The nature of the changing global economy has become a common area of research in the twenty-first century. Today’s increased globalization and technological advancements have led to an ongoing change in the international economy. This trend has been characterized by the rising number of consumers in emerging markets. These global developments have greatly influenced the way business activities across the world are conducted. As a result, executives have been forced to identify critical aspects of the international business environment, including the technologies involved, globalization, information flow, customer needs, and the movement of labor among others. Such forces have continued to shape the global financial system to the extent of compelling leaders to adopt more practical leadership skills to deal with technological changes, diversity, talent management, information, growth in emerging markets, and varying governmental roles. This essay provides an insight into the leadership challenges that stem from shifts in the global economy with a view to exploring various solutions that can play a pivotal role in the management of modern organizations.
Leadership Issues Linked to Changes in the Global Economy
Technological Shifts
Technology is perhaps the greatest force that has influenced businesses in the twenty-first century. Its role in the transformation and development of the contemporary workplace cannot be underestimated. Information technology has helped leaders to redefine companies’ visions worldwide. According to Audretsch, Lehmann, and Wright (2014), technology involves techniques and facilities that enable the transmission, storage, retrieval, and the manipulation of data. Most people only think about the computer when they come across this term. However, other economic facilities such as faxing, telephony, electronic stores, and mailing services also count in the handling of information and communication. The spread of the Internet network through computers and smart devices has given organizations an opportunity to venture into overseas markets (Audretsch et al., 2014). It has linked suppliers and buyers, employees and employers, learners and instructors in ways that have become ever more indispensable.
However, due to its rapid nature, technology has given rise to various problems in the management and leadership of organizations. While it presents a great opportunity for businesses, it also creates an unpredictable environment that does not allow leaders to pursue long-range planning. Organizations operate in complicated global networks that are characterized by dynamic innovations. This technology-facilitated inventiveness brings about disruptive forces that call for the constant development of business models. The improvement of entrepreneurship practices in the face of the underlying economic, ecological, and political factors is a problem in contemporary leadership.
The Internet has also changed the way in which communication is conducted. Communication via social platforms such as Facebook, Twitter, and Gmail among others has heightened horizontal collaboration and participation in the management of organizations across the world (Audretsch et al., 2014). As a result, social technology has become a key force in leveraging management and leadership models. Unluckily, most establishments have not adequately tapped the power of the virtual world. Audretsch et al. (2014) reveal the issue of poor realization of the corresponding leadership practices suitable for the participatory media. The expertise of handling social media does not feature as an important facet of management and leadership agendas and transformational plans.
Globalization
Globalization was initially mistaken for an exclusive process in which businesses, financial markets, and labor stretched across international boundaries without interference by governments. It presented many wonderful opportunities for companies worldwide (Cohn, 2016). Undeniably, globalization has numerous benefits. In particular, it promotes innovativeness and the formulation of better decisions, reduces turnover rates, attracts more proficient employees, and improves companies’ corporate images. It also inspires fresh insights to leaders who yearn for the management of international organizations. However, this phenomenon is characterized by dynamics that have had significant implications for the global economy. For instance, issues linked to globalization include shadows of power, civil liberties, irresponsibility, information maladministration, irregularity, and broken loyalties (Tam & Gray, 2016). Leadership challenges have occasionally sprouted from investments in developing countries.
Due to moral degradation, leaders from emerging economies often overlook important factors of development while capitalizing on profits to the detriment of national resources and citizens. For example, some leaders managing multinational firms, which operate in overseas may set standards that are lower compared to what is embraced in their home countries, thereby producing inferior products to inexperienced consumers. These malpractices contravene people’s basic rights. Corrupt state leaders please rogue companies to cause environmental degradation, which worsens the global warming effect. This kind of entrepreneurial behavior has affected the international economy immensely, a situation that has become a setback for leadership. In this sense, globalization has often muffled the economic growth of some underdeveloped countries. According to Cohn (2016), recession in a given country can result in adverse fiscal impacts across the world. This scenario occurred in 2008 where an economic decline was witnessed in international markets in the wake of globalization.
Demographics Shifts
In the wake of global markets and the need for developing international economies, demographic shifts have been inevitable. Aging population, labor force diversity, and inadequate social service support are some of the primary issues that have had adverse implications for the global economy. Leaders are faced with the challenge of managing diversity in highly complex business settings. Vance and Paik (2015) posit that a range of management principles and leadership practices that focus on diversity inclusion in the workplace can play a central role in making organizations more successful. The purpose of considering global cultural values, needs, and skill sets of other people is to achieve optimal benefits. However, social and demographic shifts have caused a bigger problem for leaders. Organizations have been forced to adapt to more resilient practices that align with the needs of the communities living in their target countries (Tam & Gray, 2016). Diversity has also been noted in foreign labor markets. Organizations frequently encounter pools of potential employees who have varying needs and expertise. Continuously shifting demographic aspects of the world population implies that leaders should develop and embrace practices that satisfy the needs of citizens in their destination countries.
