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Impacts of Globalization and Management Across Borders

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                        Impacts of Globalization and Management Across Borders

                                                           Introduction

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            Globalization is the integration of economies and societies through cross country flows of information, ideas, technologies, goods, services, capital, finance, and even people. This cross border integration can take different dimensions of social, cultural, economical, and political depending on the forces of globalization available. Globalization is based on the notion that nothing is permanent except change, and that no nation can fully be socially, culturally, economically, and politically self depended. Globalization has helped to put in place sound institutional frameworks in both developing and industrialized nations; it has helped to change how the governments perceive their role in the society, it has streamlined educational systems in nations all over the world and hence helping to create skilled labor force to work in the general betterment of the economies of the world.

[Mahesh Chandra Joshi, 2008]

                                               Case Study; Halliburton

            Many corporations which are currently among the most celebrated have got a very humble beginning; they started as small entrepreneurships, later expanded horizontally and vertically to what they are to day.

One such corporation is Halliburton, a multinational corporation that enjoys diversity of operations in the oilfield servicing and prospecting. With it headquarters in Houston, Texas, US the corporation has international operation in more than seventy countries of the world. It is a company whose history is characterized by media and political controversies brought about by the services it has rendered to the U.S government and also its political ties and corporate policies.

            Management policies adopted by Halliburton has enabled it to grow to what it is today, in short Halliburton has experienced one of the best managerial systems. Of late Halliburton has got two headquarters with the opening of another head office in Dubai, U.A.E in 2007 to fully cater for the growing needs of the eastern block market. The company’s historical experience is based on offering of energy services which may includes, drilling and formation evaluation, digital and consulting solutions, production volume optimization,  and fluid system. All these efforts have worked toward making Halliburton the global power it is now in the energy provision industry far beyond the reach of its closest rivals in the industry such as Baker Hughes and Tesco Corporation among many others. [Corporate Profile: – Halliburton, 2008]

                        Benefits of Globalization (economic) to Halliburton

                                   Free Movement of Goods and Services

            Trade in goods or services is beneficial to any economy or organization, however, this is only possible if conscious efforts are made to scrap national barriers and gear up efforts in creating international trade agreements that will facilitate reduction of tariffs, creation of special differentiated treatments, and labor restrictions. This kind of international fraternization in trade creates the spirit of specialization that ultimately leads to utilization of resources and hence gaining of comparative advantage. The success of Halliburton is wholly pegged on a favorable trade atmosphere that allows diversification of its operations and venturing into new jurisdictions of the global arena that are not competitive. [Mahesh Chandra Joshi, 2008]

                                   Movement of Capital

            Capital is the major factor of production it dictates the direction a business enterprise is going to take in light of the level play of other factors of production such as labor and others. The effect of positive globalization on capital flow across jurisdictions facilitates rapid and sound production rate. Again the mobility of capital enables the equal distribution of total savings of the world among the nations whose investment potential is considerably high. Halliburton has enjoyed this form of leeway in the expansion of its business activities to countries hitherto not been business associates of the US such as Middle East countries. The realization that the key to development especially in developing countries is through direct foreign investment has led to rapid expansion of multinational corporations such as Halliburton. Many developing countries prefer direct foreign investment over portfolio investment because of the practical positive gains that direct investment offers.  The inflow of foreign capital has been of practical importance in many developing countries e.g. East Asian countries. Halliburton has capitalized on this factor to expand its business services to the Asian countries, the recent opening of a twin headquarters in Dubai talk’s volume on this claim. [Mahesh Chandra Joshi, 2008]

                                   Financial Flows

            The creation of strong capital markets that enjoys the advantages of globalization has been highly beneficial to large firms who are capital intensive. Foreign companies can freely invest their surplus capital in foreign capital markets, this free exchange of foreign capital has culminated into gross turnover in foreign exchange hit large amounts, it is estimated that around $1.5 trillion worldwide is exchanged daily. Halliburton success can as well be pegged to this kind of global advantage, through its wide network presence in over seventy countries it has managed to invest its excess capital in diverse capital markets some which are very lucrative and hence spreading its risks wisely.  Again, global financial markets enjoys what is called the “herd instinct” as the world economies get more and more involved in the capital and financial flows they tend to give in to pressures that ensure factors relating to micro-economic stability are not ignored. [Mahesh Chandra Joshi, 2008]

                        Free Flow of Human Resources

            The advent of information technology led to the gradual shifting of the determining factors of the global trade arena. The international trade is poised of a transition from natural resources based to human resources based thanks to the emergence of sound information technologies. Production activities are becoming more and more knowledge intensive rather than resource intensive it is only a matter of time when the global economies will be sailing on relatively equal productivity and trade terms but only if balancing mechanisms will be put in place to ensure that handicaps of developing countries are overcome. Halliburton has been a beneficiary of this policy change, since its operations are more international pronounced than they are domestically it can be said that the technical know-how of his highly trained personnel has played a key role in winning key contracts in foreign jurisdictions to prospect, create conveyance channels, or even drill wells. Being a diversified corporation, Halliburton has managed to facilitate latest technological innovations in the Energy Services Group (ESG) and therefore remain steadfast in pursuing diversification in terms of winning more and more risky and sensitive assignments in the global arena, e.g. creation of oil conveyance channels in Iraq across the Tigris River. [Prof. R S S Mani, 2006]

