STRATEGIC FUNCTIONING 1

OF MULTI NATIONALS

TOPIC: INTERNATIONAL
HUMAN RESOURCE
MANAGEMENT
By:
Ankita Kohli E-9
SonamA Mahajan E-
Aman Garg A-57
Shashank Bansal A-
Paras Malik A-
Major differences between domestic HRM
and IHRM
 Business activities e.g. taxation, international relocation,
expatriate remuneration, performance appraisals, cross-cultural
training and repatriation
 Increased complexities e.g. currency fluctuations, foreign HR
policies and practices, different labor laws
 Increased involvement in employee’s personal life e.g.
personal taxation, voter registration, housing, children’s
education, health, recreation and spouse employment
 Complex employee mix – cultural, political, religious, ethical,
educational and legal background
 Increased risks e.g. emergency exits for serious illness,
personal security, kidnapping and terrorism

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Myths about globalization
 Myth #1: Global = International
 Myth #2: Global strategy means doing same thing
everywhere
 Myth #3: Globalizing = stateless corporation, no
national/community ties
 Myth #4: Globalization requires abandoning country
images and values
 Myth #5: Globalizing means tackling on acquisitions
or alliances in other countries, without much
integration/change

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Strategies of international, multinational, global &
transnational organizations

 International company – transports its business

outside home country; each of its operations is a
replication of the company's domestic experience;
structured geographically; and involves subsidiary
general managers
 Companies offering multiple products often find it
challenging to remain organized e.g. need to have a
common information systems for accounting,
financial and management controls, and marketing.
Most evolve to become multinational companies

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Strategies of international, multinational,
global & transnational organizations
 Multinational company – grows and defines its
business on a worldwide basis, but continues to
allocate its resources among national or regional areas
to maximize the total.

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Strategies of international, multinational, global &
transnational organizations

 Global organizations – treat the entire world as

though it were one large country; may be the entire
company or one or more of its product lines; may
operate with a mixture of two or more
organizational structure simultaneously.

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Strategies of international, multinational, global &
transnational organizations

 Transnational organization - Use specialized

facilities to permit local responsiveness; more
complex coordination mechanism to provide global
integration

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 Global efficiency and local responsiveness of
different types of firms

High

Global Transnational
Global
efficiency
International Multinational

Low High
Local responsiveness

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Orientation to international operations

Australian multinational organization

 Localization of some management positions but all top
corporate positions held by Australians
 Some decentralization to regional or area headquarters
 Regional headquarters is the main source of
communications; instructions from Aust head office to
regional headquarters
 HR policies and practices are mixed
 Mix of Australian and host country culture

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 Example from Japanese MNCs
.

1. Borderless structure and bottom-up decision-making processes that encourage

communication and information flow among all components of the company and
extend the network to its key suppliers, distributors, and other business partners.

2. Custodial leadership that emphasizes values and vision and is skillfully

unassertive, while energizing and challenging middle managers with demanding
targets.

3. Human resource management, including socialization, training, and promotion

via a hierarchy of ranks, job rotation, and appraisal systems that promote hard
work, commitment, and competition among peers.

4. Incremental planning and control that help a company expand little by little,
focusing on new products and the relentless pursuit of operating improvements,
rather than "grand designs" for competitive advantage.

5. An extended family model that encourages and rewards commitment.

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IHRM - a shift in thinking

 Explicit recognition by parent org of the existence

of assumptions and values of home & host cultures
 Explicit recognition by parent org – ethnocentrism
is neither good/bad, has strengths and weaknesses
 Explicit recognition of subsidiaries’ preferences –
which may be different

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IHRM - a shift in thinking

 Willingness to acknowledge cultural difference –

discuss and learn
 Genuine belief in creative and effective ways of
managing people through cross-cultural
training/learning

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Main challenges in IHRM
 High failure rates of expatriation and repatriation
 Deployment – getting the right mix of skills in the
organization regardless of geographical location
 Knowledge and innovation dissemination – managing
critical knowledge and speed of information flow
 Talent identification and development – identify
capable people who are able to function effectively
 Barriers to women in IHRM
 International ethics
 Language (e.g. spoken, written, body)

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Main challenges in IHRM
 Different labor laws
 Different political climate
 Different stage(s) of technological advancement
 Different values and attitudes e.g. time, achievement,
risk taking
 Roles of religion e.g. sacred objects, prayer, taboos,
holidays, etc
 Educational level attained
 Social organizations e.g. social institutions, authority
structures, interest groups, status systems

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Strategies for managing a global workforce

(1) Implement the aspatial career strategy

 Get people from everywhere (geocentric approach)
 Expats work in multiple countries during the course of their
career
 Gain a lot of knowledge about different cultures &
operations
 Develops in-depth knowledge
 Use previous knowledge for new assignment
 Extremely high cost
 Mainly managers, not technicians

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Strategies for managing a global workforce

(2) Implement the awareness-building assignment

strategy
 Expose a candidate to cultural training exercises
 Usually for short term (3 months to one year)
 Family members usually not required to relocate
 Usually used to train candidates for future assignments
 Learn from foreign assignment and bring experience back
to HQ

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Strategies for managing a global workforce

(3) Implement the virtual solutions strategy

 Collection of practices that exploit electronic
communication
 E.g. internet, intranet, videoconferencing, electronic
databases, email, electronic expert systems
 Low cost and very fast in terms of disseminating
knowledge
 Used by Xerox and Ford

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 Strategies for managing a global
18 workforce
(4) Implement the SWAT team strategy
 Highly mobile teams for short term assignments
 Deployed throughout the organization to different parts of
the world
 No development agenda, plain troubleshooting
 Transfer technical knowledge to locals as they fix
problems
 E.g. technical troubleshooters
Thank You

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