Running head: GLOBALIZATION AND EMPLOYMENT RELATIONSHIP 1

Globalization and Employment Relationship

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GLOBALIZATION AND EMPLOYMENT RELATIONSHIP 2

Globalization and Employment Relationship

Introduction

The advancement in technology has changed the dynamics of the contemporary business

world. The organizational profits have been increased due to modern-day technology. It has

made the expansion of business easy and simple. Organizations in the contemporary era are

expanding their business activities to other countries to generate more revenues. The supply

chain management for the production and distribution of goods and products is easy and quick

today. The competition among the organizations has been increased due to globalization because

of the bulk production of products and goods. Consequently, the global market forces have a

vital role in organizational management. The global market forces i.e. supply and demand etc.

emphasize the quality of products and services to survive in a competitive business environment.

The performance of an organization is highly dependent on the performance of the employees.

Thus the importance of employment relationships has been increased within the organizations.

The purpose of this paper is to investigate the role of global market forces to move multinational

organizations towards a standardized approach to managing the employment relationship. The

global market forces have a direct impact on the strategic management processes that influence

the employment relationship.

Literature Review

The expansion of business activities to different countries increases competition among

local and multinational organizations, thus disturbing the global market forces. The management

of the global marketplace is difficult in an intensively competitive business environment. Kanter

(1986) has found that an effective relationship with the employee assists in managing the global

marketplace efficiently. This practice also helps in reducing product/service costs, enhancing
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product quality, improving customer service, developing organizational knowledge, and

introducing new technology within the organization. Pearce et al., (1987) have found that

strategic decisions are critical for managing the global market forces adequately. These decisions

play a vital role in deploying resources and monitoring implementation, determining authority

relationships, developing distinctive competencies, and goal formulation. A research study by

Bourgeois and Brodwin (1984) shows that appropriate human resource strategies are essential for

effective employee management, thus enhancing organizational performance. Effective HR

strategies are useful for assessing the global market forces and also assist in developing

appropriate plans for controlling the global market forces (Sony & Baporikar, 2021).

The production of particular products is dependent on the efficiency of the employees

within an organization. The workers need to be efficient to increase the production of products

when demand is high, thus maintaining a balance in demand and supply. The demand for a

specific product or service is not dependent on the employees of an organization. However, the

supply of that product is highly dependent on the workers. A research study by Jha (2016) has

shown that forecasting the demand for a particular product is essential to maintaining a balance

between demand and supply. If the demand is high, the workload on the workers within the

organization increases (Baker, 2009). Another research study reveals that a high workload and an

inappropriate working environment impact employee performance negatively, thus impacting

product quality (Shamsudin & Dr VP, 2020).

Strategic Management

Strategic management can be defined as the process of achieving set objectives and goals

by appropriate assessment and analysis of available resources and adequate monitoring and

planning. The concept of strategic management is based on the vision and mission of an
GLOBALIZATION AND EMPLOYMENT RELATIONSHIP 4

organization. This process allows setting realistic objectives and goals according to the mission

of the organization. Allocating resources is a key function of strategic management. This process

ensures that the long-term and short-term goals of the organizations are achieved. These

management decisions are the key to success for the organization. Employee management is a

critical facet of strategic management because employees are a valuable asset to an organization.

Organizations can attain the desired goals with the help of employees. Thus large scale

organizations emphasize effective strategic and employee management processes.

Strategic management has several benefits. It plays a critical role in the proliferation of

the organizational business. Businesses using this concept show significant improvement in

productivity, profitability, and sales. It assists the organizations to develop strategies according

to the market demand. The strategic management process plays a vital role in evaluating the

implemented strategies. The global market forces including competitive forces shape strategy for

sustainability. The increasing competition in the market forces multinational companies to

formulate decent strategies to ensure the quality of the service or product (Sony & Baporikar,

2021). The focus of these strategies is on improving the production processes and human

resource management. The competitive force in the market encourages multinational

organizations to follow a standardized approach to managing the employment relationship

effectively. The corresponding HR strategies are crucial for motivating employees to work with

devotion for the betterment of the organization. Similarly, these strategies also enhance

employee loyalty and retention rate. Consequently, the performance of the employees and the

organization is improved. Hence, the global market force has an important role in shaping

strategic management processes and the employment relationship. 

