Globalization and Its Meaning

8/2/2019 Globalization and Its Meaning

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Globalization and its Meaning

Broadly speaking, the term globalization means integration of economies and societies

through cross country flows of information, ideas, technologies, goods, services, capital, finance

and people. Cross border integration can have several dimensions cultural, social, political and

economic. In fact, some people fear cultural and social integration even more than economic

integration. The fear of cultural hegemony haunts many. Limiting ourselves to economic

integration, one can see this happen through the three channels of (a) trade in goods and services,

(b) movement of capital and (c) flow of finance. Besides, there is also the channel through

movement of people.

Historical Development

Globalization has been a historical process with ebbs and flows. During the Pre-World

War I period of 1870 to 1914, there was rapid integration of the economies in terms of trade flows,

movement of capital and migration of people. The growth of globalization was mainly led by the

technological forces in the fields of transport and communication. There were less barriers to flow

of trade and people across the geographical boundaries. Indeed there were no passports and visa

requirements and very few non-tariff barriers and restrictions on fund flows. The pace of globalization, however, decelerated between the First and the Second World War. The inter-war

period witnessed the erection of various barriers to restrict free movement of goods and services.

Most economies thought that they could thrive better under high protective walls. After World

War II, all the leading countries resolved not to repeat the mistakes they had committed previously

by opting for isolation. Although after 1945, there was a drive to increased integration, it took a

long time to reach the Pre-World War I level. In terms of percentage of exports and imports to

total output, the US could reach the pre-World War level of 11 per cent only around 1970. Most of

the developing countries which gained Independence from the colonial rule in the immediate Post-

World War II period followed an import substitution industrialization regime. The Soviet bloc

countries were also shielded from the process of global economic integration. However, times

have changed. In the last two decades, the process of globalization has proceeded with greater

vigour. The former Soviet bloc countries are getting integrated with the global economy. More


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and more developing countries are turning towards outward oriented policy of growth. Yet,

studies point out that trade and capital markets are no more globalized today than they were at the

end of the 19 th century. Nevertheless, there are more concerns about globalization now than before

because of the nature and speed of transformation. What is striking in the current episode is not

only the rapid pace but also the enormous impact of new information technologies on market

integration, efficiency and industrial organization. Globalization of financial markets has far

outpaced the integration of product markets.

Gains from Globalization

The gains from globalization can be analyzed in the context of the three types of channels

of economic globalization identified earlier.

Trade in Goods and Services

According to the standard theory, international trade leads to allocation of resources that is

consistent with comparative advantage. This results in specialization which enhances productivity.

It is accepted that international trade, in general, is beneficial and that restrictive trade practices

impede growth. That is the reason why many of the emerging economies, which originally

depended on a growth model of import substitution, have moved over to a policy of outward

orientation. However, in relation to trade in goods and services, there is one major concern.

Emerging economies will reap the benefits of international trade only if they reach the full

potential of their resource availability. This will probably require time. That is why international

trade agreements make exceptions by allowing longer time to developing economies in terms of

reduction in tariff and non-tariff barriers. Special and differentiated treatment, as it is very often

called has become an accepted principle.

Movement of Capital

Capital flows across countries have played an important role in enhancing the production

base. This was very much true in 19 th and 20 th centuries. Capital mobility enables the total savings


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of the world to be distributed among countries which have the highest investment potential. Under

these circumstances, one countrys growth is not constrained by its own domestic savings. The

inflow of foreign capital has played a significant role in the development in the recent period of the

East Asian countries. The current account deficit of some of these countries had exceeded 5 per

cent of the GDP in most of the period when growth was rapid. Capital flows can take either the

form of foreign direct investment or portfolio investment. For developing countries the preferred

alternative is foreign direct investment. Portfolio investment does not directly lead to expansion of

productive capacity. It may do so, however, at one step removed. Portfolio investment can be

volatile particularly in times of loss of confidence. That is why countries want to put restrictions

on portfolio investment. However, in an open system such restrictions cannot work easily.

Financial Flows

The rapid development of the capital market has been one of the important features of the

current process of globalization. While the growth in capital and foreign exchange markets have

facilitated the transfer of resources across borders, the gross turnover in foreign exchange markets

has been extremely large. It is estimated that the gross turnover is around $ 1.5 trillion per day

worldwide (Frankel, 2000). This is of the order of hundred times greater than the volume of trade

in goods and services. Currency trade has become an end in itself. The expansion in foreign

exchange markets and capital markets is a necessary pre-requisite for international transfer of

capital. However, the volatility in the foreign exchange market and the ease with which funds can

be withdrawn from countries have created often times panic situations. The most recent example

of this was the East Asian crisis. Contagion of financial crises is a worrying phenomenon. When

one country faces a crisis, it affects others. It is not as if financial crises are solely caused by

foreign exchange traders. What the financial markets tend to do is to exaggerate weaknesses.

