Management and Globalization - Coursework Example

Management and Globalization 0 Introduction The increased spread of globalization has greatly affected the manner in which business leader conduct their operations today. As a result of the effects of globalization, it is now possible for managers to consider the entire world as a single market full of a potential customer base. The spread of globalization has caused management to greatly expand across the globe, a factor that is commonly attributed with having allowed for increased levels of production. The relative ease with which globalization has managed to spread across the world can generally be attributed to advancements in both communication and transportation across the globe. These two factors are seen to form the central system that allows for international exchange, which in turn is seen to make it possible for businesses to create a number of meaningful business relationships across the world with minimal cost and time investments. This paper will seek to show that globalization has served to change the various fields of management in the modern day business environment (Etemad and Wright 5-15). [2] 1.2 Methodology In conducting this research a primarily, mixed-research approach will be used. The research will utilize a number of published works as well as conduct a survey that will be sent out to a sample size of 50 students from my classroom. The survey will seek to establish just how my classmates perceive that globalization has in effect managed to impact and change the face of business management today. The results that are derived from this survey will then be compared against the information and data that will be retrieved from a number of books and other sources. To further ensure that the information that will be gathered from this research project is completely valid. The research will also feature interviews conducted on a number of local business managers. The interviews will seek to establish the opinion of these business managers on what they think on the findings of both the interviews and the research conducted on the various books. 2.0 Review of Literature 2.1 What is Globalization? The term globalization has variously been used to refer to the integration of societies and economies through the aid of cross-country flows of technologies, information, services, people, ideas, good, capital and finances. This cross border integration can have a number of dimensions which variously include social, economic, cultural and political dimensions. 2.2 The Development of Globalization It is commonly acknowledged that nothing is ever permanent and that the only thing that can be described as being permanent is change itself. Globalization has recently emerged as a key feature in our fast changing world. Globalization has been noted to be impacting the institutional framework in both the industrial and developing countries. The development of globalization has in itself been a historical process as is demonstrated by the fact that during the Pre-WW1 period ranging between 1870 and 1914, there was widespread and rapid integration of various economies in respect to trade flows, migration of people and the movement of capital. The development and spread of globalization is identified as having been quite slow between the First and the Second World War but it quickly picked up pace after the end of WWII, when all the various leading countries met and unanimously agreed to not repeat the mistakes that they had previously committed as a result of opting to try and completely isolate themselves (IMF 45). [5] Despite the drive to try and increase the level of integration across the world after the events of 1945, it nevertheless took a relatively long time period for integration levels to eventually reach the levels they were at, prior to WWI. While countries such as the UK and the US were quick to reach high levels of integration, some countries such as those located in the Soviet bloc proceeded at a slower rate primarily as a result of their being shielded from the process of global economic integration. Despite this, the changing times have seen these countries manage to integrate into the globalization process with great vigor. While these former Soviet bloc countries are quickly becoming integrated with the global economy, more and more countries are now seen to be turning towards the adoption of outward oriented growth policies. It is the adoption of these policies that is seen to have greatly impacted the different areas of management in today’s modern business environment. 2.3 Effects of Globalization on Management As a resultant effect of globalization, management is nowadays tasked with having to ensure that communication and technological resources are made available to an organization’s employees; this is in addition to its also having to ensure that these resources are leveraged in such a manner that they are able to fully optimize a business operation’s geographical reach. The global workplace implies that managers now have to employ an enormous degree of diversity management if the workplace is to be able to run in a smooth and effective manner. Estimates of the global labor pool as of 2005 indicated that multinational companies were responsible for the employment of an estimated cumulative total of over 3 billion workers; a figure is seen to be almost half of the entire global population (Schermerhorn 2010). [6] An illustration of just how globalization