The History About What Is Globalisation Business Essay

Introduction

This report is being written in order to decide whether we agree that managers have to be aware of the global environment in which they survive. This report entails the importance of global management, as managers with the highest hierarchal standing need to take into consideration the global environment in which their organisation exists. The history of how organisations have been managed without taking in contemplation of the global environment will be reviewed .We will investigate or refer to the impact that multiculturalism has had in managing businesses. Management principles will also be discussed with regards to historic theories pertaining to pre-globalisation and management principles fulfilled in the global context. We will view globalisation from a contemporary perspective and review the effect it has on organisations on how they are managed.

History

What is Globalisation?

Globalisation can be defined in several ways, but all basically mean the same thing i.e. that globalisation is the expansion of production, communication and technologies across the globe. This has been becoming more and more popular throughout the years. The two main constituents of globalisation are

1) The globalisation of markets and the globalisation of production. The globalisation of markets refers to the formation of separate nations into one global market, this occurs when cultural differences are put aside and standard products are distributed globally.

2) The globalisation of production is basically the ability to source products and goods globally in an attempt to reduce manufacturing costs.

Globalisation reaps its advantages as well as disadvantages among the people. As the great Nelson Mandela put it so clearly, "Where globalisation means, as it so often does, that the rich and powerful, now have the means to further enrich and empower themselves at the cost of the poorer and weaker, we have a responsibility to protest in the name if the universal freedom." (Mandela, N. 2000) This saying points it out quite clearly; the rich are getting richer whilst the poor remain as needy as ever. With globalisation, organisations can make more money from their goods and services due to factors such as, larger customer base, difference in economy between nations etc. This enables people who are already rich, to make further money from their goods and services whereas the poor people, who can barely afford the goods and services from their own country, do not benefit from those of other countries either. They cannot be hired by their firms because of their lack of education and skills therefore they are not advantaged by the job opportunities that present themselves in other countries.

Apart from that, the rich are getting rich due to the fact that their goods and services are in high demand in other parts of the world and therefore they make a lot of money from it. Take China for example, their products have taken the world by storm and people around the globe are purchasing them. This will be highly beneficial for the organisations who have produced them. The employees these organisations will also benefit.

Mandela, N. 2000. Speech on receiving the Freedom Award from the National Civil Rights Museum. [Online]. Nelson Mandela Centre of Memory. Available: http://db.nelsonmandela.org/speeches/pub_view.asp?pg=item&ItemID=NMS919&txtstr=22%20November

[28 March 2013]

The primary objective of any company, organisation or firm is to maximise profit earned, whilst simultaneously minimising the costs. This is achieved through constant re-evaluation of the methods of efficiency and effectiveness. The management theories and techniques have evolved through the years and still are, as innovation, technology and ways to communicate become more advanced. Globalisation resulted in many advantages as well as disadvantages, yet ultimately meeting the primary objective for many. Unfortunately, while some thrived, others fell behind - creating an imbalance and setting the course for future successes and failures in global economies. The catalyst that leads to our revolutionized world was the fall of the Berlin wall. It began to shift power all around the world to free market orientated governance rather than centrally planned economies. Flexibility was introduced into the business environment encouraging opportunities of growth and change. This historical and monumental event laid down the foundations for our world today.

Anything is possible, no one could have predicted the giant leaps globalisation has taken, especially in recent years as technology and communication reached new heights worldwide. It has connected the world and people in various circumstances that would have otherwise been unimaginable twenty years ago. Its beginning is as fundamental to globalisation as the fall of the Berlin wall .The internet has become a powerful tool, accessible to anyone and so simple to use that a child can operate its benefits. Through the years this ingenious technology has become increasingly popular, also improving remarkably integrating countries, companies and individuals. Its fascination began with simple applications such as email and internet browsing, introducing the world to a new level of convenience and intrigue while creating a significant and unexpected demand. The internet now forms an integral part of our lives, helping us to communicate with people from all walks of life, personally and in terms of business efficiency. It also offers us the precious opportunity to save time by enabling us to conveniently do a number of activities online. A world renowned company that combines the benefits of both the internet and globalisation is Facebook, created by Mark Zuckerberg. This amazing invention is one of the fastest growing companies in history, appealing to people’s social and business needs and wants in all aspects. It connects us at a cheap rate, provides information and enables us to share and communicate with one another at any distance. It’s simple and mind blowing concept again leads us to the incredible notion that anything is possible. As with most things, there are two sides to any coin and the internet has its disadvantages and dangers which can only be overcome through caution. Despite the downsides, businesses need technology to achieve their objectives, which ultimately leads them to submit to globalisation. Browsing the net, digitalization of content, improved software, and well-organized handling of content makes up our growing world, which creates a platform for collaboration and expansion.

