International Business Strategies Nad Hrm Strategies

Essay

«International business strategies and HRM strategies»

Made by:

Saint-Petersburg
2012
Table of Contents
Introduction 3
International Business Strategies 5
Human Resource Management Strategies 8
Conclusion 10
References 11

Introduction

Internationalization today is one of the crucial strategies of many companies throughout the world. During the process of going global companies are trying to extend their business on the overseas markets by searching new customers, acquiring new technologies, getting the access to resources and decreasing the production expenses. In the era of developed communications the borders are neutralizing and interactions between companies are becoming more and more important.
Another important issue as well as business strategy is the human resource strategy. Companies should reorganize their staff in order to operate on the global market. The future of multinational corporations ' competitiveness in the global market is contingent on corporations’ ability to change and adapt their resources strategically to the nuances of the broadening global playing field. Business strategies, which organizations adopt to maintain competitiveness, should be developed in conjunction with their human resource departments. The human resource practices need to be congruent with the organizations ' strategic plans in order to 'facilitate successful implementation ' of their business strategies. Given that it is the people within organizations who sell and market, develop and create products, make decisions and implement programs, human resources are vital to the success of an organization. To be strategic human resource practices are expected to maximize employees’ effectiveness in accordance with their organizations ' missions, objectives and goals.
International human resource managers have a challenging task: they must develop practice which will maintain congruence with the overall strategic plan of their respective multinational corporations (MNCs) while balancing the economic, social, political and legal constraints of the various host countries.
This paper addresses: the various international management strategies proposed in the theoretical literature, the HR practices associated with these international management strategies and the ultimate effect the strategies have on the bottom line effectiveness of MNCs.
In my essay I will analyze different international business strategies and human resource managements strategies that are implemented in the companies all over the world. My essay will have the following structure: * Introduction * 1st Chapter: International business strategies * 2nd Chapter: Human Resource Strategies * Conclusion

International Business Strategies

International business strategies in various MNCs differ a lot. The practices, processes, systems and structures developed to implement given strategies will vary greatly. Developing global strategies can be difficult, given the conflicting demands the global environment places on multinational companies. Usually the more autonomy the overseas branches have to act independently and respond to local demands, the less integrated the global organization becomes – and vice versa.
The MNCs strategies previously developed by Heenan and Perlmutter have been recently reconceptualized in terms of the MNC life cycle - consistent with the product generation and sales phases of developing MNCs. Using either the life-cycle model or classification model, the resulting management strategies involve the interplay between global integration and local responsiveness. In Heenan and Perlmutter 's language, 4 such management strategies are: * Ethnocentric (Domestic Strategy) * Polycentric (International Strategy) * Regiocentric (Multinational Strategy) * Geocentric (Global Strategy)
In general, the ethnocentric strategy suggests that companies should maximize their parent company control in order to integrate subsidiaries, at the cost of local responsiveness. The polycentric and regiocentric approaches both allow for more local responsiveness - with less corporate integration. The geocentric strategy is the 'ideal ', as it attempts to balance both global integration and local responsiveness. In a hierarchy, the geocentric strategy would be the best because it incorporates both of the theoretical ideals. Polycentric and regiocentric strategies would be second because they satisfy the local responsiveness ideal (usually at the cost of global integration). Ethnocentric strategies, focusing on headquarters ' control, are neither globally integrated nor locally responsive. Generally, as foreign subsidiaries mature, they become more resource independent with respect to strategic resources, such as technology, capital, management and access to markets. With the dependency on the parent organization gone, multinationals, who wish to maintain control over their otherwise autonomous subsidiaries, use alternative methods such as fostering the parent organization 's corporate culture worldwide. The extent to which MNCs desire their worldwide employees to share their corporate cultures will determine how host nationals are socialized into the parent corporate culture. This will be evidenced through the processes and resource allocation given to socialization methods such as sending expatriates abroad to propagate corporate culture, selecting individuals who share the organization 's values, bringing host nationals in house 'to learn how things are done ', etc.. Various human resource management practices are contingent upon the MNCs ' international management strategy. The staffing policies which MNCs adopt for their foreign subsidiaries (e.g., recruitment, selection and placement), and the socialization tactics used for host national employees are examples of practices which will vary according to the strategy chosen. For example, when staffing a foreign subsidiary, several MNCs appoint expatriate employees to fill a variety of key positions abroad. When positions in foreign subsidiaries are not staffed by expatriates, they are staffed by either third-country nationals or host nationals. There are benefits associated with host nationals staffing MNCs ' subsidiaries. Host nationals are familiar with their own countries ' cultures, languages, values, laws and resources, which makes the job of running the subsidiaries easier. In addition, unlike expatriates, there are no relocation costs associated with host nationals. Despite the benefits of host nationals, given their business strategy, many ethnocentric MNCs are unwilling to give up the bureaucratic control over foreign subsidiaries, and prefer to place expatriates in (at the very least) their key positions abroad.
Many companies use these strategies (domestic, international, multinational global) in their business. For example Unilever and Philips follow the multinational strategy. In these companies, assets and resources historically were widely dispersed, allowing overseas subsidiaries to carry out a wide range of activities from development and production to sales and services. Their self-sufficiency was typically accompanied by considerable local autonomy. Another world famous companies like GE and Procter & Gamble use the international strategy. Although they built considerable strengths out of their ability to create and leverage innovations, many suffered from deficiencies of both efficiency and flexibility because they did not develop either the centralized and high-scale operations of companies adopting global strategies or the very high degree of local responsiveness that multinational companies could muster through their autonomous, self-sufficient, and entrepreneurial local operations. Companies that adopt the global strategy depend primarily on developing global efficiency. The classical examples are Japanese companies like Toyota and Canon.

