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Global HR Practises

Global HR Practises



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Published by Sasirekha

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Published by: Sasirekha on Nov 17, 2008
Copyright:Attribution Non-commercial


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 MBA H4050 Global HR Practices
Globalisation for better or worse has changed the way the world doesbusiness. ...it (globalisation) is all but unstoppable. The challenge thatindividuals and businesses face is learning how to live with it, manage it, andtake advantage of the benefits it offers.As Warren J. Keegan rightly puts it, "a company that fails to go global isin the danger of losing its domestic business to competitors with lower costs,greater experience, better products and, in a nutshell, more value for thecustomer.”Driven by the ubiquitous economic liberalisations, national economiesare becoming more and more interdependent and integrated and the worldeconomy and business are becoming more and more globalised.Globalisation makes the business environment increasingly global evenfor domestic firms. The major competition which many Indian firms encounterin the home market now, for instance, is from foreign firms-they now face asubstantially growing competition from goods produced in India by MNCs andimports. For example, although its market is confined almost entirely to India,the competition which
encounters is indeed global. Its major competitorsinclude MNCs like Unilever, P&G, Colgate Palmolive, Henkal, etc. Besides,there is also competition from imported products. Thus, many firms in their own
 MBA H4050 Global HR Practices
2home market face the technological, financial, organisational, business and othermanagerial prowess of the multinationals. We may, therefore, defineInternational Business as
business in an internationally competitiveenvironment, no matter whether the market is domestic
Two important indicators of global economic integration areinternational trade and international production (i.e., production arising out of international investment).International trade is growing faster than the world output, indicatingthat a growing proportion of the national output is traded internationally or thatthe international market is more dynamic than the national markets. In the lasttwenty five years or so, world merchandise exports have doubled from 10 percent to 20 per cent of the world GDP. That is, about 25 years ago on an averageabout one-tenth of the domestic product of a nation was meant to be sold andconsumed in foreign countries; today about one-fifth of the domestic product isdestined to the foreign markets. Similarly, the proportion of the domesticconsumption met by goods and services produced abroad has been increasingmanifolding. Even in communist country like China, the export to GDP ratio jumped from about 6 per cent in 1980 to nearly 25 per cent by the beginning of the present decade.The cross-border dimensions of business is made more conspicuous bythe fact that world sales of more than 8.5 lakh foreign affiliates of about 65,000multinational corporations now are more than double the world's total exports.International investment, in fact, has been growing much faster thaninternational trade. In the decade since 1986, foreign direct investment inflowsincreased six-fold whereas world exports increased less than one and a half times.
 MBA H4050 Global HR Practices
3International portfolio investments and equity trading have also beensurging. One out of seven equity traded worldwide involves a foreigner as acounter party. It is the internationalisation and globalisation that creates manybusiness opportunities. Hundreds of units in export processing zones processproducts, in many cases using imported raw materials on imported plant andmachinery, for offshore trade. Many internationally well known brands of products are indeed global products in the sense that firms from many countriesparticipate in production process. Thus, what is marketed as an American car orGerman car or Italian car is not really American or German or Italian but globalbecause various parts and components of the product are supplied by a largenumber of firms from many countries and they are marketed globally. In anumber of cases the entire product marketed by a company in its brand name issourced from firms in other countries.As economy becomes more developed and open, its market will bestacked with very wide variety of goods from allover the world so that theconsumers have enough (and often more) choice and get more value for themoney. In such a society, many of the items of daily use by a consumer could beforeign goods. Indeed, here the consumer is global in his shopping.To be a successful participant in a globally competitive environment, acompany has to be global in the organisation of production and marketing.Before going into the details of different aspects of internationalbusiness, let us mull over some basic issues like what is international business,reasons for inter-nationalisation of business, international orientations andinternationalisation stages, special problems in international business, certaintrends in the international business horizon and the major strategic decisions ininternational business.

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