Development is vital in any environment and improvement is best achieved from those at the lower levels of the corporate hierarchies. Thomas Friedman reports that, ''It's called the open-source movement, and it involves thousands of people around the world coming together online to collaborate in writing everything from their own software to their own operating systems to their own dictionary to their own recipe for cola - building always from the bottom up rather than accepting formats or content imposed by corporate hierarchies from the top down''. It’s a movement that allows ideas to be improved to reach its true potential by individuals from anywhere in the world. The open-source movement moves us forward together, surpassing our differences, combining our ideas and reaching otherwise unattainable goals. Open-sourcing connects individuals intellectually to fuse brilliant ideas and improve efficiency. Jones George defines outsourcing as ‘Contracting with another company, usually abroad, to have it perform an activity the organisation previously performed itself.''

India is an ideal example to explain the concept of outsourcing. Lacking in resources, yet exceptionally rich in intelligence, Jawaharlal Nehru, India’s first prime minister, was able to acknowledge the raw talent his people possessed and took the initiative to educate the great minds in India. Nehru did this by establishing several Indian Institutes of Technology (IIT), creating strong competition between individuals and producing the most talented and best suited candidates in a wide variety of fields especially in engineering and computer science. India unfortunately had no demand for the influx of educated people, but other more developed and modernized countries did. At first the Indians emigrated to where their skills were needed, but many couldn't because of their circumstances. Then it became possible to stay in their country and offer their services which were very attractive to bigger and more established countries because India had a large volume of workers who were exceptionally equipped in their education and worked for a cheap rate. Opportunities poured into India - further empowering globalisation.

Off shoring has played an integral and significant role in the influential and powerful position China holds. Thomas Friedman defines off shoring as "A company that takes one of its factories that is operating in Canton, Ohio and moves the whole factory offshore to Canton, China. There it produces the very same product in the same way, only with cheaper labour, lower taxes, subsidized energy and lower health costs." When China chose to be part of the World Health Organisation (WHO), it achieved most of its success through off shoring. The advantages of manufacturing in China by far outweigh the disadvantages. China has offered so much more for less, attracting a lot of opportunities and defining globalisation in a new light .Off shoring complies with any organisation’s primary objective to effectively and efficiently reduce costs while maximising the overall profit.

Thomas Friedman describes supply chaining as "A method of collaborating horizontally - among suppliers, retailers and customers - to create value." Supply chaining is both enabled by the flattening of the world and a hugely important flattener itself, because the more these supply chains grow and proliferate, the more they enforce the adoption of common standards between companies (so that every link of every supply chain can interface with the next).The more they eliminate points of fraction at borders, the more the efficiencies of one company get adopted by the others, and the more they encourage global collaboration. Wal-Mart has mastered the concept of supply chaining and has become one of the world’s biggest retailers, allowing other smaller companies to acclaim the same business strategy without unexpected failures and disappointments. Supply-chaining supports expansion and convenience as command standards are adopted throughout the world by businesses facing all sorts of challenges, yet it leaves no room for growth but rather just a ripple effect. Its concept is generic and while it’s the solution to a number of problems, it also produces unforeseen difficulties. The bottom line is that supply-chaining provides products at cheap prices – bargains – that attract the attention of consumers. The bargains, variety and convenience is ideal for anyone, which is what makes supply-chaining so popular. Supply-chaining although effective is not the answer to every co-operation, especially leading companies because they would rather invest more money into other aspects of their service or product than multiply supply-chains. This development encouraged insourcing, a chance given to small businesses to flourish significantly. Insourcing makes up the third party businesses that supply services for the bigger companies all over the world, creating a more convenient and popular market demonstration worldwide.

