IMPACT AND STRATEGIC DIRECTION
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Impact and Strategic Direction
The business world is changing exceedingly fast. Globalization has set in, and the world is no longer the same in terms of structure, culture, operations, and business functions. Many individuals are currently aware of the terms “international business” or “global trade” operated either as an individual business entity or as a conglomerate. Conversely, in the past two decades, businesses could only satisfactorily aim and focus on their expansion up to the national level, which they viewed as the climax of achievement. However, the narrative is changing owing to multiple factors that are catapulting the business world into new elevated plateaus of exploration. International business is described as undertaking business transactions between parties originating from more than one country (Daniels et al., 2016). For instance, the acquisition of finished goods from one country to another through shipping for retailing purposes is an international business operation.
Subsequently, as the expansion of business magnitudes becomes inevitable, so is the structure, culture, and subsequent functions. Besides, the management of any business organization’s cultural and structural approaches is the sole determinant of the performance experienced and realized by that organization in terms of growth and development. Therefore, effective and efficient management decision-making and strategy should be considered when evaluating globalization’s impact on an organization. For instance, global managers have been faced with the need to diversify and, therefore, need to equip themselves adequately with the required knowledge and skills to align with the international needs to compete favorably and productively. Fundamentally, International managers refer to individuals who are tasked with overseeing a company’s global operations.
Thus through analysis of Choi Fung Hong Company, successful personal care products in Hong Kong, we shall extensively and intensively delineate how globalization has affected cultural, structural, and functional sections of businesses.
Structure, Culture, and Governance
The McKinsey 7s Model is a practical postulation framework that affirms that an organization’s success depends on the seven essential internal factors (Singh, 2013 p39). Therefore, these factors need to be aligned and reinforced together to achieve the intended objectives. In its functions, the model is mandated in assessing the well-being of various factors in an organization categorized as hard and soft factors to determine the possibility of success. Besides, the hard elements influence the management while the soft elements are motivated and directed by the corporate culture. The elements that are cut and directed by the management include strategy, structure, and systems. In this case, a strategy can be described as the master plan implemented by an organization to remain competitive in its market and industry while envisioning a long term growth and development. However, the strategy must be in sync with the rest of the model element and aligned with its goals and objectives. For instance, Choi Fung Hong Company’s plan to extend to European countries is a strategic plan to fight intense local competition from related companies that have similar products. Further, due to globalization, this movement across countries, which is considerably beneficial, has been made possible. According to McKinsey 7s Model, Choi Fung Hong Company will be aligning itself with other elements during its expansion to Europe because there are structural alterations, change in systems, and inclusion of new skills, shared values, and staff.
On the other hand, as highlighted in the model, an organization’s structure consists of its corporate hierarchy, the chain of command, and divisional descriptions of the company’s functionality. Fundamentally, it details the management configuration and workers’ responsibility. In the era of globalization, business management has tremendously changed due to the expansion of business, inclusivity of employees, adaptation to new environments, and legal and political requirements of the host countries. Thus, in its expansion to other parts of the world like Europe, Choi Fung Hong Company’s structure will be significantly affected. There is the emergence of new management posts, employees from different cultural backgrounds, and subdivision of labor. As a result, the top management is pressured to deploy national and regional managers to the host countries for effective leadership.
Most importantly, most businesses have disregarded global managers’ roles and instead adopted national or regional managers who are frequently present to oversee the company’s operations. While there might be a global manager at the Hong Kong headquarters, national, regional, and departmental managers will be deployed in Europe, America, mainland China and any other country that the company will expand to. For this reason, we can importantly note that globalization has deeply affected the chain of command and, ultimately, the flow of information within an organization. Indeed, having a long chain of command is slow and affects timely decision making due to the involved processes.
Similarly, globalization evidentially has had far-reaching effects on managers’ governance and qualities needed to take over in the contemporary business world. Unlike traditional managers, modern-day leaders need to possess special skills, including human resource management, participatory transformative leadership, and sensitivity to cultural diversity. They should be equipped with the skills and knowledge needed to tackle emerging issues. Still, it is necessary to possess values that guide and direct them during their maneuver in business operations (Cohen & Munoz, 2016). They should be able to determine the skills in their employees, tap them adequately, decide the leadership style, and know when and how to integrate cross-cultural members while cultivating and fostering shared values outlined by McKinsey’s 7s model.
