Lesson Presentation

Global human resource management, sometimes referred to as global HRM, is an

umbrella term that includes all aspects of an organization's HR, payroll, and talent
management processes operating on a global scale. HR managers are responsible for
the hiring, onboarding, training, termination, and legal compliance of company
employees. Global HR managers are responsible for the same important tasks, but on
an international scale. Anytime a company expands internationally, they are faced with
a number of challenges. A strong global human resources team is a vital component of
international expansion.
Some people have the misconception that HR is similar in every country. While there
are similarities from one country to the next, there are a number of cultural differences
that need to be considered. Deciphering cultural differences requires research and
experience in international business ventures. global HR managers are well versed in
cultural differences and play an important role in bridging the cultural gaps discovered
through international expansion. Let’s review some key components of HR and how
they operate on a global scale.
Recruitment and Staffing
Whether a company is looking to hire domestically or internationally, the goal is always
to find the most qualified candidate to fill the position. Understanding the job description
and the desired skill set is essential to finding the right candidate for the job. It is
important for HR to understand any unique or different job expectations for international
positions. In addition, it is important to keep in mind that job experience and education
may look very different from one culture to the next. It is beneficial for the human
resources team to be well versed in cultural differences so they are able to fully
understand the backgrounds and experiences of their candidates.
Training

Training is required for all employees to fully understand their job functions and
company policies and procedures. While it is always important to maintain consistency
with onboarding new employees, it is especially important when operating on a global
scale. To ensure the same message is delivered to all employees, global HR managers
should use the same onboarding process at every company location. Certain things
may need to be considered, like whether or not a translator is needed. However, the
more consistent the onboarding process is throughout the company, the more likely the
company will be able to maintain and grow its brand. When inconsistent policies and
procedures are presented throughout the company, their brand and reputation may
suffer.
Legal Compliance
The scales of justice.Legal compliance is a huge responsibility for human resources,
both domestically and internationally. To avoid legal trouble, it is critical that HR
understands, abides by, and helps the company to enforce all legal requirements. Laws
differ from one country to the next and therefore, an important role of global HR
managers is to ensure all laws and regulations are followed in every country in which
the company is operational.
Employee Development
Human resources aids in employee development by providing opportunities for
employees to further their knowledge and education. Companies that operate on an
international scale are able to use their international locations as great training and
development opportunities for their employees from other countries. Training
internationally can provide a unique experience for employees to learn about cultural
differences, diversity, and differing perspectives.
Global HR managers are also responsible for ensuring employees who are working
internationally have all the resources they need to successfully transition into a new
country and culture. Since global HR managers understand cultural and legal
differences, they are well equipped to help relocated employees settle into their new
role.
Compensation
As we discussed earlier in this section, following laws and regulations is extremely
important in order to avoid paying fines or facing legal trouble. Compensation, including
salary, health benefits, vacation time, etc. may differ from one country to the next. It is
vital that HR be aware of—and abide by—all work and compensation laws for each and
every country (or state) their company operates in.
Strategic Benefits
Decorative image.There are a number of strategic benefits to utilizing global HR
managers. Consistency, structure, and control are three of these benefits. Having HR

