Impact of Globalization on Multinational Organizations: A Study on H&M

This research project aims to identify the impact of globalization on the corporate structure of multinational organizations, with a focus on H&M. It also aims to determine the major challenges faced by these organizations in the global market.

Research Project

TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION ...................................................................................................3
Background.............................................................................................................................3
Research aims and objectives.................................................................................................3
Research Questions................................................................................................................3
Rationale.................................................................................................................................4
CHAPTER 2: LITERATURE REVIEW ........................................................................................4
Theme 1: Trends of Globalisation..........................................................................................4
Theme 2: Impact of Globalisation on MNC's .......................................................................5
Theme 3: Challenges faced by Globalisation.........................................................................6
RESEARCH METHODOLOGY.....................................................................................................7
DATA ANALYSIS........................................................................................................................10
REFLECTION...............................................................................................................................18
RECOMMENDATIONS...............................................................................................................19
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20

Topic: To identify the impact of globalization over corporate structure of multinational
organization and major challenges faced by them. A study on H&M.
CHAPTER 1: INTRODUCTION
Background
Globalisation is a process of interacting and integrating the business processes and other
resources of the company of one nation with that of another one. It involves interaction of two
companies or business organisation in context of people, business processes, governments and
capital of different nations assisted by Information technology (Baumann-Pauly, 2017). With the
help of globalisation, many business firms can now conduct its business operations at the
international level. Globalisation thus results in facilitation of international trade and investment
because of growth in advance technology, transportation as well as communication processes. It
assists companies in making improvement in its business processes and procedures by adopting
international ideas, culture etc. This research project will lay emphasis on identifying the impact
of globalisation over the corporate structure of the multinational business organisation. Also, it
will define major challenges which every business firm has to face while conducting their
business operations at the global level.
Research aims and objectives
Title
To identify the impact of globalization over corporate structure of multinational organization and
major challenges faced by them. A study on H&M.
Research Objectives
 To learn about the concept of Globalisation.
 To identify the major challenges faced by H&M while global expansion.
 To determine the influence of globalisation over corporate structure of H&M
Research Questions
 Describe the concept of Globalisation?
 What are the major challenges faced by H&M during the time of global expansion?
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 What are the influences of globalization on the corporate structure of H&M?
Rationale
The main aim behind conducting this research study is to assess the meaning of globalisation
concept in general term. Researcher will be able to understand the impact which will be created
by globalisation on the level of business operation performance. Further, with the help of this
research project, many scholars and researcher will be able to get knowledge about influencing
factors of globalisation over the corporate structure of multinational organisation. Also, it will
provide deep insight about major challenges which many business organisation will have to face
in carrying on their business operations and activities at the global level. The research project
will help researcher in better understanding of concept of globalisation and its advantages on the
corporate structure of many companies. Also, it will streamline about preventive measures which
can be taken by companies for mitigating the negative impact of globalisation on the structural
form of many business corporate.
CHAPTER 2: LITERATURE REVIEW
Theme 1: Trends of Globalisation
Boussebaa, (2015) Globalisation refers to the process where two companies or two
economies come together in order to interact and integrate among their people, culture or
Government. It is the exchange of knowledge, capital, resources from the developed country to
underdeveloped countries. In this process not only developed country were involved but
underdeveloped countries also participation for Globalisation. The implementation of
Globalisation also improved the ease of doing the business in another country but it has
improved the relations between the two economies.
Bretos and Marcuello, (2017) says that the because of globalisation their was increase in
the Global warming, Terrorism and Immigration. With the implementation of Globalisation
many economies have faced the problem of immigration and because of this many
underdeveloped countries have been affected. In developed countries there are more
opportunities of doing business as compared to underdeveloped countries and young generation
are attracted to the countries which are giving them higher growth. Also, terrorist attacks have