Herd instinct is not uncommon in financial markets. When an economy becomes more open to

capital and financial flows, there is even greater compulsion to ensure that factors relating to

macro-economic stability are not ignored. This is a lesson all developing countries have to learn

from East Asian crisis. As one commentator aptly said The trigger was sentiment, but

vulnerability was due to fundamentals.


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Concerns and Fears

On the impact of globalization, there are two major concerns. These may be described as

even fears. Under each major concern there are many related anxieties. The first major concern is

that globalization leads to a more iniquitous distribution of income among countries and within

countries. The second fear is that globalization leads to loss of national sovereignty and that

countries are finding it increasingly difficult to follow independent domestic policies. These two

issues have to be addressed both theoretically and empirically.

The argument that globalization leads to inequality is based on the premise that since

globalization emphasizes efficiency, gains will accrue to countries which are favourably endowed

with natural and human resources. Advanced countries have had a head start over the other countries by at least three centuries. The technological base of these countries is not only wide but

highly sophisticated. While trade benefits all countries, greater gains accrue to the industrially

advanced countries. This is the reason why even in the present trade agreements, a case has been

built up for special and differential treatment in relation to developing countries. By and large, this

treatment provides for longer transition periods in relation to adjustment. However, there are two

changes with respect to international trade which may work to the advantage of the developing

countries. First, for a variety of reasons, the industrially advanced countries are vacating certain

areas of production. These can be filled in by developing countries. A good example of this is

what the East Asian countries did in the 1970s and 1980s. Second, international trade is no longer

determined by the distribution of natural resources. With the advent of information technology,

the role of human resources has emerged as more important. Specialized human skills will become

the determining factor in the coming decades. Productive activities are becoming knowledge

intensive rather than resource intensive. While there is a divide between developing and the

advanced countries even in this area some people call it the digital divide - it is a gap which can

be bridged. A globalized economy with increased specialization can lead to improved productivity

and faster growth. What will be required is a balancing mechanism to ensure that the handicaps of

the developing countries are overcome.


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Apart from the possible iniquitous distribution of income among countries, it has also been

argued that globalization leads to widening income gaps within the countries as well. This can

happen both in the developed and developing economies. The argument is the same as was

advanced in relation to iniquitous distribution among countries. Globalization may benefit even

within a country those who have the skills and the technology. The higher growth rate achieved by

an economy can be at the expense of declining incomes of people who may be rendered redundant.

In this context, it has to be noted that while globalization may accelerate the process of technology

substitution in developing economies, these countries even without globalization will face the

problem associated with moving from lower to higher technology. If the growth rate of the

economy accelerates sufficiently, then part of the resources can be diverted by the state to

modernize and re-equip people who may be affected by the process of technology up gradation.

The second concern relates to the loss of autonomy in the pursuit of economic policies. In

a highly integrated world economy, it is true that one country cannot pursue policies which are not

in consonance with the worldwide trends. Capital and technology are fluid and they will move

where the benefits are greater. As the nations come together whether it be in the political, social or

economic arena, some sacrifice of sovereignty is inevitable. The constraints of a globalised

economic system on the pursuit of domestic policies have to be recognised. However, it need not

result in the abdication of domestic objectives.

Another fear associated with globalization is insecurity and volatility. When countries are

inter-related strongly, a small spark can start a large conflagration. Panic and fear spread fast. The

downside to globalization essentially emphasizes the need to create countervailing forces in the

form of institutions and policies at the international level. Global governance cannot be pushed to

the periphery, as integration gathers speed.

Empirical evidence on the impact of globalization on inequality is not very clear. The

share in aggregate world exports and in world output of the developing countries has been

increasing. In aggregate world exports, the share of developing countries increased from 20.6 per

cent in 1988-90 to 29.9 per cent in 2000. Similarly the share in aggregate world output of

developing countries has increased from 17.9 per cent in 1988-90 to 40.4 per cent in 2000. The


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growth rate of the developing countries both in terms of GDP and per capita GDP has been higher

than those of the industrial countries. These growth rates have been in fact higher in the 1990s

than in the 1980s. All these data do not indicate that the developing countries as a group have

suffered in the process of globalization. In fact, there have been substantial gains. But within

developing countries, Africa has not done well and some of the South Asian countries have done

better only in the 1990s. While the growth rate in per capita income of the developing countries in

the 1990s is nearly two times higher than that of industrialized countries, in absolute terms the gap

in per capita income has widened. As for income distribution within the countries, it is difficult to

judge whether globalization is the primary factor responsible for any deterioration in the

distribution of income. We have had considerable controversies in our country on what happened

to the poverty ratio in the second half of 1990s. Most analysts even for India would agree that the

poverty ratio has declined in the 1990s. Differences may exist as to what rate at which this hasfallen. Nevertheless, whether it is in India or any other country, it is very difficult to trace the

changes in the distribution of income within the countries directly to globalization.

