1.25 business management
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Lecture_2_HRMG3203_GlobalizationExpanded.pptxGlobalisation Expanded
Godspower Onah
Lecturer in International HRM,
Leicester Business School, DMU
HRMG 3203
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Outline of lecture
By the end of this lecture, you will be able to:
To explore the concept and the process of globalisation
To understand the implications of globalisation
To discuss the convergence VS divergence debate
Definition of Globalisation
“the integration of spatially separate locations into a single international market”.
(Blyton and Turnbull, (1998), The Dynamics of Employee Relations,p38.)
Definition of Globalisation
The Organisation for Economic Cooperation and Development (OECD) explains Globalisation as …
…the free movement of goods, services, labour and capital, thereby creating a single market in inputs and outputs; and full national treatment for foreign investors (and nationals working abroad) so that, economically speaking, there are no foreigners.
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The process of Globalisation
The integration of economic activities
Driven by the activities of Multinational Corporations (MNCs) operating across borders in search of lower production costs and greater profits
Aided by developments in global transportation and information and communication technology (ICT)
The process of Globalisation
As MNCs operate across borders, there are socio - cultural implications as well as economic.
DISCUSSION: Is Globalisation a force for:
GOOD
Or BAD?
Watch
Apple accused of failing to protect workers
https://www.youtube.com/watch?v=kSvT02q4h40
Inside Chinese Factories
https://www.youtube.com/watch?v=KqEjaBYXRbA
Get into debating groups
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Perceived Benefits of Globalisation
Some argue Globalisation will:
Benefit consumers by providing more choice and cheaper prices
Create jobs in developing countries, thereby improving the living standards, working conditions, and prospects of people living there
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Perceived Benefits of Globalisation
Assist developing countries in their industrial development by transferring technology and knowledge and raising educational standards and skills
Allow countries to specialise. For example, India is a host to many foreign-owned call centres; China manufactures products ranging from garments to iphones
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Perceived Benefits of Globalisation
Generate tax revenues and foreign exchange receipts for the developing nations
Have a transformative social effect through consumer market power
An article in the Economist declared ‘it is easier to change things in Nigeria by boycotting Shell than by lobbying the Nigerian government
The Economist (2002) The world’s view of multinationals. 354 (8155): 21-22
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Transformative Social Effect? Case study: Nike
Media reports of child labour being used in the manufacture of footballs in Pakistan were met with a public outcry.
It has been suggested that, in 1998, this prompted Phil Knight, Nike’s CEO, to state “The Nike product has become synonymous with slave wages, forced overtime, and arbitrary abuse …I truly believe the American consumer doesn’t want to buy products made under abusive conditions.”
Nike raised the minimum age of workers, conducted factory audits and similar measures, although all abuses may not have stamped out.
http://www1.american.edu/TED/nike.htm
http://www.theguardian.com/business/2006/nov/20/2
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Perceived Disadvantages of Globalisation
Some argue Globalisation is a form of ‘neo colonialism’, pointing to:
An unequal distribution of the proceeds from globalisation
The widening income gap between developed and developing countries; and within countries
The loss of jobs in manufacturing and the service sector in developed economies. Donald Trump’s inauguration speech:
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Perceived Disadvantages of Globalisation
The quantity and quality of local employment varies
direct job creation: Mainly in capital-intensive manufacturing industry typified by low-skilled, low-paid work.
indirect job creation: Depends upon extent to which the company imports components or relies on local suppliers.
the ‘Trojan horse’ or displacement effect: Foreign investment may force out local producers.
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Perceived Disadvantages of Globalisation
MNCs tendency to take advantage of less regulation in areas such as rates of pay, health and safety and union recognition
Examples of very poor working conditions which include job insecurity; long hours, slave labour, child labour and discouraging union membership
What Nike don’t want you to see:
https://www.youtube.com/watch?v=GLQgeg-L0ns
The True Cost movie
https://www.youtube.com/watch?v=GsG64621Tuw
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Perceived Disadvantages of Globalisation
Multinationals are able to exert power to extract concessions from host nation governments, such as deregulation and favourable tax regimes
Multinationals have caused environmental damage, including disasters such as BP oil spill and Union Carbide
Local cultures can become diluted: the ‘McDonalization of the world’ (Barber, 1996)
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IS THE WORLD BECOMING MORE SIMILAR?
Convergence versus Divergence
Convergence
The ‘convergence thesis’, proposed by American authors Kerr, Dunlop, Harbison & Myers (1962), states that, because of globalisation, the impact of national culture is diluted and ways of doing business and managing people are becoming more similar.
Closely aligned with a ‘Universalist’ approach, which reflects thinking that there is ‘one best way’ to manage people (‘best practice’ approach), so all MNCs will want to move towards this in a global competitive market.
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Divergence
Others believe convergence is not an inevitable consequence of globalisation
The ‘divergence thesis’ states that national institutions and cultural differences remain strong and the way business operates and people are managed varies throughout the world
Closely aligned to a ‘Contextual’ approach, which considers the best way to manage people depends upon the situation (‘best fit’ approach) like cultural traditions.
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Suggested Reading
Crawley, E., Swales, S., & Walsh, D. (2013). Introduction to International Human Resource Management. Oxford: Oxford University Press. Chapter 2: The Wider Context of IHRM
Harzing, A-W., & Pinnington, A. H. (2011). International Human Resource Management. London: Sage. Chapter 2: Comparative Human Resource Management
Sparrow, P., Brewster, C., & Harris, H (2005). Globalizing Human Resource Management. New York: Routledge. Chapter 2 Globalization and HRM.
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CASE STUDY: Rana Plaza
Please read the media article ‘Rana Plaza’ (on Blackboard) and address the following question:
Activity 1:
Rana plaza, five years on: safety of workers hangs in balance in Bangladesh
In groups discuss the following and be ready to make a presentation of your answers to the rest of the class:
As the International HRM department of a multinational company identify the key issues your organisation needs to address if garment factories in Bangladesh form part of your supply chain? What solutions do you propose to these issues?
Globalization – how have global processes and actors affected local HRM practices in Bangladesh? How have local HRM issues and practices in Bangladesh affected global organisations?
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