Progression, decisions, achievements and so much more require information, which is now easily accessible thanks to the breakthrough in internet service and search engines such as, Google, MSN and Yahoo to name a few. To make it in a world that’s always progressing in some field or the other, being informed and educated is essential. Web searches allow us to research, learn and discover basically everything from our computers, cell phones, laptops, and more. It equips us with sources, facts and information on any topic from all around the world with the simple click on the search option. This has overcome the time consuming trips to libraries and other sources where information is limited. Web searches override this and make everything accessible and simple to use, enabling more time for the subject at hand than searching for it. Everything you need to know is searchable, so more thorough, informed and intelligent decisions can be made. This technology also enhances who we are as people, because learning enriches life, our conversations and broadens our interests and capabilities. The system is efficient also for consumers who can find not only information, but products and services from all brands. Web search engines like Google influence globalisation substantially – connecting us irrespective of where we come from and what language we speak. It joins us, expanding our knowledge and options.

Globalisation has been around since the time of Colonialisation. Raw goods were taken from the site of production and sent to developing colonies where the final goods were produced. This was done because the labour involved in the developing colonies was much cheaper, resulting in a lower cost and higher profit for the entity. There was also a ready market for these products in the developing colonies. Since the fall of the Berlin Wall, globalisation has increased tremendously. The internet has played the greatest role in globalisation by aiding international communication and allowing businesses to operate smoothly and efficiently in other countries. Open-sourcing and out-sourcing are both vital to globalisation. They are brought about by the internet and would not be possible without it. By going global, even smaller entities expose their commodities to a wider horizon. Just like the spoke (in a bicycle) turns the wheels around, every business that goes global creates a bigger network in the world. This also creates job opportunities on a global scale and helps to alleviate unemployment and poverty. This indirectly enriches the country by boosting the economy. Globalisation also helps in the manufacture of a single product because the various components that make up the final good are produced far cheaper in the global market than in one location.

How does it affect organisations and how they are managed?

Management in general is not an easy task. A lot of planning, decision making and other things need to be taken into consideration and when globalisation comes into the picture, managing becomes even more of a challenging task. In terms of planning, managers need to thoroughly understand their customer base when producing a good or service. When this is being done locally, it is much simpler to know what the people like and dislike because the culture is more or less the same in a particular country. However, when thinking in terms of the global environment, managers have to take diverse environment as well as the likes and dislikes of the vast customer base into consideration so it becomes difficult.

Another concern for managers when dealing with globalisation is managing personnel. In general, managers have to be very precise when it comes to the actions they perform and the policies they lay out it their organisation to cater for people with different needs. They have to consider gender, ethnicity and physical ability, among other things. Now when globalisation is involved, there are more factors being added to this list such as, the most obvious one, language as well as cultural background seeing as each nation around the globe has their own defined culture.

There is an indication that globalization is making the typical ways of transacting business essentially unsuitable. As a result there is a growing necessity for managers in organization to develop into global managers who have a global outlook. As business atmosphere changes from local to global, managers and business leaders are increasingly facing challenges of rethinking their business strategies and realigning their organization to match the complexity created by globalization

An instance of how globalisation has affected management is a case of women being inferior to men in certain countries. For example, in South Africa, women and men are equal and there is a lot of politics surrounding women empowerment therefore women have the right to be treated respectfully and fairly in the workplace. However, in Zimbabwe this is not the case. According to their culture, women are inferior to men and it is found to be acceptable for the men to discipline the women if they feel the need arises. If a manager from South Africa is appointed in an organisation in Zimbabwe and finds that one of their male employees has unfairly treated a female employee, this manager’s natural instinct would tell them that this is an offense and immediate action should be taken against the man but this is not the case in Zimbabwe as this behaviour is culturally acceptable therefore the manager will find it very difficult to adjust to this change based on their own values as well as policies that they are accustomed to from their own country. This, however, is a very extreme example but it does illustrate what is being said.

Ray, C. 2010. The Effect of Globalization on Management and Leadership. [Online]. HeliumTM. Available: http://www.helium.com/items/1813111-effects-of-globalisation-on-leadership-and-management

[13 March 2013]

Pakfame. 2008. What effect does Globalization have on Managers and how they respond to it. [Online]. CSS Forum – Civil Service of Pakistan. Available: http://cssforum.com.pk/css-optional-subjects/group/business-administration/16338-what-effect-does-globalization-have-managers-how-they-respond.html

[13 March 2013]

What is Multiculturalism?

