The Impact of Globalization on Corporate Strategies and Human Resource Management - Prof. | Apuntes de Administración de Negocios

International Business

Business Globalization

Business globalization is the ever-increasing process of integration of local

and regional markets into one unitary market of products, services and

capital. The main results of this process have been an increase in the

interdependence of traditionally national markets on the macroeconomic level and

the internationalization of corporate processes, especially production, distribution,

and marketing, as well as the adoption of international business strategies on the

microeconomic level.

Economists recognize the early signs of globalization in historical phenomena,

such as the increased economic activity in the Age of Discovery in the 16th and

17th centuries, which led to the founding of the British and Dutch east India

companies; and the new economic opportunities enabled by the scientific

discoveries of the 18th and 19th centuries, followed by the 20th century's

breaking ground on the Information Age.

The World Bank identifies three waves or phases of globalization, which

happened between 1870 and the 21st century. The origins of the process are

attributed to the falling costs of transport and the lowering of the politically driven

trade barriers.

In the first phase, trade in commodities developed into trade in manufactured

goods. Initially land intensive production became labor intensive. Mass

migrations for work became an everyday phenomenon, traveling becoming

easier with the development of the more advanced transport technologies.

The telegraph allowed more distant countries to benefit from the capital available

on the stock exchanges, as stock exchange institutions were brought to new

locations, contributing to the growth of financial markets. Two world wars blocked

international trade as individual countries turned protectionist.

The situation persisted up till the 1980s, by which time the international exchange

between the developed countries was largely freed from the barriers. Here

the second phase begins leaving the developing world outside of the free

trade market. It was during this second phase of globalization, when the

countries started to specialize in production and the businesses started to

function around agglomerations and clusters that economies of scale started

to matter. A discussion on the wealth inequality and the rising poverty in the

developing countries started, resulting in the postulates to allow all the nations to

participate in the benefit of a free trade. The inequalities of the early globalization

era in the 19th century were largely related to the ownership of the land, crucial

both for the commodity trade and for the manufactures. However, the inequalities

during the second phase of globalization showed a more systemic nature, being

driven by the protectionist policies of the developed world.

The third phase of globalization brings the "death of distance" in a traditional

geographical sense. It does not matter anymore whether the whole business

process is situated at the same location, as the service and non-core

functions, thanks to communication technologies, can be successfully

performed even on different continents.

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International Business

Business Globalization

Business globalization is the ever-increasing process of integration of local and regional markets into one unitary market of products, services and capital. The main results of this process have been an increase in the interdependence of traditionally national markets on the macroeconomic level and the internationalization of corporate processes, especially production, distribution, and marketing, as well as the adoption of international business strategies on the microeconomic level. Economists recognize the early signs of globalization in historical phenomena, such as the increased economic activity in the Age of Discovery in the 16th and 17th centuries , which led to the founding of the British and Dutch east India companies; and the new economic opportunities enabled by the scientific discoveries of the 18th and 19th centuries , followed by the 20th century's breaking ground on the Information Age. The World Bank identifies three waves or phases of globalization , which happened between 1870 and the 21st century. The origins of the process are attributed to the falling costs of transport and the lowering of the politically driven trade barriers. In the first phase , trade in commodities developed into trade in manufactured goods. Initially land intensive production became labor intensive. Mass migrations for work became an everyday phenomenon, traveling becoming easier with the development of the more advanced transport technologies. The telegraph allowed more distant countries to benefit from the capital available on the stock exchanges, as stock exchange institutions were brought to new locations, contributing to the growth of financial markets. Two world wars blocked international trade as individual countries turned protectionist. The situation persisted up till the 1980s, by which time the international exchange between the developed countries was largely freed from the barriers. Here the second phase begins leaving the developing world outside of the free trade market. It was during this second phase of globalization, when the countries started to specialize in production and the businesses started to function around agglomerations and clusters that economies of scale started to matter. A discussion on the wealth inequality and the rising poverty in the developing countries started, resulting in the postulates to allow all the nations to participate in the benefit of a free trade. The inequalities of the early globalization era in the 19th century were largely related to the ownership of the land, crucial both for the commodity trade and for the manufactures. However, the inequalities during the second phase of globalization showed a more systemic nature, being driven by the protectionist policies of the developed world. The third phase of globalization brings the "death of distance" in a traditional geographical sense. It does not matter anymore whether the whole business process is situated at the same location, as the service and non-core functions, thanks to communication technologies, can be successfully performed even on different continents.

