What is Globalization? Explain.
Globalization has hit the world almost few decades ago, and it has affected the business organization largely. The companies that are there in the global market depends often has to go global to sustain in the global competitive market. Thus, to sustain their business in the global market it is important that the organizations go for overseas expansion (Ito and Tanaka 2014). Global trade could actually help an organization to succeed in the global market because it provides the company with numerous opportunities. The overseas expansion of the company, although, means that the organization has to cross several barriers. Therefore, it is important for the organization to keep certain key issues in mind before they move towards overseas expansion of the business. Among all those key issues five most important key issues that one should keep in mind are the following:
One of the most important and the fundamental issue that the organization should keep in mind in case of overseas expansion is related to choosing the country for expansion. The global market provides the organization with huge number of options. Therefore, there are chances that the organization could come in terms with the trouble. Most of the time, during business expansion, the company receives information about the country, from those parties who have the interest of either, buying, selling or else marketing the business. Thus, most of the time, the organization receives that information that is filled with errors. Thus, before the overseas expansion the organization should go through a detail market research. It would help in identifying the risks in the country and at the same time, it would help in knowing the target customer.
The success of the overseas expansion depends largely upon the primary and the secondary level of market research (Channon and Jalland 2016). The research will help in knowing whether the product of the business will be beneficial for the customer. It will also help in identifying the customers at the same time. Market research is such a powerful tool that helps in identifying the market that is growing fast.
It is important for the business to understand the culture as well as the social climate of the place where the overseas expansion of the organization will take place (Hudson 2016). The organization should not only try to penetrate in a new culture but at the same time, it should try to make the culture its own culture (Piekkari, Welch and Welch 2014).
Moving a business overseas has many risks associated with it; because overseas expansion not only means that that the business will penetrate a different culture but at the same time, the business will enter into a region where, different languages are being spoken (Wong 2016.). In such a situation, the local competitors will have their advantage but the organization should try to target the niche first and slowly as they gain experience and reputation, it will become easy for them to target the others. Thus, cultural expansion is one of the most important things that one should keep in mind during overseas expansion.
The overseas expansion of an organization means that the organization will have to go through various business regulation and tax codes. Different kinds of standards are related to labeling and packaging at the same time.
The Australia and the New Zealand Bank or the ANZ is an Australian based bank that is operating not only in New Zealand but also at the same time in few regions of the Asia Pacific, Middle East, and Europe and in America as well. ANZ started their operation as the “Bank of Australia” (Anz.co.nz 2016).
The News Corporation Ltd of Australia is a company that has been founded by Rupert Murdoch in the year, 1957. During this time, the New Corporation Ltd was known as the News Ltd. Slowly, the company grew into the New Group and today it is known as the New Corporation Ltd, and it operates in places like London, New York, and New Zealand (Limited 2016).
Geert Hofstede is the most important person, who believed that the culture of the workplace could affect the operations that are being carried out. Culture is not something that is being inherited; rather it is being learned from a particular group, staying within a particular boundary (Gallant 2013). In one country, there can be existence of more than one culture, as is the case with India and Africa. Thus, the culture of the organization could influence the operations of an organization in more than one way.
Culture Influencing the Operation within an Organization
The particular index deals with the relationship that is there between the less powerful and the powerful members in an institution or in an organization (Hofstede2014). The index particularly deals with the fact that how the less powerful within the institution, expect or accept the unequal distribution of the power (Hofstede 2015). For example, the power distance index states that Australia scores very low in the power distance index since the relationship between the manager and the employees within an organization is informal. The managers rely on the team, the communication that is there between them is informal, and at the same time, it is direct.
In case of India, things are completely different from Australia, because India’s score is quite high, in the power distance index. India is a country that depends on the paternalistic relationship, and thus communication that is being carried out is formal. Instead of relying on the team, the managers expect a complete obedience from the team. Thus, if an Australian organization decides to move their business in India then they will have to keep in mind the cultural differences that could have an effect on the workplace.
