USHA MARTIN UNIVERSITY, HARDAG

(Established by Jharkhand Government under sec. 2(f) of UGC Act 1956)

ASSIGNMENT EVEN(2020)
MBA SEMESTER- IV
MBAH-4003 CROSS CULTURE AND GLOBAL HRM

STUDENT NAME PRASHANSA SUMAN

ROLL NO. 18MBA030

COURSE MBA

SUBJECT CODE AND NAME CROSS CULTURE AND GLOBAL HRM,

4003
SUBMITTED ON 2ND MAY, 2020

SUBMITTED TO Dr. Anupama Verma

MAXIMUM MARKS 10
Q 1) What are the stages of structural evolution of multinationals ? What are
the new types of multinational structures ?

Answere :-

A multinational corporation has facilities and other assets in at least one country
other than its home country. A multinational company generally has offices and
factories in different countries and centralized head office where they coordinate
global management. These companies also known as international, stateless, or
transnational corporate organizations tend to have budgets that exceed those of
many small countries.

Three Stages of Evolution

1. Export stage

 initial inquiries => firms rely on export agents

 expansion of export sales
 further expansion þ foreign sales branch or assembly operations (to save
transport cost)

2. Foreign Production Stage

There is a limit to foreign sales (tariffs, NTBs)

DFI versus Licensing

Once the firm chooses foreign production as a method of delivering goods to

foreign markets, it must decide whether to establish a foreign production
subsidiary or license the technology to a foreign firm.

Licensing

Licensing is usually first experience (because it is easy)

e.g.: Kentucky Fried Chicken in the U.K.

 it does not require any capital expenditure

 it is not risky
 payment = a fixed % of sales
 Problem: the mother firm cannot exercise any managerial control over the
licensee (it is independent)

The licensee may transfer industrial secrets to another independent firm,

thereby creating a rival.

Direct Investment

It requires the decision of top management because it is a critical step.

 it is risky (lack of information) (US -> Canada)

 plants are established in several countries
 licensing is switched from independent producers to its subsidiaries.
 export continues

3. Multinational Stage

The company becomes a multinational enterprise when it begins to plan, organize

and coordinate production, marketing, R&D, financing, and staffing. For each of
these operations, the firm must find the best location.

New Types Of Multinational Structure :

Multinational companies have therefore evolved many structural permutations

to suit their business needs.

Subsidiary Model

Owning foreign subsidiaries is one of the most basic structural models of a

multinational company. The subsidiaries are self-contained units with their own
operations, finance and human resource functions. The major disadvantage of
this model however is the decentralization of strategic decisions that makes it
difficult for a unified approach to counter global competitive attacks.
Product Division

Organizational structure of the multinational company in this case is developed

on the basis of its product portfolio. Each product has its own division that is
responsible for the production, marketing, finance and the overall strategy of
that particular product globally. The product organizational structure allows the
multinational company to weed out product divisions that are not successful.
The major disadvantage of this divisional structure is the lack of integral
networks that may increase duplication of efforts across countries.

Area Division

Organization using this model is again divisional in nature, and the divisions are
based on the geographical area. Each geographical region is responsible for all
the products sold within its region. This structure allows the company to
evaluate the geographical markets that are most profitable. However
communication problems, internal conflicts and duplication of costs remain an
issue.

Functional Structure

Functions such as finance, operations, marketing and human resources

determine the structure of the multinational company in this model. The
advantage of using this structure is that there is greater specialization within
departments and more standardized processes across the global network. The
disadvantages include the lack of inter department communication and
networking that contributes to more rigidity within the organization.

Matrix Structure

Matrix organizational structure is an overlap between the functional and

divisional structures. The structure is characterized by dual reporting
relationships in which employees report both to the functional manager and the
divisional manager. The advantage of this structure is that there is more cross-
functional communication that facilitates innovation. The decisions are also
more localized. However there can more confusion and power plays because of
the dual line of command.
Transnational network

Evolution of the matrix structure has led to the transnational network. The
emphasis is more on horizontal communication. Information is now shared
centrally using new technology such as “enterprise resource planning (ERP)”
systems. This structure is focused on establishing “knowledge pools” and
information networks that allow global integration as well local responsiveness.

