Jan 25, 2018 in Economics

Globalization

Globalization refers to the process of political, economic and cultural integration

The main characteristics of the globalization are the spread of capitalism around the world, the international labor division migration on a global scale of monetary, human and industrial resources, as well as the standardization of economic and technological processes and convergence of cultures of different countries. Under the influence of globalization the new type of corporate organization has appeared and it is characterized as a global company that takes advantage of the activities on a global scale. There are two methods by which global companies achieve competitive advantage and ensure their long-term competitiveness. The first one is the placement of various activities in different countries, allowing the world market a better serve. The second refers to the statement the firm's ability to coordinate the activities of its branches in other places scattered around the globe. But both of these methods are connected to the management of global workforce.

Thus, it is easy to agree with Thomas that the main consequence of this is the international division of labor, migration (and, as a rule, concentration) on a global scale of capital, production resources, labor, standardization of law, technological and economic processes, as well as the convergence and fusion of cultures of different countries. This is an objective process that is systemic, that is, covering all aspects of society. In result of globalization, the world is becoming more connected and more dependent on all its subjects. It occurs as an increase in the number of common groups of problems and expanding the number and types of integrating subjects.

Making a conclusion of the definition and discussion of the term “globalization” by Thomas, it is necessary to point out that for the economic aspects of globalization, characterized by free trade, free movement of capital, reducing taxes on business profits, ease of travel industry between different countries, both developed and developing, to reduce labor costs and natural resources, they need to be closer together in terms of wages, prices of goods and profitability of enterprises. The globalization is also characterized by the growing number and size of mergers, both at national and transnational level, accompanied by a radical restructuring and the reduction in the number of the employed labor force. The trend towards outsourcing non-core activities of the specialized companies has appeared. Of particular importance is outsourcing from developed countries to developing countries, which leads to a reduction in employment in the developed countries and the growth of employment and income in developing countries.

The rapid dissemination of financial information around the world due to the Internet, the trend towards greater openness of enterprises is the next characteristic of the globalization and its impact on the business performance. The great importance of stock markets and those "financial instruments" in which they trade - shares of companies and mutual funds, commodity futures – have begun to be the part of the political and economic movements in the world and, thus, have the great impact on the business. The influence of the few national currencies through the international system of free foreign exchange on economic processes in different countries is being the next important characteristic of globalization. The globalization has created the opportunities for the businesses as it accomplished the increase in consumer loans as a platform for further growth in consumption. The globalization has created a powerful stream of advertising in all media, the erosion of clear distinction between information and advertising.

Global workforce management is characterized by differences of experiences and perspectives of managed people in the organization. These differences are based on the discrepancy of the race, religion, culture, gender, sexual orientation, age, heritage, mental, and physical abilities. The workplace that is being diversified has the strong effect on the business performance process. Appropriate, effective, and efficient management of employees that are working in such environment can give company a lot of benefits, among which are the quick adoptability and flexibility, the strict tightness and high tolerance level. These kinds of places to work are differed by high level of creativity that provides numerous benefits for the company’s performance. However, it can bring some problems with the hard managed minority groups, with high expenses that can be connected to the organizational culture creation among different employees, and that is the most important that lots of conflicts can arise, that would lead to ineffective business performance.

According to Thomas, cultural experience and differences in perceptions contribute to the development of different points of views and allow for broader problem discussion that has positive impact on the organizational performance as it leads to mutual problem understanding and solving. This is the positive tendency that is easy to agree with, as this in turn broadens one’s outlook, increases the level of tolerance, and develops emotional intelligence of employees. Thus, emotional intelligence increases the mobility and communication techniques of personnel and encourages leadership development and socialization that makes the process of their management more flexible and easier. These promote staff cohesion, which gives competitive advantage in the definite management realization and decreases the level of labor turnover and absenteeism. These factors build company’s unique knowledge base and can be seen as the unique value advantage. High level of staff cohesion builds employees commitment to the success of organization and encourages them to make moral and discretionary effort. Therefore, the global workforce management positively contributes to organizational culture and supports its development.

Problems of the global workface

Managing the global workforce also has the disadvantages both for business or organization and manager. The most important problem of global workforce management is connected to the high level of conflicts within the organization that can arise due to the differences in the cultural traditions, points of view, etc. This problem is hard to manage, because some organizations have problems with it and some created such organizational culture that promotes the tolerance among employees. This factor promoted the next disadvantage of global workforce management and it is connected with the expenses. In order to promote effective organizational culture, develop the effective personnel working process, company has to spend money for the specific hiring methods development, different motivation methods usage, training courses, specific organizational culture creation.

More and more organizations are crossing borders. The labor force is becoming more mobile and global. In this context, tasks such as talent management, retrieval and retention of talent, the development of the global work culture, and the management of global mobility valuable employees is becoming increasingly difficult. Matching resources management is crucial to ensure effectiveness. In addition, studies have shown that consumers around the world make buying decisions based on ethical treatment of the working force. The global workforce management has its advantages and disadvantages, however with the fast globalizationprocess it is better to concentrate on the advantages that the global workforce creates for the organization.

The brand McDonald's

Under the brand name McDonald's in the middle of June 2009 owned 32,060 restaurants in 118 countries worldwide (including approximately 14,000 of them located in the U.S.). Of these, a significant portion (25,578) ruled on franchising, so an assortment of restaurants, the size and composition of portions can vary in different countries. At the end of 2010, 32,737 restaurants worked under the name McDonald's worldwide. McDonald's calling card is the production of beef burgers. Since 1996, the company tried to break into the Indian market in vain. As it is known, in this country cow is a sacred animal and its meat is forbidden to eat. In this regard, sales were sluggish. The new restaurant was opened in India, where visitors are invited to try the burgers of plant origin. McDonald's fully excluded meat dishes from its menu. Instead, the restaurant proposed McVeggie patties with carrots, peas and potatoes and McSpicy Paneer - pies with traditional Indian cheese. Thus, in this case McDonald’s is using the globalization as a phenomenon like a chance to expend business and to grow, its strategy to think globally, act locally – is highly effective and efficient.

"Coca-Cola" and "Pepsi"

The scandal surrounding the production of "Coca-Cola" and "Pepsi" began in India in 2003. The Centre for Environmental Protection found that their drinks from Indian branches contained traces of pesticides. According to experts, this could indicate the use of contaminated water. Publication of the results of research center caused a scandal. The performance of the companies in the global arena created the bad reputation of the products that moreover never had had the good one. In this case, the companies were under the great pressure of the world publicity and had to solve this issue. In order to reenter the market, Coca Cola Company has decided to use one of the effective marketing techniques for the market entrance – the joint venture with the local producer. This marketing step seems rather effective as it helped to overcome entrance barriers of the market, helped to improve the company’s acceptance by the customers and has made possible to use the niche of the local company for the Coca Cola’s brands promotion. At the same time the Pepsi Co. has used more aggressive marketing. It has created the joint venture with the local companies, then researched the tastes of the potential customers, tried the new products in the market, and after the understanding that the customers like the products the Pepsi Co. introduced the new brands that burst the market. Thus, the Pepsi Co. used the aggressive methods of marketing for the entrance of the India market.

The global operation of the both companies has the bad impact, as the problem has evovled into the great world scandal. 

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