3 contemporary issues in management global is at ion

8/6/2019 3 Contemporary Issues in Management Global is at Ion

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Managing Globalization

Reading: Clegg et al. (2008), ch. 14


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Learning outcomes

At the end of this session, students will be

able to:

Discuss debates around globalization

Identify the key strategic issues for managers

arising from globalization

Apply analytical techniques for establishing

decision makingprotocols in a global context

Argue that globalization has both positive and

negative consequences for individuals,

organizations and societies


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Session outline

Defining globalization

Explaining globalization

Consequences of globalization Managerial implications of globalization

Managing responsibly and globalization


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Considering globalization

Globalization is a term you will have

encountered numerous times in your studies

to date

Taken for granted as an inevitablephenomenon

Governments, business and communities

have responded resistantly to it

Some debate as to what it is, what it

represents and what extent it is happening


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Defining globalization


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Definitions

Definitions:

y ... Worldwide integration in virtually every sphere achieved

principally through markets ... whereby the world beomes more

interconnected and the fates of ... people ... and ... Organizations

become intertwined. Clegg et al(2008: 580)

y ...the intensification of world-wide social relations which linkdistant localities in such a way that local happenings are shaped

by events occurring many miles away Huczynski & Buchanan

(2001: 897)

The Global Village (McLuhan 1958)

y Question for discussion: why is this term particularly evocative??

The Shrinking World (Giddens 1990: 64)


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Defining globalization (cont.)

Associated with proliferation ofprimarily US models ofproduction, products and services (i.e. brands)

y See Ritzers (1993) damning McDonalization thesis

y Frances resistance to English language and fast food

Multinational corporations

y Single ownership, operating in several counties

Mass communications (cheaper over time)

y Telephones

y Internet

y Transport

Access to resources and consumption opportunities

y Global branding / marketing

y Containerisation and supply chains

y Growing wealth in emerging markets (e.g. China)


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Why has it happened / is it happening??y Is it the inevitable course of history??

The determinist view

y Or is it being driven by human agency and interests??

Capitalism ... Imperialism .... brotherly love??

Despite differences in opinion, most credible commentators

agree that the factors are various and complex

y Chaos theory? Complexity theory? The perfect storm??

Also, its not a process that its easy to plot a beginning,

middle and end toy i.e. We cant say it started at 0843 GMT on 4th October 1979 or

anything

y As a concept it is very indistinct, nebulous and open to interpretation


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Key forces

Developments in communications

y Most obvious and visible factor to us

Internet, email, phones, video, transport, supply chains

y Digital revolution over last 25 years

Internationalisation of capitalism

y Predicted by Lenin in 1909!

y As local/domestic markets mature and saturate, producers must look forother markets to colonise; especially as developing markets emerge with

millions of enthusiastic new consumers (e.g. Shanghai)

NB Most of Manchester United FCs supporters will never visit Old Trafford

stadium: they live thousands of kilometres away!

y The creation of trading blocs such as the WTO, NAFTA and the EU Political / Ideological shifts (see Fukuyama, 1989)

y Fall of communism (early 1990s); even PR China is moving towards

market capitalism; end ofCold War

y Even established market economies have been deregulating and liberalising

further with the privatisation of state corporations and scaling back of welfareprovision: see Neo-liberalism as a concept


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Consequences of globalization


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Caveat

In your studies in management (e.g. Marketing, strategy,finance) to date, you will have looked at globalization and

its consequences extensively

On the whole, these consequences will have been

presented as benign and as presenting opportunities formarkets and consumer freedom of choice

However, the phenomenon deserves a further, more

circumspect examination

If the concept is open to debate and interpretation; so are

its effects

The criticalstudent of management must factor this into

their analyses in order to make more enlightened and

productive judgements


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Consequences for business

There can be little doubt that corporations have benefitted:y Access to new markets forproducts

y Access to new labour markets (more later)

y Deregulation cuts through red tape and tariffs

y Developing regions grateful for inward investment

Governments often willing to grant corporations considerable license!

