Globalisation and Management Essay Example

  • Category:
    Management
  • Document type:
    Essay
  • Level:
    High School
  • Page:
    3
  • Words:
    2097

Introduction

Globalisation has become a buzzword in the modern world. It has also become a battlefield for opponents who believe that globalisation is disadvantageous and proponents who maintain that globalisation is advantageous to business and countries. Globalisation refers to the incorporation of a country’s economy to the global economy. It entails the international incorporation of intercultural perspectives, ideas, technology, culture and products and services. Globalisation is attained by promoting inward flow of foreign technology and funds, internationalising corporations and markets and opening up the system of investments and trade. Many scholars and managers believe that globalisation of business is both highly desirable and inevitable. Yet for other business owners, individual workers and managers, the globalisation of the workplace has established more problems than opportunities. However, many of the disadvantages and advantages depend upon an individual viewpoint. This essay outlines the meaning of globalization in relation to management and identifies the conditions needed for globalisation to be advantageous. This essay contends that globalization is commonplace in society as are its impacts. For management there are pros and cons from globalization and these can depend on the type of organisation and/or the location of the organisation. Globalisation is beneficial for SMEs.

Globalisation means opening of nationalistic and local perspectives to a wider outlook of an interdependent and interconnected world with free services, goods and capital transfer across national boundaries. It is the procedure through which people become interconnected in all aspect of their lives, environmentally, culturally, technologically, economically and politically. According to Cornelius (2001), globalisation is the concept of a world economy founded on the augmenting transactions and interdependence between national economies and amid international and sub corporate actors. The key management need has been for global integration and cross-market coordination. The ease of internationalisation is linked to swift technological communication and transportation. Globalisation allows formation of a central international exchange system that helps firms to establish practical relationships worldwide with reduced costs and time investments. A firm’s management must strive to make sure that resources are accessible to workers and are well leveraged to optimise the physical reach of a firm’s operations. Therefore, in relation to management, globalisation implies a great amount of diversity management given that globalisation allows interconnection of people. Due to globalisation, firms employ people from different cultures, geographical regions and demographics. As a result, managers need to establish a globally recognised perspective that considers geographic needs, customs and values in which their businesses operate

Small medium-sized firms play a crucial role in the economic growth of nations. Globalisation has made businesses and economies to become interdependent for growth and survival. This situation promotes the role of SMEs in economic growth and job creation. Policy makers recognise the entrepreneurial and innovative capabilities and potential of small medium-sized firms in producing services and goods required by the society and establishing jobs that lead to economic growth. Notwithstanding that SMEs are a major source of job creation and economic growth, these organisations seem to be under-represented in the global economy comparative to their contribution in local and national economies. Scores of problems facing SMEs efforts to globalise are known and they include lack of finance, management skills and effective planning besides establishment of dependable partners. Nearly all economies at present offer a package of programmes and services designed to help firms to internationalise. According to OECD (2008), the past twenty years have seen the development of academic interest and policy in the role of SMES within the global milieu. SMEs contribute between fifteen and fifty percent of exports, and between twenty and eighty percent of small medium-sized enterprises are active exporters (OECD, 2008). According to OECD, the great bulk of SMEs are subject to the globalisation pressures although they may not be internationally active. However, SMEs enjoy opportunities in the global economy. The smallest of firms are internationalising at a great rate. Entrepreneurs are focusing more on international business as global transportation and communications become more effective, and as trade agreements open national markets to foreign nations. Several studies have confirmed that the size of a firm does not inevitably restrain a firm’s international activity (OECD, 2008). SMES can become global competitors and exploit their unique resources.

The numerous benefits of globalisation to SMEs involved in the international trade are well recorded. There is a great evidence body that international trading practices stimulate increased profitability growth through reinforcing innovation and competition as well as augmenting access to technology and new ideas. For instance, the ICT is the most internalised industry for SMEs in Australia. International trading activity allows SMEs to attain economies of scale and growth, which cannot be provided by domestic markets alone. For instance, TZ, a business service company, attain economies of scale through establishing six locations where it operates in United States, Oxford, Ukraine, Hong Kong and Lviv ( Diplomat 2008) Exporters are consistently found to out-perform non-exporters through different success measures including sales volumes, wages, production and profitability. While it is probable that most successful organisations tend to enter the global markets, there is great proof that implies that constant export activity prompts increased performance improvements. More so, there is powerful links amid productivity growth, innovation and internalisation. Internationalisation permits access to novel markets; improve resource utilisation, productivity and permits absorption of excess output or production capacity. Globalisation exposes SMEs to global best practice, technology and knowledge through greater experience of the aggressive forces of the international trading context. The surfacing of transnational systems of production permits the disaggregation of value chains as well as advances in information and communication technology lowers costs and barriers linked to distance.

However, every small medium-sized must comprehend that global practices do not signify more than just getting novel suppliers or customers in foreign nations. The globalisation of a business entails a procedure of thoughtful change. This change calls for risk taking, establishment of an organisation’s culture and an increased ability to learn. None of these practices takes place on impulse but calls for clear leadership and management besides adequate planning. The decision to internationalise and penetrate the import or exports markers calls for powerful commitment, vision and determined leadership of managers and business owners. These people must understand that globalising a business is a strategically essential step for a firm’s lasting development. It is only through good management that SMES can be in a position to overcome the problems and risks linked to globalisation. Globalisation raises some issues bearing managerial an economic significance. Devoid of authentic commitment of a firm’s management, a firm can put on hold its international practices immediately problems linked to international trade begin to surface. Internationalisation calls for a given degree of global knowledge and experience within a firm. As a result, managers must embrace a global mind. They should have global exposure and obtain experience in foreign cultures and markets. Understanding the foreign cultures and markets helps in bringing novel ways of thinking, which are essential in the execution of the required shifts in culture, structures and processes. For businesses to do well in the global markets, the management must be open to change and embrace diversity management in their workplace.

