Globalisation Assignment
1.0 Introduction
The purpose of this assignment is to offer comprehensive assessment and examination of globalisation and the manner in which it affects various processes and peoples around the world. The work is structured by way of two separate parts. The first part offers an appraisal of how globalisation impacts upon political, economic, social and technological processes in the United States with specific focus on business. Part two then examines the degree to which national culture affects organisational culture. Each part uses both academic source material and real world examples in order to provide a full exploration of the subject. However, before such assessment begins it is first prudent to offer some brief definitional parameters on the term globalisation.
2.0 Globalisation Definition
Providing an accurate and widely agreed definition of globalisation is something which has plagued the academic fraternity since the first globalised functions emerged decades ago (Brennan; 2003). Everyone can agree that as a phenomenon, globalisation has done more to fundamentally alter the basis on which the world functions than anything else in recent history. However, offering an effective definition has proved problematic.
Given the difficulty surrounding the definition of globalisation is it unsurprising that a whole plethora of possibilities have been offered. The best of these tend to be those that account for the broad and wide ranging nature of globalisation. Thus, as Kawachi & Wamala (2007; p.4) have suggested globalisation can be characterised by “a series of particular phenomena such as increasing trade, or capital flows, or logos, or international inequality”.
Above all, whatever definition ones choose to adopt it is vital to remember that globalisation impacts on a whole variety of functions ranging from the political to economic to social.
PART ONE
3.0 The Impact of Globalisation on the Business Environment of the United States
Although the United States remains the leading economy and sole superpower it has nonetheless been affected by globalisation to a significant degree. Indeed, it is the fact that America is so integral to global functions that has increased the level of such impact. This section examines the degree to which business in the United States has been affected by globalisation by assessing the relative impact felt in political, economic, social and technological terms.
3.1 Political Environment
Politically globalisation has had a significant effect on the political processes of every nation on earth. As such, the United States is no exception. Above all, the political effect of globalisation can be seen by the way in which it has undermined the previously privileged position of the traditional nation state (Held; 2006). Although individual national governments have been unable to totally direct their economic fortunes for some time now, globalisation has accelerated this process to a massive degree, meaning that the sovereign ability of nation states to control their economic fortunes has reduced significantly (Hill; 2009).
However, unlike in other countries, business environment in the United States has in many respects benefited from this increased level of non regulation. Indeed, given that lasses faire capitalism has always personified the American approach to business, the United States is in a fine position in terms of effectively dealing with the characteristics of globalisation in political terms (Mittleman; 2000). Stability and free market thinking as enshrined by the American political establishment therefore acts as a hugely beneficial feature of American political factors in wider globalisation (Mittleman; 2000).
Therefore, the political willingness to ensure that free market capitalism prevails in the United States has been a consistent benefit to American business in the modern world of globalised economic functions. Furthermore, instilling an atmosphere of competition has allowed American firms such as MacDonald, Coco Cola and Ford to gain a competitive edge in markets all over the world (Mittlemann; 2000).
Moreover, although protectionism has often been advocated by certain people in American business, an overt willingness to engage in free trade across national boundaries has been the hallmark of the political approach in America for decades (Hill; 2009). Indeed, in this regard it is certainly possible to see how the lessons of the Great Depression have been learnt. Furthermore, ensuring free trade during times of economic difficulty has often come at considerable political cost. Indeed, the Presidency of Jimmy Carter came under enormous criticism for not protecting American industry, most notably the car industry, in the latter 1970s (Hill; 2009). Protectionism can of course offer attractive short term benefits in terms of combating rising unemployment, however in the longer term it is ultimately destructive. Moreover, in the modern world of globalised economic functions the need to ensure free trade prevails over protectionism is of even greater concern (Trainer; 2002). Thus, the political leadership provided by President Obama in relation to global free trade and low trade tariffs is the measure to which the American political system has taken the initiative with regards the possible benefits of globalisation.
Finally, it is important to note that the action of the Federal Government is sometimes vital in economic processes and in this regard it has not been found wanting. Although the Washington’s response to the global financial crisis was slow in relation to the Lehman Brothers, concerted action such as that witnessed with AIG shows how American politics is capable of both ensuring the best features of globalisation prevail whilst simultaneously acting effectively when problems arise.