is quickly changing the field of management is demonstrated by the fact that according to Schermerhorn (2010), IBM has managed to employ an estimated over 40,000 software developers in India, while the Belgian firm InBev now owns Anheuser-Busch which is the company that manufactures “America’s King of Beers.” Globalization is also seen to be impacting the automobile industry as demonstrated by the fact that Ford now sells one of its models, the Ford Fiesta around the world, while India’s Tata Group currently owns both Land Rover and Jaguar. Globalization has also enabled Toyota and Nissan to be able to obtain 90% and 80% of their annual profits from the sales that they are able to make in America while Mercedes now builds its M-class vehicles in Alabama and the Chrysler PT Cruiser is now built in Mexico. As a result of globalization, 60% of components of the new Boeing 787 Dreamliner are built by foreign firms with the entire front fuselage of the plane being made by a Japanese company. The American company Nike is able to earn the majority of its sales outside the United States, and has managed to establish a rather complex worldwide web of contractors which includes an estimated more than 120 factories in China alone. Similar trends are currently being evidenced in other industries, and the rapidly growing power of global business enterprises is now seen to affect managers in that they are now forced to make decisions that will affect their companies on an international scale. [6] These developments have necessitated that business managers now have to develop globally aware perspectives that are able to lend themselves well to the diverse and very specific values, geographical needs and customs in which modern day business enterprises often tend to operate in. The development of this global skill set is widely perceived to be a rather powerful managerial tool. 2.4 Effect of Globalization on the Management of Employees Globalization has impacted management in that it has resulted in the development of a situation where employees are now increasingly being transferred to a number of various international locations. This has created a need for increased management as well as more forms of communication. Globalization has greatly helped in expanding diversity recruitment where managers are now leading their companies in interacting with stakeholders and customers form different languages, social backgrounds, and cultures. This has resulted in most managers directing their organizations to now hire employees drawn from all these equally diverse backgrounds. Companies with operations in different countries are now seen to recognize the value of having staff members that their customers can be able to relate to in an easy manner. Managers heading these companies also recognize having teams that constitute of diverse people greatly contributes to an increased range of ideas and influences within their organizations (Bradley nd). [1] Globalization has also greatly impacted management in that managers now tend to greatly emphasize on the training that their employees undergo. Managers now place a greater emphasis on their employees undergoing these trainings as they try to ensure that their organizations maintain a very competitive edge in the global marketplace (Bradley nd). [1] 2.5 Globalization and Increased Competition Another effect of globalization on management is that globalization has greatly increased the level of competition between companies that are now forced to compete with other companies on a global scale. Globalization’s principle driving source has been identified as being the continuous search by business enterprises for profits worldwide. It is this concerted search for profits that has seen managers, guide their companies towards the exploitation of all the various available sources of competitiveness in the markets that they may happen to choose to compete in (UN iii). In doing this, management is seen to be attempting to try and take advantage of the numerous opportunities and incentives that are being afforded by globalization. By implementing shrewd business policies, managers can be able to effectively guide their companies in accessing the various knowledge sources and markets that are found to be crucial in the general development of lasting competitive advantages through the use of continuous innovation. [7] In the less developed countries, globalization has had the effect of bringing in new competitors from the industrialized countries to compete with local SME’s. Managers running these local SME’s, are now being forced to search for competitive advantages across their own national borders so as for them to be able to sustain their existence. Globalization has caused management to be faced with a number of pressures such as the need for them to reduce their overall cost of production, become more knowledge intensive as well as increase their productivity levels. Management now operates in a business environment where consumers want the best quality products at the cheapest price possible, and all this with very little regard as to where these products are produced (Etemad and Wright 85). 