Page 66 - DMGT548_GLOBAL_HRM

Unit 3: Global Status and Control Mechanism in MNCs

supply base and delivery to a number of countries. In each country, differences had to be Notes
understood, which was unique or common enough to make an impact on the process.
The project manager therefore had to select the team based on his understanding of the
company and where he thought the skills lay within it. Through networking, it was
possible to establish this where the manager did not know.

Self Assessment

State whether the following statements are true or false:

14. Perlmutter suggested different internationalising strategies that organisations tend to fit
which influence personnel practices within the global context.
15. According to Thurely and Widenius, there is no national identity across the European
Community as there is in Japan and the USA.



Case Study GE’s Acquisition in Hungary

n January 1990, the U.S. multinational, General Electric (GE), invested in Tungsram, a
Hungarian lighting company, as part of its European market expansion strategy. By
I1994, its equity had risen to 99.6%. The Hungarian operation had 13 existing factories
employing 17,600 workers. GE initially appointed a Hungarian-born U.S. expatriate
employing as its top manager, though he was later replaced when Tungsram was brought
under the direct control of GE Lighting Europe in 1993. Staff transfers played an important
role in training and developing the Hungarian staff. Key executives were brought over
from the United States for varying lengths of time (three to six months) to assist in knowledge
and skills transfer. Management training also involved sending Tungsram staff to the
United States, giving selected Hungarians exposure to GE’s working environment, and
American life in general. In order to improve Tungsram’s competitiveness, GE reduced
staff levels by almost half and closed five plants, despite the unionised environment; it
also invested heavily in training (quality programmes) to improve production workers’
output. During this period, its European market share increased from 5% in 1989 to 15% in
1994.

Questions
1. How did G E choose to execute its expansion strategies?
2. Did GE’s top manager anticipate the HR investment that the Tungsram acquisition
would entail prior to its decision to purchase the Hungarian firm?
3. Was it proper to GE to replace the Hungarian-born U.S. expatriate as its top manager
of Tungsram when it came under direct control of GE lighting Europe?

4. What steps did GE take to improve the competitiveness of Tungsram Company?
Source: Rao, P.L. (2008). International Human Resource Management. First Edition. Excel Books. New
Delhi.
3.4 Summary

 IHRM is a very complex process.

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