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The process of globalization plays vitally important role for world relations, including, economics, culture, business relations. Due to the fact, that most countries cooperate with each other, it is logical, that they can not avoid the process of globalization and even assimilation in some forms. In this paper we are going to concentrate on globalization of business. Although many of us would say, that globalization is one of the modern processes, this is not correct, as it started already during the times, when Buddhism spread from India to China by 1300 AD. After the Ottoman Empire appeared, Europe, North Africa, Middle East were connected to each other. One of the consequences of the conquests was the development of trade relations between Asia and Europe. The famous Silk Route connected China, France, Italy and Central Asia. The eighteenth and nineteenth centuries brought some changes, like for example appearance of railways and steamships, which resulted in reduction of the cost of transportation and this certainly influenced positively on the development of capital circulating. The twentieth century brought even more technical progress, which certainly contributed to overcoming of the distance and communication barriers. Thus the advanced technologies only accelerated the tempo of business globalization. Decades have passed already since the times, when enterprises and organizations lost their connection to country borders. Numerous corporations are created, having their offices in several countries simultaneously. Some companies organize their offices in one country and place production in other countries, if it is cheaper there. Other companies produce in one country and sell the products all over the world, there are also examples of world wide nets of organizations, like for example McDonalds – this type of food can be met in most countries all over the world. In spite of cultural, economical and other numerous differences between various countries of the world, business is becoming global in many spheres of production and technology. Location of business should not be related to the main office any more, as internet and telephone connections, fast transportation of goods as well as wide range of traveling possibilities contribute to seeking the better locations for production of organizations. Usually, manufacturing enterprises are situated in the countries with low wages, because this makes the initial price of the product cheaper and increases the chance of higher final profits.
Certainly, any type of multinational business is more sophisticated and versatile and this makes the job of top managers more difficult. As soon as there are employees of various cultures, languages, religions and so on, from various countries all over the world, it becomes really difficult to manage them and their cooperation. The general rules of management, motivation, control lose their force, because all the peculiarities of each employee should be considered. Multinational employees make the work of HR managers straitened, because people, living in different political and economical conditions are used to different management approaches and to having different labor laws. Besides, HR managers should be able to judge each employee as for his or her ability to adapt with foreign culture and organization, have enough knowledge and skills for working successfully in global organization. One of the examples from the world practice is the reaction of Thai workers on the corporate loyalty and motivation strategies, applied at Japanese companies. Japanese managers had to reconsider their approach to building up these rules and they did succeed (Greer 2002). Another important factor, related to work force is unemployment rate – as it is also influenced by globalization of business. Often people from the countries with low wages risk to move to more developed countries, thus creating the problem of lower wage personnel available and unemployment and reduced wages for native workers.
Markets are also under significant impact of globalization, thus national borders do not serve as borders for markets any more. One the one hand this provides limitless possibilities for sale managers and distributors. On the other hand, their work becomes more difficult, because they are to take into consideration language, culture differences of the potential consumers, otherwise the chances for success are rather low. There are a lot of positions, which are to be considered for sale managers, advertisers and so on, because a simple advertising motto might spoil the whole advertising campaign, if it is not correctly understood.
There is a list of factors, which push any organization to start operating in the worldwide market, including internal and external ones. Internal factors are related to the aim of expansion of opportunities for the organization and external factors include environmental reasons for example. “There are six ways to enter a foreign market. They are: exporting, turnkey projects, licensing, franchising, setting up a joint venture with a host country firm, and setting up a wholly-owned subsidiary in the host country.” (Tsui 2005). The competition between the global companies grows even stronger, than between those, operating on the same country.
Overall, we have briefly studied the historical facts about globalization of business; we have studied the main advantages, which globalization is able to bring to any multinational organization or corporation, along with potential difficulties, which might arise in the process of work; we have listed some examples of the major factors, which should be considered by top managers, sale managers and HR manager of multinational organization, in order to ensure its successful operating.
Greer, C. R. 2002, Strategic Human Resource Management: A General Managerial Approach, 2nd edition, Pearson Education, Singapore
Ruta, C.D.2005, “The Application of Change Management Theory to HR Portal Implementation in Subsidiaries of Multinational Corporation”, Human Resource Management, vol. 44, no. 1, pp. 35-53.
Tsui, A.S. 2005, “The New Employment Relationship versus the Mutual Investment Approach: Implications for Human Resource Management”, Human Resource Management, vol. 44, no. 2, pp. 115-21
Wilhelm, W.R. 1990, “Revitalizing the Human Resource Management Function in a Mature, Large Corporation”, Human Resource Management, vol. 29, no. 2