"Multiculturalism means the accepting of variances and functioning from a position of genuinely appreciating one’s own cultural identity and others". (www.visions-incorp.com.26/03/2013)

Multiculturalism in the Workplace

Cultural awareness

Multiculturalism in the workplace creates a sense of cultural awareness in the workplace. Employees and employers get to know the beliefs and cultures of each other and it makes them respect each other. Multiculturalism in the workplace brings about diversity.When members of the work place know the beliefs and cultures of each other they learn to respect each other. Because of multiculturalism there is a variety of viewpoints, and when these viewpoints are used in problem solving than new and innovative solutions are reached and the business benefits.

Service coverage

"Companies that have a culturally diverse workforce may benefit from such diversity because they create a workforce with a larger social network than just one ethnic group. This can generate an interest for products and services in many ethnic communities within the larger community. Businesses that offer goods and services that appeal to several ethnic groups are more likely to benefit from a multicultural workforce whose members can communicate with people in those ethnic groups."

Employee’s relations

Employees of multiculturalist businesses are open to different viewpoints in the workplace will be more likely to practice understanding and respect of other peoples viewpoints and are likely to co-operate well with one and another or reach a compromise when differences arise. Workers who get along with each other are more productive.

Knowledge

"Employees who become aware of the culture of others in the workplace may want to learn more about that culture. A curiosity about someone else's culture can lead to a lifelong or a short-term pursuit of learning. Knowledge of another culture will stimulate tolerance in the workplace and also encourage workers to use knowledge of other cultures when they do their jobs"

When workers know about each other’s beliefs and traditions, they have knowledge about each other and this will reduce problems between each other. When Workers have good relationships with each other then the business becomes more productive. Multiculturalism promotes equity in the work place. The workplace will be diverse and people will come up with creative ideas for the business.

Management Principles

Managers are the crucial people responsible for the administration and making the most of an organization’s human and other resources to achieve its goals. Management then is the process of planning, organizing, leading, and controlling of human and other resources to achieve organizational goals efficiently and effectively.

What are management principles?

Management principles are the necessary managerial traits that managers need to obtain in order to create results. Henri Fayol was the CEO of Comambault Mining. Fayol identified 14 principles of management that are essential to increase the efficiency of the management process. These principles are the basis on which recent management theories and research is based. These principles include division of labour, authority and responsibility, unity of command, line of authority, centralization, unity of direction, equity, order, initiative, discipline, remuneration of personnel, stability of occupancy of personnel and demotion of individual interest to the common interest. These are important principles but the main critical ones researched are the following.

Planning

Planning means identifying a business’s goals and tasks as well as the suitable organizational resources required to achieve those goals and implement those tasks. Through planning managers, identify desired results and ways to achieve them. The three steps involved in planning are;

Deciding which goals the organization will pursue

Deciding what strategies to adopt to attain those goals and

Deciding how to allocate organizational resources to pursue the strategies that attain those goals. How well managers plan and develop strategies determines how effective and efficient the organizational is its performance level.

Example of excellent planning is a business such as Ernest $ young. The retrenchment rate was running at 22% a year and it cost the firm 150% of a leaving employees annual salary to hire and train each replacement They developed an initiative to reach the required needs of the firms female professionals. The firm’s chairman launched a diversity group with the planning objective to decrease the retrenchment rate for women.

Organizing

Organizing is structuring working relationships so organizational members interact and cooperate to achieve organizational goals. Organizing people into departments according to the kinds of job specific task they perform lays out lines of authority and responsibility between different individuals and groups. Managers must decide how best to organize resources, particularly human resources.This is important in order to create organizational structures so teams can reach organizational goals.

An Example of great organizational skills is The chairman if Earnest &young, who organized to meet the planning objective by first creating a new office of retention and then hiring a woman .She convened special groups to address problems and recommend ideal outcomes. Also Deborah k. Holmes’ access initiative was started to give women access to senior executives for mentoring and career guidance.

Leading

An organizations vision is a short, concise, and inspiring statement of what the organizational intends to become and goals it is seeking to achieve-its desired future states. In leading managers articulate a clear organizational vision for the organization’s members to accomplish, and they energize and enable employees so everyone understands the part he or she plays in achieving organizational goals. Leadership involves mangers using their power, personality, influence, persuasion, and communication skills to coordinate people and groups so their activities and efforts are in harmony. Leadership revolves around encouraging all employees to perform at high level to help organization achieve its vision and goals. Another outcome of leadership is a highly motivated and committed workforce.