Human Resource Management
Employees are the most valuable part of an organization. Human resource managers are charged with attracting, developing, and maintaining an efficient workforce through employee recruitment and training. They also provide compensation and benefits. Since globalization has allowed free movement of goods in and out of different countries, managers should be well-versed with the different cultures, legal systems, and economic levels that affect how employees operate in those countries indefinitely. International human resource managers must comply with the laid down laws and policies in the host country regarding hiring, training, and firing workers. These variations are palpable and differ from country-by-country. Laws supporting equality of both women and men in the job market and acquiring comparable salaries in most countries, for example, contravene greatly with the laws that outline women’s role and responsibilities in Saudi Arabia.
In this regard, in anticipation of expanding to different countries, the human resource in Choi Fung Hong Company is required to conduct adequate prior researches that place the company at a competitive advantage and complicit with the law of the host country. Additionally, the decision about where the employees should be extracted can be affected by the existing laws. Some countries require a more significant percentage of the workers to be acquired from the host country. Such laws that limit or constrain the hiring or training processes of employees should be noted with seriousness. Besides, the training process of international businesses is somewhat an upward task. Leaders to be sent on overseas management posts must, for instance, Europe, acquire competitive training encompassing multicultural studies and knowledge, which may include even language. This entails researching the intended host countries to understand the potential employees’ cultural background, including their language, values, beliefs, and economic level that mostly translates to their well-being levels and availability.
Thus, it is upon the human resource managers to commit a substantial amount of time to attract productive employees as the firm’s manager must design a human resource strategy that is in sync with the public company’s business strategy.
Participatory Transformative Leadership
Furthermore, the manager needs to be transformative (Shields, 2020). Globalization, coupled with transformative leadership, can translate into an excellent performance in an intensely competitive environment. Participatory leaders allow and encourage their employees to take part in decision making. Employees ‘contribution to a business’s decision-making act as motivation since they feel as part and parcel of the organization, and their input and contribution as impactful. Transformational leaders often don’t take credit for the decision-making input of their employees’ effort and input; instead, they share the responsibility for any changes realized. Many time than not, employees possess ideas which can be rewarding and business-changing if implemented. However, they are not allowed to put them across for application. For example, a manager at Choi Fung Hong Company, Hong Kong, making an independent decision about a marketing strategy on a new moisturizer brand will discourage and diminish the employees’ morale.
Therefore, transformational leadership can foster efficient and compelling strategic advantage if resources are allocated appropriately. Characterized by open communication and collaboration, transformative leadership, especially for international managers, can forge a close relationship with their staff members by creating a natural intellectual inspiration environment. Close-knit interrelationships among the employees and employers provide a conducive working condition hence improved productivity. Finally, the development of visions and goals that collaborate with the employees will be much more achievable since they can identify and resonate with them. Mostly, many international markets are unexplored, and businesses lack assurance when venturing for the first time. With that looming uncertainty, international managers should form productive alliances and collaborations with their employees to promote production.
Sensitivity to Cultural Diversity
Also, other to business culture, the manager must be sensitive to social, cultural, and religious diversities in any business environment. There is an exponentially high possibility that the business will have people from various cultural backgrounds as their employees during globalization. Different cultures and religions mean varied practices like food, leisure activities, worship practices, and other trivial but useful traditions that must be respected at all costs. For instance, it would be inappropriate to open a pork processing plant in a Middle East country whose majority of the population and potential workers are Muslims. This is because their religious beliefs do not allow them to interact with pig products. The manager must have an intense interest and desire to understand others’ lives and culture inspired by recognizing and understanding that one’s own culture and origin are not inherently superior to conquer and dominate the business arena.
