Page 61 - DMGT548_GLOBAL_HRM

Global HRM

Notes conditions and national culture. This type of organisation will have a strong national
presence and can respond to national diversity. There is very little direct influence from
the parent company and interpersonal communication among representatives from the
different cultures is quite limited.

Example: The American ITT, which needs to respond on a local basis to specific
regulations, requirements and formats in the telecommunications switching industry.

2. Global: The organisation exploits the cost advantages of centralised global scale operations
based on knowledge development that is retained at the centre and on the implementation
of the parent company’s strategies. It responds to the trends of growing globalisation of
tastes, fashions and consumer demand generally.

Example: The Japanese Matsushita which exploits and promotes the globalisation of
taste in consumer electrics, being export-based with research and development, manufacturing
and branding concentrated at the centre.
3. International: The organisation exploits the parent company’s knowledge and adapts it
worldwide. Sources of core competencies are centralised but other competencies may be
decentralised. The role of overseas operations is to adapt the parent company’s
competencies to the local environment. Knowledge is developed at the centre and then
transferred to the overseas subsidiaries.

Example: Procter and Gamble is a good example of an international organisation.
4. Transnational: It seeks to integrate the separate forces operating in the international
marketplace, which each of the three organisational forms addresses only partially. These
three forces are:
(a) Global integration: the trend towards greater integration of global tastes. Product
trends such as Coca-Cola and McDonald’s are examples.
(b) Local differentiation: the demand of local and national tastes and of protectionism
from national governments tends towards multinational organisational
structures.

(c) Worldwide innovation: the cost of innovation is great and it is more cost-effective, if
research and development are centralised and such products emanating from the
centre are marketed globally or are adapted internationally in local centres around
the world.

Did u know? Vertical integration is a style of management control where companies are
united through a hierarchy with a common owner. Usually each member of the hierarchy
produces a different product or (market-specific) service, and the products combine to
satisfy a common need.
A company exhibits backward vertical integration when it controls subsidiaries that
produce some of the inputs used in the production of its products.

A company tends toward forward vertical integration when it controls distribution centers
and retailers where its products are sold.

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