affected the developed countries. One of the problem of Globalisation is to affect the wealthy
people than the poor.
Young and Ghoshal, (2016) says that the Globalization helps in the free trade which
reduces the tariff burdens, value added taxes etc. between the two countries. It is the best of
exchanging the two cultures between the two countries. It gives more opportunity for creation of
jobs and also leads to economic growth of the country. Also, there is competitive advantage for
example if any country is not resources but having man power to do work than one can exchange
resources and other can give their man power to complete the work. Wealthy countries infuses
their capital and technologies in the poor country which help those countries to grow faster.
Liang, Ren and Sun, (2015) also claims that due to the Globalisation rich countries are
becoming more richer and poor countries became more poor. MNC's takes advantage to exploit
tax heaven in other countries by avoiding tax payments. According to the, the Globalisation has
also lead to the increase in the deadly disease like HIV/ AIDS because of migration of people
from one country to another country. It has also led to the exploitation of labour and also
increase in the human trafficking.
Theme 2: Impact of Globalisation on MNC's
According to Kaufman, (2016) Globalisation has increased the opportunity for the
companies and also it has also increased the ease of doing business between the two countries. It
has minimized the cost of partnership formation between the two economies. For example,
Google partnership with the South Korea's LG Electronics and with Taiwan's HTC to minimize
the cost of partnership and also it maximized the strengths of teams all over the world. It also
helped the countries in tax reduction because countries can invest in the countries which are
having less tax and can take advantage of “Tax Heavens”. The companies have the new markets
to access their products and earn higher profits. It helps in entering new markets and also
because of digitalisation and online businesses companies can deliver their products in any
country. Companies can do their business in the countries who are having cheap labours. The
country having cheap labours will reduce the product cost and also company can sell in the
countries who are giving sale price for the products.
De Brentani and Kleinschmidt, (2015) says that because of Globalisation many domestic
businesses have been shut down as they can't compete with the multi-national corporations. For
example in India many retail shops were shut down due to the entrance of the online companies
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such as Amazon, Walmart etc. Many companies uses other countries as dumping yard of their
cheap products. Many companies never invest back into the same host countries in which they
are doing their business rather they invest back in their base countries. This increases the value
of the currency of base countries and decreases the value of currency of host countries. MNC's
also uses transfer prices and tax avoidance to reduce the profits on which they have to pay less
tax to the Government in the host countries. Many companies are claimed that they have
imposed their culture in the host countries.
Theme 3: Challenges faced by Globalisation
According to Kobrin, (2017), Globalisation was not implemented by many countries
because of which all the counties were benefited by the Globalisation. The big challenge for
implementing Globalisation for many countries was that they would be losing their cultural
identity due to entrance of foreigners in their country. It has also seen that the companies causes
damage to environment, decreases the food safety and weakens the traditional cultural values of
the countries. It also leads to the unethical labour practices by many countries. New online
business and innovative technologies lead to the disruption in many traditional businesses. Many
countries levy high taxes such high tariff barriers in order to go in trade war with the
underdeveloped countries. For example Trump increased the tariff duty on steel products
because of which steel price of many companies increased. This was done to save the domestic
steel companies in US.
Young and Ghoshal, (2016) claims that building the public relations in the new country is
a big challenge for many companies. Also, it is difficult to attract the new customers in the new
geographic region because all countries are having different culture and people in that areas are
also having different tastes and preferences. It is a big challenge for every company that before
entering into country they should learn about the country's culture and prepare themselves
accordingly. Company should also know about the different lifestyles of the people living in that
area. They should also take care of the religions followed by the people in that country because
every country is having their own religion which they follow and it changes from one country to
another. Every country has their own set of rules and regulations and legal authorities to run the
businesses. Companies should fulfil all the legal framework related to that country is also one big
challenge for any company.

