ASSIGNMENT

Course Code : MS-29

Course Title : International Human Resource Management
Assignment Code : MS-29/TMA/SEM - II/2016
Coverage : All Blocks
Note: Attempt all the questions and submit this assignment on or before 31st October, 2016
to the coordinator of your study centre.
1) Enumerate different approaches to organisational structures in MNCs. Discuss different
modes of operation in MNCs citing suitable examples.
2) What are different approaches to staffing function in MNCs. Describe different staffing
methods adopted by MNCs with the help of relevant organisational examples
3) Compare and contrast leadership style followed in Japanese and French firms citing
suitable examples.
4) Explain the role of HR managers in mergers and acquisitions in international perspective.
Discuss the issues and concerns arising out of these citing examples.

Answer
1) Enumerate different approaches to organisational structures in MNCs. Discuss different
modes of operation in MNCs citing suitable examples.
Ans.: Organizational structure refers to the way that an organization arranges people and jobs
so that its work can be performed and its goals can be met. When a work group is very small
and face-to-face communication is frequent, formal structure may be unnecessary, but in a
larger organization decisions have to be made about the delegation of various tasks. Thus,
procedures are established that assign responsibilities for various functions. It is these
decisions that determine the organizational structure.
In an organization of any size or complexity, employees' responsibilities typically are defined
by what they do, who they report to, and for managers, who reports to them. Over time these
definitions are assigned to positions in the organization rather than to specific individuals..
The best organizational structure for any organization depends on many factors including the
work it does; its size in terms of employees, revenue, and the geographic dispersion of its
facilities; and the range of its businesses (the degree to which it is diversified across markets).
There are multiple structural variations that organizations can take on, but there are a few
basic principles that apply and a small number of common patterns. The following sections
explain these patterns and provide the historical context from which some of them arose. The
first section addresses organizational structure in the twentieth century. The second section
provides additional details of traditional, vertically-arranged organizational structures. This is
followed by descriptions of several alternate organizational structures including those
arranged by product, function, and geographical or product markets.

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To create an effective organizational structure is one of the most important tasks for top
managers of any company. If everyone in a company is and knows his duties, if there are
rules of interaction between departments, company's activities will remind a tuned
mechanism which works with maximum results and minimal costs.
Organizational structure - is a scheme consisting of units and individual officers of the
company, located by levels of importance and responsibility, which contains the relationship
between them and the chain of command. Depending on the stage of company development
(formation, development, stabilization, crisis) require different approaches to build the
organizational structure. It is particularly important to control the situation in transition from
one stage to another and at the stage of active growth and development of the company.
A competently built organizational structure makes it possible to optimize the strength and
number of units, to simplify the interaction between units, to distribute evenly the pressure on
staff to avoid duplication of functions and their, to eliminate double and triple subordination,
to delimit the scope of leaders, define their powers and area of responsibility, increase
productivity. Organizational structure is the basis for building an effective system of
governance.
Large multinational corporations require an organizational structure that can house the usual
business functions - finance, marketing, R&D, production, etc. - as well as those functions
required for being successful beyond the domestic market. The most appropriate
organizational structure will be determined by the overall global strategy of the firm, the
relative size of international operations as compared to domestic operations, and the
characteristics of the marketplace in which the firm competes. The four basic organizational
structures are: International Division, Global Area, Global Product Division and Matrix.
By the end of the 20-ies it became clear the need for new approaches to governance, and that
happened because of the sharp size increase of enterprises, the diversification of their
activities (multidisciplinary), and the complication of processes in a dynamically changing
environment. In this connection began to emerge the international divisional structure,
especially in large corporations who have to provide some autonomy to its production units,
leaving for leadership the strategy development, scientific research, financial and investment
policies, etc. In this type of structures is attempted to combine the centralized coordination
and the control of decentralized administration activity.
One of the leading companies in soft drinks industry, witch is also a multinational company,
is The Coca-Cola Company and their organizational structure is an International Division
one.
International Division Structure represents a more evolved form of organizational system
because of the incorporation of specialized division for acting on foreign markets, and that
way it is no limit to export. We can observe that they are more concerned about conducting
business in other countries.
The key management figures in an organization with divisional structure are no longer the
heads of functional units, but the managers leading the production department (division). The
organization by division, as a rule, is based on one of the criteria: production (product or