maintain consistency throughout the company helps to solidify a company’s brand and
operations. This also helps lay a strong foundation for the structure of the organization
as a whole. If each location is created using a similar structure and alignment, it helps to
ensure a company’s goals and objectives are at the forefront of expansion. Global HR
Managers are also able to maintain control of company operations. If every location’s
HR department acted independently, consistency and control would be a challenge to
maintain. By having Global HR Managers to oversee the company in its entirety, the
company is better able to maintain control of their international locations and overall
company brand, policies, and procedures.
Global Human Resources Strategy
Creating an effective global work force means knowing when to use "expats," when
to
hire "locals" and how to create that new class of employees -- the
"glopats."
Good H.R. management in a multinational company comes down to getting the right
people in the right jobs in the right places at the right times and at the right cost. These
international managers must then be meshed into a cohesive network in which they
quickly identify and leverage good ideas worldwide.
Such an integrated network depends on executive continuity. This in turn requires
career management to ensure that internal qualified executives are readily available
when vacancies occur around the world and that good managers do not jump ship
because they have not been recognized.
Ethnocentricity is another reason. The Greek word ethnos means "nation" or
"people".
So ethnocentricity shows itself in a lack of respect for other ways of life, and an
ethnocentric person feels that his or her own nation or group is the cultural center of the
world. In most multinationals, H.R. development policies have tended to concentrate on
nationals of the headquarters country. Only the brightest local stars were given the
career management skills and overseas assignments necessary to develop an
international mindset.
The chief executives of many United States-based multinational companies lack
confidence in the ability of their H.R. functions to screen, review and develop candidates
for the most important posts across the globe. This is not surprising: H.R. directors
rarely have extensive overseas experience, and their managers often lack business
knowledge. Also, most H.R. directors do not have adequate information about the
brightest candidates coming through the ranks of the overseas subsidiaries. "H.R.
managers also frequently lack a true commitment to the value of the multinational
company experience
The consequent lack of world-wise multicultural managerial talent is now biting into
companies' bottom lines through high staff turnover, high training costs, stagnant market
shares, failed joint ventures and mergers and the high opportunity costs that inevitably
follow bad management selections around the globe. Companies new to the global

scene quickly discover that finding savvy, trustworthy managers for their overseas
markets is one of their biggest challenges. This holds true for companies across the
technology spectrum, from software manufacturers to textile companies that must
manage a global supply chain. The pressure is on these newly globalizing companies to
cut the trial-and-error time in building a cadre of global managers to shorten the leads of
their larger, established competitors, but they are stymied as to how to do it.
The solution for multinationals is to find a way to emulate companies that have decades
of experience in recruiting, training, and retaining good employees across the globe.
Many of these multinational companies are European, but not all. Both Unilever and the
International Business Machines Corporation, for example, leverage their worldwide
H.R. function as a source of competitive advantage.
1. Break all the "local national" glass ceilings
The first, and perhaps most fundamental, step toward building a global H.R. program is
to end all favoritism toward managers who are nationals of the country in which the
company is based. Companies tend to consider nationals of their headquarters country
as potential expatriates and to regard everyone else as "local nationals." But in
today's
global markets, such "us-versus-them" distinctions can put companies at a clear
disadvantage, and there are strong reasons to discard them:
Ethnocentric companies tend to be xenophobic -- they put the most confidence in
nationals of their headquarters country. Therefore, more nationals get the juicy
assignments, climb the ranks and wind up sitting on the board -- and why the company
ends up with a skewed perception of the world. Relatively few multinational companies
have more than token representation on their boards. A.B.B. is one company that
recognizes the danger and now considers it a priority to move more executives from
emerging countries in eastern Europe and Asia into the higher levels of the company.
Big distinctions can be found between expatriate and local national pay, benefits and
bonuses, and these differences send loud signals to the brightest local nationals to
learn as much as they can and move on.
Less effort is put into recruiting top-notch young people in overseas markets than in the
headquarters country. This leaves fast-growing developing markets with shallow bench
strength. Insufficient attention and budget are devoted to assessing, training and
developing the careers of valuable local nationals already on the company payroll.
2. Build a global database to know who and where your talent is
The main tool of a global H.R. policy has to be a global database simply because
multinational companies now have many more strategic posts scattered around the
globe and must monitor the career development of many more managers. Although
some multinational companies have been compiling worldwide H.R. databases over the
past decade, these still tend to concentrate on posts at the top of the organization,