Globalization
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Globalization is defined as the process of spreading jobs, information, technology, and

products across varying cultures and national borders. It is a process by which the organizations

initiate their business activities internationally and enter new markets. The expansion of the

business operations to different countries increases sales and assist in generating more revenues.

Consequently, the organizations become stable economically. Globalization has several benefits

for organizations. The important benefits of globalization involve managing employee

immigration, international recruiting, access to new talent, access to a new market, higher

standards of living across the globe, lower cost of products, the spread of technology and

innovation, and access to new cultures (Baker, 2009). The most important benefit of business

expansion to other countries is the increase in annual profits. On the other hand, the cost of

expanding business operations to other countries is high. Moreover, it is a time-consuming

process because the consumers in a new market do not know about the quality of a particular

product or service. 

A new product or service in a new market takes time to become successful. Consumers

are required to familiarize themselves with the new products or services in a new market. All the

organizations have an opportunity to expand internationally. Thus the threat of new entrants and

competitive environment in the market is a key concern for the organizations. Organizations

require appropriate planning and an effective team of individuals to expand business activities

internationally and to overcome the threat of new entrants and growing competition in the

market. Multinational organizations cannot survive in a competitive environment if the

management is weak. For instance, Zomato is an international dining-out and food delivery

company. The company has closed all of its business operations from Lebanon, Singapore, the

UK, and the USA. The basic reason for closing business operations internationally is increased
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competition, increased cost, and low profits. The organizational sales have been reduced by 53 %

(Chugh, 2020). The poor performance of the company is due to inadequate management

practices and the employment relationship. The management of the company has not developed

effective management policies to survive in the international market. The case study of Zomato

reveals that effective employment relationships and management practices are essential for

surviving in a competitive marketplace.    

Organizational Culture

           Organizational culture involves the practices, expectations, assumptions, and values that

inform and guide the activities, actions, and decisions of the employees. It also includes the

different ways of interacting that leads to a distinctive psychological and social environment. It

also governs the behaviour of individuals within organizations. A good organizational culture

promotes positive traits that contribute to improved performance. The key qualities of good

organizational culture involve psychological safety, innovation, integrity, teamwork, resilience,

performance, trust, appreciation, and alignment. Organizational culture is critical for the growth

of a business as it directly influences employee performance. The employees in an organization

have the responsibility to ensure the quality of a particular product or service. A nurturing culture

allows employees to apply creative thinking to all facets of the business. Similarly, a culture of

trust motivates employees to use their full potential for the proliferation of organizational

business.

Organizational culture is influenced by several factors including recruitment and

selection, clients and external parties, organizational policies and values, nature of business, and

leadership principles. The leadership of an organization evaluates the strengths and weaknesses

and the requirements of the market. This practice is crucial for successful business operations.
GLOBALIZATION AND EMPLOYMENT RELATIONSHIP 7

The leaders develop principles according to the market demand and shape policies for

recruitment. Consequently, the leaders promote the intended culture in the organization. A key

aspect of the organizational culture is employee management and the employment relationship.

According to the organizational structure model by Hur and Riyanto (2012), the competition in

the market directly influences the organizational culture and the employment relationship. The

researchers have found that the organizational leaders develop the organizational structure as per

the global market forces because it impacts the organizational business. Moreover, the

employees feel comfortable in an organization having a good culture.