RESEARCH METHODOLOGY
Research methods
It is an effective approach which helps in determining various effective results in order to
achieve goals and objectives of the company in an efficient and accurate manner. Research
method is classified into qualitative and quantitative methods (Kumar, 2019). Quantitative
method is based on statistical and mathematical information which helps in numerical analysis of
the data collected through questionnaire, polls, surveys, etc. Qualitative method is based non-
numerical data and focuses o in- depth analysis on the specific matter. This method focuses on
obtaining information from open ended and closed ended communication, theory, case study,
group discussion, etc.
The researcher of this study will opt for qualitative research method which helps in
gaining in- depth understanding on the concept of globalization.
Research Philosophy
It is a concept in which the data for research has been collected, analyzed and interpreted for the
better understanding of researcher in completing its research project successfully. It is of two
types viz. Positivism philosophy which deals with theoretical and philosophical explanation of
research subject matter and other is Interpretivism one which focuses on interpreting the element
of research study (Mackey and Gass, 2015). Researcher has been using Positivism research
philosophy for completing it as it provides factual knowledge along with detailed observation.
This research philosophy usually relies on the scientific evidences for the better completion of
research project like experiments and statistics.
Research Approach
It defines the plan, process or procedure which comprises assumptions related to the method of
collecting, analyzing and interpretation of data and information for the research project. Research
approach can be either Deductive or Inductive. Deductive approach is based on generalized and
basic principles which are true and specific having correct conclusion. While Inductive one is
related with specific and particular instances and uses research questions to narrow down the
scope of research study. The researcher in this research study has been using Deductive research
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approach as it begins with the formulation of hypothesis and its application for testing at the time
of conducting of research process.
Research Design
This research methodology approach helps in critically analysing the research problem
and design an appropriate solution in order to reach the specific solution to the problem.
Research design is further categorized into exploratory, descriptive, correlation and experimental
research design (Flick, 2015). Descriptive research design helps in giving in- depth analysis and
gain insight by collecting, gathering and analysing the data collected from various qualitative
methods (Research Design – Types of Research Design, 2019). Exploratory research design
helps researcher in giving effective thoughts and ideas by critically exploring the specific matter
of the research project and give detailed answer of the research questions.
The researcher of this study will opt for descriptive research design. It helps in
identifying the impact of globalization over corporate structure of multinational organization and
major challenges faced by them. It can be done through case study, observation, experimentation
and surveys.
Data Collection
Data collection is effective method which helps in gathering, collecting, evaluating,
measuring and determining the accurate results in order to attain the desired aims and objectives
of the research methodology. This can be further categorized into primary and secondary source
of data collection. Primary data collection is a method which collects data for the first time to
gain new insights on the particular study (Silverman, 2016). This source of data can be collected
through interviews, surveys, questionnaire, observation, experiments, case study, etc. Secondary
data collection is the information which has already been collected by someone earlier. This
source of data can be collected through newspaper, magazine, articles, blogs, books, journals,
records, censuses, government information, manuals, etc.
The researcher of this study will opt for both primary and secondary data in order to
determine the major challenges faced by H&M while global expansion and future
recommendations thereto.
Sampling

Sampling is important research methodology which helps in determining the sample size
from the large population. This can be further categorized into probability sampling which
includes random sampling, stratified sampling, cluster sampling, multistage sampling and non-
probability sampling which includes purposive sampling and snowball sampling (Fletcher,
2017). Random sampling is the part of probabilistic technique in which each individual from
population gets equal chance to being selected as sample.
The researcher of this study will opt for random sampling where the researcher has
selected 20 senior managers of the H&M who will focus on determining the influence of
globalization over corporate structure of H&M.
Data Analysis
In order to assess globalization challenges and its influence on corporate structure of
H&M thematic perception test technique has been used. The reason behind this, such technique
helps in analyzing qualitative aspects effectually (Mackey and Gass, 2015). In accordance with
this, different themes will be prepared using questionnaire and gathered responses evaluated
using brief thesis prepared in literature review section.
Research limitations
Due to the limited time frame survey was conducted on only 20 managers of H&M. On
the other side, researcher is able to present better view of issue when survey conducted on large
sample. Hence, to avoid such limitation simple random sampling has been used which avoids the
level of biasses (Kumar, 2019). In addition to this, due to the availability of limited resources
thematic technique has been used over SPSS. In the case of qualitative issues thematic technique
present better view in against to SPSS.
Ethical considerations
For enhancing the effectiveness of research scholar needs to comply with ethical aspects
significantly. In this regard, consent forms will be sent to the selected responses which turn
reflects their voluntary participation. In addition to this, reference list will also be included which
in turn presents that work is reliable and new rather than copied.
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DATA ANALYSIS
(questionnaire provided in Appendix)
Theme 1 : Yes, doing business at global level has benefited H&M
Particulars Respondents
Yes 14
No 6
Interpretation :
From the survey conducted on the 20 senior managers of H&M, it was found out that
large number people agreed with the concept that doing business at global level has benefited the
clothing company significantly. This is because company has facilitated with enormous business
opportunities in the form new markets, large number of customers, higher sales volume etc.
While 6 of the respondents said that company has not been benefited by going global. They said
that instead of reaping benefits, it has created various severe challenges for the company.
Theme 2 : Benefits of conducting business globally
Particulars Respondents
Yes No
0
2
4
6
8
10
12
14
Respondents

