Globalization & managing change in organizations

1. GLOBALIZATION AND ORGANIZATIONAL
CHANGE AND DEVELOPMENT
PRESENTED TO: PRESENTED BY:
Dr.Rupinder Bir Kaur Neha Jain
Komal Sahi
MBA-HR (Sem II)
CHAPTER 16

2. GLOBALIZATION
Definition
• Globalization may be defined as the integration of the
world economies. It includes a rapid increase in the
movement of goods, services, and capital across national
borders.
• Globalization is usually the result of closer ties in
international trade, known as bilateral trade agreements.
• The WTO and NAFTA are two examples of such bilateral
trade agreements. With such agreements, cross-country
investment increases. This increase in investment is aided
by the increase in information technology and
communications, which has undergone a significant
advancement over the last two decades with the rise of the
Internet and mobile telephony.

3.  The term globalization has been increasing use since
the mid-1980s and especially since the mid-1990s.
 In 2000, the International Monetary Fund (IMF)
identified four basic aspects of globalization:
• trade and transactions
• capital and investment movements
• migration and movement of people and
• the dissemination of knowledge

4. Main dimensions of Globalization
Industrial - emergence of worldwide production
markets and broader access to a range of foreign
products for consumers and companies .
Financial - emergence of worldwide financial markets
and better access to external financing for corporate
borrowers.
Cultural - growth of cross-cultural contacts, the desire
to consume and enjoy foreign products and ideas,
adopt new technology and practices.
Ecological- various global environmental challenges
that can not be solved without international
cooperation, such as climate change, cross-boundary
water and air pollution, over-fishing of the ocean, and
the spread of invasive species.

5.  Transportation - the death of distance through the
incorporation of technology to decrease travel time.
 Greater international cultural exchange .
 Spreading of multiculturalism, and better individual access
to cultural diversity (e.g. through the export of Hollywood
and Bollywood movies).
 Greater international travel and tourism.
 Greater immigration
 World-wide sporting events such as FIFA World Cup and
the Olympic Games.

6. Factors promoting globalization
• Technological change :Through transport facilities you
can sent the goods from one place to another place
very easily in a very short time at a low cost. By internet
whole world has become a small room. You can
communicate very easily in a very short period of time.
• Process of liberalization: Till last some decades the
production was limited within the countries. Some
countries imposed strict restrictions to protect the
good produced by them. After liberalization these
restrictions were removed and you can trade freely in
different countries. This the most important reason of
the globalization. In India liberalization started after
1991.

7. • Free Trade: After the world war II the foreign trade
of all the countries has increased. The international
institution like “World Bank” and “international
Monetary Fund” have also contributed in the
expansion of trade.
• Democracy: Events such as the fall of the Berlin
Wall and the end of the Soviet Union have lead to
more open societies.
• Growth of multinational companies with a global
presence in many different economies.
• Increased mobility of labour: People are more
willing to move between different countries in
search for work.

8. • Cheaper Resources
With globalization cheaper resources became more
accessible. Until the start of the 1990's China was largely
closed to the rest of the world. Many companies in the
United States produced their goods domestically . When
China opened its market to the rest of the world, American
companies were able to take advantage of the far cheaper
labour which contributed to cheaper cost and larger
profits. This is known as outsourcing.
• International Development
A prime example of this is India. Before the late 90s, the
information technology sector in India was largely in its
infancy stage. However, coupled with an educated yet
inexpensive workforce, foreign companies were able to
start subsidiaries of high tech activities in cities like
Bangalore.

9. Technology Transfer and
Globalization
• Persistent poverty in developing country is due to
difference in technology between rich and poor
country.
• Technological upgrading is important for
development, it provides a unique opportunity for
low-income countries to raise per capita income.
• One of the main opportunity which globalization
offer to developing country is that they would have
better access to technical advances in developed
country by reducing technology gap.

10. Globalization through HR
International and domestic organizations identified
similar HR priorities for the next two years.
1. The top priority, identified by 52 percent of international
companies, was leadership development. Domestic
organizations also ranked leadership development as a top
priority (35 percent).
2. Recruiting high-quality employees ranked second as a
priority for both international (40 percent) and domestic
companies (46 percent).
3. Employee retention was also a top concern for both
international (33 percent) and domestic companies (46
percent). In fact, retention was the top priority for
domestic organizations.

11. 4)Culture :Developing a global organizational culture is
much more complex than building one domestically. The
point of a common culture is that employees share norms
and values. When your employees come from varying
cultures they have differences in their own view of work,
communication and other aspects of the company. Thus,
HR must work diligently to train employees on cultural
sensitivity and find common points shared by employees
throughout the organization.
5)Diversity : With a global company, ethnic, racial, gender
and age diversity is even greater. Thus, you have to create a
culture that promotes equality and fairness in hiring and
promotion opportunities.

