UNIT 1

GLOBAL PERSPECTIVES AND

MULTICULTURISM
1.1 Nature of Globalization and its
effects.

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1.0 NATURE OF GLOBALISATION AND ITS
EFFECTS

Globalization refers to the aspects of

integration of world into one huge market.

This calls for removal of all trade barriers

among the countries.

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At the company level, globalization means :-

(a)Company commits itself heavily with

several manufacturing locations around the
world and offers products in several
diversified industries.

(b)It also means ability to compete in domestic

markets with foreign competitors.

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Global company has three characteristics :

(i)Its conglomerate of multiple units and

located in different parts of the globe but are
all linked by common ownership.

(ii)Multiple units draw on a common pool of

resources such as money, credit, information,
patents, tradename and control systems.

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iii)Units respond to some common strategy.

. However, much governments desire to

retain economic identities, the powerful trend
to integrate national economies in sweeping
across the globe and countries are falling in
line and embracing rapid globalization

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Evidence of globalization can be seen in the
increased levels of trade, investment, close
and mobility of people across the globe.

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 DRIVERS OF GLOBALIZATION

Companies seek to take advantage by

extending their operations into foreign
markets in a number of ways.

1.Rapidly developing economies have huge

markets. Emerging markets offer immense
opportunities to increase their sales and
profits.

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2.Many Multinational Companies are locating
their subsidiaries in low wage and low cost
countries to reduce their cost of production.

3.Changing demographics also add to

increasing globalization.

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India’s young people can be an asset to global
economy because while India’s population will
be getting younger in the coming decade, the
population of most developed countries will be
getting older.

The richer countries will face shortage of

employable people.

The technology and professional people also

affects globalization.
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4.Regional trade blocks are adding to the pace
of globalization. WTO, EU(European union)
NAFTA etc. are a few.

5.Declining trade and investment barriers have

vastly contributed to globalization.

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6.The most powerful instrument that triggered
mobilization is technology.

BCG has identified currents of globalization-

•The growth of rapidly growing developing

economies (RDEs).

•The continuing cost and capital advantages of

RDEs.

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•The development of talent and capabilities in
RDEs.

•The migration of customers to RDEs.

•The emergence of RDEs based global

competitors.

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EFFECTS OF GLOBALIZATION

• Globalization and management

The older personnel management approach

has given way to the HRM approach.
Autocratic style is being swiftly replaced by
flat organizational structure given by
competency.

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High decentralized decision making and
problem solving.

The individual in a position of power driving

policies and procedures have swiftly evolved
into team based collaborative management
method.

The new generation of leadership skills, styles

and methods have evolved.

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The straight jacketed approach to define good
and bad leadership styles has been replaced
with multiple theories supporting a variety of
leadership styles.

Leaders are hired to achieve a very specific

objective of the company.

A new work methods and newer ways of

managing people and processes are maturely
evolving.
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•Globalization and jobs

Whether globalization has resulted in loss of

jobs or created additional jobs is
controversial.

In Indian experience, it has reduced after

globalization in 1991-92 till 1996-97 but in recent
years, this is showing increase. In U.S. and some
other countries, number of jobs has increased in
the last five years.
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Free trade is expected to result in countries
specializing in production of those goods and
services that they can produce most efficiently
while importing goods that they cannot
produce as efficiently.

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The nature of jobs also has changed due to
globalization.

In many places, it has created an enabling

environment for cutting down regular salaried jobs
through CRS, Contractual Employment,
Subcontracting and outsourcing.

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•Globalization and wages

Globalization has resulted in a shifting of jobs

to developing countries but the shift is
accompanied by disparities in wages.

For a work that cost US $ 100 an hour in U.S.

and in India is paid about 1/5th of that. The
wage differentiation is an outcome of the
availability of skilled labour and the general
economic conditions prevailing in the country.
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The valuation of the country currency is also
another key factor impacting pricing of
competitive resources.

Low labour costs constitute a competitive

advantage for the poor country, attract
investment and provide jobs that can lead to
greater development.

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Globalization and child labour

Globalization results in creation of job

opportunities and enhances earnings in
developing countries becauase of of inflows
of foreign investment or increase in the value
of a developing country’s export products.
This is likely to accelerate the reduction of
child labour and enhanced school enrolment
and literacy.

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The integration of world economies will enable
rich countries influence poor countries in their
policies towards child labor.

Development has a deleterious effect on child

labour. The world bodies particularly the IMF
and the World Bank mandate structural
adjustments in economies before sanction
ing aid to the developing countries.

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•Globalization and women

The globalization has a mixed impact on

women. A few positive dimensions of
globalization :

1.Globalization has enhanced employment

opportunities for women.

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2.The migration of women in search of
employment has also helped ease the burden
of poverty in many cases and meet the labour
needs of a number of countries.

3.Globalization has contributed to creation of

associations of women and the strengthening
of their networks to offer mutual support and
resources.
4.Advanced information and communication,
technology have improved the access of
women to health, micro -credit ,employment
and information in general.
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The negative dimensions are :-

1.Free trade, a cause and consequence of f

globalization, hurts women. More job
opportunities available to them ,but a fair
number of female employees work in sub-
standard working conditions and
unconventional work hours with serious
implications on their social and physical
health. The crime against women is also on
rise.

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2. The most critical impact of globalization
of women is the worsening situation of
violence against women. Work place
harassment is on rise. Migration of
workers are increasingly becoming
victims of sexual violence.

Companies are increasing comoditizing

feminity using the print media in
advertisements and movies.

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•Sex tourism and sex trafficking are on rise.

•Women are among the first to feel the

negative impact of the presence of Multi
National Corporations.

MNCs dismantle local economies and ‘mine’

natural resources needed by local and
regional communities.
The consequences is their break up,
displacement and migration which removes
emigrant women from a safety of familiar and
community support structures.
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