What Is The Opportunities Purpose Global Development?
The ‘globalization’ term has obtained substantial emotive strength. It has the ability in offering exclusive opportunities for the purpose of truly global development, though it is not succeeding evenly. Markets are in the process of promoting competence through labor division and competition- a specialization that facilitates people and the economies in focusing on the things they perform best. According to Hirst, Thompson and Bromley (2015), globalization is the competition within the global market. The rate of growth of the nations that are of developing nature along with their attainment of companies that have been first-world owned designates that the urbanized world no longer holds the upper-hand economic development. Success that lies within this new global market needs the facility in accommodating the diversified needs of the different consumer goods. Companies can attain this through the innovations in product and procedure along with maximization of the profits.
Companies that are emerging from the promising economies are pursuing the lead of the improved complement, concerning stocks and encouraging of the investment factor. This generally encourages the growth factor along with sharing of the appreciation and surpassing the previous expectations. This paper would focus on Amul, a dairy cooperative company that emerged from the developing nation of India, formed in 1950. Amul has been tipped as the biggest milk brand within Asia with it being available in 40 different countries. It has been exporting a wide assortment of products with its major markets being West Indies, US, Singapore, Philippines, China and Japan to name a few.
Globalization and Business Conditions:
The number of potentials gets much bigger once individuals consider more than the individuals. For instance, in case of Amul, a lot of people of people works in the various factories and offices it ahs overseas, each of them might be having their own perceptions on the subject of international business. As per Cooper and Ezzamel (2013), Amul works with various suppliers and many customers across the world, having their own employees, having certain level of biasness and viewpoints. Amul has to comply with global trade laws and regulations that are being impacted by the opinions of the overseas government executives.
The bigger idea is that there are hardly ever views on global business that can be termed universal. His requires to impact on the ways managers take decisions, selecting among the substitutes and crafting plans of actions. It would be unwise in assuming that the practices which are adequate at one place and time would be similarly accepted in certain other situations. It might be the fact what one individual perceives to be good may be illegal and unethical to another. Acknowledging the diversified perceptions on the factor of globalization is useful in amplification of the perceptible confusion on the subject apparent in the press of the business. Articles on the primary page of newspaper might commemorate the financial returns of Amul, attaining through an effective chain of global supply, whereas, a synchronized magazine’s cover story might lead out an attack on the cost of humans connected with the factory closings, or other interference originated by globalization (Sun, et al. 2015). The question that arises here is which one of them is right. There is high possibility of both the views being precise, depending on the ways one looks at this particular situation.
Globalization is stated to be a phenomenon that is continuously in the move, a multiplicity of viewpoints might used in evaluating the globalization’s impact, submission of meaningful insights into the management of activities within global business. The commencing point for such approaches is that global managers working in organizations like Amul need to relax their observations on the ways business is conducted in certain other parts of the world (Hitt, Li and Xu 2016). Each country comprises of its own economic conditions with people having various opinions on the suitability of several global activities of business. Simply being responsive to the conditions within the scenario of global business along with the multiple viewpoints is not supportive for individual managers who are encountering precise opportunities and issues. Awareness does not offer any help in deciding on the things that should be done about such factors. For more detailed analysis, managers need to spin to theories and models that are being urbanized by global business scholars over the precedent several decades. Globalization issues are often much complex where reactions based on instinct and gut feel is in all probabilities would be misguided, a dangerous factor to the long-term outlook of the firm (Scherer, Palazzo and Seidl 2013).
Opportunities of Globalization on Business of Amul:
Globalization has brought about enough benefits in developed economies like India. It takes in number of factors like trade, technology, competition, employment and organizational structure.
Most of the flourishing emerging markets in the developed countries are result of privatization of state owned industries. For Amul, it is a company based in Gujarat that expanded all over India with its products, attempted in expanding and extending their value chain to a global level (Kurtishi-Kastrati, 2013). Amul has been successful in its endeavor of expanding globally, reflecting through its presence in more than 40 countries. Amul has been exporting its consumer products, including products like ghee and cheese to countries like Australia, Middle East and USA where there is existence of high absorption of Non-residential Indians (NRIs). It believes in the fact that people might shift and live somewhere else, but their eating habits remain same for a lengthy time period. Global market presented Amul with lot of opportunities in marketing of its product, a decision that never required a second thought for Gujarat Cooperative Milk Marketing Federation (GCMMF), owners of the brand Amul (Rottig 2016).
Globalization has generated and extended global trade in the world. Things that were previously found only in developed economies are now available in other countries across the globe. The BactoScan approach used by Amul has been designed for fully-automatic, reliable willpower of the hygienic excellence of raw milk, used in evaluating incoming raw milk for avoiding contagion. BactoScan is a technology that is being used by developed countries like US and UK, which has been favored by Amul over a period of time. People can get access of any product from wherever they want. Amul has been able to establish itself in India over a period of 50 years, emerging as a brand that is believed by people for manufacturing quality products. It did not require much time in finding market share overseas, especially where the Indian population is more. Amul’s venture into the foreign land has led India to enjoy comparative advantage being engaged with foreign trade.