3.2 Economic Environment
It is important to remember that globalisation is not necessarily a negative phenomenon. Above all, the process which has witnessed the increasing interconnected nature of global economic functions is something that engenders benefits as well as problems (Bairoch & Kozul Wright; 1996).
With regards to the United States economy it is certainly possible to outline a number of negative impacts which have occurred as a result of globalisation. The vast increase in more effective and above all cheaper global competition has had a constituent effect on the American economy by increasing competition on the global stage.
However, one of the greatest threats posed to the American national economy as a result of globalisation is the increasing prevalence of outsourcing as a method of bringing about lower production costs (Hill; 2009). As the global economy now functions at a fundamental level of inter-reliance then the subcontracting of a service or manufacturing process to a third party outside the United States has become common practice for American businesses. Thus, the ability to produce goods and services cheaper in less developed countries has inevitably had an impact on American jobs and unemployment levels (Hill; 2009). Indeed, in 2003 the McKinsey Global Institute asserted that outsourcing among American companies was likely to increase between 30%-40% over the proceeding five years (Baily and Farel; 2004. In terms of employment the institute estimated that this would “result in the loss of 200,000 jobs a year in services of a decade” (Baily and Farell, 2004; p. a). Nonetheless, in terms of business productivity and in particular cutting business costs the development of outsourcing has resulted in a plethora of benefits for American business (Friedman; 2005). As such, various companies such as Intel, Microsoft and Boeing have gained significant benefits from outsourcing (Friedman; 2005).
Indeed, it is often suggested that outsourcing, particularly to India has resulted in serious employment damage for American businesses (Baily and Farel; 2004). However, further investigation by the McKinsey Global Institute has suggested that of very dollar produced using outsourcing in India “only thirty three cents of that dollar goes to the Indian economy in the form of wages paid to Indian workers and profits accrued by Indian firms” (Azu, 2004; p. 4). Thus, the remaining two thirds end up in the American economy thus providing the necessary capital for future investment and job security. Therefore, it is vital to highlight that globalisation is not necessarily a negative progression for American economic interests. Nonetheless, if American business is to remain a world leader then the traditional processes of innovation and development are pivotal. One must not underestimate the competitive nature which has arisen as a consequence of globalisation.
3.3 Social Environment
The globalisation of culture is something which is often considered to be a very negative result of economic globalisation (Brennan; 2003). However, in basic terms the United States is better placed culturally than any other country to deal with such developments given that it is American culture which is largely pervading every part of the world (Hill; 2009). Of course, this is not to say that cultural difference does not have a significant impact on economic performance and outlook. Indeed, such discussion forms the basis for the second section of this work. However, it is nevertheless important to point out that the diverse and flexible nature of American social functions has certainly placed the countries business processes in a beneficial position (Brennan; 2003). Indeed, it has been argued that it is the strength and durability of American society and social consciousness that can account for the success of American business over the last half century (Brennan; 2003). As such, as social functions become ever more interrelated the United States has little to be concerned about. Ultimately, the social consciousness currently gaining global proportions is based heavily on American outlook and such outlook as proven itself to be resilient in the past.
3.4 Technological Developments
Of all the technological developments which have impacted upon economic and business functions in recent decades few have greater relevance and importance that ICT and the World Wide Web (Friedman; 2005). In particular, the massive increase in online business has meant that companies previously of a national kind have been able to market themselves and carry out effective business on a global scale (Friedman; 2005).
Moreover, the development of online technology has made it significantly easier to undertake the kind of outsourcing methodologies discussed in the previous section. Naturally, a pertinent example of a business area where the internet has allowed for increased levels of outsourcing is the ICT industry. Numerous well known American computer giants such as Dell and Microsoft have undertaken significant outsourcing, particularly in India (Brennan; 2003). Indeed, some have suggested that as much as 30% of Microsoft’s development and planning processes are now undertaken outside of the United States (Hill; 2009). Nonetheless, although such outsourcing has certainly been witnessed in the ICT industry in America a whole host of other industries have also moved in a similar direction. For example, the drug giant GlaxoSmithKline now carries out much of its production in South East Asia (Davis; 2009). Moreover, the onset of internet communications have meant that drug companies from developing countries have been able to offer very effective competition in an area traditionally dominated by a small number of large global organisations. The Bangladeshi Beximco Pharmaceuticals is an excellent example of such development (Hill; 2009).
