There are many organizations having significant international presence. In the era of globalizations, it has become easier for organizations to set up their factories and develop a new branch in any part of the world in order to take advantage of economies of scale and cheap labour costs. In order to manage the business processes and talent of the organization it becomes important for the organization to develop a global strategy for its branches all over the world (Asongu et al., 2020). The organization has to incur an extraordinary investment in terms of time and money for adopting an effective global strategy for running the business processes. However, the literature points out the fact that global strategy proves to be less effective for tackling the cross border competition. The application of global strategy does not prove to be effective enough because different countries have different economic, technological and social aspects. Therefore, it becomes important for the organizations to draft policies in accordance with the internal and external environmental factors of the organization and its culture. The organizations need to develop strategies prior understanding the needs of the employees and the organizations. The organization have started adopting regional strategies which indicates that the organizations gives importance to existing geographical and cultural distinctions between the countries. The literature points out the fact that globalization has not increased to an extent that it could blur the distinctions between the countries.
The developments of regional strategies are able to target the different needs and motivation factors of employees in different regional branches of the international organization. This regional targeting helps in positively impacting the employee performance which further positively impacts the profitability of the organization. On the basis of above discussion, it can be understood that these regional differences between the countries are becoming blocs for the process of globalization (Ravenhill, 1979). Therefore, it becomes further important for the organizations to develop regional strategies in order to enjoy the benefits of economic integration for increasing the profitability of the organization.
In the era of globalization, it has become important for the organizations to focus on cross regional trade in order to increase the economic vitality of the organization. The findings of various studies indicate that the organizations that are able to adopt regional strategies are able to capture the international sales effectively. Therefore, it can be understood that the Human Resource Department has to draft regional strategies not only in order to ensure stable internal environment of the organization but also in order to ensure that the organization is able to retrieve the positive impacts of globalization for the profitability of the organization. The factors that positively impact the motivation of the employees is Country A will not necessarily increase the motivation of the employees in Country B. This makes it important for the human resource department of the organization to develop policies in consideration to the cultural and behavioural aspects of their employees (De Lombaerde et al., 2016). Every branch of the international organization has to have a distinct human resource department for managing employee relations, needs and grievances effectively. The competitive interactions between the business partners belonging to different countries are also regionally focused in order to further increase the scope of the business beyond the international boundaries.
The literature points out to the fact that most of the organizations rely on home based strategy for avoiding the complexity involved in setting different strategies for regional branches of the same international company. The findings also reveal that home based strategy is not always ineffective for the profitability of an organization. The example of Zara brand can be considered in order to understand the effectiveness of homes based strategy. The main producing hub and factories of Zara brand is located in northwestern Spain which are transported to Western European market for further delivering to the customers in the market. This approach helps the organization in responding to the needs of the customers timely and effectively (Zhao & Serieux, 2020). Along with this, the development of the home based strategy helps the organization in responding to the emerging and new fashion trends in the market. The immediate responsive strategies to the emerging fashion trend in the market makes the brand a committed and likeable brand for the customers in the market. In this way, the brand is able to reduce the cost of different producing set ups in the different locations of the world. Along with the cost, the organization is also able to reduce the time required for delivering the fashion updated clothes to its customers in the market. Therefore, it can be evaluated that home based strategy has proved to be effective for the business performance and profitability of Zara brand. Therefore, it can be evaluated that first disadvantage of regional strategies is that the organization has to further increase its investment in terms of cost and time.
Another disadvantage of regional strategies is that it is not always necessary that the benefits of regional strategy will outweigh the benefits of home based strategy. The development of home based strategy helps the organization in achieving economies of concentration that proves to have a positive impact on the profitability of the organization as compared to the economies of dispersion achieved from regional strategies. The third disadvantage can be that with the adoption of regional strategies the organization is unable to utilize the benefits of competitive advantage. If the production hub of an organization is set up in an economy where the transportation or warehousing costs is less than the other country, this happened because the organization wanted to realize the benefit of low input cost. With the adoption of this strategy, the organization is further able to reduce its production cost in comparison to its competitors in the market (Rohwedder & Johnson, 2008). This further helps the organization in developing competitive advantage against the other competitors in the market. The development of competitive advantage surely has a positive impact on the profitability of the organization. Therefore, it can be understood that it cannot be easily claimed that the benefits of regional strategy outweigh the benefits of global strategy.
