The Impact of Globalization on Organizations

By Mary T. O’Sullivan

Like it or not, the world of Globalization is here to stay. How else would we enjoy fruits and vegetables in the winter? Where would the price of electronics and software products be if it weren’t for globalization? What about national defense? What is the impact of a global world where our nation’s safety is at stake?

The overall impact of globalization on one organization has brought change in every aspect of the way it conducts its business. Due to the nature of much of the business, export of certain technologies is banned by the US Government. However, due to the US Government’s need to ally with strategic international defense partners as well as internal offset requirements, leveraging multi-national alliances has become far more commonplace. Companies now do business with Thales, BAE, and partners in Australia, Canada, as well as Japan, Taiwan, Turkey and the United Arab Emirates (among others) in order to fulfill those requirements.

Technology, Trade/Investment (such as customers and suppliers)

In this case, the relationships the company establishes are not necessarily based on cheaper labor or cheaper parts; these relationships are driven by the need of the US Government for leverage in strategic countries for the purpose of national defense.

As mentioned earlier, technology exports are closely controlled if permitted at all. As far as manufacturing our products overseas, some international customers want products that are made in US factories by US workers. They want that visit to the US to tour the manufacturing facilities. This is often a symbol of status to them.

However, securing a contract with an international customer usually dictates a need for alliances with companies in that country, often involving an acceptable technology transfer. Generally speaking, only non-critical hardware and software are available for technology transfer. Delicate negotiations and cultural sensitivities are essential in dealing with this situation. Another interesting issue a major US company can face is the importance of relationships. We have not come to grips fully with the concept of dealing with overseas partners’ relatives, friends, and other external relationships. This practice takes great finesse, and if mishandled, can lead to irreparable harm to the business deal.

Additionally, sometimes the company comes late to the party. They often approach international suppliers well after competitors have already locked them up. They may find themselves continually surprised by this phenomenon.

People (movement, composition of workforce), multi-nationals (mergers and acquisitions), culture (spread of common ideas and practices).

A major issue faced by some companies is the inexperience of its senior managers in international dealings. Many have unrealistic expectations and impose unrealistic deadlines and changes to the employees on the ground. This approach does nothing to speed up negotiations or improve milestone payments. Most international companies value relationships far more than artificial deadlines. Even with the acquisition of small international companies and hiring of experienced international businesspeople, many senior executives remain woefully unskilled in global protocols. (Like the importance of honoring verbal agreements.)

Also, while they have hired from many diverse cultures, much of the work in the company can be governed by the US Government, requiring natural born US citizens only. Employees of diverse backgrounds who were not born in the United States work in areas like HR, Communications, etc.

How the company mission, type of business, operations, ownership, management practices or other characteristics as a result of these global developments.

The organization has made some progress recently. They have appointed a UK director to lead a major international capture effort. The have also leveraged a small German subsidiary to assist in European and West Asian efforts. There is also an endeavor ongoing to establish landed companies in strategic countries like Saudi Arabia, the UAE, and Kuwait. Moreover, a senior executive for one major international business area is Indian, as is the senior in-country executive for that same business.

The mission of some companies is national defense, and that mission has not been changed by doing business internationally. The mission is dictated by the US Government, and inclusiveness is a corollary to that mission.

The international efforts are in support of expanding the role of strategic partners engaged in a similar business type overseas. The business model has not changed. They do not deal in palm oil, rice, carpets or other commodities.   Business operations have been limited to obtaining and establishing landed companies, not expanding our US concern abroad. Many businesses are not transferable.

Opportunities or potential difficulties these changes have presented.

With national protection as a core mission, opportunities as well as challenges present themselves to a large concern. Opportunities for international sales are apparent as the US Government seeks to export products to further its own interests in strategic countries. The burden for completing those deals successfully is with the contractors, as they navigate the whirlpools, eddies and currents while establishing viable business partners overseas. Savvy leaders are needed to build and maintain those business relationships and to bring profit into the company, while protecting US interests as well.

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Mary T. O’Sullivan, Master of Science, Organizational Leadership, International Coaching Federation Professional Certified Coach, Society of Human Resource Management, “Senior Certified Professional. Graduate Certificate in Executive and Professional Career Coaching, University of Texas at Dallas.

Member, Beta Gamma Sigma, the International Honor Society.

Advanced Studies in Education from Montclair University, SUNY Oswego and Syracuse University.

Mary is also a certified Six Sigma Specialist, Contract Specialist, IPT Leader and holds a Certificate in Essentials of Human Resource Management from SHRM.