Part Two
4.0 National Culture and its Impact Upon Organisational Culture
This section will assess the degree to which national culture and organisational culture interact at a fundamental level. Above all, the processes personified by economic globalisation have meant that concepts of organisation and diversity in business management practice have altered significantly. However, national culture continues to have a consistent effect upon the way in which business is conducted in a globalised world. Before this interaction is analysed it is first prudent to offer definitional explanations of national and organisational culture.
4.1 National Culture
National culture naturally denotes the cultural tendencies which personify a particular national grouping or nation state (Martin; 2002). As such, even with the widespread onset of globalised economic functions, nation states have continued to exhibit cultural features which have historical foundations. Therefore, cultural foundations within nations continue to have a consistent impact on business activity. For example, work ethic and focus on detail has been common characteristic of Japanese national culture which has naturally been transposed into the national business outlook (Hill; 2009).
However, increasing cosmopolitanism and cultural diversity has undoubtedly affected the cultures of nation states (Held; 2006). For example, increasing levels of immigration into developed countries has impacted to a considerable degree on the cultural outlook that such societies no exhibit. Indeed, the United States and United Kingdom represent pertinent examples of this development (Hill; 2009).
4.2 Organisational Culture
Organisation culture is the term which describes the cultural, psychological foundations which underlie an organisation (Martin; 2002). As such, organisational culture is essentially focused on questions pertaining to how an organisation functions at a cultural level. Cultural differences therefore account directly for divergences in organisational processes. Given this, it is quite obvious to see how different cultural trends and historical progressions could result in varyingly different organisational outcomes.
Moreover, as culture in an organisation is often something which is taken for granted then historically little academic attention has been given to the subject area. Indeed, the common utterance as suggested by Martin (2002; p. 3) that newcomers to an organisation are informed of “how things are done around here” has often meant that effective analysis on this issue is largely a recent phenomenon.
However, although detailed assessment of the intrinsic components that act to create cultural foundations in an organisation is a relatively new area of research, the onset of economic globalisation has meant that such issues have gained an increasing importance in academic and business discourse (Guidroz et al; 2006). As a result of globalised economic functions, organisations which previously operated on a purely national basis have been opened up to markets on the global stage (Brennan; 2003). Thus, effectively understanding the processes and factors which direct the organisational culture of a business partner or competitor is of considerable benefit.
Therefore, in many respects organisational culture interacts with a variety of theoretical and practical prescriptions which underlie the formation of human relationships in business. In this respect it is certainly possible to see the development of graduated interdisciplinary approaches to the subject and therefore concepts that have traditionally resided in disciplines such as sociology and anthropology are now of important consideration to business thinking (Martin; 2002).
4.3 The impact of national culture on organisational culture
The above discussion provided clear insight into how organisational culture and national culture function. Given the basic features contained within each, it is most certainly not difficult to see how the two interact in a globalised world. Above all, global economic functions have meant that the cultural tendencies of one country are now vital considerations for a business in another part of the world (Martin; 2002). Of course this is not necessarily that recent a phenomenon. Indeed, various American businesses, most notably blue chip enterprises have for decades ensured an effective understanding of Japanese cultural formation in order establish effective business relationships (Martin; 2002). However, the degree to which national culture and organisational culture interact is more complex than merely understanding how a foreign company consequences its processes and organisation.
Indeed, although the above discussion highlighted the importance of cultural issues and national culture in organisational processes, it has also been suggested that the impact of national culture on organisations has been exaggerated. For example, Guidroz et al (2006; p. 5) have argued produced empirically based data results which indicate that “country of origin explained a small amount of variance in respondents’ values and that organisational differences accounted for more variance than did country”.
Therefore, it is possible to see how in some respects organisational culture supersedes national culture in terms of importance in business. The assumptions reached by research like that undertaken by Guidroz et al (2006) and also Gerhart and Fang (2005) are beneficial in highlighting such prevalence on the part of organisational factors. Nonetheless, it is impossible to discount the interaction which often occurs in global business environments between the organisational settings and the cultural tendencies of the host country. Moreover, cultural globalisation is of equal importance to this analysis. The outsourcing of much American business to Asia, in particular India has meant that organisational structures in the latter have had to adapt to cultural norms embodied in the United States (Martin; 2002). For example, in the American banking sector considerable outsourcing to India has taken place over the last decade, especially in the area of customer service (Hill; 2009). Thus, given that many American banks now heavily outsource their customers’ telecommunications services the need for Indian workers to effectively appreciate and account for cultural tendencies in America is of considerable importance. Indeed, the same can be said for the outsourcing of telecommunications and banking customer service from the United Kingdom to India.
