, China being a huge and diverse market both in the geographical sense and demographic profile, with the people living all over the country, Wal-Mart is facing risks to actualize a single advertising strategy for the whole country. So, Walmart has to localize its marketing plus advertising strategy, thereby focusing only on the stores in specific localities, without going for pan-national perspective. Role of leadership and its impact on issues of global organisational effectiveness Among the various management issues that has to be managed by the leader, the culture of the country need to be firstly understood by the leader, to make a successful entry and importantly to actualize effective cross cultural communication channels. Culture can be understood or misunderstood by stereotyping it. Stereotyping of the people and their culture could be carried out wrongly and this will lead to bad repercussions, without any chance of optimal communication. Cultural stereotyping is a naturally occurring human activity and it happens when an individual, particularly the leader has a direct and distinct experience with another individual or individuals from a particular group. Apart from this basic process, stereotypes gets developed when an individuals particularly leader of an organisation forms assumptions based on second-hand information and opinions, output from the mass media, and general habits of thinking; which they may even have been formed without any direct experience with individuals from the group. (Ren and Wang 2006). Because of these standard stereotypes about an individual or a group of people from a particular culture, communication with them would be one-dimensional and shallow without any specificity and flexibility. With this lack of clear image or stereotype about the communication partner or even the prospective customers, the leader will not be able to implement an effective communication model. Importantly, stereotypes about many groups are predominantly negative, and this will consequently lead to communication with a member in an environment of hostility, rejection, or conflict. (Eunson 2008). To understand foreign cultures, then develop positive generalizations and thereby develop apt localisation strategies, entering organisations should take time and then come to the conclusions. Thus, it is a continuous and dynamic process, with each situation and responses giving rise to new interpretations about the cultural stereotypes. The basic necessity on the part of the entering organisation and the leaders or supervisors is to keep the mind open to new information regarding the foreign culture, so that they will be ready to redefine the existing unwanted stereotypes any time. “The idea is to separate our genuine knowledge about particular groups from those inflexible notions that have become lodged in our brains because of past experiences, rumor, or media influences” (Ren and Wang 2006). Thus, to actualize effective communication channels within the organisations and most importantly with the customers, leaders managing a global business need to understand local cultures, limit cultural stereotypes and importantly adopt localisation strategies. In a global market, any new product or service of a global business has to be marketed in a way that could entice the local people. So, localization is the process, in which the foreign companies’ products and services are marketed and promoted according to the needs, culture and tastes of particular local population, without preset and stereotypical mindset of their culture on a whole. “Localization is the process of adapting a product or service to a particular language, culture, and desired local "look-and-feel." (gvlocalization.com). So, based on the cultural and the customer differences, the leadership styles will also differ and evolve. That is, the responsibility of the leader in a global business, as discussed above, is not to be narrow minded with stereotypes, instead should keep an open mind, understanding the local culture and thereby incorporating localization in the operational and marketing strategies. This responsibility or role of leader in global context can be explained through the leadership actions of Alan Gershenhorn, Senior Vice President, Worldwide Sales and Marketing of UPS. United Parcel Service Inc (UPS), America’s major parcel service, is the worlds largest package delivery company. UPS adopted e-commerce as part of its operations in mid 1990’s. “In 1996, UPS created its e-commerce team to develop ways to use the internet to conduct business. The company realized that any way companies buy, sell, and do business would affect UPS” (Deresky 2006). Alan Gershenhorn, one of the key leaders inside UPS, played the catalyst role in the introduction of e-commerce as part of UPS’s international operations. As UPS want to manage its global business aptly, he continues to formulate all the plans regarding UPS’s e-commerce wing. “As senior vice president of worldwide sales and marketing for UPS, Alan Gershenhorn directs electronic commerce… Under his direction, UPS is focused on deepening customer relationships through an expanded offering of technology-based services and solutions.” (ups.com). The steps taken by Gershenhorn as part of global business management mainly focused on catering to the local market and local culture, particularly in the aspect of language. Gershenhorn decided to promote the e-commerce in Asian countries, which are Internet literate and has sizable internet coverage. He promoted service mainly with UPS’ motto of "Best Service, Lowest Rates”. Gershenhorn was able to handle the important challenge of reaching out and enticing the local customers in their own language, taste, culture, etc. He was able to successfully to do that by taking the American dominated UPS in the bilingual route. That is, in its international e-commerce websites or regionalized country specific websites; local language was prominently featured to explain about several of its e-commerce’s features. This tactic was already followed by UPS in the countries in North American and European market, however, Gershenhorn was developed further for the Asian Market. The success of this strategy and the effective leadership of Gershenhorn can be clearly seen in the facts given by Alan Amling, former Director of electronic commerce for UPS was “We continue to roll out additional local language sites and have seen an increase in usage. In the latest Asian sites, we have seen preliminary numbers indicating an increase of 22-143%.Visitors chose the local language version 84-96% of the time.” (cited in Wan 2002). From the above analysis, it is clear that for an organisation to manage its global business optimally, its leader or leaders should exhibit optimal leadership traits. References Altham, J 2001, Business Ethics versus Corporate Social Responsibility: Competing or Complimentary Approaches? International Business Ethics Institute, Washington, DC. Eunson, B 2008, “Intercultural communication,” In Communicating in the twenty-first Century, John Wiley, Milton, Queensland. Deresky, H. 2006, International Management: Managing Across Borders and Cultures, Pearson Prentice Hall, Upper Saddle River, New Jersey Guérin, D 2005, Chinas Rising Advertising and Media Industries, viewed on November 10, 2010 http://www.danwei.org/media_and_advertising/human_capital_and_chinas_risin.php Gvlocalization.com, Overview, viewed on November 10, 2010 http://www.gvlocalization.com/en/service.asp Insidebrandedentertainment.com 2008, Q&A: GMs Future Looks Greener With Fuel Efficiency and Hybrids, viewed on November 10, 2010 http://www.insidebrandedentertainment.com/bep/article_display.jsp?JSESSIONID=bQYPLPqJfpTbl31dLKWytWbMft2hZYc1K6jHJ20ZhZw3NM3nGWGH!405476046&vnu_content_id=1003811163L Ren, X and Wang, H 2006, A Study of Cultural Stereotypes in Intercultural Communication, Sino-US English Teaching, vol. 3, no.3. Scullion, H and Collings, DG 2006, Global Staffing, Routledge, London. Ups.com 2007, UPS foundation, viewed on November 10, 2010 http://pressroom.ups.com/mediakits/landing/0,2307,50,00.html?mkit_name socialresponsibility Wan, WP 2002, Interview: United Parcel Services Director of Electronic Commerce. Thunderbird International Business Review, vol. 44, no. 4, pp.445-454. Read More