One of the most noticeable positive impacts of globalization is the developed quality of the products due to global competition. Services related to customer along with approaches like ‘customer is the king’ to production have led to developed quality of products and services of Amul. In India, domestic companies like Amul have to see off foreign competition within local environment and then thrive hard to compete in the best possible manner in foreign market (Zaiceva and Zimmermann 2016). At the time when Amul decided to venture into Russia and USA, it came in riding on the goodwill it generated in India, which it requires to love up to (Bremmer 2014). This generates competition within the market and a situation where the fittest survives. Amul benefitted from the decision of Russia in lifting restrictions on the milk imports and other dairy products from India. However, the pricing of the milk in the global market was a factor at that point of time. The management required in taking a decision whether it would venture into the Russian market or delays its process. Russia imports around 8-10 lakh of milk powder per annum and the exports of Amul stood at 540 crore in 2014 (Wu and Chen 2014). Amul has made rapid progress in the global rankings, presently in the 13th position as per the latest data released by International Farm Comparison Network (IFCN). Amul is ranked well above other well known dairy companies like Muller of Germany, Mengniu of China, and Groupe Sodiaal of France.
Companies like Amul benefits from diversified workplace and customer base. In India too it has been managing a diversified workforce and customer base from a longer period of time, prone to varied tastes and culture that is different. The way it has managed the domestic workplace and different sorts of culture within India, it benefitted Amul immensely when it went overseas to capture the foreign market. Amul’s dairy products are result of the diversified customer base that have always fostered innovation, as companies like Amul are pushed to constantly improve their products and services in meeting varied needs. Diversity in workplace offers challenges to the manager for mitigating the disagreements caused by misinterpretation (Cuervo-Cazurra and Ramamurti 2014). Managers of Amul get first-hand experience in the local market only harnessing diversity’s productive authority and downplaying its challenges through acknowledgement. The same could be applied by them in global markets.
Threats of Globalization for Amul:
There are certain threats for Indian organizations even of Amul’s stature when it goes global, with definite need for finding answers. These challenges can be internal as well as external as been described below:
- Internal: These are the challenges inherent to the organizations in making a real impact at the international level, companies like Amul need to strengthen themselves by getting rid of such issues.
McKinsey in a study found that handling of a global business is one of the key challenges as it takes in different people having different orientation of culture to work mutually for a common goal is certainly difficult (Verbeke and Kano 2015). Wherever Amul went, their global success was based on the localization factor when pushing for the regular goal. Amul needs to develop their Indian managers with global mindset for understanding and managing the differences existing in culture.
Strong Vision and Credentials:
The introduction to bigger projects in India as compared to the global scale is restricted. Only few of the companies like L&T, GMR have been successful in completing their global projects. Companies from emerging economies need to put forward a stronger vision and plan for their global path through the leverage of their experience in India, like Amul aspires to be the global leader in the dairy product market.
External: There are certain challenges that are not in the control of the Indian companies or their decision makers.
Slow Global Economic Growth:
Due to the imperative slowdown in the European and USA markets, organizations are aggressively been pushing for the market distribution, impacting the margins. In the year 2012, the global GDP fell to 3.2 as compared to 4 per cent in 2011. The growth of GDP in the emerging markets and the developing countries were positioned at 5.3 per cent in 2013, augmenting to 5.7 per cent in 2014 (Sun, et al. 2015). Indian companies like Amul need to strategize their plans related to growth along with optimizing their resources for spirited challenges.
Home versus Host Country effect on HRM:
The idea of global competition has forced businesses in changing the ways they manage themselves at home and in abroad. The increase in the change rate along with technological advancement, high speed communication is all significant factors in contributing to these changes (Zaiceva and Zimmermann 2016). Although the global manager of an organization performs some of the basic functions to that of the local manager, he requires adjusting to more environment and variables.
International managers need to address a wider range of activities than their domestic counterparts. These take in the process of global taxation, coordinating the rate of exchange and foreign rates, international rearrangement along with the global orientation program for the employees posted overseas. The Human Resource managers working within a global scenario encounters issues addressing the HR problems of the employees fitting in to more than one nationality (Wu and Chen 2014). Hence, these HR managers need setting up of different systems of HRM for different set of locations. The Human Resource managers within the domestic environment administer the programs of HR to employees from one single nationality. The HR manager of Amul working in Mumbai would cater to one particular set of HR policies to that of one working in Chennai. However, the HR manager working in USA and Australia needs to have various HRM systems as per the nationalities working in the office.
For global business managers they need greater involvement in the employees’ personal lives. The HR manager of Amul in Russia needs to make certain that an executive who is positioned in the foreign country understands all the facets of the package of compensation offered in the foreign project like taxes, living cost. The HR managers need to review the eagerness of the employee’s family to relocate, supporting the family in amending with the foreign culture through training in cross-culture (Zhou and Guill?n 2015). For domestic, managers involvement is only limited to the offering of insurance programs or providing of the transport amenities.
There is heightened publicity to the risks in global assignments. These risks take into account health and safety related issues of employees and their families. According to Bremmer (2014), a major facet of such risk is potential terrorism. MNC’s need to consider this factor while sending their employees on global assignments. It is for the global HR or business managers to persuade the employee for a shift and seeing to it that he does not return from the assignment pre-maturely. Such a factor would lead to high direct and indirect costs. So, the global managers need to play tactically. The Global business managers need to deal with more external factors than their domestic counterparts. For instance, the practices of staffing overseas, local conduct codes, impact of religious groups. If Amul plans to do business in Turkey and is sanctioned license by the Turkish government for setting up a Turkish subsidiary, the Indian company is legally obliged to offer employment to local people.
Globalization has its effects on companies, especially the ones that are coming out of the emerging economies, like Amul. Though it has opportunities of global market and diversity to play with, issues are plenty to deal with for its survival. Managers need to be ably trained for sustaining the global market pressure and work as per the host country norms. Efficient people along with competent technology hold key for MNCs out of the emerging economies to make a mark at the global stage. A differentiation between the global and domestic business managers have also been done that states global managers have more tasks to perform than their local counterpart.
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