Demands on the Trading System

Without being exhaustive, the demands of the developing countries on the multilateral

trading system should include (1) establishing symmetry as between the movement of capital and

natural persons, (2) delinking environmental standards and labour related considerations from trade

negotiations, (3) zero tariffs in industrialized countries on labour intensive exports of developing

countries, (4) adequate protection to genetic or biological material and traditional knowledge of

developing countries, (5) prohibition of

unilateral trade action and extra territorial application of national laws and regulations, and (6)

effective restraint on industrialized countries in initiating anti-dumping and countervailing action

against exports from developing countries.

The purpose of the new trading system must be to ensure free and fair trade among

countries. The emphasis so far has been on free rather than fair trade. It is in this context that

the rich industrially advanced countries have an obligation. They have often indulged in double

speak. While requiring developing countries to dismantle barriers and join the main stream of

international trade, they have been raising significant tariff and non-tariff barriers on trade from


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developing countries. Very often, this has been the consequence of heavy lobbying in the

advanced countries to protect labour. Although average tariffs in the United States, Canada,

European Union and Japan the so called Quad countries range from only 4.3 per cent in Japan

to 8.3 per cent in Canada, their tariff and trade barriers remain much higher on many products

exported by developing countries. Major agricultural food products such as meat, sugar and dairy

products attract tariff rates exceeding 100 per cent. Fruits and vegetables such as bananas are hit

with a 180 per cent tariff by the European Union, once they exceed quotas. The tariffs collected by

the US on $ 2 billion worth of imports from Bangladesh are higher than those imposed on imports

worth $ 30 billion from France. In fact, these trade barriers impose a serious burden on the

developing countries. It is important that if the rich countries want a trading system that is truly

fair, they should come forward to reduce the trade barriers and subsidies that prevent the products

of developing countries from reaching their markets. Otherwise the pleas of these countries for acompetitive system will sound hollow.

To some extent, conflicts among countries on trade matters are endemic. Until recently,

agriculture was a major bone of contention between U.S. and E.U. countries. Frictions are also

bound to arise among developing countries as well. When import tariffs on edible oil were

increased in India, the most severe protest came from Malaysia which was a major exporter of

Palm Oil. Entrepreneurs in India complain of cheaper imports from China. In the export of rice, a

major competitor of India is Thailand. If development is accepted as the major objective of trade as

the Doha declaration proclaimed, it should be possible to work out a trading arrangement that is

beneficial to all countries.

There have been protracted negotiations at WTO in reforming the trade system.

Admittedly, the tariff and non-tariff barriers are coming down. However, there are apprehensions

that the concerns of developing countries are not being addressed adequately. Looked at from this

angle, the recent Hong Kong Ministerial is a modest success. Despite reservations, we must

acknowledge that it is a step forward. Domestic support to agriculture by developed countries

constitutes a major stumbling block to third world trade expansion. However, Indias stand in

relation to agriculture has been `defensive. We are not a major player in the world agricultural

market. The impact of what has been accepted in relation to Non-Agricultural Market Access and


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services will vary from country to country. Despite some contrarian opinion, the gain to India

from services can be significant. However, the Hong Kong Ministerial is only a broad statement of

intentions. Much will depend upon how these ideas are translated into concrete actions.

Globalization, in a fundamental sense, is not a new phenomenon. Its roots extend farther and

deeper than the visible part of the plant. It is as old as history, starting with the great

migrations of people across the great landmasses. Only recent developments in computer and

communication technologies have accelerated the process of integration, with geographic

distances becoming less of a factor. Is this 'end of geography' a boon or a bane? Borders have

become porous and the sky is open. With modern technologies which do not recognize

geography, it is not possible to hold back ideas either in the political, economic or cultural

spheres. Each country must prepare itself to meet the new challenges so that it is not being

bypassed by this huge wave of technological and institutional changes.

