Page 67 - DMGT548_GLOBAL_HRM

Global HRM

Notes  To a certain extent, how the internationalising firm copes with the HR demands of its
various foreign operations determines its ability to execute its chosen expansion strategies.

 Apart from the strategic imperatives and staffing approaches, IHRM is affected by the way
the internationalisation process itself is managed.
 Most firms pass through several stages of organisational development as the nature and
size of their international activities grow.
 Exporting is initial stage for the firms entering international operations.
 As the firm develops expertise in foreign markets, agents and distributors are replaced by
direct sales with the establishment of branch offices in the foreign market countries and
the company creates an export division or function at the corporate home office and the
export division head directly reports to the CEO.
 International operations place additional stresses on control mechanisms. There is also
additional stress on the firm’s ability to coordinate resources and activities.

 MNCs use different approaches to manage and staff their subsidiaries. While a firm goes
through evolutionary stages, their organisation structure changes.

 HRM plays an important role in control and coordination process. As the firm goes
international, there is a need for an integrated framework of strategic international HRM.

3.5 Keywords

Global: The Company that applies the global integration business strategy to manage the staff.

IHRM: It is the art of managing different people with various cultures across countries.
Matrix structure: Structure, that results from the integration of the operations of the MNC in
more than one dimension.

Multinational Corporation (MNC): It is a corporation or enterprise that manages production or
delivers services in more than one country.
Multinational Enterprise (MNE): A firm that takes a global approach to its foreign markets and
production.
Polycentric: Each subsidiary is managed on a local basis.
Regiocentric: It reflects the geographic strategy and structure of the MNC.

Strategic alliance: A collaborative arrangement of critical importance to one or more of the
alliance partners.
Vertically integrated: Companies are united through a hierarchy with a common owner.

3.6 Review Questions

1. Analyse the attitudes of MNCs towards building a multinational enterprise, giving details.
2. Examine the internationalisation process towards the path to global status.
3. Giving an example explain the integrated strategic framework for HRM.
4. Analyse the various factors that needs to be addressed for developing international
organisations.
5. Examine the changes in the HRM policy as the firm transcends across its national borders.

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