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Global HRM

Notes allowed them to increase their global sales, which ultimately resulted in an increase
in profits.
3. Access resources: One of the most important inputs used in the production of Nike
shoes is rubber. Rubber is a resource which is not produced in the United States; if
the manufacturing arm of Nike wants to use it, they will need to find it in other
countries.
4. Transportation costs: At first glance it might seem that transport costs for the
company would be higher if they adopt a globalised approach. However, with
customers all over the world, Nike needed a way to ensure that their transport costs
could be minimised to all of their customers. While it might be cheaper to sell to
American customers from a US based distribution centre, it is far more expensive to
sell to other customers from that location.
5. Economies of scale: We have seen that Nike is keen to expand their customer base,
but at the same time they would like to minimise their transport costs. In order to
achieve these joint goals, production has been centralised in certain countries. This
has allowed for very high production levels, and as a result of this the company has
been able to achieve economies of large scale production. In other words, producing
in this way has enabled them to lower their cost per item.

Question
List some other reasons which may have lead managers at Nike to opt for Globalisation.

Source: economics.mrwood.com.au/unit2/ecoglobal/nike/nike3.asp

4.4 Summary

 Globalisation is a powerful real aspect of the new world system, and it represents one of
the most influential forces in determining the future course of the planet.

 “Globalisation” is understood here to mean major increases in worldwide trade and
exchanges in an increasingly open, integrated, and borderless international economy.
 There has been remarkable growth in such trade and exchanges, not only in traditional
international trade in goods and services, but also in exchanges of currencies, in capital
movements, in technology transfer, in people moving through international travel and
migration, and in international flows of information and ideas.
 There are several sources of globalisation over the last several decades.

 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.

 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.
 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.

 Globalisation has clearly changed the world system and that it poses both opportunities
and challenges. It is also clear that the technological, policy, institutional, ideological, and
cultural developments that have led to globalisation are still very active.

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