The effects of globalisation on firms

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

"The systematic trend towards integration of production and marketing with brand named goods and virtually identical badge engineered products such as cars being made available throughout the world. This process has been fostered by many "transnational" and "multinational" companies operating in more than one country."

Business environment effects HR. As different people from different countries with different culture, religion working together. The main objective of the organization is to make profit irrelevant of the psychical location of business. Globalization is to reduce the boundaries between the countries and moment towards single free economy. The example of this is the call centre of USA based in INDIA. Where globalization has positive points it also have negative too. It not only creates opportunities but also global insecurity. Where the opportunities and wealth of one country increases the power going the across the national foundries increases and drive capitalism. sen (2002) points to the longer-term nature of globalization:

Is globalization really a new western curse? It is, infect, neither new nor necessarily western; and it is not a curse. Over thousands of years, globalization has contributed to the progress of the world through travel, trade, migration, spread of cultural influences, dissemination of knowledge and understanding (including that of science and technology). These global interrelations have often been very productive in the advancement of different countries. They have not necessarily taken the form of increased western influence. Indeed, the active agents of globalization have often been located far from west.


Growth of the international business has led to massive interest in the ways people are best and, perhaps, differently managed in various countries. Yet American business school models of management have been assumed to be normal the 'best practice' Methods to be applied. Globalization has been driven largely by issues of marketing, cost and competition. International HRM is the subject that has developed in the wake of these driving forces. Consequently, people management on the international scale has often lagged behind other Management functions (such as production and finance).

Alder (1997) argues that: Although the other functional areas increasingly use strategies that were largely unheard of or that would have been inappropriate only one and two decades ago, many firms still conduct the worldwide management of people as if neither the external economic and technological environment, nor the internal structure and organization of the firm, had changed.

The growth in the international business has led to massive change in the ways people life in different countries. Americans way of international business is considered to be normal extending beyond the country boundaries. throughout much of the 20th century and into the 21st century, US corporation has dominated world trade and it is not surprising that North American business methods- focused on tight financial controls and marketing have been widely copied.

Brewster (2002) highlights the complexity of integration and differentiation that international HRM is underpinned by the five organizational drivers: efficiency orientation, global service provision, information exchange, core business processes and localization of decision making. the international business has led to failure due to lack of the local knowledge. It is important to have local knowledge of the people culture, living and standards also the government policies and procedures, stability, economic condition to be studied and researched about. The world is becoming globalized it is not possible for a business to grow and make a standing within the same country. they need to extent the branches in different countries also due to the cheap labour cost. in the 20th and 21st century there was a boom in IT market in India and many of the US business were attracted and started there. The reason is more qualified staff and cheap labour cost which has boosted the economy of the India as well as generating more job opportunities but on the same hand led to a fall in job market in US.

International HRM is related to the production, how much of the output get per unit of the input used. When the investment increases the productivity increases and employment increases and vice versa. Productivity is closely related to wealth, includes the investment on the equipment used. For example, US vs Africa (Somalia), there is no investment from foreign countries due to lack of resources and technology in major parts of African countries. The main reason for the companies to go international is to make profit by having cheap labour, save tax to import the product in the country. For example why Honda make cars in UK? To save tax to get the cars into EU and there is less regulation of jobs. They started the business in UK because Lilent went broke and left all the factories and technology giving incentives to Honda to come to UK. It also has a negative effect of demolishing the local businesses; turnover is bigger than the country's gross domestic products. For example, 1995 economy, 1980's- 1990's IT bloom in India and collapsed market in US and UK. There are lots of businesses carried out in different countries and managed in different ways. Some can go for merger or collision. They go for the assets in countries more suitable but the government can upset them but increasing the tax, regulation and instability. International business leads to investment creating employment and economic growth. British lease land from Hong Kong for 200years including KSA / China buying land from Africa. This refers to the government owned activity in different countries.


Heeks ( 1996) identified five main factors to explain the massive growth in software subcontracting to India suppliers: Indian software programmers were paid substantially less than their counterparts in the West. According to Heeks this meant that Indian subcontractors were typically charging about 70 percent of western contract rates and 40 percent for work carried out offshore. The Indian education system was producing a huge pool of software workers who were highly educated and fluent in English. Conversely, most Western countries had skill shortages in this sector. The Indian software market was itself growing so that use of Indian subcontractors laid the ground for future strategic penetration of Indian markets. Indian companies were enthusiastic about cooperating with foreign high-tech organizations in order to gain access to new markets and technology. Indian government had become more open towards inward foreign investment and collaboration.

IN 1980S AND 1990S, the British focused American and Japanese manufacturers of computers and electronic equipment, many of which left for attractions of cheaper workforces in eastern Europe and South America in the 21st century.

Lasserre and Schutte (1999), argue that outside investment depends upon the level of economic development looking at East Asia, for example, they identify 5 levels:

1. Platform countries, such as Singapore and Hong Kong, which can be used for regional coordination, initiating new contracts and gathering intelligence.

2. Emerging countries for example Vietnam

3. Growth Countries, particularly China

4. Maturing economies, South Korea and Taiwan.

5. Established economies; such as Japan.

Despite of the criticism of multinational, many governments, those of developed and underdeveloped countries have devoted much energy and money into attracting the overseas investment. The goal of the global economy is to create equal opportunities for men and women and obtain decent productive work in conditions of freedom, equity, security and human dignity. Developing a positive environment in which investment and enterprise creation can take place both nationally and internationally with due regards to good practice.

With the special focus on the rights of the women, promotion of human rights at work, improvement of social protection which includes legislation and promotion of strong institutions to improve the employee and employer relation.

This concludes that current business environment has strong impact on the practices of human resource management. Globally linked markets, diverse workforce and cross-culture have major factors that show the need of international human resource management instead of domestic human resource management because internationally diverse people require such human resource managers that have approach of thinking in global perspective. Global markets demands to formulate human resource strategies in a way that they fulfil global demand of multicultural people who are working at same organization with different backgrounds, cultures and nationalities. It’s not the domestic human resource management that meet these challenges but its international human resource management that really does.