Standardized Approaches to Manage Employment Relationship

           The increasing competition around the globe has forced multinational organizations to

adopt the standardized approach to handle employment relationships efficiently. An adequate

employment relationship is critical for managing business activities in international markets. The

global market forces emphasize appropriate and effective teams for running a business

successfully. Consequently, multinational organizations follow a standardized and systematic

approach for developing good relations with their employees. Multinational organizations focus

on developing appropriate strategies to enhance employees' confidence and loyalty. The

management of multinational organizations evaluates the symptoms of poor employee relations.

The corresponding symptoms involve tribunals and litigation, high staff turnover, absenteeism,

poor performance, and unionization (Winter & Jackson, 2014). These symptoms have a negative

impact on the organizational business. Hence, multinational organizations adopt various

approaches for effective employment relation management.

           The standardized approach to effective employment relation management involves

redundancy, dismissal, investigations and complaints, discipline, change management and

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management control, conflict resolution, bargaining and negotiations, work-life balance, working

conditions, involvement and participation, employee communication, diversity management, and

employee management (Van De Voorde & Beijer, 2014). Similarly, multinational organizations

also improve employment relations by developing common interests and using organizational

goals. Mediation plays a vital role in managing employment relationships. According to the

research by Winter and Jackson (2014), the employee retention rate is increased to 87 % due to

the standardized approach. It is evident from this empirical evidence that a standardized

approach is effective in managing the employment relationship. Moreover, it is also equally

important for enhancing employee performance. The standardized approaches to organizational

management maximize job satisfaction and create a positive workplace culture. The outcome of

this standardized approach is sustainable business development in the global market. Thus, the

appropriate approaches to employee management are important for multinational companies to

assure successful business operations.

Case Studies

           The global market forces have a critical role in forcing multinational organizations to

move towards a standardized approach to managing the employment relationship. Several

multinational companies have developed employee relations policies to overcome the threats

imposed by global market forces. The case studies of different organizations below reveal the

influence of global market forces to adopt a standardized approach for managing the

employment relationship.

Nestle Case Study

           Nestle is a multinational organization that operates its business activities in 186 countries

around the globe. The company aims to provide services and products that evolve with consumer
GLOBALIZATION AND EMPLOYMENT RELATIONSHIP 9

demands. The company has revised its employee relations policy in 2010 because of the

changing market trends globally. The increasing competition among the large scale organizations

like Pepsico, Coca-Cola, and Nestle has forced the management of Nestle to make appropriate

changes in the employee relations policy to enhance employee retention rate, loyalty, and

performance. The company has formulated policies regarding external open social dialogue,

collective negotiations, collective dialogue, compliance, corporate labour priorities, corporate

culture, and a focused and proactive approach.

           The major focus of Nestle's employee relations policy is on effective employee

management so that the business activities are operating smoothly. The company has a proactive

approach to uphold and develop an open dialogue on labour matters with representative

associations, employee unions, and external stakeholders. The company also offers a competitive

salary to the workers to meet their financial needs. The employees are treated with dignity and

have zero tolerance for abuse, harassment, and discrimination. The annual revenue of Nestle in

2005 and 2006 are $ 73 million and $ 78 million respectively. However, the organizational

annual revenues are increased to $99 million and $ 100 million in 2013 and 2014 respectively

("Nestle SA Revenue 2006-2021 | NSRGY", 2021). The increase in the annual revenues is due to

effective management policies regarding employment relationships. 