Nothing is an unmixed blessing. Globalization in its present form though spurred by far

reaching technological changes is not a pure technological phenomenon. It has many

dimensions including ideological. To deal with this phenomenon, we must understand the

gains and losses, the benefits as well as dangers. To be forewarned, as the saying goes, is to be

forearmed. But we should not throw the baby with bath water. We should also resist the

temptation to blame globalization for all our failures. Most often, as the poet said, the fault is

in ourselves.

Risks of an open economy are well known. We must not, nevertheless, miss the opportunities

that the global system can offer. As an eminent critic put it, the world cannot marginalize

India. But India, if it chooses, can marginalize itself. We must guard ourselves against this

danger. More than many other developing countries, India is in a position to wrest significant

gains from globalization. However, we must voice our concerns and in cooperation with other

developing countries modify the international trading arrangements to take care of the special

needs of such countries. At the same time, we must identify and strengthen our comparativeadvantages. It is this two-fold approach which will enable us to meet the challenges of

globalization which may be the defining characteristic of the new millennium.

Advantages of Globalization


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o Goods and people are transported with more easiness and speed

o the possibility of war between the developed countries decreases

o free trade between countries increases

o global mass media connects all the people in the world

o as the cultural barriers reduce, the global village dream becomes more realistic

o there is a propagation of democratic ideals

o the interdependence of the nation-states increases

o as the liquidity of capital increases, developed countries can invest in developing ones

o the flexibility of corporations to operate across borders increases

o the communication between the individuals and corporations in the world increases

o environmental protection in developed countries increases

Effects of globalization

o enhancement in the information flow between geographically remote locations

o the global common market has a freedom of exchange of goods and capital

o there is a broad access to a range of goods for consumers and companies

o worldwide production markets emerge

o free circulation of people of different nations leads to social benefits

o global environmental problems like cross-boundary pollution, over fishing on oceans,

climate changes are solved by discussions

o more transborder data flow using communication satellites, the Internet, wireless

telephones etc.

o international criminal courts and international justice movements are launched

o the standards applied globally like patents, copyright laws and world trade agreements

increase

o corporate, national and subnational borrowers have a better access to external finance

o worldwide financial markets emerge

o multiculturalism spreads as there is individual access to cultural diversity. This diversity

decreases due to hybridization or assimilation

o international travel and tourism increases


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o worldwide sporting events like the Olympic Games and the FIFA World Cup are held

o enhancement in worldwide fads and pop culture

o local consumer products are exported to other countries

o immigration between countries increases

o cross-cultural contacts grow and cultural diffusion takes place

o there is an increase in the desire to use foreign ideas and products, adopt new practices and

technologies and be a part of world culture

o free trade zones are formed having less or no tariffs

o due to development of containerization for ocean shipping, the transportation costs are

reduced

o subsidies for local businesses decrease

o capital controls reduce or vanquish

o there is supranational recognition of intellectual property restrictions i.e. patents authorized

by one country are recognized in another

Advantages of globalization in the developing world

It is claimed that globalization increases the economic prosperity and opportunity in the developing

world. The civil liberties are enhanced and there is a more efficient use of resources. All the

countries involved in the free trade are at a profit. As a result, there are lower prices, more

employment and a better standard of life in these developing nations. It is feared that some

developing regions progress at the expense of other developed regions. However, such doubts are

futile as globalization is a positive-sum chance in which the skills and technologies enable to

increase the living standards throughout the world. Liberals look at globalization as an efficient

tool to eliminate penury and allow the poor people a firm foothold in the global economy. In two

decades from 1981 to 2001, the number of people surviving on $1 or less per day decreased from

1.5 billion to 1.1 billion. Simultaneously, the world population also increased. Thus, the percentage

of such people decreased from 40% to 20% in such developing countries.


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The Cultural dimension of globalization, the impact of globalization on cultural diversity

Globalization brought many opportunities and challenges. As the world becomes more integrated

and as mobility increases around the world, people from different cultural backgrounds find

themselves working side by side with each other. Now more than ever, the need for different

cultures to work with and understand each other becomes stronger.

Academic institutions around the world play important roles in developing cultural

sensitivity among the citizens. Because of the increased mobility of people around the world, and

because of the increasing population diversity (in terms of cultural backgrounds), schools are

starting to realize the importance of intercultural diversity. According to Bagnall (2008), the

difference between international schools and national schools is narrowing as people move freely

between countries (p. 121). As people move from one country to another, population of many

regions and countries around the world become culturally diverse. This diversity is mirrored by the

make up of students attending schools. Now student diversity is not exclusive to international

schools. We can see many national schools adopt international curricula. Schools have a big role in

preparing students top become global citizens.

