Page 71 - DMGT548_GLOBAL_HRM

Global HRM

Notes
!
Caution The world economy is being transformed by a combination of:
(a) Technological, and

(b) Geopolitical factors.
There are several sources of globalisation over the last several decades. Technological advances
that have significantly lowered the costs of transportation and communication and dramatically
lowered the costs of data processing and information storage and retrieval comprise one such
source. The latter stems from developments over the last few decades in electronics, especially
the microchip and computer revolutions. Electronic mail, the Internet, and the World Wide Web
are some of the manifestations of this new technology, where today’s $2,000 laptop computer is
many times more powerful than a $10 million mainframe computer of twenty-five years ago.

Notes Technological factors would include:
 Improvements in transportation and communications
 Movement toward greater Western styled cultural homogeneity
 Real time information about world events through television and the internet

 Role of jet travel, communication satellites, and fiber-optic networks
 Technology has aided the development of a single global capital market (New
York, London, Tokyo stock markets)

Another source of globalisation is trade liberalisation and other forms of economic liberalisation
that have led to reductions in trade protection and to a more liberal world trading system. This
process began in the last century, but the two World Wars and the Great Depression interrupted
it. It resumed after World War II through the most-favoured-nation approach to trade
liberalisation, as embodied in the 1946 General Agreement on Tariffs and Trade (GATT) that has
evolved into the World Trade Organisation (WTO). As a result, there have been significant
reductions in tariffs and other barriers to trade in goods and services. Other aspects of
liberalisation have led to increases in the movement of capital and other factors of production.
Some economists and historians have suggested that globalisation is little more than a return to
the world economy of the late nineteenth century and early twentieth century.
A third source of globalisation is comprised of changes in institutions, where organisations
have a wider reach, due, in part, to technological changes and to the more wide-ranging horizons
of their managers, empowered by advances in communications. Thus, corporations that were
mainly focused on local markets have extended their range in terms of markets and production
facilities to a national, multinational, international or even global reach. These changes in
industrial structure have led to increases in the power, profits and productivity of those firms
that can choose among many nations for their sources of materials, production facilities and
markets, quickly adjusting to changing market conditions. Virtually every major national or
international enterprise has such a structure or relies on subsidiaries or strategic alliances to
obtain a comparable degree of influence and flexibility. As one measure of their scale, almost a
third of total international trade now occurs solely within these multinational enterprises. With
the advent of such global firms, international conflict has, to some extent, moved from nations
to these firms, with the battle no longer among nations over territory but rather among firms
over their share of world markets. These global firms are seen by some as a threat to the scope

66 LOVELY PROFESSIONAL UNIVERSITY