Pashaeva
L. M., Rieznik M. A.
GLOBALIZATION
OF BUSINESS
A major change that has taken place in the world in the last
fifteen years is the globalization of business. The world has become a global
village and business has become global in its character. Organizations are
venturing beyond national boundaries in the pursuit of business opportunities.
Toyota Motor Corporation makes its cars in the
Multinational corporations require employees who can adapt
to different cultures, customs, social practices, values, economic and
political systems and management approaches, who can work with other employees
from various backgrounds. This has resulted in new challenges for HR managers.
The HRM of a company must develop systems that will help individuals from
different cultural backgrounds to work together. Human resource managers must
ensure that employees with the required knowledge, skills, abilities, and
cultural adaptability are available so that they may be successful in global
assignments.
Another recent change faced by HRM in the present business
scenario is that of Mergers and Acquisitions. Companies today need to be fast-growing,
efficient, profitable, flexible, adaptable, and future-ready and have a
dominant market position. Without these qualities, firms believe that it is
virtually impossible to be competitive in today's global economy. In order to
gain access to new markets and fresh ideas, companies often choose to grow via
Mergers & Acquisitions (M&A) rather than concentrating their efforts on
their own business activities. Such inorganic growth is often viewed as a
faster way to achieve growth for the company. Especially in technology driven
industries, where growth is often accelerated through increased innovations, and
one way for the firms to compete is to align themselves with those companies
that are developing the innovative technology. Such alignment is achieved
through M&A activities. Successful manifestation of such activities
involves complex procedures and processes in order to integrate both organizations
and align them as companies having a common unified objective.
This has created certain problems for an organization. One
of the problems associated with mergers and acquisitions is the retrenchment of
staff that becomes unnecessary due to the rationalization of operations. For example,
in the financial service sector, M&A activity between 1996 and 2006 caused
an aggregate employment decline. Due to M&A, sector experts predicted a
loss of more than 300,000 jobs in the banking sector between 1999 and 2002.
When negotiations for M&A are on, employees of the concerned firms are
subject to several rumours that cause insecurity about the future. Thus, HRM is
faced with several challenges before, during, and after the M&A decision.
In the present era, the competitive advantage of
organizations is linked to 'knowledge'. There is a lot of emphasis placed upon
dissemination of knowledge and knowledge workers within organizations.
Therefore, there is an increased focus on management of the knowledge resource
in organization. Thus, in the 21st century, the HRM function has a key role to
play in shaping the competitive position of the organization. To compete
effectively in the knowledge economy, a firm must have what Ulrich calls
'organizational capabilities'. HRM plays an important role in creating,
developing and managing the organizational capabilities that are essential to
compete in the knowledge economy. Human resource managers have to create
effective teams within a diverse workforce; tap talent throughout the
organization by recruiting, retaining and developing people at all levels;
build and integrate cultures as mergers and acquisitions become common; and
develop employee commitment toward organizational vision. Human resource
management is confronted with major challenges in the present knowledge
economy. Thus, HRM is no longer simply focused on 'managing people' or confined
to traditional HR functions rather; it is now responsible for managing the
capabilities within the organization.
Thus, the business environment affects the HRM. External
business environment includes the political, economic, social and technological
aspects. The external environment affects the internal environment of an
organization which, in turn, influences the decision-making of the
organization. Traditionally, the main aim of organizations was to earn profits.
But now modern-day organizations have to think about 'Corporate Social
Responsibility', not at the cost of earnings, though, because earnings are the
main source of survival in the competitive market. The smooth and congenial
external environment will ensure smooth functioning of an organization. There
is a lot of interdependence between the two. Since the world is now considered
to be a global village, the integration of global and business environment is
very important.