Therefore, numerous commentators such as Martin (2002) have pointed out that cultural issues are of considerable importance two both sides when services are outsourced. For example, Bank of America has over recent years outsourced around 30% of its customer service operations to India (Hill; 2009). Moreover, the company has expended considerable resources to ensuring that their Indian colleagues effectively appreciate cultural and national factors in the United States. Conversely, Bank of America has also had to make sure that their business model of development effectively accounts for Indian cultural norms and processes (Hill; 2009). Thus, it is certainly possible to see how national culture and organisational culture often interact on a fundamental level. Therefore, although academic sources such as Guidroz et al (2006) and Gerhart and Fang (2005) have offered an insightful contribution to the debate in this area, it is ultimately impossible to deny the clear and unequivocal link that exists between national culture and organisational processes. Moreover, this essential link has been propelled to ever greater importance because of globalisation.
4.4 Conclusion
The various discussions above offered examination of the various processes and functions which personify the development of globalisation. Above all, what is clear is that globalised economic functions have had an enormous impact upon business all over the world, including our case study example the United States.
Firstly, it is undeniable that globalisation has in many ways had a negative effect on business in the United States. Although American business has often been able to gain access to new and productive markets, the increase in cheap foreign competition across a variety of business sectors has caused significant concern. Moreover, although globalised functions such as outsourcing often result in lower costs for American businesses they have an obvious consequent impact on internal employment.
Nonetheless, it is important to remember that globalisation is not necessarily a negative development either for equality among national economies or for business development in the United States (Bairoch & Kozul Wright; 1996). With specific regard to the latter, the innovation which has personified American business for well over a century can certainly negate the worst impacts of globalisation. Finally, national culture and organisational culture interact at a fundamental level. Indeed, the globalisation of world culture on the basis of lasses faire American economics places the United States in a strong position in terms of cultural ascendency and the benefits such preponderance has for business development.
Bibliography
Baily, M. N., and Farrell, D (2004) “Exploding the Myths about Offshoring.”
McKinsey Global Institute [online], available at; www.mckinsey.com/mgi/reports/
pdfs/explodingmyths/explodingoffshoringmyths.pdf, date accessed, 17/12/09.
Bairoch, P & Kozul Wright (1996) ‘Globalisation Myths: some historical reflections on integration, industrialisation and growth in the global economy’ Conference on Transnational Corporations and Global Economy UNCAT: Number 113.
Brennan, T (2003) Globalization and its terrors: daily life in the West. Routledge: London.
Davis, S (2009) ‘Global Trade’, Business Source Premier, 75(4), p180-183.
Friedman, T.L (2005) The World is Flat: a brief history of the twenty first century. New York: Farrar, Straus and Giroux.
Gerhart, B. & Fang, M. (2005) ‘National culture and human resource management:
Assumptions and evidence’. International Journal of Human Resource Management, 16, 971-986.
Guidroz, A.M; Kotrba, L.M; Denison, D.R (2006) Workplace Diversity: Is National or Organisational Culture Predominant. New York: The Linkage Leader.
Held, D (2006) Models of Democracy. New York: Stanford University Press.
Hill, C.W.L (2009) International Business: Competing in the Global Market Place. 7th edition, McGraw-Hill Irwin: London.
Kawachi, I & Wamala, S.P (2007) Globalisation and Health. Oxford: Oxford University Press.
Martin, J (2002) Organisational Culture: mapping the terrain. London: Sage.
Mittelman, J. H (2000) The Globalization Syndrome. Princeton University Press: New Jersey.
Trainer, T (2002) ‘Two Common Mistakes About Globalisation’ Social Work: University of New South Wales, 18 (2), 1-8.
Yeganeh, M.E (2004) The Impact of National and Organisation Culture on Information Technology. Tehran: Islamic Azad University.