2.6 Movement of Capital Management recognizes capital as being a key production factor; and the flow of capital across different countries due to the effects of globalization is seen to play a key role in the enhancement of the base of production an aspect that can greatly affect the general profitability of a given business enterprise. It’s not possible for any type of economic activity to successfully be undertaken without capital, and the capital mobility that is promoted by globalization is attributed to enabling the total savings of the world to be distributed among the different countries that happen to have the highest investment potential. Under this circumstance, managers are able to ensure that their business enterprises grow and succeed as they are basically not limited by their own domestic saving which might at times be considerably low. The constant inflow of foreign capital has been adequately utilized by business managers in less developed countries such as some of the countries located in Africa and East Asian region. These managers have been able to channel this capital in aiding their business enterprises to expand and be in a position to successfully compete on the international stage. 2.7 Threat of Financial Flows The recent emergence of relatively very strong capital markets is recognized as being one of the most important features of the current globalization process. While the radical growth experienced in the foreign exchange and capital markets has greatly helped in facilitating the transfer of resources across various national borders, the overall gross turnover in a number of foreign exchange markets has been extremely large. It is currently estimated that the gross turnover in these markets currently stands at about $1.5 trillion per day worldwide. This figure is recognized as being hundreds of times much greater than the total trade in services and goods. Although currency trade has generally become an end in itself, the great degree of volatility in this global foreign exchange markets and the ease with which it is possible for funds to be withdrawn from a given country has served to often create panic situations for business managers. Examples of these include the East Asian financial crisis and the global financial crisis. These crises have had the effect of forcing business managers to adopt a number of radical measures to ensure that their business enterprises remained able afloat in the face of a number of newly emergent threats that business management has never before been faced with. The contagion of financial crises is widely perceived to be a very worrying trend due to its nature where when one country happens to be facing a crisis, it spreads and affects other countries. 2.8 Leadership Style The shift by companies from their being country-centric corporations to the adoption of a more global outlook is noted to have a rather radical impact on the development of management leadership. The most successful managers will not necessarily be those having the highest IQ levels but those who display relatively high level of both emotional and cultural intelligence. The traditional leadership approaches that were used by managers in leadership can be quite inadequate in the successful provision of leadership on a global scale (Hannan 2012). It is important for managers to cultivate global leadership traits that variously include: [4] 2.8.1 The capacity to develop both local and global perspectives: Although it can prove to be rather challenging for business managers to develop this capacity, it is possible for managers develop this capacity by endeavoring to try and live in different parts of the world. 2.8.2 Overcome dominant thinking: Business organizations employees sometimes develop a dominant way of thinking that helps the company to succeed at the country-centric level. However, in light of the increased globalization, it is important for managers to overcome this dominant thinking and adopt a non-dominant thinking approach. The development of this non-dominant thinking approach requires a passion for diversity in life experiences as well as a great degree o intercultural empathy. By developing these traits, managers will have an insatiable need to learn about other cultures (Hannan 2012). [4] 2.8.3 The ability to develop networks: Global business managers should be able to develop networks that are found to be both internal and external to their organizations. This generally involves a process of shifting from vertical management to horizontal collaboration. In this regard, an individual’s role and title are found to be far less important than their capacity to get things done (Hannan 2012). [4] 2.9 Cross Cultural communication At times, managers experience considerable challenges in attempting to communicate in an effective manner in the global environment. Misunderstandings are still possible even in situations where both of the parties speak the same language due to inherent cultural and ethnic differences. Over the last few decades, numerous examples have emerged demonstrating just how poor communication can potentially result in poor organizational performance. In light of the increased globalization, managers now realize that the existing relationship between themselves and their subordinates in multinational firms is of great importance. It is important for managers to critically consider the aspect of cross cultural communication as it has been shown that companies that are able to communicate cross-culturally in an effective manner generally tend to have a greater competitive advantage as a result of the fact that they are able to devote more resources and time on their business operation as opposed to their wasting time in resolving a myriad of external and internal communication issues. Communication