Today’s business environment is consisting on high level of turmoil that comes from globalisation, news technologies, and great transparency (Reeves & Deimler, 2009); that demand organisation’s responsiveness for levels of dramatic, and often tumultuous, organisational change and development in order to achieve its organisational goals and objectives (Darling & Heller, 2009). Because of these revolutionary changes in the business environment (Stewart, 1993); the scope of organizations has expanded into a various sizes and types which lead to the important need for cross-cultural awareness and understanding of the daily operations of international businesses (De Cieri, Fenwick, Hutchings, 2005). Therefore, the purpose of this essay is to analyse the international human resource management’s challenges and opportunities when multinational enterprise operates in two different national cultures simultaneously. This essay uses Australia as the host nation, and Indonesia as the host nation subcontractor as the basis of comparison.
The concept of external environment refers to a specific and general environment outside the organisation that can affect its performance (Robbins, Bergman, Stagg & Coulter, 2008). These changes that create a revolution movement in the business world are mainly globalisation and information technology (Stewart, 1993). Particular changes in the external environment can affect their position in the market, dismantling traditional chain of command in the organisation, and restructuring organisation (Stewart, 1993). Thus, it is important to know a few factors that increase the practice of IHRM in multinational enterprises.
In this essay the external environmental factors that are analysed are technology and globalisation. One of the factors that has a significant influence in the business environment is technology (Stewart, 1993). The advent of new media and innovation in technology gives company choices in how to conduct their recruitment practices, such as online recruitment, which is quick, effective and cost efficient (Searle, 2006). This leads to the changes in the majority of work that have transformed from manual work to a more knowledge-based work, due to the increase in globalisation, competition, and technological development (Borland, Hirschberg & Lye, 2004). Technology is used as a tool that can eliminates physical borders; which then accelerated the pace of globalisation (Mendenhell et al., 2003). *
The second factor that has accelerated changes in business environment is Globalisation. It can be seen from a number of organisations that compete in the global market, that have increased substantially due to the increased development in technology (Mendenhell et al., 2003). Taking advantage of the growing worldwide competition is not limited to technology only; organisations also have to compete in their totality and human resources globally (Harpaz & Meshoulan, 2010). Globalisation has removed the geographical borders that make cultural and distance barriers obsolete when markets fuse together; and has shifted traditional rules, and transforms it to new rules that bring vague, unstable, counterintuitive, and full expectations (Mendenhell et al., 2003). Thus, understanding cultural, political, legal and economic differences among countries and its communities can be significant challenges (Dessler, 2008). In addition, globalisation creates feelings of insecurity for employees in relation to the prospects of keeping their job, while the intensification of manual, and also of intellectual work, constituting a fertile ground for the creation of mental disorders, such as stress and depression, especially at a time when mental health is extremely important and vital for society and MNEs’ growth (Antonopoulou & Derivisi, 2009). That is why the...