Q 2) Differentiate between following with examples :

i. International

ii. Multinational

iii. Global

iv. Transnational

Answere :-

1) International Companies

 The operations of such companies lie in one single home country as the base
center.
 These companies only export or import products from the home country.
 The offices, hence, only exist in the home country and there is no foreign
direct investment in other countries.
 The functioning and strategies are derived mostly from the primary market
which is the domestic home country market.
 They have to continuously adjust to trading norms of the home country.
 Spencers is an example in the Indian context.

2) Multinational Companies

 As the name suggests, these companies have direct operations in more

than a single country, however, it is usually not a very large number.
  However, MNC’s have a centralized structure, with the head office in the
home country calling all the shots.
 In this case, products are decided and developed by the head office and
subsidiary offices do have options to adapt to local markets if needed.
 Adidas is an amazing example to explain multinational companies.

3) Global Companies

 These companies work to have a foothold in a large number of countries,

usually larger than a Multinational Corporation.
 They, however, do not follow the system of having an official head office.
 Various subsidiaries are set but standard products are sold, without any
flexibility in terms of adapting to local consumers.
 There is no change in branding or information about a global company,
even if the country of operations changes.
 McDonald’s – a fast-food chain, is an exemplary example of this kind of
companies.

4) Transnational Companies

 These companies are operating in multiple countries, having foreign direct

investment in all of them.
 Such companies follow a flexible approach, understanding and adapting to
the local culture and demand of each country.
 Hence, offices in each country work in a decentralized manner with
decision-making powers.
 In fact, subsidiary offices can launch and make products which might not be
manufactured in the original home country, if there is a chance of demand.
 Nokia is one of the examples in the Indian context.

Q 3) Select one company of your preference from any of the above categories
and prepare the profile of it on the following guidelines :

1. Company name.
2. Founder name.
 3. Year and place (head quarter) of establishment.
4. Head quarter/ different subsidiaries and its location.
5. Organizational structure at the Head quarter as well any one of the
subsidiaries.
6. HR policies of the company and its head quarter as well as its subsidiaries
(few important ones).
7. Product diversification if any on the basis of geographical location.
8. Brief profile of company.

Answere :-

 Company Name : PepsiCo.

 Founder Name : Caleb Bradham
 Year of Estd. : August 28, 1898
 Head quarters : Harrison, New York , United States

 Organizational Structure at PepsiCo :

PepsiCo originally had a hierarchical organizational structure in its early
years. However, after a number of key mergers and acquisitions, along with
global expansion, the company has changed its organizational structure
accordingly. The following are the main characteristics of PepsiCo’s
organizational structure:
1. Market divisions
2. Functional corporate groups/offices
3. Global hierarchy

Market Divisions. The most prominent feature of PepsiCo’s organizational

structure is its market divisions. These divisions are based on two variables:
business and geography. In terms of business, PepsiCo’s maintains one
global division for Frito-Lay and another global division for Quaker Foods. In
terms of geography, the company has divisions for the Americas, Europe,
and other regions. The following are the market division in PepsiCo’s
organizational structure:

1. PepsiCo Americas Beverages

2. Frito-Lay
3. Quaker Foods
4. Latin America Foods
5. PepsiCo Europe
6. PepsiCo Asia, Middle East & Africa

Functional Corporate Groups/Offices. This characteristic of PepsiCo’s

organizational structure refers to basic business functions. The company
has global or corporate offices for these functions. PepsiCo’s objective in
having functional groups is to ensure corporate control and rapid
implementation of policies and strategies. An Executive Vice President or
Senior Vice President heads each of these groups. The following are the
main functional corporate groups/offices at PepsiCo:

1. Global Categories and Operations

2. Global Research and Development
3. Human Resources
4. Finance
5. Government Affairs and Legal
6. Talent Management, Training and Development
7. Communications

Global Hierarchy. PepsiCo’s organizational structure also features a

hierarchy that spans the global organization. A hierarchy typically supports
monitoring, control and governance at the global/corporate level. PepsiCo
 has maintained considerable hierarchy for top-down communications,
monitoring and control. This characteristic of the organizational structure
also provides a means through which PepsiCo minimizes deviations from its
policies and strategies.

 Human Resource Policies at PepsiCo.