The aging population has posed significant threats to the global economy in the recent years, especially in the many advanced economies. An increase in the elderly population in some countries is gradually interfering with the economic growth of some countries due to reduced labor participation (Vance & Paik, 2015). This phenomenon compels governments to offer social security and public services for aging people while protecting the economy from possible recession. Indeed, population aging can give rise to amplified government consumption due to the bigger demand for medical services (Vance & Paik, 2015). This situation can bring about declined aggregate productivity since governments shifts focus from the production sector to service delivery. Such a trend has become a big blow for leaders because slowed labor participation has serious implications for productivity.
Customer Needs and Incentives
Changing consumer needs and motivations have become prime determinants for economic growth in both developed and developing countries. Many leaders are still grappling with this fact. The use of technology in the manufacturing and advertising of products has amplified the complexity of choices among buyers (Allio, 2013). Today, people use several media platforms to come up with sound shopping decisions. This situation makes it difficult for marketing executives and leaders to coax consumers to procure their products. Allio (2013) reveals that some categories such as mainstream, low, and/or high-end consumers are beginning to vanish. Nowadays, it is common to see buyers who take a Lufthansa flight from New York to Milan just to purchase a luxurious Gucci wristwatch. This inclination makes it difficult for leaders to base their product attractiveness on consumers’ emotions and rationale. As result, many global firms have indulged in manufacturing personalized product designs. This tendency gives rise to unsteady economic growth forecasts.
According to Meyer and Peng (2016), leaders overlook consumers’ behavior as a significant source of economic development. Focusing on changing consumption trends provides a powerful background for revitalizing the global economy in addition to improving profitability in unstable market segments. The prevailing changes in economic trends are characterized by an increased rate of inflation. Such developments have notable effects on consumers’ spending. The consumer price index (CPI) and producer price index (PPI) are among top economic indicators. While amplified price increments interfere with clients’ buying abilities, interest rates on products can dissuade them from spending, hence slowing down global economic development (Meyer & Peng, 2016).
Managing Workforce at the International Level
Various forces such as the free transportation of merchandise, technological progression, the movement of labor, the expansion of businesses across transnational boundaries, and risk exposure have greatly influenced the global workforce. These elements have imperative implications for the development of the international economy (Vance & Paik, 2015). The globalization of organizations relies on leadership practices that accommodate cultural differences while developing a dependable workforce purposively to realize shared goals. Since transnational boundaries are no longer obstructive, firms have the privilege to select the best team of workers from diverse regions. According to Vance and Paik (2015), many employees in developing nations have the same qualifications as those in developed ones. Furthermore, the integration of information and communication technology into business undertakings has led to intricate relationships among workers, business partners, and businesses (Szabla, Stefanchin, & Warner, 2014). This situation has given rise to a more interconnected workforce that has not only improved the development of international firms but also economies of countries in which they operate.
Nevertheless, the shifting positioning, the increased diversity, and the internationalization of the global workforce have resulted in conflicts between individual and corporate cultures. As result, the management of multinational companies has become a challenge for leaders who have to strive to accommodate multiple talents while meeting the needs of diverse people (Vance & Paik, 2015). Global companies have experienced a big challenge in helping teams to realize the importance of developing, executing, and sustaining shared business goals. Leaders’ role in this environment entails incorporating diverse value orientations into strategic development with a view to harnessing the untapped potential of cultural differences.
Labor Force Productivity and Talent Management
One of the bold objectives of any business is to boost its productivity. Organizations, especially those operating at the international level, often incur great costs in the procurement of labor. Zadeh and Ahmadi (2017) reveal that leadership roles in the twenty-first century have changed significantly. For instance, in the past, human resource executives concentrated on functions such as recruitment, payroll, and employee benefits, as opposed to the integration of strategic practices into management (Zadeh & Ahmadi, 2017). Currently, roles such as the supervision of compensations systems, corporate management, and business communications among others have been integrated into strategic human resource management. While leaders continue to crack down such tactical areas, a topical swing towards talent management has posed a new challenge for contemporary leaders. According to Zadeh and Ahmadi (2017), this singularity is a prime element in the development of the modern economy. Although it presents remarkable opportunities for organizations to harness the capabilities of unrivaled talents while ensuring improved efficiency, leaders regularly grapple with the alignment of talent development with workforce management systems.
The Growing Role of Governments
One of the major factors influencing the global economy is the role of governments across transnational borders. Administrative regulations in different countries around the world have profound implications for organizational leadership. Broader government roles, including the provision of public goods, the strengthening of rivalry, and internalizing externalities, exist in capitalist economies (Tam & Gray, 2016). Although producers and consumers come up with many of decisions that build the economy, national policies governing commercial activities have a great influence on its stabilization and growth (Tam & Gray, 2016). The management of organizations in capitalist economies has been a bit tough for leaders due to governmental control over the use of credit and tax rates. Fluctuating interest rates have been a challenge for international corporations. Inflation results in increased prices of products and services, thereby reducing consumers’ spending capacity.
How I Can Handle these Issues as a Leader in Today’s Business Environment
To deal with challenges brought about by technological changes, I as a leader need to appreciate the need for redesigning organizations to pave the way for agility and flexibility (Audretsch et al., 2014). I should realize that real-time responsiveness to business strategies needs to be taken as an important factor in dealing with market volatility. The rate at which new technology unfolds has obliged executives to guide their employees through participatory and cross-border dialogue approaches to leadership.
