Page 62 - DMGT548_GLOBAL_HRM

Unit 3: Global Status and Control Mechanism in MNCs

Balanced vertical integration means a firm controls all of these components, from raw Notes
materials to final delivery.

3.3.1 Implications for Human Resource Management Policy

The implication of different phases of internationalisation for human resource management is
gaining importance nowadays. They view organisational forms as representative of stages in
the development of international enterprises.
The four phases identified are: domestic, with a focus on home markets and export; international,
with a focus on local responsiveness and the transfer of learning; multinational, with a focus on
global strategy and price competition; and global with a focus on both local responsiveness and
global integration.

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Caution Adler and Ghadar’s model provides the relationship of culture and responses
within human resource management.
1. In the first phase, domestic, there is a denying or ignoring of other cultural contexts
with foreigners simply being offered a product developed in the home country.
2. In the second phase, international, it is important to take the cultural component
consideration, as firms are moving into foreign markets in which they need to
operate more fully and take account of local conditions.
3. The third phase, multinational, is characterised by a globalisation of products and
services in order to compete on price and culture is not such a major factor because
of necessity there is recognition of cultural differences among the countries of
operation.
4. In the fourth phase, global, there is a more complete adaptation to local markets of
global products and cultural sensitivity and the international human resource function
attempts to provide managers from anywhere with opportunities to develop in
order to develop the organisation itself.

3.3.2 Integrated Strategic Framework

There is a need for an integrated framework of strategic international human resource
management that brings together a number of the aspects in a MNC. They propose that there are
two major multinational enterprise components that impact on strategic international HRM
issues: the inter-unit linkages and internal operations.

1. Inter-unit linkages involve the organisation’s mechanisms for managing the differentiation
and integration of its operating units.
2. Internal operations involves the need for each operating unit (e.g. subsidiary) to function
effectively within its own (national or market environment).
The strategic international human resource issues in their framework are concerned with these
two components and with the need to manage the international organisation by balancing
differentiation and integration and balancing the autonomy of local units against the need to
coordinate and control them.

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