This report aims to identify the key issues organisations face as a result of globalisation and what Human Resource managers can do to ease the transition of the organisation going from multinational to transnational

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INTERNATIONAL MANAGEMENT 375

Group Research Report

Iie Sapphira Lawer 14556953

Ng Shu Hui 14343003

Muhamad Ory Adrianto 14668609

Teoh Woo Thon 15062037


To: Managing Director, Boost Juice Pty Ltd

From: Management Consultants

Iie Sapphira Lawer

Ng Shu Hui

Muhamad Ory Adrianto

 Teoh Woo Thon 

Date: 31 January, 2011

Title: The Implications of Globalisation on Organisations


Executive Summary

This report aims to identify the key issues organisations face as a result of globalisation and what Human Resource managers can do to ease the transition of the organisation going from multinational to transnational. HR managers must first perform strategic HR management, which is to align HR activities such as recruiting, selecting, training, and rewarding personnel (especially for the right person for the right job) to the business’ strategic goals and objectives to improve business performance and develop an organisational culture that promotes innovation and flexibility.

The four key areas of the challenges identified in this report are cultural distance, human rights, ethical concerns, and diversity in the workplace. Recommendations made in regards to the challenges organisations of today face include communication and interpretation issues when communicating with other nationalities, ethnocentrism, acting both legally and ethically, differing employment laws, labour laws such as child labour and sweatshop labour, and working among people of different backgrounds, gender, education level, nationalities, and race.

A SWOT analysis was developed to compare Boost and other industry players and what measure Boost need to undertake to increase its performance and strengths while understanding how to better manage its weaknesses and threats from current and potential competitors. Through franchising, Boost has acquired a substantial share in the wellbeing industry in many countries and a positive brand image and constant product quality standard is essential in garnering growth in market shares.


  1. Introduction

Globalisation is a process which results in “greater interdependence and mutual awareness among economic, political, and social units in the world” and where “the rapid increase in cross-border economic, social, technological, and cultural exchange is civilising, destructive, or feeble”. It is “a process fueled by, and resulting in, increasing cross-border flows of goods, services, money, people, information, and culture” (Guillen 2001, 236).

Multi-national corporations (MNCs) need to “build global capabilities such as the ability to seamlessly move talent, ideas, and information around the world to create products and services better than competitors” to acquire a competitive advantage over the latter. Global managers need to engage in “thinking global but acting locally” (Ulrich 1997, 3).

Boost Juice Pty Ltd was established in 2000 by Janine Allis in Adelaide, Australia who recognised the potential for wellness products in an age where there is increasing demand by time-strapped consumers for healthy food amidst growing obesity and health issues. Averaging a growth of 28 stores and with a group turnover of more than $AUD 85million per annum, there are more than 200 stores around the world. In 2001, Boost started its franchising program with franchisors generally being attracted to the unique retail concept, good marketing support, interactive and fun work-culture, well-established brand name, and most importantly, shared values and common direction. The previously untapped market for a healthy fast food alternative amidst growing demands by consumers who are more educated than before was seized quickly by Allis in what can be said is a blue ocean strategy, where companies will succeed in “uncontested markets ripe for growth” (Kim and Mauborgne 2007, 70).

2.0 Impact of Globalisation on HR Managers

Globalisation especially brings competitiveness in the business environment. Individuals not only have to compete within the country but also with people of other parts of the world. This translates to organisations having more choices and opportunities in their choice of manpower. With globalism, corporations need leaders equipped with worldwide perspectives and encompassed with practical judgements and sensitivity to global concerns. Organisations will have an added advantage if they are able to understand and maximise diversity efficiently (Holtzman and Anderberg 2011, 76). Globalisation aids in adding synergy to the company and thus, competitors will not see the company as a representative of a particular country but as a company in itself.

McShane, Olekalns, and Travaglione (2010, 169) suggested that globalisation and certain organisational changes can potentially undermine the level of trust and commitment necessary to motivate employees to work beyond expectations. Firms need to prepare their staffs for potential changes they might face due to globalisation.

2.1 Cultural Distance

Cultural distance includes include language, religion, family structure and difference in standard of living (Samovar, Porter, and McDaniel 2009, 18).

Culture shapes people differently. For instance, in an individualistic society, it is challenging for people to be more collectivist. Culture refers to a “systemic way of perception” and is composed of “beliefs, norms, assumptions, knowledge, values, or sets of practice that are shared and form a system” (Ahamer, Kumpfmuller, and Hohenwarter 2011, 18).

Dealing with global business, one of the issues that Boost may face is that of ethnocentrism. Ethnocentrism defined as people “making false assumptions about others' ways based on our own limited experience” (Hammond and Axelrod 2006, 927). These assumptions appear because of “one’s belief that their way of doing thing is the best and all other cultural practices are inferior”. Ethnocentrism can cause misunderstanding leading to conflicts and misunderstandings. To operate effectively and address ethnocentrism, managers should implement induction programs to counter culture shock (Soderberg and Holden 2002, 108).

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2.2 Human Rights

With many companies focusing on profit maximisation, they might fall to moral myopia or moral blindness to achieve their goals. One of the key issues of human rights is the use of child labour. Many consider child labour to be inhumane and abusive in nature as young children are often underpaid and work in dire conditions.

Labour laws vary from country to country and in Australia, home country to Boost, a child has to be of 14 years and 9 months to be able to be legally employed while age varies for full-time positions. Boost ...

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