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service) - product specialization; by targeting specific groups of consumers - consumer
specialization of serviced territory - a regional specialty.
Some main features of this type of structure are: typically set up when firms initially expand
abroad, often when engaging in a home replication strategy; foreign subsidiary managers in
the international division are not given sufficient voice relative to the heads of domestic
divisions; the "silo" effect: International division activities are not coordinated with the rest
of the firm, which focuses on domestic activities; Firms often phase out this structure after
their initial overseas expansion.
2) What are different approaches to staffing function in MNCs. Describe different staffing
methods adopted by MNCs with the help of relevant organisational examples.
Ans.: Regardless of how it happens, being a multinational organization changes things. Once
companies have the economic power to venture into emerging markets in foreign lands, they
face new dilemmas and challenges related to organizing the business structure and adjusting
corporate strategy to accommodate a global business model. Companies new to the
multinational status can no longer rely upon a singular strategic approach and expect it to
work well across far-flung business operations.
Multinational strategies are shaped by the trade-off between opportunity and risk. Three
broad environmental factors determine that trade-off. The first is the prevailing political
economy, including the policies of both host and home governments, and the international
legal framework. The second is the market and resources of the host country. The third factor
is competition from local firms. The impact of these factors on corporate strategies was
explored during three eras in the modern history of globalization from the nineteenth century
until the present day in the research paper “Multinational Strategies and Developing
Countries in Historical Perspective” by Geoffrey Jones, Harvard Business School. The paper
indicates that performance of specific multinationals depended on the extent to which their
internal capabilities enabled them to respond to these external opportunities and threats. 1
“Localizing” Strategies:
Given these factors, one challenge multinational companies face is recognizing the need to
“localize” strategies. Once that recognition has set in, the next challenge is then determining
how best to accomplish localization.
Strategy localization is needed in order to allow the business to respond appropriately to
geographic-based opportunities and threats. Corporations should expect cultural heuristics to
differ from country to country. Likewise, markets operate differently across the world, and
there is no “one size fits all” approach to successfully conquering them. Competitor threats
must be addressed with locally adapted strategies to be effective, thus the competitive
analysis involved with strategic planning is a requirement to successfully navigate the terrain
of the region’s business ecosystem. Marketing and sales tactics are only part of geographic
differentiation, although they are certainly not insignificant in terms of importance. There are
also unique supply-chain considerations to factor into local strategies. Resource costs,
including labor, vary widely across countries. It doesn’t stop there. Legal systems, labor laws
and distribution systems also impact local strategy. For this reason, operational

