Global Issues in Busisness

Global business I no more the prerogative of multinational corporations or the big few.  Due to recent developments, cross border trade and business have become more common all over the globe.  There is an increase in overseas business for more U.S. companies.  This increased activity has led to new concepts, terms, practices and regulations that managers have to be aware of.

There are at least three distinct phases of globalization that a company goes through.  International HR practices differ from country to country.

Import-Export Firms:  In this scenario, firms do not employ people in other countries.  They just export or move products across the borders.  A few man agers only negotiate deals or business agreements.  This involves buying and selling products/services only.  Companies need to understand trading firms` culture and communication barriers.  Expatriates are not employed widely by import-export firms as compared to multinational firms.  There is not much of a change in HR policies and practices from the company`s practices at home.

Multinational EnterprisesL(MNEs). In this phase of globalization, companies have their units located in foreign countries.  Here parts of the company`s goods/services may be produed in one country, then moved to another for assembly, and finally distributed to other countries where they are sold by company employees.

MNCs employ expatriates extensively who are from the parent organization to oversee operations in foreign countries.  They function and coordinate between subsidiaries and HQs, manage strategies, ensure quality and other control systems, and global information systems.

MNCs hiring workers in foreign countries musthave HR practices adapted to each country.  Along with hiring, MNCs must also train foreign work force, adhere to the laws of the land, monitor cost of labor, selecting expatriates, and helping them and their families succeed in their new assignment and the environment.

Global Firms:  In this phase, companies have their offices in a number of other countries that interact with both HQs and with each other.  Each country unit  may specialize in one area of the total functions; for example, engineering may be done in one country, research in another country, production in yet another.  Both people and products are moved very extensively across national boundaries to meet company`s demands.

International Agreements. The global markets have become extremely competitive, dynamic and volatile.  Companies have to get into a global market to survive because the cost makes a major difference.  Companies with small national economics have found competition very difficult to manage.  To have a larger market, European countries have created a single market by removing internal barriers through the European Union.

In response, Canada, Mexico and the United States signed the NAFTA to facilitate the movement of goods across boundaries within the North America.  This is a 3-country pact for the benefits of labor against competitive economic pressures.         

Questions:

• How do Multi-national Enterprises operate in the globalized business?
• Describe the operations of Global Firms.