The Globalization At Macro Level Business Essay
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This is a small assignment based on the question of Globalisation is inevitability for both manufacturing and service organisations .As an SME in your country, what does this challenge mean for business sustainability
This report is consists of many factors which have adverse implications on the overall goals of the organisation. In this cutthroat competitive milieu globalisation has played a pivotal role in the ever-changing environment of the organization. Further, constant change in the culture and system of the organisation has their own significance in the organizational culture that will be discussed exhaustively in this report.
Arguably, the biggest single challenge facing managers today is globalization: the creation of a unified world marketplace (Dunphy et al, 2007). According to (Brunes.B, 2009)"Allied to globalisation, however, are three other challenges: how to achieve sustainability in a world of dwindling natural resources and increasing environmental pollution, how to manage an increasingly diverse workforce and at a time when business leaders are considered less trustworthy than ever before, how manage ethically. On the other hand (Jones, 1995; Deresky, 2000) thinks that globalisation is the name of economic phenomenon, which is related to the integration and Convergence of economic systems through the growth in international trade investment and capital flows (Jones, 1995; Deresky, 2000).
While some authors has suggested that it is a merely combination of four factors such as social, cultural and technological elements. (Giddens, 2002) assures that with the help of globalization death of the distance is certainly possible. But, it also makes it possible for the organisation to cross the boundaries and start the cross culture communication with other organisations. According to the Reich (1998) shows some agreement amongst the writers that what is driving globalisation? Whether it's intensification of international competition, economic liberalisation, removal of trade barriers or advent of new technologies. But some authors has unfortunately shed some light over the factors which brought about many conflicts between the stakeholders who see it as a force for global good and those who see it as the oppression of poor nations by rich ones (economist, 2002, Hosbawm, 2008; Klein, 2001; Stiglitz, 2007). (Brunes, 2008) According to a research "more than half of the 100 largest economies in the world were private corporations. Further, the sales of Ford and General Motors combined were greater than the combined GDP of sub sharan Africa. Which clearly proves the point of conflicts when globalization was seen as a force of global good and a oppression for the poorer community.
Globalisation has its own implications that may hamper the organisations some ways or either helps organisations to grow and sustain in the market for a longer period. Sustainability stems from the same notion of having a globalized milieu with a set rules pre-defined by the regulatory bodies as per the behaviour and pattern of the organisation. (Brunes.B, 2008) has defined sustainability by highlighting the characteristics of sustainable organisations.
"There is a wide spread view that governments must solve environmental problems. However, the major multinationals outstrip many of the world's national economies in terms of wealth and power, and their global coverage allows them to escape the requirements of particular governments seeking to place severe environmental restrictions on them. They can simply move their operations across national borders." In addition to that, (Dunphy et al, 2007) argues that it is highly likely that an organization the one who operates in competitive and hostile market, it has to work as per the desire of the stakeholders for increased profit with the need to act in the wider and long term interests of society as a whole. Therefore, the organisations in the volatile external environment are not potent enough to sustain in a scenario whereby managers do not have the authority to divorce their actions from the wider impact they have on society. Adding that, (Brunes.B, 2008) nor can they ignore the fact that a sustainable future of the organisation needs a non-volatile open and close system in the external environment of the organisation.
In order to, bring about the sustenance in the system of the organisation. Incremental and transformational approaches should be intertwined in a way, which will then help to create a sustainable organisation. While, (Docherty et al 2002) proposed a theory that "sustainability is not about the relationship of organisations to their environment, or the depletion of natural resources". But, sustainability encompasses three levels: individual, the organisational and societal. It is evident with the recent studies that sustainability is not merely the name of satisfying the needs of some group of people at the cost of others. But, it is a name of a cohesive process, which creates bond between the customers, personnel owner and society. Due to this reason, many organisations in Asian countries were unable to survive or stop functioning properly at some point.
2.2. Work Force Diversity:As Jones et al (2000) defines that: Diversity is dissimilarities differences among the people due to age, gender, race, ethnicity, religion, sexual orientation, socioeconomic background and capabilities. It has very severe implications if it is not handled well. Any organisation can easily collapse in this highly globalised environment. In many transnational organisations people are engaging with the workforce of other culture and creating a synergy as per the requirement of production or service based company. In the case of Muslim Charity, which has made strategic alliances or co-partnering with the regional companies to deliver their projects in far fetch areas.
