STAMFORD UNIERSITY OF BANGLADESH

Midterm B :
Video case study ( Chapter – 3)

Submitted By:
Umma Habiba ID: MBA 07018234

Course Code: HRM607

Course Title: International Human Resource Management
Submitted to: Khadiza Rahman
Senior Lecture
Department of Business Administration

Date: 02 – 07 – 2020
 Answer No 1
Factors should be taken in to consideration when MNEs formulating and implementing effective
IHRM policies and practices:

External factors-

When it comes to human resource management there are several factors that affect day-to-day
operations. Adapting in this field is important because at a moment’s notice new legislation can
be passed with an immediate effective date or corporate policies are changed where human
resources feels the brunt. A well-developed strategy for your human resources department takes
into consider external factors that might affect your department.

MNE performance-

MNE in-crisis performance is associated with the pre-crisis development of asset management
capabilities, or the capacity of managers to orchestrate assets so as to extract more value from
the firm’s resource pool. Specifically, we argue that because dynamic managerial capabilities
evolve as a response to a firm’s task environment, MNEs that operate in dynamic industries
develop stronger asset management capabilities. However, we also posit that whether these
capabilities contribute to in-crisis performance is contingent upon the munificence of the
industry environment in which the capability evolves. Asset management capabilities that evolve
in munificent environments would encompass a wider spectrum of routine-altering activities, and
thus increase the ability of the MNE to react to more revolutionary events, such as global
economic crises. Conversely, asset management capabilities that evolve in resource-scarce
environments will result in more strategic lock-in due to firms' constrained ability to experiment
with novel resource configurations, resulting in poorer in-crisis performance

Answer No: 2
 Balance of standardization and localization in HRM according to the multinational ‘global
requirements are:

Global standardization:
 Global standardization is the ability to use standard marketing internationally. In other words,

it's the ability for a company or business to use the same marketing strategy from one country to
the next, and across various cultures. When a product has basically the same appeal all over the
world, global standardization is a useful tool.
Localization:
Localization (also referred to as "l10n") is the process of adapting a product or content to a
specific locale or market. Translation is only one of several elements of the localization process.
In addition to translation, the localization process may also include:
● Adapting graphics to target markets

● Modifying content to suit the tastes and consumption habits of other markets
● Adapting design and layout to properly display translated text
● Converting to local requirements (such as currencies and units of measure)
● Using proper local formats for dates, addresses, and phone numbers
● Addressing local regulations and legal requirements

The aim of localization is to give a product the look and feel of having been created specifically
for a target market, no matter their language, culture, or location.

Assumption: In order to balance standardization and localization in HRM the HR department

must align the policies and practices with the parent company’s strategy and structure, corporate
culture and the size and maturity of the firm

Answer No 3

FACTORS DRIVING STANDARDIZATION

MNEs might want to standardize work practice. The relationship suggested in the literature
explains that a large MNE with a long international history and extensive cross-border
operations:

● pursues a multinational or transnational corporate strategy

● supported by a corresponding organizational structure; that is

However, in practice, we do not always observe perfect adherence to these factors in all MNEs..

In such highly internationalized organizations we often find attempts to standardize HRM

practices on a worldwide basis. Of course, this approach is not appropriate for the whole
workforce but aims at a group of managers who are working at the cross-border boundaries of
the firm in the headquarters or in foreign locations, i.e., international boundary spanners.15 A
good example of a MNE which has attempted to globally standardize compensation practices is
Schering AG, a German pharmaceutical company, which introduced a global performance
system for top managers worldwide.16 Within the context of a new strategic orientation,
Schering implemented a standardized bonus system for top executives that aimed at
strengthening the performance culture in the company and facilitating a common orientation for
all managers. The corporate element of the bonus system consisted of a standardized bonus
structure. As the cultural acceptance for variable bonuses varied across Schering’s subsidiaries,
the proportion between the fix and variable part of the total compensation package of managers
was adapted to the country-specific conditions. The Schering example not only shows us that the
implementation of global standards is possible, but at the same time, it also makes it clear that
local adaptations and exceptions to the standards are often needed. The factors driving the
localization of HRM practices are outlined in the next section.

Answer No: 4
To respect local: Cultural values, traditions, legislation, government policies, and education
systems .Host country effect is the change that a company must adopt in terms of hr practices,
legal bindings, business policies etc when it sets up its business in another country or the host
country. Whereas country-of-origin is where the organization originates from in terms of its
corporate practices and management

The cultural environment:

There is evidence that culture has an important impact on work and HRM practices. Sparrow, for
example, has identified cultural influences on reward behavior such as ‘different expectations of
the manager-subordinate relationship and their influence on performance management and
motivational processes’.17 Triandis18 found that cultures where work is based on more
integrated personal social ‘relationships’ may value a more complete balance of intrinsic and
extrinsic rewards, while cultures characterized by personal independence and isolation
(‘individualism’) as well as rapidly changing personal and social contexts may emphasize
extrinsic rewards – given the absence of a strong and enduring social matrix that attributes
meaning and power to intrinsic rewards. The examples indicate that the effectiveness of
standardized practices might differ in various cultural contexts.

The institutional environment:

In addition to national or regional culture, institutional settings shape the behavior and
expectations of employees in subsidiaries.19 the institutionalism perspective20 indicates that
institutional pressures may be powerful influences on human resource practices.21 According to
Whitley22 institutional norms and values may be based on the features of a national business
system. Elements which are relevant to HRM are, for example, the characteristics of the
education system or the industrial relations.

HRM practices Impact of the institutional context:

Recruitment and selection: Education system

The reputation of educational institutions such as public and private universities varies in
different countries. This is reflected in the recruiting processes and selection criteria of the firms
in those countries.

Training and development: Education system

Education systems differ between different countries (existence of a dual vocational training
system, quality and reputation of higher education institutions). This has an effect on the training
needs perceived and fulfilled by MNEs.

Compensation: Legislation and industrial relations

Legislation such as the regulation of minimum wages or respective union agreements with
respect to compensation have an impact on the firm’s compensation choices with Respect to pay
mix and pay level.

Task distribution: Legislation and norms

Legislations and respective norms Support gender-based division of labor to a differing extent in
different countries. While in some countries the percentage of female managers is relatively
high, in other countries it is not common that women work at all.

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