Effects Of Globalisation On Management Of An Institution Business Essay

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Private and public sector organisations are increasingly having to operate and compete in an international environment due to the effects of globalisation. One of the more well known definitions of globalisation would be the following:

"inexorable integration of markets, nation-states and technologies to a degree never witnessed before-in a way that is enabling individuals, corporations and nation-states to reach around the world farther, faster, deeper and cheaper than ever before".

Friedman (1999 p.8)

The term 'globalisation' came to light in everyday current affairs during the 1980's as an umbrella term for a range of factors that were emerging in the corporate environment. Child (2005) identifies such factors as being: (see appendix 1)

Many of the concepts & theories of globalisation comprise of concepts & theories from political science, sociology, anthropology and philosophy as well as economics. There are however, set dimensions of globalisation: (see appendix 2)

Globalisation sparks conflict; it crosses boundaries of government and business, media and social movement, general and academic interest. As seen in appendix 3 globalisation invites more controversy than consensus and different disciplines hold widely diverse views on the fundamentals of globalisation.

As highlighted in 'Globalization Education' there are many conflicts of globalisation of the education industry. One of the most prominent questions asked by the literature is "Education for what will prevail in the globalization age?" (p.18) Further on in the literature three crucial ways implications of globalisation is having a major impact on education are outlined (see appendix 4).

With reference to the education industry and The Nottingham Trent University specifically, globalisation refers to the convergence in buyer needs and wants in markets around the world. It is apparent from analysing data provided that NTU are aware of the rise of globalisation and are in the process of acting upon it.

Since 2002 there has been a 2.4% increase in the number of students that come from outside the EU resulting in approximately 8.5% of their student population being non-British citizens (see appendix 5). In 2004 NTU formed a partnership with Kaplan Inc to form Nottingham Trent International College specifically aimed for international students. As well as reacting to globalisation in the U.K the university has collaborated with institutions around the world, allowing British students to study abroad or register local students on NTU accredited awards. All of the above required management to react to change in the global environment.

Drivers of Globalisation

The model referred to largely when identify the main drivers of globalisation is Yip's 1992 (appendix 6).

Appendix 7 further details the above drivers. It is now essential to identify the drivers of globalisation relevant to the education industry. In terms of market drivers, being the main driver in this industry, there is the emergence of universal customer needs. This not only means the common need for higher education but the content of the curriculum taught. This means an increased student to teacher ratio resulting in a need to expand not only within the U.K but internationally.

Cost drivers include the advances of technology innovation aiding research and development and the existence of global customers willing to pay for higher education. Government have also seen the importance of globalisation, thus introducing international studies as a requirement of certain education curriculum. Finally competitive drivers consist of the increase of world trade leading to increased competition among nations to produce the most effective labour force.

Yip's model can be used to analyse both the industry sector and market. The model can be mapped onto Porters 5 forces for micro-environment variables (see appendix 8) and the changes in the drivers can be indicated by macro-environmental analysis as seen in section 5 (PESTLE).

Environmental Variables Analysis

There are many challenges and variables which organisations must take into account and analyse when expanding into the global market. There is not only a need to assess the macro-environment and micro-environment, but it is also essential to analyze the interface between the organisation, Nottingham Trent University in this case and the industry in which it operates. For each one of the above there is an available model to analyse appropriate environmental variables which can be contextualised to a specific industry and organisation.

PESTLE Analysis

PESTLE analyses factors from the macro-environment; (political, economical, social, technological, legal and environmental) (see Appendix 9) allowing managers to understand how changes in the environment would have an indirect affect on the activity of a specific industry thus the organisation. Some factors within the macro-environment interlink between the variables of PESTLE analysis.

Political & economical pressures from globalisation and the knowledge-based economy are modernising the conventional role of universities. Universities are seen as the largest "knowledge-based" institutions by policy makers, consequently it has been concluded that universities will aid economic rejuvenation by teaching such knowledge and expertise through industry linked partnerships.

Economically, funding of higher education is a critical issue across the world. NTU have increased their income by diversify and forming collaborations with private sector organisations. By carrying out research and development relevant to the specific industry the organisation will provide funding as well as career opportunities to the postgraduate students of NTU. For this to be possible, a customer-responsive corporate education model has been developed in partnership with the corporate and public sector, nationally and internationally due to the increase of globalisation.

Section 5.4 also relates to technology. The advancements in technology have been one of the biggest drivers of globalisation, thus has a major effect on Nottingham Trent University. The continuous improvements in technology have made the requirements of R&D to be more comprehensive and on an increased global scale. Nottingham Business research strategy places particular focus on applied research and on the international standing and recognition of research work. Therefore to successfully compete in the global market of R&D an increase of resources and greater strategic management is required.

Perhaps one of the more important variables to analyse as a result of globalisation would the social/cultural aspect. It is essential that Nottingham Trent University management are responsive to the increased diverse culture attending NTU and that of partnership institutions outside the U.K. This will link in with the career attitudes and size of potential market of certain countries.

Briefly, laws and regulations will affect the rise of globalisation within the education industry. Currently 25% of NTU's permanent teaching staff are from outside the U.K, however, this may be limited due to employment laws further outlined in section.