Example of leading from Earnest&Young

Deborah K.Holmes became a champion for improved work life balance and pursued it relentlessly as women were often stressed as their spouses worked. Her office supported and encouraged better balance in many different ways. She started "call free holidays" when professionals did not check voicemail or email on weekends and holidays. She also started a "travel sanity" program that limited staffers travel to far days a week so that they could get home weekend.

Controlling

Controlling means that the actions of organizational members are consistent with the organizations values and standards. In controlling the task of a manager is to evaluate how well an organization is achieving its goals and taking action to maintain or improve performance. The outcome of the control process is the ability to measure performance accurately and regulate organizational efficiency and effectiveness. The controlling task also helps managers evaluate how well they themselves are performing the other three tasks of management - planning, organizing and leading and take corrective action.

An example of controlling At Earnest&young Laskawy and Holmes had recorded what the firms’ retention rate for women was when they started the new programme. With this baseline they were able to monitor progress to verify real improvement. Through measurement they were able to compare actual results with planning objectives and identify changes and work- life balance and retention rates overtime. As they reviewed the results they continually adjusted their plans and activities to improve future outcome.

How were management Principles fulfilled by historic theories: Pre –Globalisation?

Globalization refers to the increasingly global relationships of culture, people, and its economic activity. Pre-globalization during the 19th century was one of the major periods in the history of globalization. There was a significant increase in the quality and quantity of goods. This resulted in higher exports and better trade and business relations. Organizations have realized in the past that a deep understanding of management principles are required in order to ensure that their businesses are continuously improving. "Management theories were solely or primarily adopted in organizations to help get the job done and find ways to efficiently manage the organization and enhance financial rewards." (Grey, 2005)

During the period of pre-globalization there were many economic fluctuations and organizations had to be aware of these changes as they had to adapt in order to survive in their economic environment. Managers had to adopt the management principles accordingly and appropriately in order to ensure that the business was efficient and they were maximizing profits.

At the turn of the 19th some of the most prominent businesses had grown and had become industrialized. During this time, the scientific management theory by Fredrick Taylor was introduced. This theory dealt with job specialization and the division of labour. The scientific management theory aimed its focus on pairing management with science. The background focus of this theory was behaviour and performance. "The best management is a true science, resting upon clearly defined laws, rules, and principles, as a foundation". (Mirchandani and Ikerd, 2008, 41-42). By applying these principles managers sought to restructure processes and develop new ways to increase efficiency within the organization. Taylor had become a recognized figure with the introduction of his theory and during the same time period, other theories were also being developed.

Later, the administrative theory was introduced which differed from that of the scientific management theory in that it was based on achieving efficiency through organizational structure and control systems rather than science based decrees. Max Weber and Henri Fayol were the driving forces behind this theory. Max Weber then introduced the theory of bureaucracy which was closely linked to that of the organizational structure concepts. "The system of task and authority relationships that control how employees use resources to achieve the organization’s goals", (Jones and George, 2009, pp. 48-49) Henri Fayol developed the 14 principles that formed as a foundation for many organizations with regards to increasing efficiency in the organization. With a deep understanding off all these principles an organization can achieve efficiency and maximize profits.

The behavioural theory was later introduced during a similar time period by Mary Parker Forlett. This theory explained that by managers motivating and encouraging the employees, and by behaving in a manner that would create a comfortable and good working environment and relationships within the organization, employees would be more committed. She believed Globalization refers to the increasingly global relationships of culture, people, and its economic activity. Pre globalization during the 19th century was one of the major periods in the history of globalization. There was a significant increase in the quality and quantity of goods. This resulted in higher exports and better trade and business relations.

Historical Overview

Classical management theorists such as Henri Fayol and Frederick Taylor identified and emphasized management principles that they believed would make companies more successful. However, the classicists came under fire in the 1950s and 1960s from management thinkers who believed that their approach was inflexible and did not consider environmental contingencies. Although the criticisms were largely invalid (both Fayol and Taylor, for example, recognized that situational factors were relevant), they spawned what has come to be called the contingency school of management. Research conducted in the 1960s and 1970s focused on situational factors that affected the appropriate structure of organizations and the appropriate leadership styles for different situations. Although the contingency perspective purports to apply to all aspects of management, and not just organizing and leading, there has been little development of contingency approaches outside organization theory and leadership theory. The following sections provide brief overviews of the contingency perspective as relevant to organization theory and leadership.

