Globalization and Its Impact on Businesses

This assignment examines the multifaceted impacts of globalization on businesses. It delves into reasons for multinational companies' (MNCs) engagement in global markets, such as cost advantage and expanded customer bases. The analysis highlights the importance of value chain assessments before international expansion and advocates for a stakeholder approach prioritizing the Triple Bottom Line. The document further discusses managing diverse workforces in a globalized context, emphasizing the role of post-bureaucratic approaches within MNCs while acknowledging the persistent issues of exploitation in Economic Process Zones (EPZs). Finally, it critiques potential negative consequences of globalization, drawing parallels to historical examples like the East India Company.

Running head: GLOBALIZATION
GLOBALIZATION
Name of the Student:
Name of the University:
Author’s Note:

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Thesis statement- This essay analyzes how practices of managing culture contribute to managing
globalization with the advance of post-bureaucratic approaches.
Introduction
Globalization has led to formation of a diverse workforce .Bureaucracy is the formal,
hierarchical structure of the organization. Post-bureaucracy has led to formation of flatter
organization structures with less managerial control where employees are self-driven and enjoy
autonomy. Global leaders can either improve virtuous organizational performance by focusing
on Corporate Social Responsibilities (CSR) activities and creating value for stakeholders or they
can be a risky investment leading to a managerialised world. Globalization can also lead to use
of coercive power. In the modern era of Globalization, business organizations not only operates
in the home country but has expanded its operation worldwide. Globalization has interconnected
people and business of world. Corporate globalization has resulted in the formation of
transnational and multinational organizations. The reasons behind the choice of a business
organizations to expand its operation in global countries are to achieve economies of scale, to
achieve cost advantage, to satiate the needs and demands of the customers of international
market ,to utilize the cheap labor by outsourcing business operations to least developed or
developing countries. Though globalization can be advantageous for business organizations, but
it imposes some risks for business organizations which should be mitigated to achieve
competitive advantage in the global market(Bal and Bozkurt 2013).
Discussion
Globalization has led to integration of workforce, economies, commerce and finance,
politics and defense, global rights and networks of transportation and communication.

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Globalization has led to emergence of multi-national companies. Globalization also means re-
localization. In a globalized world three groups of industrial and services activities can be noted
which are highly competitive labor intensive industries, high-technology industries and services
like financial and business services. Earlier bureaucratic practices were adopted by organization.
The organization stricture was rigid with more hierarchical levels. Restrictions were imposed to
staffs by higher authorities who would exert bureaucratic control. However, the modern era of
globalization has led to the formation of flatter organization structures. The advancement of post-
bureaucratic control means that employees of the organization enjoy more autonomy, are self-
driven and there is open communication practiced in organization (Saxena 2014). Globalization
has led to the management of a diverse workforce where people from different culture, race,
ethnicity, gender, and sexuality work together. The diverse workforce includes people from
different culture working together and needs effective management. Cultural inclusion and
cultural tolerance should be adopted by organizations in a global environment. Stereotypes and
cultural biases should be avoided. Employees should be discouraged to judge co-workers based
on personal factors and to avoid discrimination towards the individual culture of other people.
The policies and procedures adopted by business organizations to manage a diverse culture in
this era of globalization and post-bureaucratic control should encourage open communication,
open-mindedness and respect towards cultural diversity, for instance, Walt Disney has adopted a
culture of diversity to gain competitive advantage in a globalized world (Jonsen et al. 2013).
Globalization has also led to the emergence of global leaders who shape the destiny of
the global firms with their visionary leadership. These global leaders are management gurus,
managers and executives of multinational corporations like large IT firm, for instance, Sundar
Pichai who is the CEO of global technology giant Google is a global leader. Global leaders can

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adopt the stakeholder perspective and create sustainable value for stakeholders by focusing on
the Triple Bottom Line of Business (TPL) .These are Profit, People and Planet which create
social, economic and ecological sustainability. Globalization has also led to the consolidation of
international norms and rights and openness. Business leaders can create long term value for the
stakeholders of a firm by creating virtuous or positive organizational performance and by
undertaking corporate social responsibility (CSR) initiatives. The CSR initiatives also enhance
the image of the business and improve Customer Perceived Value which enhances the long-term
profitability of the firm (Podsiadlowski et al. 2013).
Business organizations follow different modes of entry to enter the global market like
they can form strategic alliance with organizations in the global market to gain competitive
advantage or to outsource business processes .In a strategic alliance, independent firms co-
operate and manage business operations by shared control. Mergers and acquisitions,
franchising, licensing and exporting are other modes of entry for a global firm. The value chain
of a global firm is composed of primary activities like inbound logistics, outbound logistics,
marketing, operations and services. These primary activities are supported by activities of the
firm like firm infrastructure, human resources, technology development and procurement. Each
activity of the Michael Porter’s Value chain adds value to the products and services of a business
organization. This value can be measured by the difference between the price customers are
willing to pay and the cost entailed to accomplish profit. The value chain activities of a business
organization should be analyzed judiciously before an organization plans to enter the global
market. The value chain activities enable an organization to achieve competitive advantage in the
global market (Clegg, Kornberger and Pitsis 2015).

