The Challenges Of Globalisation In Firms Business Essay

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Globalisation for businesses produces opportunities and challenges for today's managers. If today's managers can get it right then the opportunities are enormous for Multinational Corporations with an increase in market share, competitive corporate growth, risk divergence and an increased Return on Investment.

On the other hand, if managers get it wrong and misjudge the opportunities, the reverse could happen. Market share, corporate growth and being competitive may diminish to such a point where the business reputation and corporate brand are damaged.

To achieve the purpose and objectives of the company globalisation strategy, the function of management requires Planning, Organising, Leading and Controlling. This management functional frame work allows managers to operate within the three separate managers roles. Interpersonal which involves people, Informational for receiving, collecting and disseminating information and Decisional which revolves around making decisions?

The success of the above mentioned management functions and managers roles will determine if the business process framework is aligned with a successful corporate globalisation business strategy.

Therefore the awards and risks involved with business globalisation leads to a discussion on the following statement.

As the interactions with global markets and overseas operators increases, will the management of diversity issues be less of a challenge to managers?

Discussion

The above mentioned statement has significant importance to the global business community due to the rapid changes in technology, the current world political and economic climate. These environments will have a significant impact on the way business functions and the interacting roles of the managers.

Trading Alliances

As infrastructure has been developed and trade barriers reduced, enormous opportunities have opened up for organisations to expand globally. Regional trading alliances have assisted managers in focusing on economic growth and productivity gains. Some of these regional trading alliances are:

The Australia - New Zealand Closer Economic Relations Agreement (CER);

Australian bilateral free trade agreements;

Association of Southeast Asian Nations (ASEAN);

The European Union (EU);

North American Free Trade Agreement (NAFTA);

To oversee global growth and trade among nations the World Trade Organisation (WTO) provide the systems and processes required for developing trading relationships. It could be argued that the WTO and regional trading alliances are providing managers with a more successful platform for international trade as compared with years gone by.

Global Perspective

Throughout the world history of business globalisation management and managers have used several different types of attitudes to fulfill their globalisation strategies. The move away from ethnocentric and polycentric attitudes and towards a geocentric attitude has resulted in assisting management in achieving their objectives while at the same time allowing the managers to concentrate on more challenging issues.

This can be clearly demonstrated in the large number of successful multinational corporations not just here in Australia and the western world but also to a larger extent into the developing countries. Multinational corporations I refer to as multidomestic, global, transnational or born global corporations.

Global Sourcing

One issue for managers and team leaders that has arisen as global markets and overseas operators increase is global sourcing of skilled labour resources. Due to the vast number of projects currently in the development or construction phase an acute shortage of professional skills which include Top, Middle and Line Managers has occurred. Particular disciplines that have been affected are IT, Engineering, Accounting and Trade people.

Managers have been affected by this shortage by working longer hours with the 'burn out' rate increasing, by accepting or promoting people with inadequate skill sets, paying a huge premium on employee remuneration and delaying or cancelling projects.

Managing In A Global Environment

To be an effective manager operating in today's global marketplace it requires awareness in all types of environments. How managers address, adapt and solve issues in these global environments will decide how well business objectives are met.

Political

The political environment is a changing environment in many countries and this will not stop global leaders from seeking new markets for their goods and services, find new suppliers for their raw materials or the setting up of production and distribution networks.

Governments play an extensive role in globalisation by exerting their political agendas through the opening and closing of markets in which entrepreneurs and global leaders can leverage through the investment in technology research and development. The direction of globalisation is generally guided by the political agendas of the world's most influential nations.

Countries are categorised by their political stability. Maximum, high, moderate, low and failed. Due to the ever increasing globalisation of markets into the less stable countries, managers need to be aware of potential, fast moving issues that may affect corporate sovereignty and ensure there is a clear exit strategy when dealing with these less stable governments. One clear example of this is the multinational oil companies currently working off the cost of Nigeria who, for the past 20 years have been self-imploding with an internal political power struggle.

An area of concern for managers involved in global markets has been the political instability of the Muslim Jihad movement through the highly visible group Al-Qa'ida. This has given managers extra responsibility by ensuring corporate planning mitigates this menacing evolving issue. This would include risk management, security, evacuation plans etc.