Teachers are responsible in ensuring that differences in culture are respected and that

everyone is included in the learning process. According to Hutchison (2006) teachers mustunderstand the influences of culture in teaching and learning (p. 103). Leeman and Reid (2006)

investigated on how multicultural education is being implemented in Australia and the

Netherlands. Both Australia and the Netherlands have ethnically diverse populations and both face

problems caused by inequitable social relations (p. 59). Dutch educational policy focuses on

opportunities for immigrants to enable them to participate in the institutions of Dutch society and

on cultural education (Leeman and Reid 2006, p. 62). Multicultural education in Australia was

largely concerned with language acquisition for the immigrant and anti-racist practices in schools

and classrooms. Multicultural education has a focus on maintenance of culture for the immigrant

(p. 63). In order to develop cultural sensitivity among students, the teachers themselves must learn

to understand and respect cultures. According to DePalma et al (2006) in-school practicum for pre-

service teachers are not effective as it may perpetuate or even exacerbate racial and ethnic

stereotypes (p. 328). They believe that majority pre-service students can learn much more about


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minority children if they let these children participate in the learning process outside the

institutional space of schooling (p. 328). Teachers play an important role in the inclusion of

minority students in class. It is important to look beyond the childrens cultural backgrounds.

Teachers must identify each students strengths and weaknesses and encourage them to participate

in activities and projects that will develop their knowledge and skills. According to DePalma et al

(2006) engaging minority children in projects and activities outside the school setting, allowed

majority pre-service teachers to make close relationships with the children. The children became

more open and friendlier to the pre-service teachers and became interested in learning. Chang

(2006) presented an account of how he used cultural diversity a key resource in teaching and

learning. He proposed the notion of transcultural wisdom bank, which accumulates cross-cultural

insights and experiences about problems and issues that affect all humans (p. 370). A wisdom bank

is the collection of the set of possible solutions from many different cultures or societies torecurrent problems that are common to the human condition and that no one culture has managed

to solve completely. A transcultural wisdom bank broadens students views in terms of a larger

range of possibilities about important issues in everyday life (Chang 2006, p. 371). Cultural

diversity produces opportunities for both the teacher and students to learn from each other and to

find ways of dealing with different problems by cooperating and sharing knowledge. The

transcultural wisdom bank provides an example on how the teacher can develop cultural sensitivity

among students and it helps the students to be proud of their cultural backgrounds and values. The

students learn about others culture and see its uniqueness and importance.

According to Deardorff (2006) one important outcome of intercultural education is the

development of interculturally competent students (p. 241). A culturally competent individual is

believed to have a recognition of global systems and their interconnectedness, including openness

to other cultures, values, and attitudes. An interculturally competent individual has cultural

awareness, deep cultural knowledge and sociolinguistic awareness. An interculturally competent

individual possess skills such as adaptability, flexibility, ethrnorelative view, and empathy. Andlastly, an intercultural competent individual effectively and appropriately communicates and

behaves in an intercultural situation (Deardoff 2006, p. 256).

From the discussion thus far, we can see that academic institutions around the world are

embracing intercultural diversity and are realizing the importance of encouraging every student,


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regardless of their cultural backgrounds, to participate in the learning process. The populations of

many countries are starting to be culturally diverse and this change is mirrored by many schools.

Now more than ever, diversity of cultures must be looked upon not as a burden, but a source of

strengths for a society or a country. Diversity must be viewed as an opportunity for everyone to

benefit and to gather knowledge, experience, and values.

Now I will focus my attention on how organizations can include all cultural groups by

reflecting on my own experiences. In order to ensure that all cultural groups are included in the

process, policies and activities of the organization, the management and the employees must be

educated both multiculturally and interculturally. Multicultural education according to Lasonen

(2005) prepares the learners to adjust themselves to live and work on a daily basis in a

multicultural communities and working contexts. This concept is often used in the context of adjusting immigrant groups to new home countries or in the context of mediating between different

parties of ethnic conflicts (p. 400). Intercultural education, on the other hand, is defined by

Lasonen (2005) as a concept of preparing the learners to act as interpreters and mediators between

different cultures. This concept is often used in the context of international and intercultural

cooperation promoting understanding diversity (pp. 400-401). In order for every member of the

organization to develop a respect, understanding and appreciation of cultures, it is important that

the management train and educate them to acquire multicultural competence and intercultural

competence. Multicultural competence refers to the ability of an expert to make ethical policies,

strategies, and decisions concerning minority groups while intercultural competence refers to the

ability of an expert to work in international and multicultural working environments to promote

learning between different cultures, and to relate ones own contribution to collaboration in such

working communities (Lasonen 2005, p. 401).