Financial Benefits 8
Access to new market 5
Increase the Goodwill 4
Exposure to Foreign Investment
Opportunities
3
Interpretation :
From the above table and graph, which is a tabular and pictorial representation of the
survey conducted on 20 senior managers of H&M, it can be observed that majority of the
participants were of the view that company has been benefited by its global business in the form
of greater financial results. They said because of the global business environment, the company
got newer markets of the emerging economies through which it had the opportunity of serving
the needs of large number of customers. This increased their sales at the global which eventually
reflected in company's higher financial results. The same is also supported by the information
collected from secondary sources.
11
Financial Benefits
Access to new market
Increase the Goodwill
Exposure to Foreign Investment Opportunities
0
1
2
3
4
5
6
7
8
Column B

While 5 senior managers were of the opinion that company got an access to new markets.
Further, 4 participants said that going global has resulted into enhanced goodwill for the
company. The brand is now recognized as a global brand which in turn has created a level of
trust and belief in the clothing brand. The immediate impact of increased goodwill is showing in
the increased number of loyal customer base of the H&M. Whereas 3 believed that due to
globalization, the clothing brand is experiencing higher exposure to foreign investment
opportunities.
Theme 3: Yes, H&M faced challenges while going for global business
Particulars Respondents
Yes 12
No 8
Interpretation :
Yes No
0
2
4
6
8
10
12
Respondents

The above table and graph reflects the findings of the data collected by the way of survey
conducted on 20 senior managers of H&M, it was observed that H&M is facing various severe
challenges that are adversely impacting its operations. 12 senior managers confessed that
company is facing difficulty in confronting the challenges imposed by the global business
environment. While 8 respondents were of the opinion that going international has not impacted
the business of H&M in a crucial way. They said that company is operating at global level in a
very smooth and efficient way.
Theme 4 : Major challenges faced by H&M in international business environment
Particulars Respondents
Technological 7
Cultural 4
Fashion 6
Legal 3
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Interpretation :
From the survey conducted on 20 senior managers of H&M, it can be seen that company
is facing serious challenges in the global business environment. 4 senior managers said that
company is facing cultural differences while operating at global level. As also supported by
secondary sources, there are cultural barriers which needs to be taken into consideration for
coping up with the global business dynamics. Further, 7 people said that rapid changes in the
technology is seriously hampering the operations and profitability. This is because the
technology become obsolete at a rapid and matching this pace of technological evaluation is a
serious challenge. The company have to make arrangement for the resources for employing the
latest technologies in the operations which is a costly affair for H&M.
6 senior managers were of the view that rapid changes in the fashion trends at global
level is negatively impacting the business of company. It has continuously changes and modify
its product ranges for meeting the demands of global customers. Whereas, 3 managers told that
there are numerous legal restrictions from the government of emerging countries which are
posing a problem for the company.
Technological Cultural Fashion Legal
0
1
2
3
4
5
6
7
Respondents

Theme 5: Yes, Technological changes has affected the H&M's global business
Particulars Respondents
Yes 15
No 5
Interpretation :
It can be observed from the above survey which was conducted on 20 senior managers of
H&M that majority of the respondents believed that technological changes significantly affected
the business of H&M at the global level. Advancement in the technology has made it possible for
the organizations to grab the opportunities in the new markets. Digital technology is playing a
crucial role in expanding the business of H&M. Digital marketing has helped the company in
connecting with large number of customers throughout the world which has helped it in
15
Yes No
0
2
4
6
8
10
12
14
16
Respondents

increasing the number of potential customers. However, 5 senior managers said that
technological changes has not affected the business of the clothing brand.
Theme 6: Yes, H&M noticed changes after going global
Particulars Respondents
Yes 13
No 7
Interpretation :
From the above survey which was conducted on 20 senior managers of H&M, it was
observed that 13 people were of the opinion that company is experiencing several changes after
it went global. While 7 participants said that organisation has not noticed any major changes in
its operations post its expansion in international markets.
Theme 7 : Major change noticed by H&M after operating at global level
Particulars Respondents
Change in work culture 8
Yes No
0
2
4
6
8
10
12
14

Change in Fashion 7
Change in Management 5
Interpretation :
It can be observed from the above survey conducted on 20 senior managers of the fashion
brand H&M that company has noticed major changes in its operations and business. 8 of the
senior managers believed that post expansion, the company has experienced change in its
working culture. Company now has to operate at large scale and accordingly all of its activities
are undertaken. 7 respondents said the different international markets have different fashion
trends according to which the company has to create its products for meeting the demand of
different customer base around the world. 5 people said the company's management has been
changed drastically after the company went global.
Theme 8: Yes, domestic business has been affected due to H&M's global business
Particulars Respondents
Yes 11
17
Change in work culture Change in Fashion Change in Management
0
1
2
3
4
5
6
7
8
Respondents