A society that is individualistic in nature is concerned only about the self and the direct family that is associated with it. In case of the collectivist society, things are different because, here the social groups here are more important, than the individuals in the society are. The score of Australia in the individualism index is 90, whereas the score of India in the individualism index in 48 (Hofstede and Hofsted 2014). Thus, India is a collectivist society, whereas Australia is individualistic in nature.
The society that is masculine in nature giving more importance to the winners and the masculinity score of Australia is 61(Hofstede 2014). Thus, Australia is masculine in nature, where importance is given to success as well as to the achievements in life. India too has a high masculinity score, which is 56, and in fact, India projects herself as a masculine country.
The particular index helps in assessing how different culture, reacts to the unexpected and the unknown. Australia, in this particular index has an intermediary score that is 51. India on the other hand, has a low score of 40, which proves that Indian culture is tolerant in nature (Geert-hofstede.co 2016). The people accept whatever is there in the future. Moreover, The Indian culture also accepts the rules, follows the rules, and does not questions why there are the rules.
Technology Change has Brought Change in Landscape of Operating Overseas
Technologies play an important role in an organization, and especially in case of any innovation, the organizations owes much to the technologies that are there in the country. In case of the developing countries innovation, is important (Lawlor 2016). The overseas expansion of the organization helps in the growth and the development of the developing countries.
The traditional way of conducting a business has gone through a rapid and dramatic change with the introduction of the globalization. Today if a company has an access to the innovative services or product then it will not be impossible for the organization, to market their product or services globally. Globalization therefore helps the organization in expansion but at the same time, globalization also poses many challenges towards the organization. The challenges arises because different countries have different kinds of cultures, socio-economic background, food habits, languages and along with it there are problems, related to the demography and the business regulations that are there in a country.
The concept of “Think Global Act Global” helps the multinational corporations so that they could easily adapt within a particular market. It is true that there are difficulties that the multinational organization faces, while adapting them in an individual market. The particular concept helps in overcoming those difficulties. Therefore, it is important to accept the concept “Think Global, Act Local”, because it helps the organization in more than one way.
The competition that is there in the global market is quite different from the competition that is there in the local market. The difference between the countries and the difference between their cultures create the difficulties, which most of the companies that is moving their organization overseas have to face. The market of the different countries of course creates advantages for the organization but also at the same time, there are certain disadvantages associated with it.
The concept “Think Global Act Local” is more a strategy than a concept. The particular strategy helps the organization, so that they could come up with a global vision. The organization has to make sure that the global visions are not at all rigid. One has to make sure that the global vision of the organization is flexible because different countries have different cultures. (Verma, Gupta and Nangia 2016) Therefore, consumer behavior and the consumer expectation changes, because different countries have different cultures, which has the influence on the population or on the consumers of that particular country. The concept “Think Globally, Act Local” helps in satisfying the local customers, who are there in each country. Every multinational corporations, has the vision of gaining profit, or rather it can be said that the profit maximization is the foremost aim of the organization (Dudovskiy 2012). The strategy or the concept “Think Global, Act Local” is such a concept or a strategy that helps in fulfilling this particular aim and the objective that almost every organization have.
The American company McDonalds has been wisely using the concept or strategy. The particular company is an American based company, but today McDonalds is having 33,500 restaurants or outlets (Joining the Groundswell 2014). These outlets are operating or rather they are located in 119 different countries. It is possible for McDonalds to be in the top because McDonalds offers local menu in the local market. Thus, the food offered by the company differs from one country to another. In fact the way McDonalds has marketed them in different countries, are also different from one another.
In countries like India, where there are people of different culture and people from different background, there McDonald has introduced Maharaja Mac. In India, there are many people such as the Jains, Hindus Muslims, who refuse to eat pork, beef and there are people who do not even eat meat. Thus, Maharaja Mac, in this country is such a dish, which based either on vegetable nuggets or on the mutton.