I worked in a multinational organization before. The organization has a culturally diverse

workforce. In order to make sure that everyone is treated fairly and equally, the management

commits itself to diversity management. Diversity Management takes many forms in practice, but

can be defined as an organizations active investment in the integration, development, and

advancement of individuals who in the collective, represent the heterogeneity of the labor force,


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and in the development of organizational strategy, culture, policies, and practices that support

interpersonal respect, communication, and individual, team and organizational performance in a

diverse environment.

Managing Diversity is the organizations commitment to integrate and develop individuals that

make up a heterogonous workforce. Diversity management is the development of organizational

strategy, culture, policies and practices that support interpersonal respect, communication, and

individual, team and organizations performance in a diverse environment. A diverse organization

employs people with different culture. The goals of the companys diversity management initiative

if to identify the differences between cultures and determine their strengths and weaknesses. By

focusing on the strengths of everyone and giving them opportunities to contribute to the

organization, success is achieved. The companys commitment to diversity is reflected in its policies and practices, especially those involving employee. The management emulates respect for

diversity and this is being followed by the employees. The talents, ideas, skills and values of

everyone are developed and enriched.

The increase in international trade and the fast rise of globalization has caused a major shift in

organizations and the way they are managed. The workforce has become more diverse culturally.

In order to participate in the global marketplace, companies from different parts of the world are

forming partnerships, alliances and joint ventures. Managing Diversity, the way I see it is theorganizations commitment to integrate and develop individuals that make up a heterogonous

workforce. Diversity management is the development of organizational strategy, culture, policies

and practices that support interpersonal respect, communication, and individual, team and

organizations performance in a diverse environment. A diverse organization employs people with

different culture. I believe that this is the only way for an international business to succeed. The

international organization needs to understand the host market. In order to better understand the

host market, an international organization needs to employ locals. Thus in employing local

residents, the international organization opens its doors to cultural diversity. When diversity is not

properly managed, problems, misunderstandings and conflicts will arise.

Cultural diversity is seen by the organization as an opportunity as it gives access to a wide

resource of knowledge, skills and expertise. If managed correctly, a culturally-diverse workforce


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can become a source of competitive advantage. The management can make use of its employees

cultures and values. Managing Diversity has many benefits for the company. Managed well,

diversity can be a positive force, spurring creativity, dynamism and excellence, renewing and

refreshing the corporation, and ultimately improving the bottom line. Diversity brings differences

in styles and in ways of looking at and doing things which can help organizations do more than

they ever dreamed possible. Diversity can help organizations create new and more innovative

products and services, better meet the needs of customers and clients, and do more for the

community the organizations are part of and serve. Diversity means differences, and differences

create challenges, but differences also open avenues of opportunities. Diversity enables a wide

range of views to be present in an organization, including views that might challenge the status quo

from all sides. It also focuses and strengthens an organizations core values and serves as an

instrumental in organizational change. Diversity stimulates social, economic, intellectual, andemotional growth and helps an organization understand its place in the global economy.

There are different ways in which a firm goes global. Firms establish businesses abroad in

different ways. Some companies take an international business strategy. An international business

establish operations abroad in order to support its domestic operation. There are also multinational

companies that recognize the importance of overseas markets. The fundamental strategy of a

multinational firm evolves around having a number of national subsidiaries sensitive and

responsive to each national market. Global companies on the other hand exploit the scale economy

advantages by making and selling products worldwide. To achieve worldwide efficiency, a global

company sets up its production facilities in selected countries and distributes its products across

countries. Lastly, a transnational company aims at accomplishing production efficiency while

making necessary changes in product design, manufacturing, and distribution because of the local

market conditions. I learned that companies go global for different reasons. The are also companies

that are products of joint ventures, alliances and partnerships. No matter what the reasons are, these

companies are employing different people with different cultural backgrounds.

There are different ways in which managers in multinational firms manage diversity. One example

of such strategy is think global, act local in which the global initiatives of the firm are adapted

locally in order to better manage the local workforce. Another way of integrating cultural diversity


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is to decentralize centers of excellence to those cultures that do the job best and most cheaply. In

this strategy, global excellence becomes a synthesis of approaches taken in many places.

In the area of Human Resource Management (HRM), managing diversity must be present

in all processes. For example, the recruitment process of the organization must reflect its

commitment to cultural diversity. In addition, many organizations, are introducing diversity

training, in order to ensure that every employee accepts diversity in the workplace. The topic of

cross-cultural management always leads to HRM particularly International HRM or IHRM.