No 9
Interpretation :
From the above survey which was conducted on 20 senior managers of H&M, 11 of them
responded that domestic business of the company had been affected by the organization's global
business. Expansion of the business results into diversification of business risk. While 9 of the
participants were of view that domestic business has not been affected by company's expansion
in international markets.
REFLECTION
From the above research report, I came to realize that I really enjoyed the process of
undertaking a research study. There were times when I faced some issues such as providing a
structure to the research study. After the completing the project, I learned that elements of the
research study should be divided into smaller goals so that they can be accomplished with much
more efficiency. In the research report, qualitative research methods were used by me. If I was
provided with more resources in terms of time and money, I would have conducted a quantitative
Yes No
0
2
4
6
8
10
12
Respondents

research which would have provided research findings in numerical terms which are easier to
understand for the readers of the research study.
RECOMMENDATIONS
It is recommended to the management of H&M that it is necessary for the company to
overcome the challenges it is facing in the global business environment for surviving long in the
international markets. The company can overcome the challenges in the following ways :
 The company must adhere to all the legal compliances while conducting on global level
for avoiding any kind of legal interruptions in the operations. Further, the company can
conduct more of its business in the countries where the host country have free trade
agreements to avoid large number of legal considerations.
 H&M needs to make provisions for adapting to the technological changes for conducting
the business in the most effective manner. As technology is evolving at a rapid pace, the
company which makes financial provisions for replacing the technology finds its easier to
adapt to the international business dynamics.
 Thorough research about the international markets could help the company in coping up
with the cultural differences which the company is facing due to the international
business environment.
CONCLUSION
From the above research project, it can be summarized that globalization is the concept
which is related to integration of world's economies. The concept has provided enormous
business opportunities to the business organizations around the world. The report concluded
about the impact of global business environment on the corporate structure of H&M. It was
observed that company has been benefited with greater financial results and access new markets
due to globalization. However, the phenomenon has posed major challenges for the company in
the form of numerous legal considerations, technological changes, cultural differences. For
conducting the primary research, qualitative research methods were applied for assessing the
first-hand information regarding the impact of globalization on the corporate structure.
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REFERENCES
Books and Journals
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Boussebaa, M., 2015. Professional service firms, globalisation and the new
imperialism. Accounting, Auditing & Accountability Journal. 28(8).pp.1217-1233.
Bretos, I. and Marcuello, C., 2017. Revisiting globalization challenges and opportunities in the
development of cooperatives. Annals of Public and Cooperative Economics.88(1).pp.47-
73.
De Brentani, U. and Kleinschmidt, E.J., 2015. The impact of company resources and capabilities
on global new product program performance. Project Management Journal.46(1).pp.12-
29.
Fletcher, A.J., 2017. Applying critical realism in qualitative research: methodology meets
method. International Journal of Social Research Methodology.20(2). pp.181-194.
Flick, U., 2015. Introducing research methodology: A beginner's guide to doing a research
project. Sage.
Kaufman, B.E., 2016. Globalization and convergence–divergence of HRM across nations: New
measures, explanatory theory, and non-standard predictions from bringing in
economics. Human Resource Management Review. 26(4).pp.338-351.
Kobrin, S.J., 2017. Bricks and mortar in a borderless world: Globalization, the backlash, and the
multinational enterprise. Global Strategy Journal.7(2).pp.159-171.
Kumar, R., 2019. Research methodology: A step-by-step guide for beginners. Sage Publications
Limited.
Liang, H., Ren, B. and Sun, S.L., 2015. An anatomy of state control in the globalization of state-
owned enterprises. Journal of International Business Studies. 46(2). pp.223-240.
Mackey, A. and Gass, S.M., 2015. Second language research: Methodology and design.
Routledge.
Silverman, D. ed., 2016. Qualitative research. Sage.

Young, C. and Ghoshal, S., 2016. Organization theory and the multinational corporation.
Springer.
Online
Research Design – Types of Research Design. 2019. [ONLINE]. Available
through:<https://scholarshipfellow.com/research-design-types-research-design/>
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