(Brunes, 1998) By and large, migration and recruitment has been the important factors for transnational organisations as well. But, in high context cultural (leadership, 2008) countries preference of male over the female is always evident. Though, it has been proved time and again that organisations in economically developed countries accepted the workforce of minority (women). Yet (Cummings and Worley, 2001, 429-30) are in consent with each other at one point that is contemporary workforce characteristics are radically different from what they were just twenty years ago. Employees represent every ethnic background and colour range from highly educated to illiterate, vary in age as well and parents may have dual income or physically or mentally challenged.
(Brunes, 2008) point outs that culture is not about the fact that all work forces possess the common work ethos and reacts in the same way. But, Ricks (1999) raised a very critical point about cultural differences that they are "the most significant and troublesome variables encountered by the multinational company. Failure to understand this very point comprehensively can mislead managers of the organisations. This is where managers made many blunders. For instance, Muslim charity has a very diversified culture to extent whereby, sometimes conglomerates unable to resolve the disparities that pops up every now then. The main rationale behind is the differences in the culture.
Moreover, (Hofstede, 1980) successfully determined the similarities and differences between national culture and the implications of these for the management of different groups. For example, workers from UK-Muslim Charity will be less effective if they to manage a group of employees from south Africa-Muslim Charity. On the contrary of that, (Cumming and Worley, 2001) came up with the brilliant concept that comprehensively covers all the dimensions of diversity." Diversity results from people who bring different resources and perspectives to the work place and who have distinctive needs preferences expectations and lifestyles". Therefore, In order to gain a competitive advantage organisations must establish a division that appraise the performance of the work force.
Although, (Hofsetede, 1980) work on understanding the culture was criticised enormously by other authors on national cultures. Further, Hofsetede work showed some resemblance with the contemporary work of Handy's (1986) in which he explained that four forms is striking. But, it has been observed from the past research work that in many organisation's both role and task cultures are prevalent simultaneously. For instance, in most countries Muslim Charity's organisational environment is purely based upon the role culture. While, in low context culture where only task culture is prevalent only. In addition to this, both task and role culture is prevalent in the headquarter milieu.
(Rogers et al, 2006) Bain and Company found a very interesting research on culture that: "Culture is at the heart of competitive advantage, particularly where it comes sustaining high performance. Bain & company research found that nearly 70 percent of business leaders agree: Culture provides the greatest source of competitive advantage. In fact, more than 80 percent believe an organisation that lacks a high performance culture is doomed to mediocrity".
2.3 Indvidualism v collectivism: (www.geert-hofstede.com) Geert Hofstede had explained about the Individualism and collectivism that they are the two ends of a framework. One, which is defined as a "loosely-knit social framework in which individuals are expected to take care of themselves and their immediate families only. Its opposite is collectivism in which preference is given to the tightly-knit framework in society in which individuals can expect their relatives or members of a particular in-group to look after them in exchange for unquestioning loyalty.
In the context of Muslim charity transition in the culture of the organisation is taking place where a framework of individualism is not viable in the system and subsystem of the organisation. Instead, Collectivism is replacing individualistic culture incrementally in the internal environment of Muslim Charity, whereby; internal stakeholders are performing conditionally in exchange of the reward system. Which is expected from the group of employers. Thus, the culture of individualism within the strategic business units or the divisions of regional offices of Muslim Charity is on the lower side.
2.4 MASCULINITY FEMININITY: Further, Hofstede highlighted more on the importance of the masculinity femininity. The masculinity side of this dimension represents a preference in society for achievements, heroism, assertiveness and material reward for success. Society at large is more competitive. Its opposite, femininity, stands for a preference for cooperation, modesty, caring for the weak and quality of life. Society at large is more consensus-oriented".
By and large, preference to the masculinity over femininity has been removed from the ethos of Muslim Charity and a constant incremental change has enabled the system to adopt a policy whereby, equality has become the preference of charitable trust. However, some policies should be adopted whereby, everyone has the power to contribute and internal stakeholders expects a reward system purely based on fair policy specifically at the international stage. It has been observed in the 3rd world countries where organisations have not been able to adopt fair policy for both the sexes. Resulting, a great loss of human capital. Although, according to the (www.wolframaalpha.com) statistics of 2008 in Pakistan. Unemployment ratio remains to a 8%. But, the feminine community were ignored in all the sectors.
