The Environment of International Business

Understanding the external environment is critical to the success of managing any international

business. The dramatic changes that have occurred in recent years in Russia and eastern Europe

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will have their effects on HRM. Of probably even greater influence is the unification of markets

in the European Union (EU). In concept, the EU will turn Europe into a unified buying and

selling power that will compete as a major economic player with the United States and Japan.*

(*Originally, the EU was composed of twelve nations: Belgium, Denmark, France, Germany,

Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain , and the United Kingdom.

Recently, these countries voted to add Sweden, Finland, and Austria to their ranks.) Highlights in

HRM 1 describes some of the effects that unification may have on HRM practices within Europe.

Though there are many obstacles to complete unification, the goal of the EU is for goods,

services, capital, and human resources to flow across national borders in Europe in a manner

similar to the way they cross state lines in the United States. A similar transition will likely occur

within North America with the passage of NAFTA. In the years ahead we will have a unique

opportunity to observe the effects of globalization on HRM.

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