Chapter1- IHRM

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Copyright 2004 Asia Pacific Institute of Information Technology

International Human Resource

ManagementBUS-1-08-MBChapter 1 Strategy & Structure

of Multinational Companies
http://www.apiit.edu.my/


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Ethical and Social Issues

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Topic & Structure of the lesson

Learning Outcomes

Understanding the differences between

domestic and multinational firms

Professionalism

Social Responsibility in business


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Learning Outcomes

At the end of this module, YOU should be able to:

Recognise the three ideal type of multinational companies

Objective of HRM in MNCs


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Main Teaching Points

Ethics in business Planning and controlling

Principles and procedures

Customer relationship

Working condition

Professionalism The need for professionalism

The advantages of professionalism

The issues in professionalism Social Responsibility in business

The role of management

Society and management

Social and green issues


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Introduction

Differences between domestic & MNC

Alder tried to identify the major differences

between domestic & MNC firms

2 factors considered of primary importance indifferentiating between domestic & MNC:

multiculturalism : the presence of people from two or

more cultural backgrounds within an organisation

Geographic dispersion : location of various sub-units

of the parent firm in different countries


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Potential benefits of

multiculturalism &

geographic dispersion

Increasing creativity & innovation

Demonstrating more sensitivity in dealing

with foreign customers

Being able to get the best personnel from

everywhere

Taking a global perspective


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Creating a super organisational culture

Greater flexibility with the organisation both toadopt a wider range of environments and to

change within those environments


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Strategic Objective

Barlett & Ghoshal (2000) discuss 3

different strategic objectives:1) Global efficiency can be enhanced both by

increasing revenues and lowering costs

2) Multinational flexibilitythe ability of a company

to manage the risks and exploit the opportunities

that arise from the diversity & volatility of the

global environment


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Barlett & Ghoshal identified 4 sources of

diversity & volatility that can offer both

risks & opportunities

macro-economic factors e.g interest rates

policy actions of national governments

responses of competitors in the hostmarket

resources like natural, financial & HR


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Structuring Multinational Companies

Strategy & Structure: Early Studies

1) expansion of volume

2) geographic dispersion

3) vertical integration

4) product diversification


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The International Division Structure creates a number ofproblems:

It tends to underplay the importance of internationalactivities

It underestimates the diversity that be inherent ininternational operations

The isolation of domestic & international activities maycreate duplication of efforts & limit the transfer ofknowledge in the company

Because of structural separation, there is lack of co-ordination between domestic & foreign operations

International Division

Structure


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1) Multi-domestic organisational model:

It gives importance to national

responsivenessFor eg branded packaged product industry

2) International Organisational model:

* It involves sequential diffusion ofinnovations that were originally developed

in the home market

Strategy & Structure: Recent

Developments


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For eg. Int. industry is telecomm switching

3) Global organisational model

standardised consumer needs & scale efficiencies

make centralisation & integration profitable

A firms competitive position in one country is

significantly influenced by its position in other

countries eg. Consumer electronics

4) Transnational organisational model

Orgn structure very flexible

Expertise is spread throughout the orgn


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Typology elements:

1) Organisational design

The orgn structure of the global companyis centralised & globally scaled & the main

role of subsidiaries is to implement parent

company strategies, that is: act aspipelines of products & strategies.

An Empirical Test of

Typologies of MNC


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Typology Elements

2) Interdependence

- Indicates the extent to which various units

of a MNC are dependant on each other &

hence gives an impression of the level of

the integration within the MNC as a whole.

- Distinguish 3 levels of interdependence

a) interdependence that is the subsidiary

is not or hardly dependant on HQ


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Typology Elements

b) dependence, that is the subsidiary ismainly dependant on HQ

c) interdependence, the subsidiary HQ &

other subsidiaries form part of aninterdependant network, they are alldependant on each other

3) Local responsiveness is defined as theextent to which subsidiaries respond tolocal differences in customer preferences


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Typology Element

4) Control mechanisms can be defined

as the instruments that are used to make

sure that all units of the organisation strive

towards common organisational goals.


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Quick Review Question

1)Describe the key characteristics of multidomestic,

international, global and transnational companies.

Would you agree that it would be best for most

companies to follow the transnational model?

2) Take a multinational company of your choice and

describe its organisational model. Do you feel this

is effective, given the companys product/market?


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Follow Up Assignment

Barlett, C A Ghoshall, S. (1989) Managing Across

Borders, The Transnational Solution


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Q & A

Question and Answer Session

Chapter1- IHRM

Documents

Transcript of Chapter1- IHRM