Contingency Perspective and Organization Theory

Environmental change and uncertainty, work technology, and the size of a company are all identified as environmental factors impacting the effectiveness of different organizational forms. According to the contingency perspective, stable environments suggest mechanistic structures that emphasize centralization, formalization, standardization, and specialization to achieve efficiency and consistency. Certainty and predictability permit the use of policies, rules, and procedures to guide decision making for routine tasks and problems. Unstable environments suggest organic structures which emphasize decentralization to achieve flexibility and adaptability. Uncertainty and unpredictability require general problem solving methods for non-routine tasks and problems. Paul Lawrence and Jay Lorsch suggest that organizational units operating in differing environments develop different internal unit characteristics, and that the greater the internal differences, the greater the need for coordination between units.

Joan Woodward found that financially successful manufacturing organizations with different types of work technologies (such as unit or small batch; large-batch or mass-production; or continuous-process) differed in the number of management levels, span of management, and the degree of worker specialization. She linked differences in organization to firm performance and suggested that certain organizational forms were appropriate for certain types of work technologies.

Organizational size is another contingency variable thought to impact the effectiveness of different organizational forms. Small organizations can behave informally while larger organizations tend to become more formalized. The owner of a small organization may directly control most things, but large organizations require more complex and indirect control mechanisms. Large organizations can have more specialized staff, units, and jobs. Hence, a divisional structure is not appropriate for a small organization but may be for a large organization.

In addition to the contingencies identified above, customer diversity and the globalization of business may require product or service diversity, employee diversity, and even the creation of special units or divisions. Organizations operating within the United States may have to adapt to variations in local, state, and federal laws and regulations. Organizations operating internationally may have to adapt their organizational structures, managerial practices, and products or services to differing cultural values, expectations, and preferences. The availability of support institutions and the availability and cost of financial resources may influence an organization's decision to produce or purchase new products. Economic conditions can affect an organization's hiring and layoff practices as well as wage, salary, and incentive structures. Technological change can significantly affect an organization. The use of robotics affects the level and types of skills needed in employees. Modern information technology both permits and requires changes in communication and interaction patterns within and between organizations.

Contingency Leadership and Perspective

Dissatisfaction with trait-based theories of leadership effectiveness led to the development of contingency leadership theories. Fred Fiedler, in the 1960s and 1970s, was an early pioneer in this area. Various aspects of the situation have been identified as impacting the effectiveness of different leadership styles. For example, Fiedler suggests that the degree to which subordinates like or trust the leader, the degree to which the task is structured, and the formal authority possessed by the leader are key determinants of the leadership situation. Task-oriented or relationship oriented leadership should would each work if they fit the characteristics of the situation.

Other contingency leadership theories were developed as well. However, empirical research has been mixed as to the validity of these theories.

How Are Management Principles Fulfilled In The Global Context?

The global economic and business environment is constantly changing at a very rapid rate. Therefore effective business global management is even more important. Management principles are thus extremely important in ensuring that businesses remain competitive and successful in the present global economic conditions. Organizations need to strategically manage their business with the foundation of the fundamental principles of management. In the wake of globalization and a world that has rapidly integrated businesses must keep up with the constantly changing markets by adapting and employing management principles to guide their organizations to accomplish their goals.

The management of an international business varies from that of an international business as an international business is affected by many factors such as political and economic factors. The management principles are therefore essential to understand as these skills and techniques are imperative and must be utilized in order to not suffer losses. And in doing so, other companies that are involved with trade with the business will also suffer from not being able to purchase the products of the business. Managers must ensure that all levels of the organization have implemented the principles of management in order for the business to perform successfully on the global market.

The comparative figures of two global firms, Price Waterhouse Coopers and Ernst and Young will be utilized in order to illustrate the use of management principles within the global context. PwC is an accounting firm that has a network of firms in 158 countries, in 771 locations and has close to 169 000 employees. PwC is involved in services in assurance, tax and advisory services. Assurance, tax, transaction and advisory services are offered by Ernst and Young. The firm has 152 000 employees delivering these services with firms in 700 locations. PwC has specialized in certain fields and are attaining greater revenue than Ernst and young according to the financial statements of 2011. With this we can see that their management principles differ or are implemented in different ways. Since PwC believes in specialization whilst Ernst and Young believes in offering all services. It is quite clear that their approach to the changing markets differ.