neglecting the middle managers in the country markets and potential stars coming
through the ranks.
I.B.M. has compiled a database of senior managers for 20 years, into which it feeds
names of promising middle managers, tracking them all with annual reviews. But it
made the base worldwide only 10 years ago. Now the company is building another
global database that will cover 40,000 competencies and include all employees
worldwide who can deliver those skills or be groomed to do so. I.B.M. plans to link the
two databases by 2000.
3. Construct a mobility pyramid
Evaluate your managers in terms of their willingness to move to new locations as well
as their ability and experience. This will encourage many more managers to opt for
overseas assignments and open the thinking of line and H.R. managers to different
ways to use available in-house talent. Some multinational companies, for example,
have been developing a new type of manager whom we term "glopats": executives
who
are used as business-builders and troubleshooters in short or medium-length
assignments in different markets. Other multinational companies are exploring the
geographical elasticity of their local nationals.
Globalization is an essential part of business. Global markets, customers, and talent
pools are fundamental to the growth plans of many, perhaps most, companies.
Regardless of whether they operate in mature or rapidly developing markets,
companies today have a critical need for speed and efficiency to move dozens,
hundreds, or often thousands of professionals, technical specialists, managers, and
executives around the world, far from their home offices.
To prepare for and respond to opportunities in global production, research and
development, and innovation, as well as to optimize customer sales, service, and
growth, companies need the ability to get the right people to the right places at the right
cost – quickly and efficiently. Companies also face an ever-increasing need to attract,
develop, deploy, and retain employees and leaders who know how to think and operate
globally. Global workforce and global mobility has become more important than ever to
companies. Global mobility and workforce strategy
An effective global mobility management requires a formal strategy that focuses on a
company’s long-term global talent needs instead of simply reacting to individual
opportunities as they arise. A company’s global mobility and workforce strategy should
be integrated with its business strategy, talent strategy, and workforce planning efforts.
It should include both short- and long-term assignments while balancing the business’
need for special technical skills with its talent development needs for a more globally
prepared workforce.
The global mobility function should use its specialized knowledge and capabilities to
help shape the mobility strategy and govern related investments and execution. An

effective Global mobility program should address the following issues: 1. Global
employee rewards Expatriate rewards should address the barriers to global mobility,
and align with the actual value of each assignment. They should highlight career
development and personal growth along with compensation and bene? ts.

As far as is practical, expatriate rewards programs should be integrated with “regular”

rewards programs and generally administered by HR as part of its ongoing operations.
This would free up the global mobility function to use its specialized capabilities to help
design expatriate rewards programs and customize rewards for a portfolio of
international moves and situations. 2. Global mobility service delivery An effective global
mobility program should be able to support businesses and assignees with high-quality
service that is cost-effective and consistent.
4. Assess your bench strength and skills gap
Ask each executive to compare his or her skills and characteristics with the ideal
requirements defined for the executive's current post and preferred next post. Invite
each to propose ways to close any personal skills gaps -- for example, through in-house
training, mentoring, outside courses or participation in cross-border task forces.
Compare the skills detailed in the personal assessments with those required by your
business strategy. This information should form the basis for your management
development and training programs and show whether you have time to prepare
internal candidates for new job descriptions.
Unilever uses a nine-point competency framework for its senior managers. It then holds
the information in private databases that serve as feeder information for its five talent
pools. The company thoroughly reviews the five pools every two years and skims them
in between, always using a three- to five-year perspective. In 1990, for example, its ice
cream division had a strategic plan to move into 30 new countries within seven years.
Unilever began hiring in its current markets with that in mind and set up a mobile "ice
cream academy" to communicate the necessary technical skills.
5. Recruit regularly
Search for new recruits in every important local market as regularly as you do in the
headquarters country. Develop a reputation as "the company to join" among
graduates
of the best universities, as Citibank has in India, for example. The best way to attract
stellar local national recruits is to demonstrate how far up the organization they can
climb. Although many Fortune 500 companies in the United States derive 50 percent or
more of their revenues from non-domestic sales, only 15 percent of their senior posts
are held by non-Americans.
6. Advertise your posts internally
Run your own global labor market. In a large company, it is hard to keep track of the
best candidates. For this reason, I.B.M. now advertises many of its posts on its
worldwide Intranet. Unilever usually advertises only posts in the lower two pools, but
this policy varies by country and by business unit.
CONCLUSION
Most multinational companies now do a good job of globalizing the supply chains for all
their essential raw materials -- except human resources. Players in global markets can
no longer afford this blind spot. Competition for talent is intensifying, and demand far
outstrips supply. To have the multicultural skills and vision they need to succeed,
companies will have to put into place programs that recruit, train and retain managers in
all their markets.
If companies are to handle the challenges of globalization and shift to a knowledge-
based economy, they must develop systems that "walk their talk" that people are
their
most valuable resource. The purpose of a global H.R. program is to insure that a
multinational company has the right talent, managerial mobility and cultural mix to
manage effectively all of its operating units and growth opportunities and that its
managers mesh into a knowledge-sharing network with common values. ( Bloom, 1999)