Prudential plc Case Study

           Prudential plc is a multinational organization. The company is operating in eight different

countries across the world. The headquarters of the company are located in the UK. The

company offers various products and services to the customers including health insurance, life

insurance, home insurance, car insurance, retirement plans, and investment plans. The bargaining

power of customers is the key market force that forces the company to adopt a standardized
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approach to managing the employment relationship. An important responsibility of the

employees of the company is to convince the customers to use the company’s services and

products. The employees are in direct contact with the company’s customers. The employees are

required to be well-qualified and have appropriate training to handle the customers. The

expansion of the business operations to other countries has enhanced the roles of HR within the

company. With the proliferation of the organizational business, the company has revised its

governance framework. The sector-specific or jurisdiction-specific developments and trends are

reported directly to the Group HR. The corresponding developments might involve changes in

union recognition practices and policies, employee engagement, and market practice regarding

employee involvement. The company promotes positive relationships with external stakeholders,

representative organizations, and employees. The company’s approach towards employment

relationships is to focus on employee training, benefits, and competitive wages. The employees

are treated with respect within the organization. The employees have the right to directly contact

to Group HR manager for any grievances. The employee management approach of the company

has helped to increase the annual revenues to $ 55.97 billion in 2020 (Prudential plc Annual

Report 2020, 2020).

PRAN-RFL Case Study

           PRAN-RFL is one of the largest business groups in Bangladesh. The company is

operating in 145 countries around the globe. The company has around 5500 products related to

different categories including industrial solutions, mother and kids care, kitchenware, medical

OTC, paint, safety and security, stationery, and toys. The company owns 100 brands. The total

number of employees at RFL is 110000. Managing a huge workforce require particular policies

and regulations. The company provides several benefits to their employees to maintain the
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required number of workers. The company provides free insurance and transport facility to the

workers. Medical services are also provided to the workers at the workplace. The compensation

to the workers is dependent on various factors involving revenues generated, cost-saving, and

performance. The company also provides training to the employees to enhance their operational

efficiency. The employees have also been given training for success planning (RFL Annual

Report 2018-2019, 2019). The key concern of the company is to increase the retention rate of the

employees in a competitive business environment because the company requires a huge

workforce for its business operations. The human resource policies and strategies have helped

the company to develop long-lasting employment relationships. The corresponding policies have

assisted in enhancing the loyalty of the workers. The case study of PRAN-RFL reveals that the

workforce is a potential global market force that can impact organizational performance and

business.

Pepsico Inc Case Study

           Pepsico Inc. is one of the largest beverage companies that operate its business operations

in more than 200 countries around the globe. It is one of the few companies that operate in

almost every country. The company has almost three hundred thousand employees worldwide.

One of the key competitors of Pepsi is Coca-Cola. The company manages the global market

forces through effective strategic management strategies and employment relations. The

company values its employees and workers and gives them adequate benefits. In addition to a

competitive salary, the company offers retirement and financial benefits and several health and

insurance benefits. The retirement and financial benefits involve a defined contribution pension

plan, defined benefit pension plan, stock bonus, 401 (k) plan, and profit-sharing. Similarly, the

health and insurance benefits involve prepaid legal, accidental health insurance, life insurance,
GLOBALIZATION AND EMPLOYMENT RELATIONSHIP 12

vision insurance, dental insurance, supplemental unemployment, severance pay, and temporary

and long-term disability insurance (Zhang, 2019). The company offers these benefits to motivate

the employees to work for the betterment of the organization. The company also demands loyal

employees to achieve the set goals and to maintain a balance between demand and supply in the

labour market. The management of Pepsico Inc. believes that the employees are an asset of the

organization and the success of the organization is highly dependent on their performance.

Conclusion

Globalization has changed the dynamics of business in the contemporary era. The large-

scale organizations are expanding their business operations to other countries day by day.

Multinational companies have to tackle the global market forces to run their business operations

successfully. The global market forces particularly demand and supply, competitive business

environment, bargaining power of customers, the threat of new entrants, and labour force,

influences the strategic management processes of an organization. The strategic management

processes influence employment relationships. The market forces also emphasize effective

employment relationships. The organizational culture is also influenced by the global market

forces. The case studies of large multinational organizations have revealed that these companies

have appropriate employee management policies to enhance employees’ loyalty, retention rate,

and performance. It is evident from these case studies that the global market forces have a

critical role in moving these organizations towards a standardized approach to managing

employment relationships.
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