Rapid globalisation has made the organisational workplace to become a global village. The smudging of nations’ boundaries in business actions has instigated discrepancies in ethnicity, religion, language, gender, age and culture. These discrepancies affect working links among employees. There is interdependence amid international mobility of workers and globalisation. The migrating of employees contributes to novel venture creation and strengthening of globalisation. The modern labour pool is considerably different compared with the past labour pool. Workplaces are no longer controlled through a homogenous population, but accessible talent is now impressively represented through people from an immeasurable assortment of life experiences and backgrounds. The globalisation of business implies that the managerial employees must be in a position to deal productively with people from other countries. It is also essential for managers to deal efficiently with diverse cultural groups within one’s own company and country. Both the domestic and international workforces are diverse. Diversity entails the mixture of people with diverse group identities within the same environment. Following globalisation, it is pleasant to have different groups working together. Enhancing cross-cultural relations, essential in international trade, calls for acknowledgement of the true meaning of diversity. To recognise diversity, an individual must go beyond treating and tolerating people from different ethnic and racial groups justly (DuBrin, 2008). Organisations should value diverse perspectives and backgrounds that a diverse workforce brings in organisational performance. Companies should capitalize on the advantages of a diverse workforce through addressing diverse issues and managing diversity.

Besides diversity management, the prosperity of any business depends on a firm’s ability to promote innovation, entrepreneurship and prompt and effective absorption of technological advancements. For instance, the Australian Vmoto has embraced technology advancements to promote its innovativeness in motorcycle manufacturing (Diplomat, 2008). While globalisation has prompted novel prospects for SMEs, it has also established challenges for this type of organisations. Globalisation threatens the sustainability and survival of SMEs. When more SMEs enter the growing and emerging markets overseas and domestically, many encounter challenges that emanates from threat of competition from emergent and new entrants. The concern for globalisation is in the similar manner impact SMEs as large organisations. SMEs are suffering from harsher competition. To counter these challenges firms require being innovative. Innovation can be attained through acquisition of essential skills and it calls for adequate training. Continuous and enhanced training equips employees with knowledge and skills needed to help their firms win a competitive advantage. Sensitivity and knowledge to the beliefs, languages and customs of other cultures illustrate the call for cross-cultural training. The main argument behind provision of cross-cultural training is that it allows employees to adjust to the novel culture more effectively thereby becoming productive in their novel roles. For instance, McDonald’s sells across cultures and therefore requires conducting cross-cultural training aimed at getting a broad comprehension of the different cultures they deal with. The global village deep culture disparities hold a profound effect on the manner businesses are performed in diverse cultures. Different worldviews, attitudes and value systems put great effect on every factor of a business organisation. When cultural issues are neglected, the benefits of globalisation could be compromised. Besides cross-cultural training, employees need to be trained on the new advances in technology prompted by globalisation for their firms to counter the challenges of globalisation. Generally, a big percentage of SMEs establish their business through application of their practical skills, passions and interests and personal experiences. Most of these business owners are poorly trained to manage an organisation. In addition, they rarely go through formal management training. However, a swiftly changing and globalising business setting creates challenges for SMEs as they attempt to be innovative. If training is neglected in international firms, service delivery becomes poor leading to the fall of a business. The main function of HRM is to manage utilisation, training, acquisition and maintain a good number of competent personnel.

Conclusion

Numerous obstacles and constraints hinder the success of SMEs following globalisation. Such obstacles constrain entrepreneurial and innovative conduct among businesses thereby blocking their capacity to generate economic growth and employment. Inappropriate regulatory, tax policies and macroeconomic instability blocks entrepreneur conduct and makes small medium-sized businesses from being innovative. To curtail these obstacles, SMEs must embrace transparent and integrity in the application of regulations and rules. For instance, Paladin Energy, one of the most successful uranium miner in Australia responded to local regulatory limitations while pursuing its operations in Namibia. In addition, SMEs fails in the globalised economy because of barriers in accessing skills and global markets. To counter these barriers, firms should invest in effective communication technology aimed at ensuring effective dissemination of information concerning markets and customs. Training that facilitates acquisition of effective skills is also paramount. Access to skills flow is essential in the milieu of the extensive adoption of innovation across many industries, sectors and culture. This calls for involvement amid new and existing business, policy makers and organisations in diverse regions. Such collaborations are essential for growth of novel services, products, processes, technologies, organisational models and new products. Besides effective management of human resources, managers should also manage intangible and intellectual assets of SMEs to ensure innovation, sustainability, growth and competitive in the era of globalisation.

References

Cornelius, N.(2001). Human resource management: A managerial perspective. UK: Cengage Learning.

Dubrin, A.(2008). Essentials of management. USA: Cengage Learning.

OECD 2008. Removing barriers to SME access to international markets. UK: OECD Publishing.

The Diplomat 2008. Australia’s Top 100 Global SMEs 2008, The Diplomat. Retrieved from http://thediplomat.com/2008/11/australias-top-100-global-smes-2008/