is found to be important for business managers and their employees to be able to sufficiently express themselves as well as manage to fulfill some of their basic needs. Without the basic ability for business managers and their employees to be able to communicate and understand each other, it would not be possible for businesses to run their operations successfully as a result of the ensuing chaos. By ensuring that communication in their organizations is primarily based on a clear cultural understanding, business managers will ensure that they aptly prevent any misunderstandings that might be caused by various personal biases and prejudices (Guffey and Almonte 5). [3] 2.10 Choice of Location Globalization has made it easier and freer for managers to choose where their business enterprises will operate from. Managers can now shift their operations to more efficient and cheaper locations. The increased movement of jobs and businesses has to some extent, forced governments to start competing with each other in a bid to provide business enterprises with low-cost and attractive locations by offering a number of incentives such as tax holidays. Recent trends have seen management relocate their manufacturing businesses to a number of low-wage countries with the aim of attempting to reduce their production cost. The cost of inputs is seen to greatly vary in price across the world and as a result of globalization; managers are now free to move their operations so as to capitalize on cheaper inputs such as cheap labour in developing countries or financial advice in London. A key limitation of this is that management will not always move operations to countries that have dangerous or unpleasant living conditions. 2.11 Challenges of Globalization for Management Although Globalization might currently be offering business enterprises a number of new growth opportunities in the various emergent markets, it has however been noted as introducing a rather complex array of various operational risks. To deal with these newly emergent challenges, business managers have now had to ensure that they put the right infrastructure in place effectively confront these risks that can potentially have the effect of putting their companies out of business. Some of the biggest risks to companies and their management that are seen to commonly be posed by increased globalization include: 2.11.1 Regulatory Obstacles: As a result of globalization, business managers now have to deal with a number of regulatory obstacles that include fast changing local policies and regulations that can at times have a dramatic effect on the profitability o their cross-border investments as well as serve to greatly heighten uncertainty in the rapid-growth markets. 2.11.2 Resource Constraints: As a result of the increased competition for local talent that is caused by globalization, managers are now faced with skills shortages to help in serving in a number of key functions within their business enterprises. 2.11.3 Cultural Differences: The management of diverse workforces that are separated by international time zones, religious differences, thousands of miles, and cultural differences can at times prove to be an exacting challenge for managers. This has necessitated that management now ensures that it creates infrastructures that are able to largely maintain the diversity of the business enterprise’s international times while at the same time greatly empowering local delivery. 3.0 Survey In conducting this research, a survey was conducted on a sample size of about 50 students drawn from my class. The survey posed questions to the students and these questions were designed to establish if the students believed that globalization had in fact, greatly impacted management as well as ask them to state the manner in which they thought that some of the different aspects of management had been impacted over the years. The questions posed in the survey were as follows 1. Has globalization affected the different fields of management? 2. Have the effects of globalization on management been positive or negative? 3. What do you recognize as the positive effects that globalization has had on management? 4. What do you happen to believe are some of the negative effects suffered by management that can be attributed to be as a result of globalization? 5. Identify an area of management and specify how you think that globalization has affected this particular area of management. 3.1 Survey Results The survey results indicated that all the students believed that globalization had greatly affected the different fields of management. 78% of the respondents indicated that the effects of globalization on management have mostly been positive while 22% of these respondents believed that globalization has mostly had a negative effect on management. 90% of the respondents were able to list a number of positive effects with most of these listing increased customer bases and cheaper production costs as being key benefits. 78% of the respondents were able to list some negative effects of globalization on management, although these were not as numerous as those they provided in the survey question asking them to indicate, what they believe to be the positive effects of globalization on management. When asked to indicate an area of management and specify how they thought that management had impacted this particular area. All the respondents were able to identify at least one area of management. The areas of management that they identified can basically be categorized into the management of employees, the management of increased competition, the effective management of changes in movement of capital, the management of the potential threats posed by financial flows, the change in management styles, the management of cross-cultural communication as well as the increased freedom of management to shift the location of their operations to more efficient locations. 