 Care for customers, consumers and the world we live in. They are driven by
an intense competitive spirit in the marketplace, but they direct this spirit
towards solution that achieve a win for each of there constituents as well
as a win for the corporation.
 Sell only products company can be proud of. This principle extends to every
part of the business, from the purchasing of ingredients to the point where
products reach the consumer’s hand.
 Speak with truth and candor. They speak up , telling the whole picture not
just what is convenient to achieving individual goals. In addition to being
clear, honest and accurate, they take responsibility to ensure that
communications are understood.
 Balance short term and long term. The company make decisions that hold
both short and long term risks and benefits in balance over time. Without
this balance, they cannot achieve the goal of sustainable growth.
 Win with diversity and inclusion . PepsiCo leverage a work environment
that embraces people with diverse backgrounds, traits and different ways
 of thinking. This leads to innovation, the ability to identify new market
opportunities, all of which helps develop new products and drives the
companies ability to sustain there commitments to growth through
empowered people.
 Respect others and succeed together. The company is built on individual
excellence and personal accountability, but no one can achieve there goals
by acting alone. They give importance to people who have the capability of
working together in structured teams or informal collaboration. A spirit of
fun, the value they put on team work has made the company which people
enjoy being part of, and this enables them to deliver world-class
performance.

 Product Diversifications Of PepsiCo. :-

PepsiCo’s diversification strategy can be viewed in three broad
categories:

Soft Drinks

Soft drinks represented 35% of PepsiCo’s sales and 39% of its operating
profits in 1991.To make the figures even better Pepsi Co acquired acquire
several of its franchised bottlers, including some of its largest ones. It also
acquired the international operations of Seven-Up, the third largest soft
drink operation outside the United States, for $246 million.

Snack foods

Pepsi-Cola acquired Frito-Lay in 1965 and with brands such as Doritos,

Lay’s, Fritos, and Ruffles, Frito-Lay’s share of the $10 billion U.S. snack
chips market was nearly half, and PepsiCo Foods International (PFI)’s
share of the $13 billion international snack chips market was about one-
quarter. In 1989, PepsiCo purchased two U.K. snack companies-Smith
Crisps, Ltd. and Walker Crisps, Ltd.-for $1.34 billion, becoming the leading
snack food company in Europe.

Restaurants
 In 1986, PepsiCo purchased Kentucky Fried Chicken. Combined with Pizza
Hut and Taco Bell, the purchase made PepsiCo the international leader in
number of restaurant units. In 1991, PepsiCo’s restaurant segment
attained the highest revenue of the company’s three segments,
surpassing soft drinks for the first time. With three top line restaurants
under its charge, Pepsi Co was on its way to constructing a recognizable
three-legged stool. The CEO Calloway, felt that the new structure would
bring the company success and costs would decrease significantly by
transferring of skills across the three chains.

 Company’s Profile :-
PepsiCo, Inc. engages in the manufacture, marketing, distribution and sale
of beverages, food, and snacks. It is a food and beverage company with a
complementary portfolio of brands, including Frito-Lay, Gatorade, Pepsi-
Cola, Quaker, and Tropicana. It operates through the following business
segments: Frito-Lay North America; Quaker Foods North America; North
America Beverages; Latin America; Europe Sub-Saharan Africa; and Asia,
Middle East, and North Africa. The Frito-Lay North America segment
markets, distributes, and sells snack foods under the Lay's, Doritos,
Cheetos, Tostitos, Fritos, Ruffles, and Santitas brands. The Quaker Foods
North America segment includes cereals, rice, and pasta under the Quaker,
Aunt Jemima, Quaker Chewy, Cap'n Crunch, Life, and Rice-A-Roni brands.
The North America Beverages segment consists of beverage concentrates,
fountain syrups, and finished goods under various beverage brands such as
Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Diet Mountain Dew,
Tropicana Pure Premium, Sierra Mist, and Mug. The Latin America segment
covers beverage, food, and snack businesses in Latin America region. The
Europe Sub-Saharan Africa segment comprises of beverage, food, and
snack goods in Europe and Sub-Saharan Africa regions. The Asia, Middle
East, and North Africa segment offers snack food products under the Lay's,
Kurkure, Chipsy, Doritos, Cheetos, and Crunchy brands. The company was
founded by Donald M. Kendall, Sr. and Herman W. Lay in 1965 and is
headquartered in Purchase, NY.