The globalization definitely helps the organizations in utilizing the benefits of low cost technology and other inputs. However, the increase in technology has also posed many challenges for the organizations. The increase in globalization has resulted in increase of competition in the market as the choice of products available to the customers has increased (O’Rourke, 2019). The increase in the choices has increased the purchasing power of the customers in the market which has made it important for the organizations to keep innovating their products in order to be ahead of the competitors in the market. The challenge of innovation further increases when the rate of technological advancement is exponential. The easy transfer of knowledge and technical up gradations make it difficult for the organizations to adapt these up gradations in their production process (Sideri, 1997).
However, the organization which becomes unable to adapt to the changes in the market is not able to sustain in the market for a longer period of time because the customers in the market prefer innovative and creative products. Therefore, it becomes important for the organizations to increase their effectiveness of R&D department in order to effectively track the important changes taking place in the global environment and adopt them immediately in order to sustain in the market for longer period of time. A strong R&D department can help the organization in utilizing the emerging opportunities in the market (Mittelman, 1996). However, the organization may have to increase their expenditure on the R&D department for increasing the technological up gradation pace of their organization.
The globalization has also increased the diversity in the contemporary organizations. People belonging to different cultures and backgrounds work together toward a common goal of the organization (Mäkelä et al., 2020). The employee diversity proves to have positive impact on the performance of the organization because they have different mind sets and experience which help them in offering different ideas for the further growth of the organization. However, different mind sets in the organization can even lead to conflicts between the employees (Jacoby & Meunier, 2010). The literature points out to the fact that increased internal conflict between the employees can negatively impact the performance of an organization. Therefore, it becomes important for the human resource department of the organization to conduct interviews in order to understand the needs of the employees belonging to different cultures.
It is also important that the human resource department of the organization organizes different programs and events in order to further increase the communication and relationships between the employees of the organization (Jansen et al., 2020). All these strategies implemented by the human resource department of the organization will help in reducing the chances of internal conflict in the organization thereby positively impacting the performance of the organization (Radziyevska & Us, 2020). It can be evaluated from the discussion that human resource department of the organization plays an important role in helping the organization in realising the benefits of diversity in the organization.
It is also true that with the help of increased globalization, the extent of target market of customers has increased for the organizations. However, there still prevails hindrances like tariffs which increase the cost of distributing goods for the organization. However, the organizations cannot avoid this cost because exporting can prove to be profitable for an organization (Cuc & Tripa, 2007). In order to be cost effective, the organizations can reduce the quantity of resources involved in the production process. With the adoption of updated technology the organization can reduce the number of resources involved and increase the efficiency of the production process.
The creative solution of upgrading technology and cross training efforts can be adopted in order to increase the efficiency and the performance of the employees in the organization. In this way, the organization will be able to enhance the present skills of employees in the organization and further increase the overall productivity of the organizational processes (De Wilde, 2019). The HR department of the organization can also play a major role in increasing the productivity of the employees. It should be the responsibility of the human resource department of the organization to identify the training needs of the employees in the organization and arrange adequate training methods for enhancing the capabilities of the employees. Through the discussion, it can be understood that all suggested ways target at increasing the performance of the employees. Therefore, it can be evaluated in order to deal with globalization induced competitive environment it is important that the employees in the organization are contributing to their best efforts towards the goals of the organization.
It can be understood from the above discussion that regionalization strategy is an approach adopted by the organizations in order to effectively operate beyond the boundaries of the economy. It becomes important for the organizations to develop such strategies in order to realize the benefits including low cost of inputs which further help the organization in increasing its profitability and achieving competitive advantage.
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