4.0 Interview with local business managers To conduct this interview, I was invited by Mr. Johnson, one of the local business managers to a casual meeting that he had helped in setting up with four of his friends who either owned or had been managing businesses for a number of years. These managers were given sections of the findings of this research project and then asked to respond to them. Their responses and opinions on how globalization has affected management are as follows: 4.1 Mr. Johnson and Mrs. Davies on Increased Competition Mr. Johnson remarked that about 20 years ago when he had just set up his first business, things were relatively easy and he was able to effectively compete in the local town as he used to be one of the town’s biggest suppliers of electronic goods. However, he agreed that globalization had greatly affected management as at some point, his business had started to suffer from the competition he faced from online electronics companies that were able to supply products to customers at a cheaper rate than he could. Mrs. Davies who owns a cosmetics shop pointed out that as a result of facing increased competition, she was at some point forced to setup a website that would help her in selling her products to neighbouring towns. This helped her in almost doubling her annual profit margin. 4.2 Mr. Kowalski and Mr. Grayson on Cross-cultural communication and leadership style Mr. Kowalski and Mr. Grayson are managers at a local factory. Mr. Kowalski pointed out that when he started out, most of the factory workers mostly comprised of locals with a few Spanish speakers of Mexican origin. Communication at this time was not complex as the company had a policy of ensuring that all its personnel were fluent in English. However, as a result of globalization, increased migration and changes in regulations have caused the company to now employ increased numbers of personnel drawn from numerous cultures. He experienced numerous communication issues before he eventually implemented policies designed to integrate intercultural communication considerations into the company’s communication strategies. Mr. Grayson pointed out that previous leadership styles were currently not effective as he now has to handle a relatively greater number of employees in numerous locations across different countries. He had to adopt a global managerial approach so as to effectively manage the greatly increased workforce. 4.3 Mrs. Dawson on the threat of changes in Financial Flows Mrs. Dawson affirms that changes in financial flows have often posed a number of risks in the management of her business enterprises. The most recent threat that she had to manage in this regard was the global financial recession that forced her to take a number of drastic measures so as to remain afloat. She narrated how she was forced to lay-off nearly 50% of her staff, terminate all leaves and increase the working hours for her employees at the bank. 5.0 Summary and Conclusion The results of this research project clearly show that globalization has had an effect on different areas of management. These changes are seen to ranging from human resource management and the management of the threat posed by global financial flows, to the manner in which business managers are forced to tackle increased competition in addition to their having to change and adopt new management styles. From the results of the interview conducted on the managers, it can be deduced that it is crucial for managers to ensure that they do not discount how globalization has greatly impacted management as doing so can potentially expose their business enterprises to a number of threats. However, by carefully taking into consideration the effects of globalization on management as outlined in this paper, organizational management can ensure that their business enterprises not only remain afloat, but also achieve tremendous growth both in size and profit margins as a result of fully exploiting the benefits that they are able to derive from increased globalization. Works Cited 1. Bradley Jeremy. Effects of Globalization on Human Resources Management. nd. Web. May 2014. Accessed from http://smallbusiness.chron.com/effects-globalization -human-resources-management-61611.html 2. Etemad Hamid and Wright Richard. Globalization and entrepreneurship : policy and strategy perspectives. Cheltenham, UK ; Northampton, Mass. : Edward Elgar. 2003. Print. 3. Guffey Mary and Almonte Richard. Essentials of business communication. Toronto : Nelson Education, [2009], 2010. Print. 4. Hannan Julia. Developing the Global Leader. Oct 2012. Web. May 2014. Accessed from http://hbswk.hbs.edu/item/6967.html 5. IMF. World economics outlook: May 1997 ; globalization ; opportunities and challenges. Washington: International monetary fund. 1997. Print. 6. Schermerhorn John. Management. Hoboken, N.J. : John Wiley. 2010. Print. 7. UN. Globalization, Competition, Competitiveness And Development. October 1997. Web. May 2014. Accessed from http://unctad.org/en/docs/tb44d20.pdf Read More