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The firm’s choice to enter the global market is due to many reasons. The firms enter the
global market to leverage a global customer base and to serve the needs and demands of the
global customers of the international market. Business organizations also achieve economies of
scale by entering global market. Worldwide communication and transportation network provide
opportunities for economic scope. The reason for globalization can be also to outsource business
activities to less developed countries. For instance, Wal-Mart and GAP outsources production
facilities to the Economic Process Zones (EPZs) of the countries like Indonesia, Sri Lanka,
Southern China, Philippines, Africa and South America where there is availability of young
labors who are ready to accept minimum wages (Samimi and Jenatabadi 2014).
Though globalization can be advantageous in many ways for the business organizations
and society in general, however there are risks and threats imposed by globalization which
should also be taken into consideration. For instance, global leaders can be a risky investment
when they do not perform according to the set expectations and do not meet future needs of the
firm. This leads to the formation of a managerialised world.
Globalization can also lead to global tensions between objectives and needs of employees
in different zones, national governments, human beings, citizens and managers of transnational
corporations. Globalization can also be destructive. Bureaucratic control is observed in
Economic Processing Zones where there is rise of sweat shop labor, long working hours and
military like supervision. Young women are employed in these sweat shops and they receive
below subsistence wages. These zones are separated from the gaze of consumers of the western
world, consumers are unaware that their favorite Nike shoes or their Wal-Mart goods are
manufactured in poor work conditions of the EPZs. For example, multinationals had to pay $10
to $18.50 per hour to workers of textile factories in Germany or the United States and thus in

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order to achieve cost advantage, manufacturing facilities of these textile firms were outsourced to
China where $0.80 per hour is paid to labor in China. Globalization can also be destructive and
can lead to necrocapitalism .Though globalization is considered to be a recent phenomenon with
positive impacts to global economy and society, however in this article the author argues that
roots of globalization can be traced back to 100 of years ago. The author states the example of
East India Company which operated 200 years ago during British colonization in India. This
demonstrates the dark side of globalization and the use of coercive power to establish colonies
by Western countries (Banerjee et al. 2009).
Thus diverse workforce and post-bureaucratic approach is only observed in the corporate
houses of global multi-national companies. The MNCs manage the diverse workforce through
cultural tolerance and cultural inclusion. Stereotypes and biases are avoided to manage diverse
culture and globalization with the advance of post-bureaucratic approaches in the corporate
offices of MNC’s however bureaucratic control, inhuman work condition, low wages are still
dominant and highly prevalent in the Economic Process Zones (EPZ) of countries like China and
Africa and these poor work conditions are hidden from customers of the Western world (Hsueh
2016).
Conclusion
It can be concluded that business organizations enter the global market for multiple
reasons like to gain cost advantage, to achieve economies of scale and to gain a global customer
base. The value chain activities of a firm must be analyzed before entering global market. Global
leaders can adopt stakeholder’s approach and contribute to Triple Bottom Line of business. The
management of the diverse workforce can lead to managing globalization with the advancement

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of post-bureaucratic approaches. However post-bureaucratic approach is only observed in the
corporate offices of global companies where there are flatter structure and autonomy is given to
employees who are professionals and are well-driven. Thus the western world and MNCs enjoy
benefits of globalization. However, bureaucratic control is still observed in Economic Process
Zones of China, Philippines, Africa, Sri-Lanka and many more. Around 27 million people live
in EPZ. Also, globalization has destructive effects which can be traced back to the example of
the East Indian Company 200 years ago. Globalization led to colonization and still today can
lead to a managerialised world where managers are unable to meet the expectations and future
needs of the firm. These negative effects can be mitigated with the adoption of minimum wage
laws and health and safety conditions in these Economic Process Zones.

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Reference Lists
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Diverse Workforce. Cultural and Technological Influences on Global Business, p.1.
Banerjee, S.B., Chio, V.C. and Mir, R., 2009. The imperial formations of
globalization. Organizations, markets and imperial formations: Towards an anthropology of
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Clegg, S.R., Kornberger, M. and Pitsis, T., 2015. Managing and organizations: An introduction
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Hsueh, R., 2016. State Capitalism, Chinese‐Style: Strategic Value of Sectors, Sectoral
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