This third phase of globalization created offshoring locations in central and Eastern Europe and the new, previously developing, economic empires of India and China. Although some of the former developing countries broke their way to the free market and compete successfully for the investments, others remained marginalized and are becoming even more excluded from the benefits of the world economic growth than ever before. One of the most striking examples of poverty levels and inequality are in the region of sub-Saharan Africa. The relationship between economic, social, political and cultural aspects of globalization is visible in the main determinants of globalization, which can be attributed to various spheres of human activity. They include but are not limited to 1) digitization , which enables easy distribution of data, information and knowledge paired with a parallel advancement and accessibility of communication channels, especially the Internet; 2) development and internationalization of mass media , which creates certain convergence of consumer patterns (e.g., mass accessibility of TV such as MTV makes the icons of contemporary pop culture such as McDonald's or Barbie the symbols of capitalist world, which developing societies demand, aspiring to the Western style of life); moreover increasing capital consolidation in the sector of media enables the formation of media empires, like Rupert Murdoch's, which allow a relatively small group of opinion-makers to influence whole societies; 3) increasing cross-border and overseas migration trends , caused by people's urge to improve their lives and economic standing; 4) longing for freedom in those countries, which suffer internal oppression either from the ruling class or from any other form of political or economic regime; the democratization of political systems and in consequence 5) the introduction of economic liberalization and popularization of the free market philosophy (e.g., the spectacular transformation of central and eastern Europe countries from centrally planned economies to the free market); 6) advancing skills of global management allowing entrepreneurs to operate in the wider geographical scale (a new category of companies, called transnational corporations, is both a consequence of globalization processes and a response to increasingly tighter competition, stimulating global dispersion of corporate influence, management methods, production patterns and technologies); 7) technological advancement and dynamics of innovations with their net effects such as a quicker use up of limited Earth resources; this in consequence creates new organizational behavior patterns (i.e., business sustainability, where business models are created on the basis of energy savings and social responsibility); 8) standardization of production and services being a consequence of adopting certain strategies on the global market (a classical example of such standardization is presented by the quality measurement norms-series ISO-certified by independent bodies such as TUV; getting a certificate, which is determined by adopting standard procedures in the organization, often determines whether the company can obtain good contracts as the big companies with large international networks of suppliers and distributors often select partners for co-operation on the basis of quality certificates possessed);9) less restrictive trade tariffs ;10) strategies adopted by transnational corporations , which aim at

the market, for example through the emission of stock. These phenomena changed the core role of the banks as the sole capital providers. Banking institutions now need to diversify their activity to stay competitive. Regions also compete for the investments, specifically foreign direct investments (FDIs), which bring new technologies and jobs. Globalization should be analyzed in the macroeconomic context-as an aggregated phenomena taking place on the global scale, and in its microeconomic context-at the level of individual enterprises, adopting certain development strategies and making strategic decisions (e.g., locating elements of a value chain in the countries with local advantages or centralizing them in one location). Economic globalization stimulates a significant institutional evolution. Global institutions are set up to manage certain aspects of activity in the global marketplace. They are equipped with both political and economic tools to control and influence the global market players. The most important include the World Bank, International Monetary Fund, and World Trade Organization. Outsourcing : is to purchase goods or subcontract services from an outside supplier or manufacturer to cut costs. Off- shoring: is the practice of outsourcing operations overseas. It simply means having the outsourced business functions done in another country. Frequently, work is off shored to reduce labor expenses. Other times, the reasons for offshoring are strategic.

Elaborated by: Jaime Ramirez Business Administration Teacher English Teacher Globalization and Human Resourcing By Dr A. Lewis Globalization refers to the growing economic dependence among countries as reflected in increasing cross-border flows of goods, services, capital and knowledge.

At an organizational level, globalization can refer historically to the extent to which a company has expanded its operations so that it engages in cross- border flows of capital, goods and knowledge across subsidiaries. It can also be used to describe a corporate strategy, designed to reap the benefits of becoming a global company. Globalization at all levels is, therefore, very much an outcome of corporate decision makers who perceive globalization as an attractive and feasible proposition. As such, the process need not be an inexorable one. Economic uncertainties may drive national governments and corporations towards the protectionism of defending a home market and away from the free-market ideology that has been synonymous with globalization. Several economic downturns have led to unresolved debates about what can be done to prevent global capitalism from destroying itself. There is a concern that global capitalism's blindness to anything but the bottom line and an apparent indifference to inequalities suffered in the poorest countries make the system unsustainable, which in turn places in jeopardy the living standards within the developed world. Globalization will continue to be a critical success factor for most companies and for most developing countries alike. The progress made with information technology and communications and in particular the internet during the past decade has made this inevitable in much the same way as with the industrial revolution during the last century. Indeed a global economy and global business remain very much a critical component of our existence now. All of the best known branded names, drinks, fast foods, sports equipment, automobiles, petroleum, computers, pharmaceuticals, electronics and other consumer products can be found in the majority of the world's countries. Popular statistics can also reveal the dominance of multinational companies: over 50 percent of the world's top 100 economies are not countries but companies. The largest 500 companies control over 50 percent of the world's wealth and conduct over half of its trade. The ten biggest companies together turn over more money than the world's smallest 100 countries and the world's second largest multinational, Shell, owns or leases 400 million acres of land, which is larger than 146 countries put together. Consequently to talk about differences between the UK, US and Europe's country economies can be considered somewhat futile these days. What we should be talking about is the differences between global company economies. The latest economic downturn has all but confirmed this. We can sense the impelling force of globalization ourselves. We can also appreciate that the economic liberalization of the world's developing countries and the technological advances in telecommunications and transportation has made globalization an enticing prospect for those corporations seeking to grow and survive. In the face of increasing international competition, multinational company chiefs have identified the opportunities afforded by the globalization process as the means by which to meet the challenges. In turn their business decisions help to sustain the process. These international opportunities include capturing new markets and realizing great

The Impact of Globalization on Corporate Strategies and Human Resource Management - Prof. , Apuntes de Administración de Negocios

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International Business

Business Globalization