One more critical point put forward by (Brunes.B, 2008) Hofstede, cultural dimension model that every organisation has its own orientation. Which is classified into two kinds; namely, employee oriented and employer oriented. First form of orientation is purely revolves around the employees preference to their personal goals which are entirely not align with the organisational aims. Employees try to attain these personal goals on the expense of organizational objectives. On the contrary, notion of employer orientation is the way of engaging employees and realign their orientation to attain common objectives of the organisation. In the culture of Muslim Charity this has been the most critical point. This is where management has not yet been able to successfully execute a work plan for employees. Resulting, a horrendous consequences faced by the organisation which ultimately hampered the working capital of the organisation. Employer orientated guidelines are required at national and international platforms that will exhibit synergy at all levels in the hierarchy of the Muslim Charity.
2.5 Degree of leadership style: In (Brunes.B, 2008) Hofstede's cultural dimensional theory the very last element that is known as leadership style. It plays a vital role in the organisational culture as a whole which really transform and shifts it two a new level. (Brookes, 2008) There is no iota of doubt that different leadership styles bring various outcomes for the organisations, which are then used effectively by the leaders as per the requirement. (LD, 2008) Leadership styles are classified into three categories, which are as follows:
In the internal environment of Muslim Charity more or less all the styles of leadership are required. Due to low coercive power the flow of information in the scale of chain of command never transfer from operational core to strategic apex (bottom to top)(Bpp, 2008). As result of this, untimely delays in the decision-making makes it even harder for senior management to take S.M.A.R.T (G. jones, 2010) decisions. Occasional authoritative style will help organisation to attain its goals. However, long-term dictatorial culture in the high context cultural organisation can bring numerous conflicts. Which can cost heavily to any organisation, which has certainly deteriorated the internal environment of Muslim Charity. Pace-setting style which will enable the Muslim charity to engage employees to bring about their individual skills and delegate and participate in the operational activities that will increase the leverage of the business in the long run.
2.6 POWER DISTANCE:
This refers to the response to power and authority at different levels of a hierarchy no society functions without some hierarchy and power distances. In cultures where power distances appear low, their informally prevails or is more subtle and is not necessary responding to a formal structure, close work supervision would be presented in cultures with wider power distances, the members of that society accept and respect hierarchy and even encourage it. Manager would expect autocratic decision-making. Employees work is organised according to what the next line of managers expect.
So, (Brunes.B, 2008) Hofstede has looked at one very interesting dimension here as he recognizes social inequalities in many countries and work environments these are a part of life. (G. Jones, 2010) interestingly sub-classified the power distance in various categories. As per the classification Muslim Charity falls under the category of power distances coercive and legitimate power. Where power is centred at one place and a very limited delegation of authority prevails in such organisations. In particular low context culture organisation possess such distance powers. In the context of globalisation and conjunction of two power distances can some time possess uncertain threats to the open and close systems of the organisation? As a result of this processes within the organisation discontinue itself, which will then create hindrance in the flow of information of hierarchical structure.
4. Uncertainty Avoidance
According to (Hofstede, 1980) the fourth dimension that Hofstede distinguishes is the uncertainty dimension. The spectrum is made up of uncertainty avoidance on the one end and uncertainty tolerance on the other end. Further, it can be defined as the extent to which the members of a culture feel threatened by ambiguous or unknown situations', this expresses itself in the work place for example in the need for predictability.
This dimension refers to the extent of the need to avoid uncertainty in life. Where this dimension is high, the effects of conflict, organisational politics, and competition at the work place are more feared. Naturally stress levels are higher, individuals are less entrepreneurial or independent. At the other end of the spectrum the opposite applies because the work force is willing to take risk, be less resistant to change and have less stress and job anxiety. To combine both power distance and uncertainty avoidance, consider figure 1.0 which is as simplified extraction from Hofstede's work to serve as an example only.
Diagram of hofstede model.
According to the model Pakistan falls under 3rd quadrant where the power distance is always very low in comparison with the uncertainty avoidance. In such circumstances due to high uncertainty avoidance whereby everything is structured in a society and rules that are required in the society are very stringent. In case of Muslim Charity uncertainty tolerance in the UK division is very low in comparison with the other end of the uncertainty spectrum.