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considerations related to pricing, production and distribution also cannot be ignored with a
cookie cutter corporate strategy that is imposed across countries / geographies.
None of this means that the foreign-based division can go rogue and operate business
practices that run counter to the strategic goals of the parent. What it does indicate, however,
is that parent company’s corporate strategy must be operationalized to fit localities.
There are many multinational models that have evolved over the years as companies adapt to
new opportunities in emerging markets. Below is a list of five common models, along with
pros and cons of each:
1. The most common multinational organization structure is the subsidiary model, where
business subsidiaries are formed with other considerations in mind beyond simple
geography. Subsidiaries are self-contained units with their own operations, finance
and human resource functions. This model has the advantage of allowing the foreign
subsidiary a large degree of autonomy in responding appropriately to local
competitive conditions with locally responsive strategies. The major disadvantage of
this model however is the lack of a cohesive overall global corporate strategy that
serves to unify the company’s approach to countering global competitive pressures
and enjoying greater economies of scale.
2. Not surprisingly, the geography-based organizational model is organized into business
divisions that are based solely on geographical area. Usually, in this model, each
geography is self-contained with its own functional units for sales, finance, operations
and human resources under the regional division’s responsibility. The division has
responsibility for all the products and services sold within its region, maintaining its
own Profit & Loss control. While this structure does allow the company to evaluate
the geographical markets that are most profitable and showing positive growth, the
model is prone to many issues including: communication problems with other parts of
the company, conflicts arising over corporate controls and duplication of costs (e.g.
numerous regional initiatives occurring instead of one corporate led global program).
3. A product alignment model ignores geographic boundaries and focuses the
organization’s structure purely on product / service portfolios. In this model, product
divisions are setup to have responsibility for the production, marketing, finance and
the overall strategy of that particular product on a global basis. The advantage offered
by this model is the attention paid to product performance. The major disadvantage of
this structure is the lack of integral networks that may lead to overall higher costs as
initiatives are duplicated and economies of scale are not leveraged.
4. Another multinational organization structure commonly found is the function model.
As the name indicates, in this structure functions such as sales, marketing, finance,
operations and human resources determine the organization of the multinational
company. For example, all the company’s product service personnel globally would
work under the product service unit. The advantage of using this structure is that there
is greater specialization within units and more standardization of processes across the
global organization. The disadvantages include the lack of inter-unit communication
and networking that contributes to more silos and rigidity within the organization.

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 5. The matrix model is an overlap between the functional and divisional structures and
groups employees by both function and product. This structure can combine the best
of both separate structures. A matrix organization frequently uses teams of employees
to accomplish work, in order to take advantage of the strengths, as well as make up
for the weaknesses, of functional and decentralized forms. The advantage of this
structure is that there is more cross-functional communication that facilitates creative
thinking and innovation. This model still allows decisions to be localized, a clear
benefit. A disadvantage to the matrix model is that there can more confusion and
politics involved because of the dual lines of command. Evolved matrix models place
an emphasis on horizontal communication and shared services such as Information
Technology (e.g. leveraging a common ERP platform) across the organization.
Approaches to strategy and planning in multinationals requires more effort due to more
complex organizational structures and market specific factors global companies face.
Corporate strategy must be “localized” to allow the business to respond appropriately to
geographic-based opportunities and threats. Likewise, strategy development must include the
involvement of the company’s foreign business leaders to help the strategy be adapted
correctly to local needs. Exactly how this is done is dependent upon the type of structure the
company has decided best suits the organization (e.g. matrix, product, geography, etc.).
3) Compare and contrast leadership style followed in Japanese and French firms citing
suitable examples.
Ans: Leadership is defined as the process of having dominance on group activities in order to
realize the objectives. To execute the leadership task, managers try to have influence the
people under their supervision and motivate and direct them to achieve the organizational
objectives. Creating motivation in staff in such a way that they do their activity and work in
the organization with enthusiasm and reach the goals is very important. This problem with
transnational managers who have to create motivation in the individuals with different
cultures is more significant. Type’s of the behaviors which results in success of the leader
depends on the definition of success and is conditions. There are considerable numbers of
different leadership styles in different countries and various cultures, and many researches
have done many surveys in the field of leadership in which the relation of leadership style
with situations conditions has been emphasized.
Leadership styles and management methods across the world are diverse and are influenced
by specifications dominant in the environment. Different studies and researches in different
countries have emphasized compliance of leadership style in terms of success conditions. The
relationship between managers and culture, and leaders and culture is different. Managers
tend to be the people who get things done, and the corporate culture is the mechanism they
use to understand how to communicate, how to work and what to expect on a day to day
basis. The managerial staff knows what the current culture expects, how to feed and nurture
the existing culture and how strong or weak the culture is. Managers of transnational
organizations should necessarily show flexibility proportional to culture differences, respect
to the differences, recognize motivates of the people, and select a suitable style of leadership