The way McDonalds promote or market their product is different from the way other organization promotes their products or services. McDonalds, therefore, standardize the brand name, although they localize various advertisement campaigns (De Mooij 2013). In case of East Asia while promoting their brand McDonalds use the children or rather promote their brand through the children. It has been seen that this type of promotion has turned out to be effective for the success of the organization in that particular region.
Another company, Starbucks, has also adopted the strategy of “Think Global, Act Local”, although the strategy is different from the strategy that is being taken by McDonalds. Starbucks has not brought any changes in their menu. Rather Starbucks is a company that has change the design of their coffee shop in order to adopt with the local culture of the country. Thus, different, countries have different designed coffee shops, but the taste of the coffee shops is same in all the coffee shops that are in various organizations.
The managers of the organization while going through overseas expansion has to go through various kinds of staffing challenges; and there are more than one kind of staffing challenges that are being faced by the managers of the organizations. Some of the challenges that are being faced by the organizations are discussed here.
The communication problem is one of the serious staffing problem or a challenge that is being faced by the organization. The communication problem arises mainly because of the cultural differences that are there between the organization and the workforce of a particular country (Florida 2014). The cultural differences actually lead to misunderstandings between the two groups and to avoid such problems, it is important, to have an international team as well.
Countries like India and China follows a hierarchical structure within an organization. In case of a hierarchical structure the workers, has some clear and definite roles and they follow the instruction of their authority or the managers. It is something that is in stark contrast with the structure that is there within a western organization. In a western organization the managers, instead of instructing the work force, allows the employees to take initiative at the same time. Thus, the structure of the organization could often lead to serious staffing challenges for those employers who are going overseas expansion.
The recruitment of the staff of the host country depends on the policies and the regulations that are being followed by the country. Different kinds of countries, has different kinds of labor laws and policies (Farndale, Pai, Sparrow and Scullion 2014). The difference in the labor laws and the policies poses as challenge for the overseas expansion of the organization.
The overseas expansion of the organization depends on the smooth working of the workforce. The efficient working of the workforce depends on providing proper training to the people working in the organization (Pieterse 2015). Therefore, to ensure, that the workforce of the organization has to put an end to favoritism. It is one of the fundamental and the first step, towards, providing the right training to the people working in the organization.
The managers of the organization should try to develop their managerial skills as well. Along with developing the managerial skills, the managers of the organization should come up with such planning within an organization, which would help the employees of the organization to gain in-house training (Karadjova-Stoev and Mujtaba 2016). The managers or the executive of the organization should try to identify the skill gaps of the employees. Therefore, the managers of the organization should follow these few things, to ensure that the staff receives appropriate level of training; and be a part of the global workforce.
References
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Bailey, C., Knepler, B. and Vanlombeek, P., 2015. Creating flexible global brands in federated organisations: A case study from a global not-for-profit. Journal of Brand Strategy, 3(4), pp.350-356.
Channon, D.F. and Jalland, M., 2016. Multinational strategic planning. Springer.
De Mooij, M., 2013. Global marketing and advertising: Understanding cultural paradoxes. Sage Publications.
Dudovskiy, J. (2012). “Think Globally, Act Locally”: A Critical Analysis – Research Methodology. Research Methodology.
Farndale, E., Pai, A., Sparrow, P. and Scullion, H., 2014. Balancing individual and organizational goals in global talent management: A mutual-benefits perspective. Journal of World Business, 49(2), pp.204-214.
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Hofstede, G.E.E.R.T., 2015. Cultural Insights.
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Lawlor, B. (2016). The Age of Globalization: Impact of Information Technology on Global Business Strategies. 1st ed.
Limited, N. (2016). History of News Corporation Limited – FundingUniverse. Fundinguniverse.com.
Piekkari, R., Welch, D. and Welch, L.S., 2014. Language in international business: The multilingual reality of global business expansion. Edward Elgar Publishing.
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