What is Globalization ? – Meaning and its Importance
We often hear the word globalization in many contexts and repeated frequently as a concept to denote more trade, foreign companies and even the ongoing economic crisis. Before we launch into a full-fledged review of the term and its various manifestations, it is important to consider what exactly we mean when we say globalization. Globalization […]
Role of HR Consulting in Mergers and Acquisitions
Corporate transactions, including mergers, acquisitions, divestitures, joint ventures, and other methods of organizational restructuring and transformations, are strategically important in enhancing competitiveness, economies of scale and growth of an organization. Nevertheless, the human resources or ‘people’ factor of an organization holds the key to success in all such corporate transactions. But, this factor is the […]
What Are Mobile Wallets?
Mobile wallets have become the latest startup sensation. Companies like PayTm have the first mover advantage in this space. However, other companies like MobiKwik, Phone Pe, M-Pesa etc. are quickly moving into this space. It is surprising that an area of business which did not even exist a few years ago is now on the […]
Effect of Domestic Politics on Business Process Outsourcing (BPO)
In previous articles, we talked about how the ongoing global economic crisis coupled with domestic pressures affect the outsourcing of back office operations. In this article, we look at a hot topic and a burning issue in the West i.e. the hue and cry over outsourcing and shipping jobs overseas especially at a time when […]
Step 1: Selecting the Correct Variables to Monitor
Since the entire premise of having a Six Sigma process is based on measurement, comparison of measurements and setting corrective action plans, it is crucial that the variables (metrics) being measured are appropriate. Wrong measurements lead to wrong decisions which are expensive and a wastage of time and resources. As explained in the Define module, […]
It is a known facet of globalization that businesses that operate across the world have to contend with global policies and local regulations at the same time.
In other words, these international businesses have to not only follow the global rules set by world trade bodies like the WTO (World Trade Organization), GATT (General Agreement on Tariffs and Trade) and the United Nations but also have to obey the local regulations in the countries in which they operate. This is sometimes referred to as the marriage of globalization and localization, which gives rise to the term Glocalization that, was popularized by the famous cheerleader of globalization, Thomas Friedman. The implications of this adaptation are that more often than not, many international businesses have to comply with the quantum of profits that they can repatriate from the market in which they are operating.
Repatriation refers to the practice of sending back the profits from the countries in which these international businesses to their home country.
For instance, the global consumer products giants, Unilever and Proctor and Gamble have to ensure that the rules in the countries in which they operate have to be complied with during their business activities.
This has led to these giant companies having separate subsidiaries in the Asian and African countries where they have their presence so as to ensure full compliance with the local regulations.
The other aspect about international businesses is to do with the internal policies.
For instance, many multinationals have global HR (Human Resource) policies that need to be followed across all units. However, the labor laws in the specific countries in which they operate have to be taken into account as well when they formulate policies for these units.
For instance, in many Asian countries including China and India, there are strict labor laws that mandate the working hours for women and insist that the companies provide transportation in case of longer working hours. This means that the international businesses have to be cognizant of these laws and to comply with them as well.
Indeed, many multinationals often complain that they are constrained by the local rules and regulations. The rejoinder from the local authorities is that these are the costs of doing business in that country.
Perhaps no aspect of international businesses and the need to suit themselves to local rules is more important than the hiring and firing of employees. In the west, it is common for companies to hire employees when there is an economic boom and fire them when the boom bursts.
However, in many Asian countries, hiring and firing of workers has to conform to strict regulations and the companies must show evidence that the downsizing or the layoffs were warranted.
The other side of the coin is that many western companies take advantage of the lax labor laws in countries like Bangladesh, Thailand, and Indonesia to setup what are known as “sweatshops” or manufacturing units that can operate at the terms of the western companies. This has drawn howls of protest from human rights activists who complain that the western companies are exploiting the workers in these countries taking advantage of the lax labor laws.
Whichever side of the debate you are in, the fact remains that harmonizing the global rules and the local regulations is indeed a challenge for western companies seeking to do business in other parts of the world.
Added to this is the fact that in Africa, many western companies have been accused of resource theft or exploitation of the mineral and oil wealth in those countries leading to severe resistance from the locals.
Finally, we have touched upon many themes in this article and each of them is a separate topic for discussion as the dynamics between the global rules and the local regulations takes on interesting aspects of how multinationals operate.
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Cross Border Mergers and Acquisitions and Some Recent Trends in this Field
February 12, 2025