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in accord to situations and then take action with regard to the individuals under their
supervision to realize defined objectives.
Several studies are performed about leadership and the key factors in leadership efficiency
have been inspected. A characteristic which is regarded positive in a situation might be
regarded as a negative specification of leadership in another position. A special style of
leadership that is suitable for individualism cultures may lead to defeat in a collectivism
culture. Many studies and researches have been done in this field: Geert Hofstede has done
researches over different cultures (Hofstede,1980). Another well-known study was done by
Bashir Khadra (1990).
Another important research was done by two scholars Smith and Vien (1992) in Australia,
Japan, England and Taiwan, emphasizing on the behavior of the dominant person. Finding of
this research is the effect of culture on types of dominance strategies. Effect of
industrialization on leadership behavior has been considered as an intercultural effect. One of
the studies in this field is done by Kamil Kozan (1992) and has concluded that in the
countries placed in the low rank of industrialization, autocratic leadership styles are more
common than other leadership styles.
In some regions and countries such as Philippines and Hong Kong, there is high diversity in
leadership style. Generally, leadership style should be adapted with cultural environment and
space dominant in the organizations (Wiley ,1996). In business leadership, there also is a
diversity of models: In America, with its longstanding experience with professional business
leadership, the most readily available role model for the head of a company is the corporate
CEO. In China and Chinese-related businesses it is the head of the family. In France it
remains the military general. In Japan it is the consensus builder. In Germany today it is the
coalition builder.
Japan
The rapid economic development of Asia in recent decades is one of the most important
events in history. This development continues today and there is every reason to anticipate
that it will continue indefinitely unless derailed by possible but unlikely international
conflicts. At the core of Asian economic development is its business leadership—managers
and entrepreneurs who sustain and create Asian companies. Do they exhibit the same
leadership styles as top executives in the West? In the culture of Japanese people, human
being has special value according to Confucius instructions; they believe in endless force of
human being and put importance on human training and training innovators. Japanese
organizations see their staff as their asset in this culture and regard human resources
development as a very important matter. Many organizations use regulations and laws to lead
their staff to perform tasks and some of them emphasize cultural norms and values as the
mechanism of dominance on staff. In Japan, if there are laws and regulations, norm
orientation is dominant on legalism. According to some researches, functionality of Japanese
staff is controlled by their own colleagues in the working groups.
The French manager will be found in the center of the action. The Germans are more
understated and subdued. Where the French manager would project warmth and acceptance,

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the German would tend to maintain distance and be more aloof. German managers display
less energy, are more difficult to get to know, and have a more formal style that is based on
role and responsibility within the hierarchy rather than personal magnetism. While the
Germans are skeptical of those in authority, the French are loyal to the organization and will
consult superiors and defer to people above them. Of all the European managers, the French
are the least comfortable in the management position, placing less emphasis on taking charge
and more emphasis on seeking the advice of others, creating and valuing close supportive
relationships. The Germans, on the other hand, are comfortable in a leadership role and are
willing to take command, and may in fact have difficulty when required to function as a team
member rather than a team leader.
4) Explain the role of HR managers in mergers and acquisitions in international perspective.
Discuss the issues and concerns arising out of these citing examples.
Ans.: All forms of international alliances (specifically, cross-border mergers and acquisitions,
and international joint ventures) are cooperative arrangements/partnerships involving
autonomous firms from different countries (Miller, Li, Eden and Hitt, 2008). Although
important in today’s intensely competitive and global environment, they often face major
coordination and integration challenges (Briscoe, Schuler and Tarique, 2012; Schuler,
Jackson and Luo, 2004), particularly relating to the design, formulation and implementation
of cooperation strategy (Lajar, Lillo and Sempere, 2003). It is thus important that
international human resource management (IHRM) professionals pay particular attention to
these issues, in order to contribute to the success of cooperative arrangements.
In recent years, there has been a steady increase in international (or cross-border) acquisition
and merger and international joint venture activity. This upsurge has been guided by the need
to compete more successfully with other global firms through achieving world-class market
entry and industry leadership and/ or acquiring complementary assets and resources (usually
technological and knowledge-based in nature) that would otherwise be too expensive, take
too long, or just be impossible to develop internally (Briscoe, et al. 2012). When an
acquisition or a merger is the choice for entry into a new market, it is usually a quicker and
more effective way to develop presence in a local market than to build such capability from
scratch. At other times, forming an international joint venture may better serve the interests of
two or more companies for a wide variety of reasons. In some cultures or countries, for
practical purposes, partnerships are the “smartest” way, if not the only way, to enter the
marketplace, either because foreigners can only do business in the country through local
partnerships—joint ventures or other forms of alliance (because relationships are of primary
importance to doing business in that culture) or because the government requires such local
partnering. For example, China’s strict commercial laws mean that joint ventures have to be
entered into because the choice comes down to investing through a joint venture or not
investing at all.
In an international merger, two companies agree to merge their operations to form a new
company in which they participate as equal partners. In an international acquisition, in
contrast, one firm buys controlling or full interest in another firm with the understanding that
the buyer will determine how the combined operations will be managed.