Global Distribution and Marketing

Distribution is the process of making a product or service available for the consumer or
business user who needs it. This can be done directly by the producer or service
provider or using indirect channels with distributors or intermediaries.
The three types of distribution channels are wholesalers, retailers, and direct-to-
consumer sales. Wholesalers are intermediary businesses that purchase bulk quantities
of products from a manufacturer and then resell them to either retailers or—on some
occasions—to the end consumers themselves.
Global marketing is defined as “marketing on a worldwide scale reconciling or taking
global operational differences, similarities, and opportunities in order to reach global
objectives".
Global marketing is also a field of study in general business management that markets
products, solutions, and services to customers locally, nationally, and internationally.
International marketing is the application of marketing principles in more than one
country, by companies overseas or across national borders. It is done through the
export of a company's product into another location or entry through a joint venture with
another firm within the country or foreign direct investment into the country. International
marketing is required for the development of the marketing mix for the
country. International marketing includes the use of existing marketing strategies, mix,
and tools for export, relationship strategies such as localization, local product offerings,
pricing, production, and distribution with customized promotions, offers, website, social
media , and leadership.

Global marketing relies on firms that understands the requirements associated with
servicing customers locally with global standard solutions or products and localizes that
product as to maintain an optimal balance of cost, efficiency, customization and
localization in a control-customization continuum to meet local, national and global
requirements.
Global marketing and global branding are integrated. Branding is a structured process
of analyzing "soft" assets and "hard" assets of a firm's resources.
The strategic analysis
and development of a brand includes customer analysis (trends, motivation, unmet
needs, segmentation), competitive analysis (brand image/brand identity, strengths,
strategies, vulnerabilities), and self-analysis (existing brand image, brand heritage,
strengths/capabilities, organizational values).
"Global brand identity development is the process of establishing brands of products,
the firm, and services locally and worldwide with consideration for scope, product
attributes, quality, uses, users and country of origin; organizational attributes;
personality attributes, and brand-customer relationship; and important
symbols, trademarks metaphors, imagery, mood, photography and the company's brand
heritage".
A global marketing and branding implementation system distributes marketing assets,
affiliate programs and materials, internal communications, newsletters, investor
materials, event promotions and trade shows to deliver integrated, comprehensive and
focused communication, access and value to the customers.
In order for global marketers to be successful, the availability and accessibility of
products and service to customers is imperative. Distribution channels make up the
“place” in the 4 p's of the marketing mix (along with product, price and promotion)
The Four Ps
Reaching new consumers is often the main reason for international expansion. The
rising standards of living in the developing world mean billions of new consumers. In
fact, 80 percent of the world’s population lives in emerging-market countries.
Companies based in the mature economies of the West are attracted by the potential
for double-digit growth in emerging markets.
One begins with the core of marketing knowledge—the four Ps—product, price,
promotion, and place. The answers to questions about the four Ps are all the same;
country differences will have important implications for how product, price, promotion,
and place play out when an organization takes its offerings across borders.
The Marketing Mix
The four Ps together form the marketing mix. Because the four Ps affect each
other, marketers look at the mix of product, price, promotion, and place. They fine-tune
and adjust each element to meet the needs of the market and to create the best

outcome for the company. Promotion has an impact on the other Ps because a
product’s price, for example, may be lowered during a promotional event. Likewise,
holding a special promotional event like a two-for-one deal on a product impacts place,
because the company must ensure that it supplies stores with enough product to meet
the anticipated demand. Finally, the promotion might affect the product’s packaging,
such as bundling a shampoo and conditioner together.
A company’s marketing mix will often be different for different countries based on
• a country’s culture and local preferences,
• a country’s economic level,
• what a country’s consumers can afford, and
• a country’s distribution channels and media.

