Globalization increases as time passes. Industries are repeatedly under global pressure and there is no way out of it. There are high demands for global goods and services, investment are moving frequently across limitations, with an increase in international joint venture, alliances, and the number of people and amounts of money that cross the border is repeatedly increasing. Enterprises participate at a national level; firms produce goods and services than sell to consumers all over the world. A large number of people work at home for foreign owned subsidiaries and domestic firms that are foreign owned. All these have resulted laws, economies and social movements to form at an international level.
What does globalization explain to us?
The impact of new generation, education, technology, inspiration, socio-economic changes, and globalization have redirected businesses from petty trading, hawking, local and intra-state businesses to a modern international level. The most intriguing factor being the power of the internet; the internet resized the world, making the world just about the same size as a piece of sand. Today, everybody from every part of the world is connected, making it easier for whatever is happening to any part of the world to impact the rest of the world. Take for instance, the freedom sought today in the Arab world, a part of the world known as huge producer of oil has impact in the price of fuel around the world.
The aims for Globalization
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Competitors Globally: Rivalry among firms is now on a global level.
Opportunities: businesses in the advanced countries afford a limited opportunity; this pushes many firms to set up business in the foreign markets in other to enjoy the opportunities.
Economies of scale: The need for an increased output to spread over large fixed cost to lower per unit cost.
Resource access and cost savings: Access to raw materials and low operation cost in financing, transportation, low wages, lower unit.
Fast and wide Global Communication: improvement of global communication like internet, which offers awareness on what is happening all over the world and also improving the standard of living globally.
Free Trade: Increases trade between countries and regions; decreases trade barriers like free trade within EU zone, this help to advance trade among European nations members. Firms may decide on move to overseas in other to avoid high tariffs and reduce exportation cost.
New Technologies: Improvement in technologies has empowered production of goods and services with good quality and reasonable prices globally. Education (modern) has made it likely for countries to more active in the world economy.
E-Commerce: businesses have been made easy faster and cheaper to firms and consumers by the use of (internet) World Wide Web, credit cards and global transportation and logistics services.
Global jobs transfer; this is changing the type of work that is still sustainable in the global world. HRM in businesses today is committed to reducing the number of manpower and replenishes them with technology so as to increase profit in the long run. The socio-economic and technology of today are the pressing factors that have the world unemployment rate on rise allowing.
Educated people are replacing the uneducated and the uneducated are left in misery and poverty. The only uneducated people that are still making their ways today are those talented with skills and creativities. Even as creative as they may be, they still need educated people to give them specialized direction.
Inspiration is another motivating factor, some are inspired by the power and freedom of Oprah Winfrey and George Soros, and others are inspired by the wealth of Bill Gate and Warren Buffet. The entertaining power of Jay Z and the late Michael Jackson have deflected people to that direction. Finally jobs with higher skills are in the process of transferring to low cost countries. It is predicted that by 2015 there will be a shift of the US white collar jobs to low cost countries. This shows that dominating international trade are not just for big economies countries like US, UK, Japan, France, and Germany. Smaller countries like Switzerland, Denmark, Sweden, and Venezuela and a few others are contributing to global trade.
Need for an International View about HRM
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So what is this new development in the current business environment? The answer is clear, 'globalization'. The entire world is converging, Industries are under constant global pressure and there is no escaping it (Dennis R. Et al 2009). It affects every functional part of the organization. Business behaviours are now global so and has HRM.
Human Resources are foundation of competitive advantage for organizations; the success of multinational enterprises rest on its Human resources. People who do the work in MNE's are one of the largest working costs for the firm. Both on the cost and benefits aspect, human resources are keys to existence and achievement of the enterprise. (Brewster et al 2007)
Industries that functions on multinational level are wide-open to cultures different and institutional constraints, which increases difficulty of international human resource management. Knowing that this has been established earlier, the workforce is being gradually diversified in the domestic market. Apart from set up MNE's offices in foreign countries, there is a movement of labour to other countries due to free movements of workers across borders, advanced technologies that permits workers to keep up-to-date to latest information about jobs in foreign countries, the need for more skilled workers in developed countries and with different ethnic group and orientations.
HR matters are among the most serious issues for competing in the global market place today. Companies need to fit in HR in their international strategic making decisions. There is a need for a fit between HRM strategies and the overall corporate strategy of the companies.
Changes between HRM and IHRM
HRM can well-defined as those actions by an organisation to effectively exploit its human resources. These actions are;
Human Resource Planning
Training and Development
Reward and Benefits
When we say HRM goes international it performs all the actions of the domestic HRM and more. Morgan in 1986 Developing IHRM outline performances of IHRM. HRM deals with employees within one border. Whereas IHRM comprises of all activities in HRM and employees from different locations, IHRM is very difficult and many companies underrate its difficulty. For HRM to go international there are specific challenges at which they will all face.
Understanding of the new global completive environment and the impact it has on the management of people worldwide. The global HR challenge consists of how to engage and retain thousands of MNE employees in many different countries.
Aligning core HR processes and activities with the new requirements of competing globally, while simultaneously responding to local issues and requirements.
Enhancing global competencies and capabilities within HR function.
All these shows that there HRM differs from IHRM here are some differences;
In IHRM there are more activities and functions example, the management of international assignees which includes such things as foreign taxes, work visa, and assistance with international relocations.
A broader expertise and perspective, including knowledge about foreign countries their employment laws and practices, and cultural differences.
More involvement in people's lives, as the firm relocates employees and their family from country to country.
Dealing with and managing a much wider mix of employees, adding considerable complexity to the IHR management task with each of the various types of global employees requiring different staffing, compensation and benefits programs.
More external factors and influences, such as dealing with issues stemming from multiple governments, cultures, currencies and languages.
The method of globalization cannot be overlooked. Firms that want to have competitive advantage have to develop international skills and experiences. Human resources are the key to any business and management matters. factors or elements like geographic dispersion, legal, social system and cultures different, movement of capital, goods, services and people crossing border that international firms faces adds new competencies and sensitivity not seen in local firms. Management of HR in the international level needs a different personal and attitudes and perceptions by the IHR manager so to be able to handle the multiple nations and ethnic group seen on the international level. Managers have come to understand that the same HRM applies domestically May not work internationally, which has given rise to the need for managers to take a more international view about HRM if they wish to compete positively at the international level.
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