Impacts Of Globalisation On Organisation: A Case Study Of CRH

Positive Impacts of Globalisation

Discuss about the Globalization and its Impact on CRH for Business Environment.

Globalisation integrates people, organisations, governments, markets and economies across the globe (Ch. et al., 2011). It not only increases the global reach of the customers but also increases organisational opportunities and benefits from trade. Advancement in communication is the major contributor of the current scenario of large-scale globalisation. Globalisation acts as a parallel process resulting in greater prospects as well as obstacles for the growth and sustainable development. On the other hand, it integrates societies as well as various cultures through immigration, transportation and communication.

The article by Thoumrungroje and Tansuhaj analyses the impacts of globalisation on the organisation (Thoumrungroje and Tansuhaj, 2007). Globalisation has impacted nations financially, economically, politically, environmentally and socially. It creates interdependence among nations.  It talks about the relationship between the performance of the organisation and the globalisation. Globalisation can be both constructive and detrimental simultaneously.

CRH

CRH is a multi-national public limited group supplying wide range of construction products. The company has its headquarters in Dublin (Ireland) and owns 3,800 branches worldwide. Cement Limited and Roadstone Limited merged to form Cement Roadstone Holdings (CRH). It has a net worth of €1,919 million and 87,000 employees as per 2017. It functions strong and vertically-integrated heavy side businesses and has long term reserves which are located strategically. It has a unique balance in its geographic range as well as its core business involvement. It tries to even out the varying economic conditions and aims to provide better growth opportunities. CRH tries to minimise the effects of uncertain demand patterns through a balanced portfolio and caters to the needs of a broad customer base. The demand for CRH products can be categorised into new build and repair, improvement and maintenance.it provides high-engineered products and expert solutions for the construction projects (CRH, 2018).

(CRH, 2018)

There are various factors discussed in the article which aggravate the impacts of globalisation. There are economic, political, cultural and other trends (Irani and Noruzi, 2011).

1. Organisational aspects: Organisations are at the heart of the globalisation. There is a global strategic diversion of attention from a specific market or economy to the global economy.
2. Technological aspects: Globalisation contributes to technological advancements in transportation and communication. They are the backbone of growth in any economy and globalisation. It is the major contributor of increase in transactions.

• Macro-economic aspects: Globalisation spurts the growth of technological transfer as well as growth in the population due to immigration. The incomes of various factors of production are also affected. There is an increase in wage inequality(Helpman, 2017).

1. Political aspects: Political changes in the economy impacts the free flow of investments and trade. Deregulation, privatisation and liberalisation are favourable to globalisation.

These factors influence the level of globalisation and hence the all the organisations and the firms. There has been an increase in the level of competition as well as interdependence among the nations. Globalisation is responsible for diversifying the consumer demands. Also, there has been an increase in the uncertainty and the risk involved.

CRH diversified its attention from the market of Ireland to the markets of many European, American and Asia Pacific countries (CRH, 2018). Transportation is very important for the CRH firm because of its bulky products. Improvement in the same has reduced the cost for the firm. The macro economic factors have resulted in the transfer of technology and the employment of people in the numerous branches across nations. With the growing trends of globalisation, deregulation and liberalisation in countries, CRH is able to extend its products to the potential customers across nations.

Negative Impacts of Globalisation

The article discusses positive impacts of globalisation as follows:

Resources play an important role for the entry of the new firms. Resources are scarce in nature and these have to be efficiently utilized by the firms (Noruzi and Hernández, 2010). The environmental munificence includes growth (decline), capacity and opportunities (threats). This leads to resource abundance to the firms. It also contributes to global labour division (?etkovic and Zarkovic, 2012).

CRH needs raw materials and human resource to start its operations in a new nation. The decision is based on the abundance of the resources. The cheap resources in the developing countries help to reduce the costs for the company and enable it to operate efficiently.

Globalisation offers opportunities like increased market potential, resources accessibility and trade and investment. Other opportunities include the removal of investment and trade barriers, privatisation, trade and investment deregulation policies and information technology developments. Their contributions include accessibility to new markets (Samimi and Jenatabadi, 2014).

CRH has increased its market by expanding to various nations of Europe, America and Asia Pacific. It can now produce on an even larger scale and benefit from the economies of scale.

The costs are reduced by the exploitation of cheap resources and reallocation of the operations. The organisations outsource their operations in other countries where cheap labour and resources are available. This helps the firm to cut down their costs (Okoye and Nwaigwe, 2015).

When CRH establishes its operations in developing countries, it outsources it operations and reduces its cost. The labour and resources are relatively expensive in the home country and CRH can benefit from the low cost operations in developing countries.

There is efficiency in the markets and production because of increased markets around the globe. The production of the firms increase and the cost reduce with the economies of scale. There is sharing on the global level to cater to the needs and growth of the locals (Bakhtiari, 2014).

CRH taps the potential of nations and establishes it operations there. It reduces its cost in terms of cheaper resources as well as increased scale of production.