PRODUCT
Refers to any physical good or intangible service that’s offered for sale. For example,
the product could be physical, like a laser printer, or it could be a service, like printing or
photocopying services. The product could also be access to information, such as stock-
market reports. Given the differences between countries (e.g., language, culture, laws,
and technology standards), a company’s products may need to be adapted to different
countries. Some products, like Coca-Cola or Starbucks coffee, need little, if any,
modification. But even these companies create product variations to suit local tastes.
For example, Starbucks introduced a green tea Frappuccino in China. The new flavor
was very successful there.

Example: Innovation at Starbucks

Annie Young-Scrivner, Starbucks’s chief marketing officer, described her company’s plans for
innovation and international expansion. “We continue to have very solid plans for China,”
Young-Scrivner said. “As we expand outside of the U.S. and get more depth in [international]

markets, we’re finding lots of best practices and innovation that we can bring back. There are so
many examples of creativity, like flat white [a milk and espresso beverage] in the U.K., black
sesame [and] green tea Frappuccino in China. Green tea Frappuccino came from an
international market and we launched it here. The local relevance became a tipping point for
innovation in other markets for the brand.
PRICE
The amount of money that the consumer pays for the product. Pricing can take different
forms. For example, pricing can be by item (e.g., a can of corn), by volume (e.g.,
gasoline), by subscription (e.g., monthly cable service), by usage (e.g., cell-phone
minutes), or by performance (e.g., paying more for overnight delivery versus two-day
delivery).
Pricing has even more nuances when applied to international products. For example,
emerging-market countries often have a less-developed financial system and limited
credit available to local consumers and businesses. Some of the biggest challenges in
selling to emerging markets involve making the product affordable. In Brazil, 26 percent
of the population lives below the poverty line. However, companies have devised ways
to help even the poorest consumers afford products. Casas Bahia has succeeded in
selling to the bottom-of-the-pyramid (BOP) consumers in Brazil.
The third P—promotion—refers to all the activities that inform and encourage
consumers to buy a given product. Michael Solomon, Lisa Duke Cornell, and Amit
Nizan, Launch! Advertising and Promotion in Real Time (Nyack, NY: Flat World
Knowledge, 2009). Promotions include advertising (whether print, broadcast radio,
television, online, billboard, poster, or mobile), coupons, rebates, and personal sales.
Like products, promotions are often customized to a country to appeal to local
sensibilities. One obvious mistake to avoid is a language translation that misses the
nuances of native speakers. For example, a straight translation of Clairol’s “Mist Stick”
curling iron into German misses the nuance that “mist” in German is slang for manure.
Likewise, Coors’ “turn it loose” slogan, when translated into Spanish, is interpreted by
some locals as “suffer from diarrhea. Globalization, and Importing", regulations in
Germany prohibited discounts, free gifts, or money-back guarantees with purchase.
When US clothier Lands’ End expanded into Germany, it was taken to court for its
guarantee that “If you’re not satisfied with any item, simply return it to us at any time for
an exchange or refund of its purchase price.” Only recently have these German laws
been repealed to bring them in line with European Union laws.Jan Peter Heidenreich,
“The New German Act against Unfair Competition,” (German Law Archive, accessed
August 9, 2010,) http://www.iuscomp.org/gla/literature/heidenreich.htm#D3c.
The final P—place—refers to the location at which a company offers its products for
sale. The place could be a small kiosk in a village, a store in town, or an online website.
Place poses a particular challenge when selling internationally.

