This report aims to identify the key issues organisations face as a result of globalisation and what Human Resource managers can do to ease the transition of the organisation going from multinational to transnational. HR managers must first perform strategic HR management, which is to align HR activities such as recruiting, selecting, training, and rewarding personnel (especially for the right person for the right job) to the business’ strategic goals and objectives to improve business performance and develop an organisational culture that promotes innovation and flexibility.
The four key areas of the challenges identified in this report are cultural distance, human rights, ethical concerns, and diversity in the workplace. Recommendations made in regards to the challenges organisations of today face include communication and interpretation issues when communicating with other nationalities, ethnocentrism, acting both legally and ethically, differing employment laws, labour laws such as child labour and sweatshop labour, and working among people of different backgrounds, gender, education level, nationalities, and race.
A SWOT analysis was developed to compare Boost and other industry players and what measure Boost need to undertake to increase its performance and strengths while understanding how to better manage its weaknesses and threats from current and potential competitors. Through franchising, Boost has acquired a substantial share in the wellbeing industry in many countries and a positive brand image and constant product quality standard is essential in garnering growth in market shares.
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Introduction Globalisation is a process which results in “greater interdependence and mutual awareness among economic, political, and social units in the world” and where “the rapid increase in cross-border economic, social, technological, and cultural exchange is civilising, destructive, or feeble”. It is “a process fueled by, and resulting in, increasing cross-border flows of goods, services, money, people, information, and culture” (Guillen 2001, 236).
Multi-national corporations (MNCs) need to “build global capabilities such as the ability to seamlessly move talent, ideas, and information around the world to create products and services better than competitors” to acquire a competitive advantage over the latter. Global managers need to engage in “thinking global but acting locally” (Ulrich 1997, 3). Boost Juice Pty Ltd was established in 2000 by Janine Allis in Adelaide, Australia who recognised the potential for wellness products in an age where there is increasing demand by time-strapped consumers for healthy food amidst growing obesity and health issues.
Averaging a growth of 28 stores and with a group turnover of more than $AUD 85million per annum, there are more than 200 stores around the world. In 2001, Boost started its franchising program with franchisors generally being attracted to the unique retail concept, good marketing support, interactive and fun work-culture, well-established brand name, and most importantly, shared values and common direction.
The previously untapped market for a healthy fast food alternative amidst growing demands by consumers who are more educated than before was seized quickly by Allis in what can be said is a blue ocean strategy, where companies will succeed in “uncontested markets ripe for growth” (Kim and Mauborgne 2007, 70).
Impact of Globalisation on HR Managers
Globalisation especially brings competitiveness in the business environment. Individuals not only have to compete within the country but also with people of other parts of the world. This translates to organisations having more choices and opportunities in their choice of manpower. With globalism, corporations need leaders equipped with worldwide perspectives and encompassed with practical judgements and sensitivity to global concerns. Organisations will have an added advantage if they are able to understand and maximise diversity efficiently (Holtzman and Anderberg 2011, 76). Globalisation aids in adding synergy to the company and thus, competitors will not see the company as a representative of a particular country but as a company in itself.
McShane, Olekalns, and Travaglione (2010, 169) suggested that globalisation and certain organisational changes can potentially undermine the level of trust and commitment necessary to motivate employees to work beyond expectations. Firms need to prepare their staffs for potential changes they might face due to globalisation.
Cultural distance includes include language, religion, family structure and difference in standard of living (Samovar, Porter, and McDaniel 2009, 18). Culture shapes people differently. For instance, in an individualistic society, it is challenging for people to be more collectivist. Culture refers to a “systemic way of perception” and is composed of “beliefs, norms, assumptions, knowledge, values, or sets of practice that are shared and form a system” (Ahamer, Kumpfmuller, and Hohenwarter 2011, 18). Dealing with global business, one of the issues that Boost may face is that of ethnocentrism. Ethnocentrism defined as people “making false assumptions about others' ways based on our own limited experience” (Hammond and Axelrod 2006, 927). These assumptions appear because of “one’s belief that their way of doing thing is the best and all other cultural practices are inferior”.
Ethnocentrism can cause misunderstanding leading to conflicts and misunderstandings. To operate effectively and address ethnocentrism, managers should implement induction programs to counter culture shock (Soderberg and Holden 2002, 108).
With many companies focusing on profit maximisation, they might fall to moral myopia or moral blindness to achieve their goals. One of the key issues of human rights is the use of child labour. Many consider child labour to be inhumane and abusive in nature as young children are often underpaid and work in dire conditions.
Labour laws vary from country to country and in Australia, home country to Boost, a child has to be of 14 years and 9 months to be able to be legally employed while age varies for full-time positions. Boost needs to acquaint itself with the various employment laws in the countries it operates in. Taking precedent would be the infamous Nike child labour and sweatshop incident where it was reported that the company, which Nike has outsourced, its productions to made the employees work more than 60hours per week with workers who refuse to work overtime being punished.
Ethical concerns are important in business practices and research endeavours in organisational chain management. In particular, ethical concerns become evident in situations of asymmetric relationships across organisations. However, sometimes it is hard to determine which act can be considered of ethical value and which is unethical (Svensson 2011, 21). Ethical issue refers to the concept of what is right and wrong on the basis of how businesses conduct their relationships with others.