Broadly defined IHRM is the process of procuring, allocating, and effectively utilizing human

resources in a multinational corporation. In the area of IHRM, the management needs to develop

HRM practices and policies that consider the cultural background of the employees. For example

an international business that seek to expand its operation in China must take into consideration thecharacteristics of the culture, the values and behaviors of the employees that were derived from

their culture.

Cultural diversity management has made me realized that the world is becoming flatter. I

think that cultural diversity in the workplace will continue to increase. As people become more

mobile and as businesses become more global, diversity in the workplace will become more

common. Perhaps the key to successful cross-cultural management is respect and being open-

minded. As a future manager, I should develop a respect for every person, regardless of his or her cultural background. I should also learn to be more open-minded. Instead of judging people, I must

learn to accept that every individual is unique. Everyone can contribute to the success of the

organization.

UNDERSTAND THE IMPLICATIONS OF GLOBALISATION FOR ORGANISATION

AND THEIR MANAGEMENT

Globalization is the closer integration of the countries and peoples of the world brought about by

the enormous reduction of costs of transportation and communication, and the braking down of

artificial barriers to the flows of goods, services, capital, knowledge, and human resource across


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borders. Globalization as an effective instrument of international exchange of goods and services

has to have a human face, based on ethical consideration rather than on cut throat competition. It

should play a positive role in reducing economic and social disparities within and among, the

nations. It should be also effective tool for improving sustainable development. In the era of

globalization, with the increasing competition, locally or globally, organizations must become

more adaptable, resilient, agile, and customer-focused to succeed. And within this change in

environment, the HR professional has to evolve to become a strategic partner, an employee

sponsor or advocate, and a change mentor within the organization. In order to succeed, HR must be

a business driven function with a thorough understanding of the organization dig picture and be

able to influence key decision and policies. In general, the focus of today's HR mangers is on

strategic personnel retention and talents development. In today's aggressive global market it has

become necessary for organization to expand internationally to gain competitive advantage.Globalization has forced organization and their human resources functions to redefine their

strategies. It is necessary for the management to invest considerable time and amount, to learn the

changing scenario of the Human Resource Department in the 21st century. In order to survive the

competition and be in the race, HR Department should continuously update itself with the

transformation in HR suitable HR Policies that would lead to the Achievement of the organization

as well as the individual's goals should be formulated.

HR Practitioners of every organization and also for those who have significant interest in the area

of Human Resource Management should realize the growing importance of human resource and

understand the need to build up effective HR strategies. Peoples are important assets. Placing this

value on employees, requires the organization to emphasize on human resource practice, including

reward for superior performance, measures of employee satisfaction, careful selection of

employees, promotion from within, and investment in employee development.

Just taking care of employees would not be enough; new HR initiatives should also focus on the

quality needs, customer-orientation, productivity and stress, team work and leadership building.

The researcher has thrown light on the emerging HR trends and discusses HR issues in various

industries like Financial Services, IT, Power, Healthcare etc.

It is valuable for practicing HR managers of every organization and also for those who have a

significant


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interest in the area of Human Resource Management, to realize the growing importance of human

resource and understand the need to build up effective HR strategies to combat HR issues arising

in the 21st century.

CHALLENGES IN MODERN HUMAN RESOURCE MANAGEMENT:

1)Changing Workforce Dynamics

Frequently, physical relocation is required. The increasing number of dual-career professionals

limits

individual flexibility in accepting such assignments may hinder number of dual-career professional

limits individual flexibility in accepting such assignments and may hinder organizational flexibilityin acquiring and developing talent. Some demographic changes in the workforce having their own

implications to the HR managers.

2)Changing Employee Expectations

Employees demand empowerment and expect equality with the management. Previous notion on

managerial authority are giving way to employee influence and involvement along with

mechanisms for upward communication and due process. If we look at the workers unions of Otis,

Hindustan Lever, ICI TOMCO, Blue Star, Webel Electro and Central Bank. They rewrite their

agenda to include quality and better customer service and even accusing the management of

malpractices.

3)Globalization

Many Indian firms are compelled to think globally, something which is difficult for mangers who

were

accustomed to operate in vast sheltered markets with minimal or no competition either from

domestic or foreign firms. Indian firms need to move one end of each continuum to the other end.


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4)Managing Diversity

Its value is getting more important issue because of increase in the number of young workers in the

workforce, increase in the number of women joining the workforce increase in the proportion of

ethnic minorities in the total workforce increase in mobility of workforce international career and

expatriates are becoming common, international experience as a pre-requisite for career

progression to many top level managerial positions.