12. ORGANIZATIONAL
DEVELOPMENT PROCESS
THROUGH HR
• Training and development
It is needed to achieve competitive advantage. Training will
ensure that the employees develop the right skills,
attitudes and knowledge that will enable them to perform
jobs effectively and efficiently.
• Reward management
It act as a source of motivation for employees to perform
effectively. As a result of globalisation, there is now free
mobility of labour. International companies can advertise

13. • Management development
Managers should have a vision and should also
understand what is expected of them. Managers
now should be trained to think globally and act
locally.
• Employee participation
Employee participation will tend to enhance the
employee's contribution. There are various
methods of employee involvement, e.g., joint
consultation, quality circles, and suggestion
schemes.

14. Organizations were asked to respond to the following:
What is the most effective action your parent organization
has taken to make HR practices more consistent across all
locations/offices?
Created centralized reporting relationships
around the globe.
Standardized assessment, development,
and compensation practices
Created global policies for performance
management, compensation, education, and
development
International assignments are often used as a way
to develop the talent of global leaders
Developed an HR mission statement.

15. Effects of globalization
1. Import-Export:- After the liberalization the import and
export become more convenient.
2.Industrialization:- The numbers of industries have increase
after the liberalization. As a result the growth rate in the
country raised after 1991 rapidly.
3. Increase in foreign investment:- After liberalization the
multinational companies have increased their investment
in India. Likewise many Indian companies became
multinational companies.
4. Advantage to consumer:- After globalization the price of
many goods and services have been reduced. The
consumer are getting the goods of excellent quality. More
alternatives are available for the consumer

16. Problems created by globalization
Impact on small producer:-Globalization adversely affect
the small scale industries in India. The small industries are
not able to compete with the multinational companies.
Uncertainty of employment:- The jobs of labour are not
secure due to globalization. The factories owners to
minimize the cost, provide temporary employment.
Benefit not to all:- The globalization has not been
beneficial to all. The weaker and poor section of the society
is far away from the advantages of globalization.
Influenced of developed countries:- The globalization is
being implemented by the direction of World Trade
Organization. But the developed countries influence these
types of organization.
Regional disparities: The regional disparities have
increased due to globalization. Developed countries are
benefited more than the developing countries.

17. PART II

18. Major Institutions Regulating
Globalization

19. World Trade Organization (WTO)
• Established in 1995 to administer the rules of international trade as agreed
to by its member countries. Before the WTO, there was the General
Agreement on Tariffs and Trade (GATT)
• 150 member countries at present
• WTO agreements cover 12 subjects in the area of trade in goods :
 Agriculture
 Textiles and clothing
 Trade-related investment measures (Trims)
 Sanitary and phyto-sanitary measures (SPS)
 Technical barriers to trade (TBT)
 Anti-dumping
 Customs valuation
 Pre-shipment inspection
 Rules of origin
 Import licensing
 Subsidies and countervailing measures
 Safeguards

20. International Monetary Fund (IMF)
• Established during the Second World War in 1946.
• Primary purpose-to strengthen the process of
globalization
• Services include –
(i) Promotion of international cooperation on finance,
(ii) Encourage stability in exchange rates & orderly systems
for exchanging money between countries
(iii) Provide temporary assistance for countries suffering
balance of payment problems, etc.

21. World Bank
• Provides loans to poor countries for development
projects
• Provides loans for investment projects-like water &
sanitation, natural resource management, education,
and health.
• Also lends for adjustment projects-which support
governments undertaking policy reforms, such as
improved public sector management, etc.

22. United Nations (UN)
• Established during the concluding phase of the second phase
of the Second World War.
• Supports the reforms in international institutions, including its
own Security Council
• Promotes a shared set of core values in the areas of labour
standards, human rights, and environmental practices
between the UN & business community.

23. Organization for Economic Cooperation and
Development (OECD)
• OECD develops economic and social policy for its
member countries, which includes North America,
Western Europe (including Czech Republic, Hungary, &
Poland), Japan, Korea, Australia, and New Zealand.
• Provides economic arguments for globalization

24. United Nations Conference on Trade and
Development (UNCTAD)
• Permanent inter-governmental body of the UN- aims to
maximize trade investment & development opportunities
of developing economies, & assists their efforts to
integrate into the world economy.
• PRIVATE BODIES & SOCIAL ORGANIZATIONS
An NGO in India, namely Liberty Institute, New Delhi, also
promotes the cause of globalization.

25. Globalization Challenges for Managing
Organizational Change & Development

26. Challenges faced by business
organizations
Managing
HR
Managing
Ambiguity
Managing
Diversity
Interdependence

27.  INTERNAL ADJUSTMENTS
 EXTERNAL ADJUSTMENTS
Organizational Preparedness to cope
with the challenges of Globalization

28. Framing the organization
structure along product lines,
geography, customers,
functions, & projects, etc.
INTERNAL ADJUSTMENTS
Adopting new policies to
respond to changes
subsequent to globalization
Adopting an approach of
simplification in managing
the complexity of change

29. Organizations neglect External
environmental cues, to the
extent of neglecting the
market information
EXTERNAL ADJUSTMENTS
Real value creation is
possible by exploiting
external opportunities
For example- Outsourcing
few operations