y Opportunities for strategic alliances/ partnerships, mergers

acquisitions

y Enhanced innovation and development opportunities

y Able to play financial systems and tax regimes

E.g. exchange rates, registration of subsidiaries off-shore

Some problems:

y Enhanced competition, market volatility, complexity, risk

y Unwelcome scrutiny of corporate social responsibility (CSR)


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Consequences for States

Governments have been mixed in their responses, either:y (a) embracing globalization (e.g. UK, Dubai, India, Brazil), breaking

down barriers to trade and financial transactions .. Or ...

y (b) resisting it, seeking to protectdomestic trade and jobs

Most governments are in a dilemma

y On the one had they need their countrys economy to performcompetitively (investment, trade, growth, sustainable public

expenditure)

y On the other, their voters will be upset if they lose their jobs in

factories which relocate to cheaper, less well regulated locations!

E.g. The European /American auto industry (or whats left of it!).

Governments in developing democracies are wary of

balancing need for investment and forpopulation not to be

exploited! (e.g. Venezuela, India)

y Autocracies (e.g. PR China) dont care so much!


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To what extent should states try to hold back

the tide of globalization? Should they try??

Discuss ...


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Consequences for workers

For workers in developedcountries, it creates problems:y Jobs which were taken for granted (e.g. manufacturing) have been

disappearing in their millions, moving to China etc.

y Labour markets must adjust to service and knowledge jobs

y Innovation, new skills and attitudes required

y Greater insecurity

y More emphasis on doing jobs that cant be replicated elsewhere

E.g. R&D, personal services, tourism and hospitality

For workers in developingcountries, it creates opportunities

y Chances for betterpaid worky Greater choice

y Growth of middle classes (e.g. Mumbai, Shanghai)

y BUT .... millions of workers still in poverty, badly exploited


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Consequences for communities and citizens

Potentially, greater access to information and

products gives greater freedoms and opportunities

y Does not always work this way in reality!

As corporations become more powerful, struggles

may emerge with the communities on which theiractivities impact

y E.g. Pollution, labour markets

This raises many ethical issues for managers!

y... More later!


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Managerial implications of globalization


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Managerial implications

Competition

y You must be constantly on your toes, to innovate, to experiment and

to quickly take advantage of opportunities

Culture

y You must be aware of other ways of thinking and seeing

yImportant in employment and marketing terms Consumers and workers in different contexts respond to different

imperatives (see Hofstede, 1980)

What works in one place wont necessarily work in another!!

Intelligence

y Accurate data and the ability to analyse crucial

Must identify opportunities and threats

Stakeholders

y Need to negotiate diverse and often competing demands from

multiple interest groups


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Key skills for globalization

Flexibility

Communication

Inter-cultural awareness

Management development?

y MBA (US-style) becoming standard

Delivered in virtually every country

y Does the standard US model have all the

answers???


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Managing responsibly and globalization


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Winners and losers

Despite tremendous economic growth in the last threedecades, stark inequalities remain

Many commentators (e.g. Klein, 2001; cited in Clegg et

al. (2008; 586) blame globalization for this

Others claim that without globalization, things would be

much worse and that the developing countries are

merely coming through a necessary historical stage from

which they will emerge in time to prosperity

y What do you think????

Either way, there are definite winners and losers To what extent should managers spend time worrying

about the losers??


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World Bank Poverty levels


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Ethics and CSR

Contemporary management thought

stresses the importance of ethical

behaviour (explored in more detail in a

later session)

Also, Green, Fair-trade and ethical

marketing can make good business

sensey Is this cynical??


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Globalization: some critical points

There has undoubtedly been an enhanced

internationalisation of commerce and popular culture

in the last three decades

Is it anything new??

y British Empire? (1600s-1960s)

In an era of assimilation and convergence, why do

nationalist identities remain??

y Sometimes violently expressed (e.g. Tamil Tigers)

y

Sometimes peaceful (e.g. Scotland)y Counter ideologies (e.g. Radical Islam)

The Old Rich World (i.e. USA, Europe) still the richest

and most powerful regions


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Summary

A variety of environmental forces have

made the world more interconnected

This hasprovided o

pportunities andthreats

The contemporary manager cannot

afford to be insular and parochial

An ethical mindset will lead to a moresustainable model of commercial

operations

3 contemporary issues in management global is at ion

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