Porters Five Force's

A global industry can be viewed as: "(one) in which the rivals compete against each other on a worldwide basis" (Porter 1986). This is illustrated through Porters 5 forces analysis (see appendix 10). Competitive forces strategy focuses on the micro-environment identifying the main factors which directly affects the activity of an organisation, enabling the organisation to exploit opportunities and understand the competitive dynamics.

Universities are now operating in a highly competitive environment, competing with one another for financial resources and high calibre staff and students on a global scale. As well as non-traditional substitute who offer distance learning education programmes using online resources.

Threat of new entrants depends on barriers to entry, economies of scale and government policy. The potential threat from non-traditional educational institutions such as private universities and university alliance programmes can be substantial due to the funding they are able to acquire.

"Buyers compete with the industry by forcing down prices" (Porter, 1980 p.24). In the education industry customers don't have the barging power to lower prices but can be selective over which university they wish to enrol. Universities are therefore competing to attract students.

The suppliers to universities are many and diverse including faculty, administrators and related materials. Barging powers of each supplier varies depending on the saturation of the market for the product or service.

SWOT Analysis

The final model of analysis being SWOT combines the internal aspects of the organisation with the external changes analysing the interface between the organisation and industry. The aim of a SWOT analysis is to identify where an organisation is strong or vulnerable, where it should attack and defend. Institutions are then able to match available resources and capabilities to the competitive environment which will be instrumental in strategy formulation for management.

Managing Culture in International Business

Kroeber, A. L., and Kluckhohn, C., (1952) define culture as:

"Transmitted patterns of values, ideas and other specific systems that shape behaviour"

From the above definition set characteristics of culture as outlined by Hodgetts et al. (2007) (see appendix 11).

Cultural differences should no longer be seen as an obstacle or barrier but as a source of knowledge for managers which will enhance organisational learning and promote the efficiency of networking being a pathway to resources.

Strategic and Managerial Implications of Competing in Global Industries

When competing globally it is essential management have a firm grip on understanding cross-cultural management, being flexible and reacting to change in global environment and able to develop "best practice".

Hoare, (2006) concludes that "flexibility, cultural sensitivity and integrity" are the preferred managerial attributes. Cabrera and Bowen, (2005) further believe "a global manager is a citizen of the world possessing a global mindset as the unique, value-added competence."

The speed of change in the learning environment means managers have to be prepared to constantly redevelop education institutions

When expanding internationally, Nottingham Trent University were unsure of the culture and wanted of the population. Therefore to reduce risk they collaborated with established institutions who know the needs of the society. However, NTU still need to manage the relationship with the institution being aware of culture differences.

Conclusion & Recommendations

Perhaps one of the more evident assumptions of the effect of globalisation is, the claim that globalisation affects higher education institutes, rather than higher education institutes themselves being implicated in the promotion of globalisation.

A recommendation that would be appropriate to Porters 5 forces would be to enhance off campus learning through online resources. This will enable NTU to compete on another level with substitutes, hopefully attracting wider participation nationally and internationally.

Continued growth of alliance with corporate businesses and established institutions abroad making them more appealing to 'buyers' with appropriate internships internationally and high job prospects. Also such alliances will aid funding improving technology and R&D.

The question that also needs to be asked is 'Should Universities be state owned or become privatised?'

In conclusion Nottingham Trent University is coping well with the evident implications of globalisation. The number of international students has risen as shown, there are prominent partnerships abroad with established institutions and corporate businesses increasing international links as well as successfully managing the partnership locally with Kaplan Inc.

Appendix

(Appendix 1) Child (2005):

Increasing levels of interdependence

Erosion of boundaries between commercial & financial markets

Acceleration in the growth of world trade

Global integration of currency & financial markets

Decrease in transport costs leading to the spread of value added chains

Widespread application of new information technologies

Dissemination of best-practice concepts

(Appendix 2) Set Dimensions of Globalisation:

Increase of Movements - this is the continuous exchanges due to movements of goods, services, work, capital and people.

Internationalisation - continual increase in the volume of exports compared to GDP and the number of Foreign Direct Investments in different countries.

Liberalization - free markets.

Universalisation of Culture - the emergence of shared values, assumptions and beliefs.

Dematerialisation of Territories & Spaces - possible through development of technology.

(Appendix 3)

(Appendix 4)

(Appendix 5)

Local, EU and International student population at NTU

 

Number of Students

UK

21,581

International

1,521

EU

493

http://www.ntu.ac.uk/apps/ntuyourcountry/display.cfm?p=3HYPERLINK "http://www.ntu.ac.uk/apps/ntuyourcountry/display.cfm?p=3&s=4&country=133"&HYPERLINK "http://www.ntu.ac.uk/apps/ntuyourcountry/display.cfm?p=3&s=4&country=133"s=4HYPERLINK "http://www.ntu.ac.uk/apps/ntuyourcountry/display.cfm?p=3&s=4&country=133"&HYPERLINK "http://www.ntu.ac.uk/apps/ntuyourcountry/display.cfm?p=3&s=4&country=133"country=133

(Appendix 6) Yip's (1992):

Market drivers

Cost drivers

Competitive drivers

Government drivers

Low (Domestic) High (Global)

(Appendix 7)

(Appendix 8)

(Appendix 9) PESTLE analysis:

(Appendix 10) Porters Five Forces:

(Appendix 11) Characteristics of Culture, Hodgetts et al. (2007):

Learned

Shared

Transgenerational

Symbolic

Patterned

Adaptive

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