Collectivist . Pakistan
4Quadrant 3rd Quadrant
Individualist . Britain
2nd Quadrant 1st Quadrant
[figure is taken from Brunes. B, (2009), Managing Change]
Britain East Africa
Low Distance High Distance
[figure is taken from Brunes. B, (2009), Managing Change]
5. Globalization at macro level:
As numerous writers has written a lot about globalization at various occasions. By and large the fundamental definition of globalization will change in the context of macro and microeconomics level.
According to (www.Beerkens.info) the characteristics of the globalisation trend include the internationalizing of production, the new international division of labour, new migratory movements from south to north, the new competitive environment that generates these processes and the internationalizing of the state making states into agencies of the globalising world.
6. Key Drivers for Globalization:
One of the author's had come up with 4 key drivers of globalisation. A change small change in any of the following drivers can have critical implications on the economic outlook of any country. Which will thus, slows the growth of companies. a) Customer drivers, b) Cost Drivers, c) competition Drivers, and Country Driver. As far as the cost driving force in terms customer is concerned will challenge any organisation when the demand and satisfaction need of all the customers converge and becomes a common need altogether. Afterwards, it would become very easy to run the business on a common platform.
Cost Drivers: it is very crucial to recover or save the cost in the production of the service. While, at the same time company enables itself to increase its economies of scale that will allow the company to spread the cost and thus reduce or mitigate the financial risk on geographical bases. Henceforth, Muslim charity can achieve the economies of scale by sale volumes globally.
Country Drivers: are the key fundamentals drivers that may bring about the increase in the overall profit of the MNC's (Multinational National Corporation). Economic trade policies (Whittington, et al, 2009) and (Porter. M,1982) reduction trade barriers can really thrive the profitability of any business. In addition, to this globalization also underpins the regulations related to standardization of either product based businesses or serviced based. As a result of that, meeting those standards can reduce the chances of speeding the cross-cultural business. Further, for Muslim Charity reaching to the wider audience requires a common cross communication tools and ethical standards, which will easily facilitate the business to run openly on, cross communication bases.
Competition Drivers: (Whittington et al 2008) in this cut throat competition at global level. It is very important to determine the optimal capability profile of the competitors, which ensures their level to do business at local or progress it towards next level of globalization. According to (G.jones, 2008) competitors has the biggest say of driving the focus of competition from one level to another or divert the focus from one thing to another. (Porter.M, 1982) whenever the rivalry increases specially with the entry of new entrants into the market and they emerge from regional level to compete at international level. Resulting a profound impact of globalization will become evident for longer period. For instance, Muslim Charity is entering at the gross root level in charity sector of Bangladesh to penetrate the market by competing with the movers and shakers of the market at domestic level first and then progress further towards global level.
According to (G. Jones, 2010) for a company to become less competitive or show no incline towards the competition will depend upon some factors as shown in the figure. Firstly, it has to remain competitive localised by having a certain niche strategy in the market, which is shown in the 1st quadrant of the figure. For a geographical space in the market occupying a certain space of product scope for sustainability perspective will bring about the competitive international broad range strategy which will push company to become globalised but at the same time remain uncontested.
In the context of Muslim Charity moving from quadrant 2 to 4 is to expand the business by being local. Instead tapping the international market on regional and geographical level while, keeping the current competitive position. While, option 5 whereby the company has to sustain itself by closely reading the market condition and determining the ability of the competitors to market the transition.
Local or National
Competitive Localised Niche Strategy 1
Competitive Localised Broad Range Strategy 3
International or Regional
Competitive International Niche strategy 2
Competitive 4 International Broad Range Strategy
Geographic market scope
[figure is taken from Brunes. B, (2009), Managing Change]
Finally, Intricate and demanding processes of Muslim Charity requires rigorous and intensive exercise of all the 6 dimensions of Haofstede model which will enable it to become more competitive for longer period of time. Further, it will make Muslim Charity to become order winner instead of order qualifier. If the points which were discussed comprehensively and the flaws comprehended in the report rectified practically. There is a possibility that Muslim Charity will certainly gain competitive advantage and it will sustain in the market.
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