The Impact of Globalization on Management and Culture

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.

According to Mead (2005) International Management has emerged as an important subject in this contemporary era. Formerly the concept was limited to either seasonal managers or corporate troubleshooters. Nevertheless globalization has widely expanded the perspective and each distinct business is termed as a global business. Moreover cross-border transactions are customary and employees have to deal with diverse cultures and own responsibilities and maintain relationships internationally. Key factors like political, economical and technological advancements have extensively influenced the role of International Managers. Today, cultural difference can be found at diverse levels. However individuals are aware of their own culture therefore they confront to others culture. Specific MNCs even claim that culture plays primary role in their decision making process. It is vital to understand culture diversity because it effects the internal environment and it assists in formulating an effective communicating medium for a firm. More often strategic decision is taken by groups rather than individuals hence management needs to understand multi-culture facets across the organization.

Management and Culture:

Kedia and Mukherji (2003) acknowledged that in this arena global managers must deal with cultural diversity, major legal changes and globalization. The content of international management is highly opposed to key management functions hence managers role can be better unstated in specific cultural context. Cross-cultural management has presented a broader scope of international management. Some of the chief issues allied with current management practices are as follows:

The Impact of Globalization:

The term considers world as a sole existence with no trade barriers and precincts. It works for the interest of both society as well as the business. Worldwide every sphere is interconnected and it has resulted into integration. A major shift can be seen in economic policies, political influence and technological encroachment. Four factors have contributed to the progression of globalization:

Economic Integration:

More and more FTAs (free trade agreements) and RTAs (regional trade agreements) are taking place. NAFTA (North American Free Trade Agreement), European Union and APEC (Asia Pacific Economic Cooperation) accounts for major portion of the trade. Moreover the growth rate of Developed countries has reduced and developing economies specifically Asia and African countries seems to reflect significant positive growth rate. FDI (foreign direct investment) has further influenced globalization route and China is the second largest beneficiary of FDI. Due to the fact economic power no more resides with Europe and North America. It has been forecasted that backlash might impose adverse impact on agricultural economies like Argentina, Brazil and Asia.

Organizations specifically MNCs and global corporations consider globalization as an opportunity and have located diversified functional units like distribution, marketing, sales, production across different countries in order to capitalize and gain benefits from those economies. Today Intra firms account for one-third of the worldwide trade. Organizations no more prefer drawn out hierarchical structures and opt for strategic alliances with other corporations. Firms are deploying communication technologies and giving pave to virtual organizations where employees communicate with each other through technology. Economies are interconnected since MNCs produce and sell globally and this has created a diverse network of global linkages and global managers must deal with these states of affairs.

Multifaceted work environment:

The set of connections between countries and corporations have affected the stability factor within the organization. There exists team-based management and organizations to a greater extent prefer downsizing and government are putting interest in privatization. Increasingly firms are looking for cheap labor hence moving towards China, India, Vietnam, South Korea and many more and layoff majority of employees performing in developed economies. Even more mergers and acquisitions are taking place to carry out in the competitive environment which has further resulted into workforce reduction and it also affects the left behind employees in the organization. It has been found that majority of the population dwelling in India, China and Philippines have migrated to USA, Russia, Germany and Ukraine. In 2005 alone, the population of migrants account for 200 million which was equal to the population of Brazil. In 1976 number of women migrants was just 15% and it increased to 70% in 2005. One analysis revealed that after World War II majority of unskilled labor migrated from developing countries to developed economies. However today highly skilled labor is migrating to developed countries resulting in brain drain. Recently 20% of the highly skilled labor of New Zealand migrated outside for working purpose. Moreover privatization has resulted into interference by foreign firms in the domestic environment resulting into intensive competition. However it works in the betterment of the state-owned enterprise since foreign firms bring technology and management skills along with them. Businesses are looking for cross-functional teams across the globe to enhance the productivity. More and more employees are getting older and participation of women is also increasing in the workforce, cultural diversity is increasing and highly skilled employees can move across borders on the basis of RTAs.

Erudition of Information Technology:

Across geographical discrete existence, corporations are utilizing communication and information technologies. Traditionally there were barricades to economies of scale but computing technology has exterminated the issue and information flows across margins and borders. Even SMEs (small and medium enterprises) can access to these changes due to decrease in prices. In this information driven workplace global managers need to keep informed with new systems.

Increase in the number of players:

Several scholars argue that globalization is nothing more than increase in global trade as a proportion of gross world product. It is a valid point that international commerce exist even hundreds of decade back. But today it involves partners such as domestic firms, foreign firms, MNCs, Global corporations, Home Country, Host Country, formal institutions, agencies, international agencies and organizations and many more. More importantly major alliance can be seen among colossal economies. Prior to the changes USA was considered as the home town of MNCs and global businesses but today MNCs has moved towards Paris and Tokyo which lead in this competitive arena. During 1990s SMEs were no more than a mere player but today they own major proportion of export business in Italy, Sweden and affiliated Japanese firms. In this modern era service sector contributes to the major portion of the economy MacLennan (2010).

Meanwhile there exist terrorists and international gangs based in Hong Kong, China, Colombia, Russia, Japan and USA who illegally use banking system and drugs transport system and human trade. Terrorist’s attacks on World trade Organization, Spain transport system and night clubs have negatively affected globalization (Hong and Pollard, 2010).

Understanding Global Management:

Gooderham and Nordhaug (2003) instigated that Global management requires focusing on political, legal, cultural and economic factors. One needs to understand economic strategies of different countries, implication of set of laws and regulations worldwide and political system of specific countries. It must be highlighted that culture and history contributes to legal, political and economic system of a country. Culture is the fundamental which creates meanings and belief systems. Unfortunately business practices more often neglect this aspect. Global management is termed as interaction between different cultural forces and global mangers even deal with multicultural forces within their own country.

Significance of Global Managers:

Management principles are difficult to observe hence numerous scholars looked for alternative solutions. Mintzberg stated managers own responsibilities and these activities can be categorized as informational, interpersonal and even decisive role