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. IBMs 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