5)Outsourcing Human Resource

The trend towards outsourcing has been caused by several strategic and operational motives. HR departments are divesting themselves from mundane activities to focus more on strategic role.

Outsourcing has also been used to help reduce bureaucracy and to encourage a more responsive

culture by introducing external market forces into the firm through the biding process. It is a big

challenge before the HR manager to prove that his/her department is as important as any other

functions in the organization.

1)Making HR Activities Ethical

Hiring ethical strong employees is only the beginning. The need to institute mechanisms to ensure

ethical conduct of employees is increased a lot with the passage of time. The HR manager needs to

carefully screen applications for jobs, weed out those who are prone to indulge in misdemeanors

and hire those who can build a value driven organization.

2)Organizational Restructuring

Peter Drucker prophesies in his book (The New Realities) is showing its colour and many big

companies has reduced their number of management grades, elimination of layers, and redrawing


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reporting lines within their organization. ITC, HLL, Godrej & Boyce, RPG Enterprise, Raymond

Woollen Mills, Shaw Wallace, Ballapur Industries, Compton & Greaves are some of the

companies that are doing so.

3)Work Life Balancing

Balancing work and life assumes relevance when both husband and wife are employed. Travails of

a working housewife are more than a working husband, thus balancing it is becoming a major

challenge for HR manager. So a programme aiming balancing work life is required and are

supposed to include; childcare, Job sharing, Care for sick children and employees, On site summer

camp, Training supervisor to respond to work and family needs of employees, Flexible work

scheduling, Sick leave policies,Variety of errands from dry cleaning, dropping children at school, making dinner reservations etc

and many more like the same or other.

CHALLENGES OF HUMAN RESOURCE MANAGEMENT IN INDIAN INDUSTRIES

(TCS & BIRLASOFT):

1)Management of Workforce Diversity

In order to effectively manage workforce diversity, Cox (1993) suggests that a HR Manager needs

to change from an ethnocentric view (our way is best way) to a culturally relative perspective (lets

take the best of a variety of ways). This shift in philosophy has to be ingrained in the managerial

framework of the HR Manager in his/her planning, organizing, leading, and controlling of

organizational resources.

1)Maintaining Workforce Diversity

The future success of any organization relies on the ability to manage a diverse body of talent that

can bring innovative ideas, perspectives and views to their work. The challenge and problems

faced of workplace diversity can be turned into a strategic organizational asset if an organization is

able to capitalize on this melting pot of diverse talents.


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2)Managing EIS

As information is the basis of decision-making in an organization, there lies a great need for

effective managerial control. A good control system would ensure the communication of the right

information at the right time and relayed to the right people to take prompt actions.

3)How To Retain The Same Level Of Recruitment Even In Recession

The biggest challenge for HR is to maintain the company reputation which it gained over the

period by recruiting a large number of new employees every year.

4)How To Absorb All Recruitees

Though there are recruitments in large scale, they do not have enough projects to absorb all the

new recruited employees. In order to tackle this situation they are calling the new recruited

employees in small batches rather than 2-3 large groups.

5)How To Motivate Employees

The development of an appropriate organizational reward system is probably one of the strongest

motivational factors. This can influence both job satisfaction and employee motivation. The reward

system affects job satisfaction by making the employee more comfortable and contented

motivational factors in an organizational context include working environment, job as a result of

the rewards received.

6)Performance Management

Driving the organization's and its member's progress by establishing objectives related to

committed work against which performance can be measured, ascertain capability development

assistance required to continuously enhance performance.


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7)Career Development

To ensure that individuals are provided opportunities to develop their competencies that enable

them to achieve professional and personal career objectives within the organization's goals.

8)Competency Development

This start with identification of requisite competencies at the organization level which are

ultimately dependent on competencies that are needed to be identified, built or enhanced in the

individual Birlasoftian. Enhancing constantly the capability of Brilasoftians to perform assigned

tasks and responsibility in turn uplinks to the organization capability building.

9) Compensation

To provide all individual with remuneration and benefits based on their contribution and value to

the organization in a fair and transparent manner. Competitiveness of the compensation offered in

comparison with the prevailing market's reality is the driving force.

10) Training & Development

To ensure that the identified competency requirements are built through a systematic and focused

approach.

11) Participatory Culture

A myopic outlook of utilizing talents of people only in the delivery of assigned duties has two

broad undesirable effects; it prevents people from developing as well rounded professionals; and it

denies the organization the readily available multitalented internal resource pool that could

potentially contribute to most of the challenges and opportunities facing the organization.

Documents

Globalization and Its Meaning