30. This requires focus on :
 PROFESSIONAL QUALITY OF DECISION-MAKING
 ENCOURAGING SIMPLIFICATION OF
ORGANIZATIONAL PROCESSES
 SIMPLIFYING THE PURPOSE AND VALUES, CORE
PROCESSES, DECENTRALIZATION, AND EARLY
AWARENESS SYSTEMS
Organizations must focus on environmental scanning &
rational forecasting of strategic outcomes

31. REVIEW OF ORGANIZATIONAL
PURPOSE AND VALUES
VISION
Vision is the permanent imprint for organizations that
guides their behaviour and value systems
Eg. To adopt a customer-centric approach, a shared
vision needs to be developed & embraced by all
members of the organization
MISSION
A mission statement defines the purposes of
organizational existence and thus verbalizes the vision
into action
Eg. IBM’s change in business focus, from desktops to IT-
enabled services, required them to redefine their
business goals, thus changing their mission statement

32. CORE PROCESSES AND DECENTRALIZED
AUTHORITY
 Core processes vary from organization to organization depending on
the nature of business
 Organizations standardize their core processes.
For eg.
For a pharmaceutical organization, R & D is a core function, while for a
consultancy org, knowledge sharing is core.
 So organizations dissuade from outsourcing this function.
 After standardizing their core processes, organizations decentralize this
function.
 Non-core processes can be outsourced in a cost-effective manner as
the overall change impact will be minimal.

33. LEADERSHIP

34. Leading an organization undergoing the change problem
subsequent to globalization requires an altogether different
mindset. Due to interdependencies in the modern industry it is
not possible to keep the works distinct and specific.
In networked organizations ,leadership means not only
managing the change complexity in global organizations by
providing different leadership roles and styles depending on
different situations , but also leading different parts of networked
organizations to work together and create value.
Leadership & Coping With Change

35. The leader of complex organization must create and
communicate an understanding of the different roles played by
managers, teams, business units , and bosses, in the
interdependent structure.
So in complex organizations , effective communication is not
only a leadership survival tool, but is also much more in terms of
interpreting context and meaning, and investing in relationships
rather than transferring dry facts and ultimatums.
Leadership & Coping with Change

36. Paper 1-
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.
1.1.202.4681&rep=rep1&type=pdf
• Globalisation, organisational modes and the growth of international strategic
technology alliances
BY Rajneesh Narula and John Hagedoorn
October 1997
Abstract: The growing use of strategic technology partnering (STP) as a means to
undertake technological development is often regarded as a hallmark of globalisation.
Some distinction needs to be made of the difference between the following three terms
which are often mistakenly used as synonyms: collaborative or cooperative agreements,
networks and strategic alliances.
Cooperative agreements include all inter-firm cooperative activity, while strategic
alliances and networks represent two different (though related) subsets of inter-firm
cooperation.
By strategic alliances we refer to inter-firm cooperative agreements which are intended
to affect the long-term product-market positioning of at least one partner
(Hagedoorn 1993).

37. Paper 2- http://www.studentpulse.com/articles/601/effects-of-
globalization-on-work-and-organizations-exploring-post-
industrialism-post-fordism-work-and-management-in-the-global-era
• Before describing the impact globalization has had on work and
organizations, it may be useful to briefly speak about the central ideas
of post-fordism and post-industrialism.
• Fordism refers to ideas & principles propagated by Henry Ford: mass
production of uniform goods and a market for this, rigid technologies
like the assembly line, unvarying work routines (Taylorism), and
increasing productivity through economies of scale, deskilling and
intensification (Ritzer, 2000)

38. • The post-industrial organization is characterized by : flattening in hierarchy,
blurring of boundaries between organizations, an organization structure that is
more integrated and less specialized, lack of rules to govern behavior, selection
of employees based on their potential for creativity, and customized work and
products.
• Mutinational corporations have begun to focus principally on brands & brand
management, believing that while products are made in factories, a brand us
made in the mind and bought by the consumer (Klein, 2000)
• As a result of globalization, various free-trade or export-processing zones (EPZ)
have emerged.
• Thus, globalization puts pressure on the workers and the producers by
weakening their bargaining power as a result of the increased competition.(Carr
& Chen, 2001)

39. Globalization and Organizational
Transformation
My name
My position, contact information
or project description

40. • 2 Approaches
Incremental (TQM) Radical (BPR)
There are 6 keys to success :
• A consistent, clear, and driving vision
• A set of supporting processes, drawing broadly to refine & communicate
the vision
• A persistent & constant in-place leadership
• The willingness & drive to re-engineer any process, doctrine or org. & to
take risks
• The willingness to allocate the funding necessary for change & to re-
prioritize budget allocations
• A commitment to align the measurement system across the hierarchy & in
accordance with the vision

41. Strategic Alignment
• Gould (1996) suggested that each organizational state comprised 4
strategies:
1. FINE TUNING : a strategy of ‘refinement’ where processes and
routines which build on core competencies are incrementally
improved.
2. BUILDING : a strategy of ‘planning’ which leads to the creation of a
formal change programme (core competencies are further established
and made routine)
3. CRISIS : where all existing routines & structures are suspended or
abandoned. (accompanied by changes in leadership & power)
4. TRANSFORMATION : where planning is replaced by
experimentation. (test the new directions & try change)

42. THANK YOU