                        Impacts of Across the Border Management

            Halliburton’s expansion of her tentacles to overseas countries required sound management systems that in order to effectively execute the business orders that won in foreign jurisdictions. Halliburton built its reputation internally by successfully undertaking sensitive national duties that involved contracts awarded by the army and other sensitive security assignments. Through successful close working with the government it was easy to secure other lucrative assignments at international levels. These across the border assignments were equally executed with much precision as the domestic ones and hence Halliburton built its reputation locally and internationally. It is through the service of able chief executive officers such as the former US vice president, Dick Cheney that Halliburton was awarded some of the most lucrative contracts in Middle East. [30]

                        Effects of Globalization on Management Styles

            In US traditionally the management of companies is measured by the amount of dividend its share holders are earning. These stereo typically held propositions lads to the sacking of the best CEOs on account that their practices are not “favorable” to the shareholders. A recent case of the sacking of Compaq CEO, Eckhard Pfeiffer, serves to give credit to this argument. [Effect of Globalization on management styles, 2008]

            A look at management situations in Japan gives a complete shape of the same. In Japan they base their measures of management on debt rather than equity. The American layoff style is unheard of in Japan with lifetime employment being the norm of management. In continental Europe this has been equally the case with many governments encouraging industries to protect job environments that are characterized by massive unemployment.

            This difference in management approaches between Americans and European counties and Japan has served to help both sides into lessening their approaches and therefore adopting a system that is neither American nor Japanese. On a global point of view it has led to mutual compatibility of foreign corporation’s management systems and hence streamlining the corporate operations.

            Some international multinationals such as Nokia, Nissan, Sumitomo, Sakuro, and Renault are among those reportedly adopting corporate management changes. These changes may include the laying off of workers in subsidiaries that seem unproductive.  However, such changes need to be built on the tenets of reliable socio-economic and political good will. Again, these changes can be made a reality if the top management officials are treated to bonuses at the end of every successful financial year in order to encourage efficiency and patriotism. [Effect of Globalization on management styles, 2008]

            Another global factor that has induced a change in management systems was the introduction of Euro back in 1999 as the common currency in 15 European community countries. This made European based companies to reconsider their stand as far as their relationship with their shareholders were concerned. This was necessary for the investment of surplus capital in security markets across the borders and therefore offering a chance for comparison of the returns of a given industry in various jurisdictions. This trend led to more than 1,000 European companies enlisting themselves in the New York Stock Exchange (NYSE) a phenomenon that provides a direct passport to accessing the capital of the world’s largest economy and therefore exposing the European-based firms to more disclosure standards. This global trend has led to the adoption of more liquid-guided managerial approaches as opposed to asset-based approaches.

            In US, many companies are going the Japan way by improving quality and operational efficiency through the choosing of the best managerial practices. Lean production and just-in-time inventory is becoming the operational norm a concept that was traditionally popular with Japanese firms. Vendor relations are equally becoming popular among American firms a very contrastingly phenomenon to traditional American style of tough bargaining with suppliers. [Effect of Globalization on management styles, 2008]

                        Worthwhile Management Strategies

            In any corporation a number of management strategies are applied in order to achieve the corporate goals, corporate values, corporate culture and corporate missions and visions. The most important of these is the strategic management since it duly incorporates all the aspects of the firm and as a result gives direction to the firm’s corporate ideas of values, culture, goals and mission. Other strategies include competitive strategies and functional unit strategies. [David, F, 1989]

            A corporate competitive strategy facilitates a conscious diversification of the company’s core activities to develop a competitive edge in regards to the specific industry in which a firm operates. It involves the asking of such questions as “in which business environment should we compete?” and “how does operating in these business environment add competitive value or advantage of the corporation in general.” [David, F, 1989]

            Functional strategies induce new ideas in the whole corporation, these ideas includes legal strategies, financial strategies, marketing strategies, supply-chain strategies, human resource strategies, and information technology strategies. The main idea behind these functional strategies is to ensure that both short and medium term plans are catered for and that they supplement each other in meeting the overall corporate objectives. These three strategies together with many others that keep on finding their ways to the corporate world of business organizations helps to lubricate the organizational wagon wheels so that it can travel the extra mile into realizing the corporate goals. [David, F, 1989]

                                   References:

Mahesh Chandra Joshi, 2008; Impact of globalization and education management in India, available at;
http://www.citehr.com/75481-impact-globalization-management-education-india.html, accessed on accessed on December 8, 2008

Corporate Profile: – Halliburton, available at;
http://www.halliburton.com/phoenix.zhtml?c=67605&p=irol-homeprofile, accessed on December 8, 2008

David, F Strategic management, Columbus: Merrill Publishing Company, 1989, accessed on December 8, 2008
Effect of Globalization on management styles, available at;
http://ismindia.org/faculties/ved/lecture05.html, accessed on December 8, 2008

Prof. R S S Mani, Effect of Globalization on, HR, Available at;
http://en.allexperts.com/q/Human-Resources-2866/IMPACT-GLOBALISATION-HR.htm, accessed on December 8, 2008

 

Cite this Impacts of Globalization and Management Across Borders

Impacts of Globalization and Management Across Borders. (2016, Oct 03). Retrieved from https://graduateway.com/impacts-of-globalization-and-management-across-borders/

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