As a leader, I can address challenges posed by globalization by campaigning for the protection of the global economy, which is heading into a more threatening stage (Tempest & Coupland, 2017). It is important to note that the globalization phenomenon not only affects emerging countries but also developed ones. As a result, I acknowledge the need for fixing its impact on the environment, cultural hegemony, and discrimination. For instance, I can create an environment whereby all stakeholders are held responsible for any violation of the set globalization standards. Some businesses operate with the sole objective of reaping the greatest profits possible while disregarding cultural values, human rights, and protection of the environment in which they conduct their activities. I can set the bar a bit higher by ensuring that no rogue suppliers are allowed to engage in corruptive practices at the expense of public resources or citizens of any country. Tempest and Coupland (2017) assert that the response to global business needs should be sound and easily understood for leaders to feel obliged to protect core global business values and human dignity.
As a leader, I would encourage multinational companies to capitalize on capabilities that help them to deal with dynamics linked to consumer markets (Meyer & Peng, 2016). Prudent leadership practices are important for organizations that need to embrace advanced assessment tools to analyze swiftly shifting data with a view to classifying the most profitable opportunities in the global economy. Consequently, I would also campaign for the adoption of agile entrepreneurial approaches to strategic management and operational receptiveness (Meyer & Peng, 2016). This way, leaders can deliver more personalized products and services that meet consumers’ prospects, hence boosting the global economy. According to Cook (2016), positive changes in buyers’ behavior can increase growth in the international arena. However, businesses need to strive to meet the demands of modern shoppers in the face of unstable markets and high anticipations for global revenue development.
To address the challenge of dealing with a diverse global workforce, I can encourage leaders to ensure that the input of all cultures leads to the realization of the set corporate goals. At the international level, I would also emphasize the need for upholding values that match with those of the workers in the destination countries. The issue of training workers can play a huge role in attaining international employee standards. For instance, I would also emphasize the need for hiring staff members who can at least read, write, and speak the commonly used language in the destination market (Laforet, 2016). Furthermore, leaders should be aware of their cultural preferences to build values that respect other people. As a result, I would strive to link diversity to specific business practices that promote the development of the global economy.
Furthermore, some leaders follow authoritative models that allow the formulation of solitary decisions in an organizational setting. The international business arena is complex to the extent that individual choices can result in adverse reactions by multicultural teams (Laforet, 2016). Accordingly, as a leader, I would recommend the recruitment of expert consultants to help in aligning business goals with the expectations of policies of the destination country. This undertaking can reduce the risk of incurring possible economic losses. I would also campaign for the integration of continuous learning into the prevailing corporate culture. Developing values that help individuals and teams to advance their intercultural competitiveness is paramount to improving organizational performance (Vance & Paik, 2015). This distinctive responsibility has a direct impact on the global economy since its growth depends on the progress made by businesses.
To address the challenge of labor force productivity and talent management, I can encourage leaders to consider shifting from outmoded management practices to more integrative technology systems that align labor force productivity with development strategies (Kozak, Volgger, & Pechlaner, 2014). Presently, numerous software tools can assist managers to monitor talent and workforce metrics, including recruitment, turnover rates, absenteeism, and labor costs. I would also advocate for strategic leadership practices that are paramount to economic development. According to Zadeh and Ahmadi (2017), engaged workers are not only more productive but also ensure efficiency in the production process. Therefore, I would ensure that human resource managers invest in systems that can collect and analyze data for enlightening employees’ actions. Furthermore, leaders should recognize the disconnection between talent and workforce management with a view to developing hiring and development plans that match with the available talents (Zadeh & Ahmadi, 2017). Effective leadership should involve setting defined objectives and executing robust strategies towards achieving them. I would embrace this practice to attain improved corporate productivity, which leverages the global economy.
As a leader who wishes to address the challenge linked to The Growing Role of Governments, I would implement proactive strategies that align economic demands with organizational performance with a view to thriving even in the most competitive environments (Bushe & Marshak, 2014). I would also recommend the deployment of the company democracy model, which is suitable for leaders who need to develop intellectual human capitalism for shared values in the international business. Value creation plays an important role in promoting the economic position of a firm. It aligns production strategies with the needs and challenges facing the society. As a leader, I would adopt this model to achieve success amid problematic administrative regulations.
Conclusion
Changes in the global economy discussed in this essay have had various implications for leadership in modern organizations. Executives should focus on reinforcing existing business strategies and reshaping value creation models to realize financial success at the international business arena. Identifying constantly evolving information and communication technologies, globalization trends, consumers’ expectations, and the movement of labor will provide a suitable framework for the development and improvement of business models. Nevertheless, it is important for corporate leaders to appreciate that the global economy is expected to shift even further in the near future. The current rate of innovation, changing government roles, amplified globalization, and the speedy flow of information and goods across transnational boundaries will continue to restructure the way in which companies conduct business in different parts of the world.
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