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There are many strategic and business reasons for companies to merge or acquire one another
(Bower, 2001), including efforts to a) promote growth, b) manage technology, c) as a
response to government policy, political / economic conditions, d) take advantage of
exchange rates, e) reducing labor costs / increase productivity, e) follow clients, f)
diversification, and/or g) horizontal integration. Consequently, mergers and acquisitions
allow companies to achieve market extension abroad, invest in faster growing economies,
exploit superior technology, and/or acquire scarce talent to compete more effectively in the
global marketplace. Several scholars have attributed the high failure rate among mergers and
acquisitions to their singular focus upon strategic and business aspects, and neglect of people
issues.
Despite the numerous interest of mergers and acquisitions (M&As) of most public sector
organizations in developing countries, a significant body of literature suggests that the
performance of these merged and acquired firms consistently fails to live up to expectations
Panford. Numerous studies have suggested that human resources (HR) and employment
relations issues are poorly handled in M&As. Accordingly, Cartwright and Schoenberg
(2006) suggest that inappropriate decision making, negotiation, and integration processes can
lead to inferior outcomes of the M&A process and these can be traced to HR inefficiencies.
Similarly, Søderberg and Vaara argue that cross-border M&As “frequently fail to deliver the
synergistic or other benefits strived for, lead to human resource and cultural problems, result
in power plays, and often produce problematic consequences for various internal and external
stakeholders”. Rees and Edwards (2009), however, defend HR managers by insisting that HR
in one party to the merger may find itself outside the dominant coalition of course, while the
function as a whole may be marginalized during the M&A process. Hence, there is a need to
compare the sort of impact the strategic intent of the deal and integration has on the roles of
HR managers (Antila & Kakkonen, 2008). Consequently, the context of this study looks at
the influence of indigenous HR managers in the M&A process.
With these assertions in mind, this study aims to assess the extent to which current HR
managers in developing economies engage management practices that are needed for
effective implementation of peaceful and successful mergers and postmergers integration.
Using the case of Ghana as context of a developing country, this article attempts to fill the
gap and weakness of the public sector HR literature that has been dominated by Anglo-Saxon
perspective in much of the research (Clark, Gospel, & Montgomery, 1999). It is believed that
HR has always played multiple roles in employee advocacy and management conscience, but
the last decade has witnessed the advocacy of new roles—the most popular of which
promotes HR as a business partner (Ulrich, 1996). Although the business partner role is
important, it carries potentially problematic implications because it focuses HR on being part
of the team supporting the business strategy (Ulrich, 1996). This study seeks to find out the
exact role HR in developing economies advocates during international M&As of public
enterprises because many of the M&As, particularly in Ghana, have been confronted with
industrial unrest. In addition, the study seeks to respond to Antila and Kakkonen’s (2008)
challenge that it would be very important to study international M&A processes from
beginning to end and analyze in depth how HR managers behave in these processes.