Robertson and Crittenden (2003, ) stated that “varying legal and cultural constraints across borders have made integrating an ethical component into international strategic decision quite challenging”. Sometimes managers will have these dilemmas of determine ethical and unethical societal norms due to the complexity of the national and cultural factors in particular host environment. Many practices that are considered unethical or even illegal in some countries are accepted in other country. Some of unethical issues that global managers will potentially face are that of bribery and nepotism.
Bribery refers to an action of giving, receiving of something value to influence an action of the other where it is different from gift giving to bind social and familial ties. In many Asian countries, it is the norm to receive bribery whereas Westerners often regard it as a shameful action. When doing business in a country where bribery is customary, managers may need to provide extra payment or favours as that is the culture. Thus, it becomes a dilemma for manager to adhere to their ethical standards in the face of foreign custom and follow the local ways to remain competitive.
Nepotism is “favouritism shown or patronage granted to relative” in business (Tuff 2005, 55). Certain countries believe nepotism is the right practice. Sometimes without any ill-intention, some companies may have the entire family in the top management without any considerations about the educational background of each individual. There is nothing wrong with a family member as a top manager as long as it is supported by capability and skills and performance is judged base on merit.
Diversity in the Workforce
As mentioned by Lattimer (1998, 5), as more companies operate beyond national borders, the challenge of diversity has moved from a social ideal to becoming a practical business mandate. Organisations nowadays are seeking employee from miscellaneous background that embrace on social knowledge, linguistic and culture to adjust the business and practice to fit the customer expectation. According to Ely and Thomas (2001, 230), diversity is imbedded in individuals and includes both visible and non-visible aspects by which individuals categorise themselves and others.
These aspects include race, ethnicity, religion, age, sexual orientation, gender, nationality class. It becomes a challenge for HR manager in facing the diversity in the workforce where it can result in discrimination and harassment. Discrimination refers to any practice that distinguishes different groups based on characteristics defined in the anti-discrimination legislation and resulting in one group being at the advantage and the other group facing disadvantages. For example, gender stereotypes and unfairness. Harassment is behaviour designed to make a person feel unwelcome, offended, humiliated and intimidated.
These issues often faced by managers operating globally. Discrimination and harassment can create a hostile work environment for the employees and hinder the daily operations of organisation. Furthermore, it might also result in the company having a negative reputation.
Critical Analysis of Key Issues
Shared culture is a precondition for the formation of a society (Buzan 2010, 5). The general perception regarding culture is there are major differences between Western and Eastern countries, suggesting that the shared cultures are different.
With differences in cultures between nations, national culture will further impact organisational culture (Essounga 2009, 72) which becomes problematic for businesses looking at expanding their businesses globally. For example, Disney Company in Paris lost 1 billion dollars in the first 18 months of its operation resulting from the hostility culture of French towards the Americans. Zhang (2010, 72) suggested that globalisation countries grow to be bicultural where the society at large does not own a common set of culture.
Different generations hold different sets of common cultures. Emerging trends have it that the young generation of today are becoming more open-minded and will accept others cultures easily. However, the blind adoption of Western management practices will lead the company towards failure. Companies should avoid adopting a standardised approach for management practices but tweak it according to local needs (Jelavic and Ogilvie 2010, 56). Example can be seen from McDonald’s glocalisation; offering different products according to the market demands.
There are growing concerns of human rights in the society attributing to the rise in global companies pledging to abide to the UN Global Compact. For example, principle 2 of global compact: “Business should make sure they are not complicit in human rights abuses” (Unglobalcompact. com n. d. ). Due to globalisation, UN Global Compact brings attention of issues many think are norms for global businesses (Stohl 2010, 56). There are also companies, which do not comply, often refusing to take an ethical stand and take advantage of regulation differences between countries.
An example would be Nike sweatshop. Developing countries are usually weak in the implementations of law, resulting in frequent cases of human abuse. For example, Green Construction Material Chemical Factory in China was involved in abuse cases (Global Times 2010). Growing expectations from society leads to companies recognising the need to engage in ethical practices and being accountable to stakeholders, therefore, human rights is a challenge for international management (Soysa and Vadlamannati 2011, 25).
Practices of business regarding human rights will impact the image of the business, which in turn affects the profitability of the business.Ethical issues are challenges for international manager because economies and companies are interrelated as a result of globalisation (Romar 2004, 668). For example, Enron wrecked havoc to the world economy and adversely affected investors and retirees depending on their pension funds. The root of Enron’s case is the management of Enron had placed their self-interests over ethical conducts and stakeholders.
Ethical issues are considered challenges because we assume that there are differences in ethical principles between local markets and at international level. With a uniform code of ethics created by United Nation (Yucel, Elibol and Dagdelen 2009, 103), ethical issues would not pose as challenges anymore as there are standards and protocols to follow. Ideally with a standard operating procedure in place, ethical issues will no longer pose as challenges for international managers but it is hard for individuals to implement because individuals have different value systems.
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