The human capital as well as funds can move freely around the globe. This facilitates the business transactions.

Liberalisation in the countries makes the entry for CRH easier. The polies facilitate the growth and development of the organisation.

The demands of consumers are diversifying and there is complexity because of increased market. The demand shocks increase the uncertainty in the market.

Comparison of the Effects of Globalisation on Organisation of Two Countries

CRH has to cater to the needs of the global market. It has to cater to the needs specific to countries and clients along with maintenance of its quality standards. As the customers now have access to greater market and information, they compare the products of various brands and force CRH to mould to their needs.

With the increase in the market for an organisation, there is an increase in the level of competition. Not only the firm faces competition from the domestic firms but also the firms in the foreign country where the organisation now operates and also from the firms which enter the home country due to globalisation.

Globalisation also impacts the environment adversely. It contributes to the pollution, destruction of historical monuments, deterioration of nature and others (Karata?, 2016). There are also huge amounts of electronic waste generated because of the old computers, cell-phones and others used for the communication (Adesina, 2012).

CRH faces competition from the big MNCs like Lafarge S.A., Holcim ltd. and CEMEX. Also, it faces competition from the local producers of construction material. The level of competition increases with the magnitude of globalisation. The wages of professionals and high skilled labour have also reduced due to globalisation (Hamdi, 2013).

As the markets and opportunities because of globalisation grow, the competition in the market increases and the forecasting of demand becomes more complex. The consumers are more aware and have access to information and other products in the market. This increases the chance of substitutability by the consumers and the demand becomes more indefinite and less probable.

Internet has enabled customers to access information and products from the various producers across the globe. With the increase in the competition the consumer bargaining power increases and the firm has to provide customised products to the clientele. CRH tries to minimise the uncertainty in the needs of different markets and people.

The information is easily accessible with the advent of globalisation. This makes the firms conscious of the alternative firms that prevail or may come up in the market. While resources continue to be scarce, the price inflexibility keeps on increasing with the increase in competition. The buyers are becoming more price resistant which lowers the rate of returns to the firms.

The journal article compared the effects of globalisation on the organisation of two countries with different level of globalisation. One chosen country was developing (Thailand) and the other was developed (US). They are diverse on the basis of degree of globalisation, national competitiveness and the level of prevailing economic development. USA has a greater degree of globalisation compared to Thailand. Foreign Policy Magazine (2005) ranks US on 4^th and Thailand on 46^th on the global index. The two nations differ dramatically on national competitiveness. Thailand holds its position on 36^th while US holds its position on 2^nd on the index of national competition.

Indirect Relationship between Organisation’s Performance and Uncertainty

The article predicts indirect relationship between organisation’s performance and uncertainty. There are networking activities involved. With the increase in uncertainty, the firms increase alliance participation and activities of networking to enhance their performance.

CRH minimises the uncertainty and risk of demand fluctuations. It provides the customers with high quality products and services to make it competitive.

In the short run, the intense level of global competition is often estimated to be harmful. This has positive repercussions in the long run. This motivated the firms towards innovation and efficiency in production. This proves to be healthy for the organisations as well as the consumers and the society. They will thrive for continuous improvements in production as well as services. Experts emphasise on the importance of strategic flexibility of the organisations and alliance formation to service and succeed in the era of globalisation.

Globalisation also impacts the level of employment in the country where CRH establishes its functions. The human capital is put to efficient use and resources are allocated efficiently. Technological transfer also contributes to the efficiency in the production processes of the firms. CRH faces the high level of competition in the global market. It tries to reduce the uncertainty and maintain its position in the top suppliers of construction material.

Conclusion

Multi-faceted globalisation is both constructive and detrimental for the organisations. It increases the accessibility of the firms towards various resources. The cheap resources reduce the costs of the firms and increase the efficiency. The economies benefits on the economic terms as well as socially in terms of unemployment and efficiency. The key to sustain and grow in the globalisation is innovation and strategic planning. The firms need to minimise the waste and pollution generated in the process. There should be sustainable growth and development through efficient allocation of resources. Firms like CRH need to comply with rules and regulations pertaining to the governments of the different countries and the values of the people. 

References 

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Bakhtiari, S. (2014) ‘Globalization And Education: Challenges And Opportunities’, vol. 05, no. 02, January, pp. 95-101, Available: https://www.researchgate.net/publication/242621870_Globalization_And_Education_Challenges_And_Opportunities [13 April 2018].

?etkovic, J. and Zarkovic, M. (2012) ‘Key Challenges of Future Path of Globalisation in Global Economy’, INtellectual Econommics, vol. 06, no. 02, pp. 7-17, Available: https://www.mruni.eu/upload/iblock/453/001_cetkovic_zarkovic.pdf [13 April 2018].

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CRH (2018) CRH’s diverse product range services the breadth of construction needs, [Online], Available: https://www.crh.com/what-we-do [10 April 2018].

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