This political instability does not always come from government level. History has taught managers that instability can come from the grass roots level, as in the case of the closure of one of the biggest copper mines operated by Bougainville Copper Limited in Papua New Guinea (PNG) in 1987. This grass root instability came from the local landowner issues which eventually forced a succession movement by the local government that then led to the subsequent intervention of the PNG army.

Today, companies like Oil Search Ltd (PNG) working in developing countries, require managers to work and interact with the local population so there is a process where information is received evaluated and action plans initiated on a 'as needed basis'.

The basis of global economics involves the creation of economic interrelations across geographical boundaries as defined by national borders through the production, exchange, and consumption of goods and services.

Economic

As with the bird flu epidemic, the dot com bubble burst, the Asian Financial crisis, and the current world financial woes all have a significant force on the economic modeling managers had and currently must employ to achieve their corporate objectives.

With the advent increase of global trade corporate competition and competitiveness has increased. Company strategic planning needs to be aligned with the current economic conditions for sound business planning decisions.

Managers today need to be in tuned more so in this competitive environment and understand the macroeconomics, interest rates, inflation, currency movements, labour market issues and the drivers behind these issues if they are to survive and become prosperous global managers.

Technology

Technology is moving at a rapid pace and is the main driver of the large increase in the global trade through e-business. Technology is the force behind managers today in becoming more effective and efficient. Information is power and that's what technology has delivered for an increased global trade network.

Technology has delivered a new set of issues for managers to operate in. As faster, complex data and statistical information flow managers can manage by exception. It has educated and enlightened the consumer globally, forcing the managers to drive effective and efficient management organisational practices.

Managers today dealing with e-business issues in the global environment require attention to languages and cultural sensitivity, the rapid change management processes being introduced to strategic alliances, joint ventures and foreign subsidiaries. Ethical standards and organisational effectiveness are also current issues that managers must be aligned with. A good example of this is would be the effectiveness of an international organisation utilising web based applications. Are ethical standards being upheld?

Sustainability

Sustainability is becoming more of an issue for multinational corporations. Environmental issues such as green footprint, climate change, gas emissions are examples of current global issues for the global managers to contend with.

Sustainability is not just about environmental issues. In the case of the global company Oil Search working in developing countries, sustainability is about economics. To remain in business by ensuring they give back to communities through the following programs.

Providing positive social outcomes

Community equity involvement in projects

Business development and employment opportunities

Sustainable ongoing community based developments

Promote Gender Equality and Empower Women

Reduce Child mortality

Combat HIV / Aids / Malaria and other diseases

Developing Global Partnership

Local Economic Development

Education Enhancement

Community Health Programmes

Corporate Social Responsibility

Each one of these community programs helps achieve Oil Search business objectives. Each individual project has issues that managers need to control throughout the Planning, Leading, Organising and Controlling phases of the management cycle.

Cultural

Cultural awareness has become a pivotal strategy for today's managers. With increased globalisation into developing countries, issue arise where English may not be the first language of choice and where work values and behaviours may not be in line with that of western world countries.

Assessing cultural differences and understanding how business managers need to implement strategies to support the multinational globalisation objectives, managers have available several tools to assist in analysis and assessing culture difference. Hofstede's and Globe framework for assessing cultures are two available

Understanding cultural difference is a risk management program for managers who are required to meet their corporate objectives. A key for survival in the 21st century.

Conclusion

Globalisation of business has created opportunities and challenges for all levels of managers from corporate down to the front line.

In my view, even though there are many case studies of successful managers throughout the history of 'global business' the challenges and the successful deployment of solutions to address these challenges are always changing into the future. This is mainly due to the fact that products, customer's expectation, world events, technology, markets and environmental issues never stop changing.

A perfect example of this is the Starbucks Corporation. A very successful multinational company who's managers took their eye off the globalisation environment. Drastic action was required to realign their operational strategies to their strategic plan.

As more multinationals move into non-traditional markets such as in South East Asia, many issues will arise to challenge the modern day manager. Mangers will need to provide solutions to these challenges using their innovation, leadership and conceptual skills while maintaining a focus on the issues that arise from the current global environment.

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