According to Hofstede, there are six major dimensions of the national culture which are essential and influential at workplaces, namely the Hofstede’s Dimensions of Culture (Soares, Farhangmehr and Shoham, 2007 pp277-284). Among is the Power Distance Index (PDI), which refers to the distribution of power in an organization. For instance, in Hong Kong, Choi Fung Hong Company operated on a system whereby the staff is at the bottom of the ladder. There are supervisors, managers, directors, and executive leadership with each ascending step, each with more superior authority than the other. Employees who accept and recognize the organization’s vertical structure facilitate high PDI culture scores and seek approval from their superiors. However, this process is slow in decision making and has been reverted by globalization. With no stringent hierarchical division of power, international managers have been empowered to operate through direct interactions with their employees to forge productive relationships. Likewise, Hofstede’s theory on individualism vs. Collectivism presents views on the effects of independent work and teamwork on a business. While individualism is necessary for businesses that require specific talent and abilities, teamwork creates an interdependency and interrelationships that are eventually beneficial to the organizations. Due to diversification brought about by globalization, it is instrumental in practicing teamwork, which can unite people from all backgrounds. Finally, as men and women’s narrative intensifies, the Masculinity vs. Femininity culture theory under Hofstede has been described according to the roles and position assumed by either of them. While history has always placed women in support roles, the narrative is changing owing to globalization. For instance, women are assuming high-level leadership positions traditionally reserved for men and are proving to be even better managers.
Ethical and Sustainable Factors in Global Market
Business ethics is a term with a broader context of interpretation than it is commonly thought. Most people translate it only to mean corruption and bribery. Nonetheless, unethical business transactions can result in various damage in the world, including impacts on human resources, social responsibility, and the environment. Further, the practice and implementation of sound ethical, moral, and socially responsible behavior profoundly impact management and corporate social responsibility (Ferrell and Fraedrich, 2015). In the global platform, the management is liable for integrating ethical practices in their operation.
Nevertheless, the global perception of ethical practices may vary from culture to culture. Depending on the host country, the people’s ethical approach and perception toward the employer-employee relationship may be biased because no distinct rules are guiding against discrimination and preference of people based on race, gender, age, sexual orientation, etc. Therefore, the company has to choose the most suitable practice that aligns with its mission and vision and principles in a country with no clear demarcations. For instance, if Choi Fung Hong Company were to expand its operations to Afghanistan or Saudi Arabia, it would be inappropriate to make a woman the head of the operations since their local culture has already classified women as domestic helpers. While some businesses depend on the conformation with the local culture for success, globalization has pressured international businesses to adopt a more independent decision-making approach. This ensures sustainability since cultural influence can make life difficult for the company resulting even in closure. Ostensibly, consumers are now not making decisions based on the usability and desirability of the goods but environmental and ethical considerations. For instance, the tobacco industry has been deeply embodied in a long term ethical debate and criticism due to its long term health effects. Also, companies should practice corporate social responsibility (CSR) for sustainable, responsible businesses.
Routes of Internationalization
Indeed, as Choi Fung Hong Company aims at achieving a global status, it can do so through internationalization, diversification, integration, cooperation, or even concentration as strategic expansion routes. There are arrays of spectacular benefits that result from internationalization. Under diversification, the company can develop a new product other than the personal care products or venture into a new market. Also, expansion can be achieved by combining one or more current operations without affecting the target customer groups. Finally, the company can enter into a mutual agreement with the competitor so that they share similar operations but compete simultaneously, known as cooperation. Ostensibly, the company will enjoy entry to new markets, which exponentially increases the chances of building a new customer base or expanding the existing ones. Likewise, there is direct tapping of local talents and skills required for specialization hence improved productivity. Additionally, it boosts business growth and reduces competition. Business expansion is a chance to get out of a concentrated market and staying ahead of the competition. However, it is not merry all the way. There is a compliance risk that comes with entering new markets. The company must abide and operate according to the host country’s regulations, which may vary vastly with the home rules. Moreover, cooperation may bring about unprecedented competition forcing the business to be sidelined hence losing its relevance. Further, barriers like cultural barriers can be limiting and challenging in new environments. Language has always been one of the most experienced cultural barriers during globalization. Therefore, the organization needs to be adequately prepared to handle these drawbacks successfully.
References
Daniels, J.D., Radebaugh, L.H., and Sullivan, D.P., 2014. International business. Prentice-Hall.
Ferrell, O.C., and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.
Shields, C.M., 2020. Transformative leadership. In Oxford Research Encyclopedia of Education.
Soares, A.M., Farhangmehr, M. and Shoham, A., 2007. Hofstede’s dimensions of culture in international marketing studies. Journal of business research, 60(3), pp.277-284.
Singh, A., 2013. A study of the role of McKinsey’s 7S framework in achieving organizational excellence. Organization Development Journal, 31(3), p.39.