It goes without saying that management of international company differs from management of national one, firstly because global business is more affected by political and economic factors such as customs duties , taxes on corporate income , offset trade and local content . Thus managing international company requires not only management skills, but also cultural knowledge and cross-cultural communication skills Understanding how to communicate cross-culturally will assist business developing in promoting creating smoothly working project teams responding to customers , clients , and markets living and working in a culturally diverse world . In a modern swiftly changing world people and cultures are circulating and interacting as at a really dizzying speed Those people who know how to use language and how to communicate cross-culturally have a crucial advantage over other businesses.

Global managers should contribute to company’s success by understanding the main levels of globalization as well as by admitting the importance of international agreements. Global business has led to creation of new concepts and practices and all leaders of global companies have to understand them. Global company belongs to the final stage of globalization meaning that such business is provided with strategic corporate units in other countries that interacts with both headquarters and each other. Therefore, the objective of a manger is to create global structure aimed at tying people and to provide help in coordinating scattered offices. The next moment to admit is the global businesses are trying to establish global human resource practices with a minimum of country-specific adaptations. Managers of global companies provide leadership and continuity in the various divisions apparently, managers would benefit from leading global businesses as it gives further opportunities in career development and promotions in leading an international company and ensures the highest levels of leadership skills.

CONCLUSION

Which Management Theory Is The Most Plausible For Modern Organisations That Exist In The Global And Multicultural Context?

The introduction of the organizational environmental theory was a revolutionary step in bringing about the best theory that could ensure an organization took into account all factors that could affect the business including the external environment. It is the latest theory and is therefore the most equipped in dealing with the modern economic conditions. This theory is designed for managers that are operating on a global market and take into account changes that happen within the boundaries of the organization as well as the external factors and changes that could possibly influence the business.

Customized or tailored products which take into consideration the needs of the consumer are actually more successful on the market than products that do not meet the needs of the consumer. Therefore it can be concluded that businesses which understand the needs of the consumer and make their goods suit the preferences of the consumer are also more successful. Businesses that operate on the global market must employ this technique and take into consideration the global market in which it serves. The adopting of the organizational environmental theory is accustomed to helping a business identify specific needs of the consumer and in doing so helps the business increase efficiency, decrease production costs and increase revenue. Feedback from consumers through an open system is therefore an essential part of the organizational management theory.

By taking into consideration the needs and wants of consumers, organizations are at a reduced risk of running losses since they are catering for the specific needs of individual customers. By studying the purchase history of the consumer, an organization is able to gain greater insight into the fluctuations of the markets as well as the preferences of consumers and trends that occur. In doing so, they are in a better position to satisfy the needs of the consumer in the global context, in different countries and across different cultural barriers. Managers must therefore establish working relationships within the organization itself and relationships with consumers as this is a key method to become an innovative business that is always moving with the trends of today. By adopting the organizational environmental theory, feedback becomes a key method to running the organization as it helps all levels of management in the hierarchal standing.

The organizational management theory is the most credible for an organization to adapt as it takes into consideration the current changing world, multiculturalism, the way in which organizations are managed, the preferences of individual consumers, the current trends, global market and in turn helps an organization become more efficient and increase revenue.

Do Managers Need To Be Aware Of The Global Environment They Exist In?

"The question of globalisation is dealt within the context of the foundations of management because the nature of the operating environment requires attention to, and understanding of, global and international social, economic, political and competitive forces, and because the potential for all organisations to expand outside the borders of their own immediate locality is growing all the time."(Richard Pettinger, 2007:111)

The above statement proves that managers need to be aware of their surroundings globally and in their locality. The current global economic market is always changing and evolving. In order for organizations to be successful they must always be aware of the changes and fluctuations of the markets. They must also always take into account cultural differences, tariff barriers, political issues and unstable foreign markets. Therefore it is essential that managers are always aware and have a profound knowledge of management principles as they form the foundation of a successful global organization which is efficient. With this, it is conclusive that managers must be aware of the global environment they exist in.

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