KFC has had great success in China after a first failed attempt. KFC try again after its
first failure for the same reason that most companies market their products globally.
Specifically, companies expand internationally to reach more customers, gain higher
profit opportunities, balance sales across countries in case one country experiences
problems, and compete with other brands that are expanding internationally and with
global firms in their home markets.
Products reach consumers through a channel of distribution, which is a series of firms
or individuals who facilitate the movement of the product from the producer to the final
consumer. The shortest channel, called the direct channel, consists of just the producer
and the consumer. In this case, the consumer buys directly from the producer, such as
when you buy an apple from a local farmer. An indirect channel, in contrast, contains
one or more intermediaries between the consumer and the producer. These
intermediaries include distributors, wholesalers, agents, brokers, and retailers. In
international business, the number of intermediaries can expand due to the regulations
affecting import and export across national boundaries. Agents, brokers, international
freight forwarders, and trading companies may get involved. Then, once a company’s
product is in the foreign country, that country may have its own wholesalers who get
involved. The firm must pay all these intermediaries for their services, which increases
the cost of the product. Firms must raise prices or accept lower margins when
confronting these added channel costs.
Supply chain management is the management of the flow of goods and services and
includes all processes that transform raw materials into final products. It involves the
active streamlining of a business's supply-side activities to maximize customer value
and gain a competitive advantage in the marketplace.
Market Segmentation
Market segmentation is the process of dividing a larger market into smaller markets that
share a common characteristic. The characteristics might be demographics, such as
segments divided by age groups (e.g., eighteen to twenty-four year-olds), genders, or
household incomes. Segmentation can also be done on the basis of geographic location
or by lifestyle (e.g., new moms of different ages might have more in common with each
other than they have with identically aged nonmothers.) The purpose of segmentation is
to give the company a concrete vision of its customers, so that it can better understand
how to market to that customer. Segmentation helps companies target their marketing
efforts more effectively.
Each country may have its own cultural groups that divide the country or transcend
national boundaries. For example, the northern coast of Colombia is culturally more
similar to the Caribbean than it is to the interior of its own country because the Andes
Mountains split the country into two regions: east and west. Historically, these regions
had been cut off from each other. Foreign markets are not just copies of US markets;
they require products suitable to the local population. Although European and
developed country markets are more similar to the United States, emerging markets like
the BRIC countries have important differences. Products must meet local needs in
terms of cost, quality, performance, and features and, in order to be successful, a
company must be aware of the interplay between these factors.
Gray Market. Refers to products that are sold legally, but outside of the brand's
permission. These products can harm relationships with distributors and damage
product reputation. Common gray market goods include cameras, cars, watches and
even pharmaceuticals.

The gray market exists because of price discrepancies between different markets. For
example, consumer packaged-goods companies may price their products higher in
Austria than in the neighboring Czech Republic due to the Austrian citizens’ higher
income levels. As a result, Austrians might order their goods from Czech retailers and
simply drive over the border to pick up the products. The goods in the Czech stores are
legitimate and authentic, but the existence of this gray-market activity hurts the producer
and their channel partners (e.g., distributors and retailers) in the higher-priced country.

Counterfeit
Counterfeit markets purposely deceive the buyer. For example, counterfeiters slightly
alter the Sony logo to Bony in a way that makes it hard to distinguish without careful
inspection. Counterfeit markets hurt companies that have invested in building
intellectual assets such as unique product designs, technological developments, costly
media content, and carefully crafted brands. Together, these intellectual assets
represent an investment of millions or billions of dollars. If a company’s product,
technology, or brand is counterfeited, both the company’s reputation and financial
security suffers. All of its channel partners (i.e., distributors, retailers, and licensing
partners) are affected as well. For example, an executive traveling in Hong Kong saw
unique styles of Nike shoes. When he asked about them, he was told the shoes were
only available in size nine. This fact led him to realize that the shoes were probably
prototype samples from a local factory that had been smuggled out of the factory to be
sold. Some industries have tried to limit the scope of the counterfeiting and copying of
DVDs through regionalized encoding, but even this is too easy to circumvent. That’s
why musical and entertainment giant Bertelsmann avoids expansion into emerging-
market countries that have lax enforcement of intellectual property rights.
Counterfeiters may also tamper with branded products. For example, Intel processor
chips vary in price based on their processing speed: the higher the speed, the higher
the price of the chip. Counterfeiters buy (or steal) low-end chips, repaint a few numbers
on them, and then sell them as high-end chips. The high-end chips sell for $100 or $200
more than the low-end chips. Customers looking for a bargain may unwittingly buy
these chips. For Intel, these remarked chips not only cannibalize sales of the higher-
margin, high-performance chips, but they also create higher warranty costs because