Human Resource Management Strategies
Ethnocentric IHRM practices Staffing subsidiaries with expatriates in key management positions will centralize the parent-company control in decision making more than when subsidiaries are managed by host-country nationals. This ethnocentric management practice is common in startup ventures and when rare technical skills are needed which cannot be found in the local labour force. IHRM is responsible for finding suitable expatriates who will be successful abroad. Financial (i.e., expatriates are quite expensive) and legal limitations (i.e, foreign employment laws) often interfere with companies operating from this strategy.
Ethnocentric multinational corporations expect their expatriate managers to transfer headquarters ' cultures and philosophy by working with host nationals. However, the nature of the socialization process, the expatriates, who are sent to socialize the host nationals to their parent corporate cultures, are often being socialized themselves by the host nationals .The reason for this is that the value structure of the host nationals is not being directly influenced by the parent company. Some data show that subsidiaries, even when managed by expatriates, will have corporate cultures more consistent with their own countries ' cultures than with that of the parent company.
Polycentric and regiocentric IHRM practices in a polycentric MNC host nationals manage subsidiaries with some co-ordination from headquarters on how the subsidiary should operate. For these organizations, host-national employees manage the foreign subsidiaries, and expatriates are rarely (if ever) used. Host nationals have no language and culture barriers, and are less costly than expatriates. However, parent-company employees are unable to gain the valuable global perspective from working abroad. Likewise, host nationals are not socialized to the parent companies ' organizational culture through either contact with host nationals or transfers into the parent country. Host nationals are able to develop as managers in their own country, but their own careers will be limited because they are never able to reach the corporate level. In polycentric organizations, there is little concern for a common corporate culture. A management strategy similar to polycentric is regiocentric. From this perspective, host-country nationals and third-country nationals are recruited, selected and developed on a regional basis. Regions are consistent with some natural boundary, such as the European Economic Community or the Middle East. In regiocentric MNCs, the communication and integration systems must be highly sophisticated for headquarters to maintain control over the regions. As in the polycentric perspective, the likelihood of host nationals ' career advancement is greatest within the region, but still may be limited in headquarters. As in the polycentric perspective too, however, the host nationals are given the opportunity to manage their own subsidiaries.
Geocentric IHRM practices When MNCs desire an integration of all of their foreign subsidiaries and the melding of a worldwide corporate culture, they adopt a geocentric management strategy. MNCs adopting this strategy will staff positions worldwide such that the best people are recruited for positions, regardless of nationality. Since headquarters and the foreign subsidiaries of any geocentric MNC will view themselves as integrated parts of a global organization, the corporate culture will be highly unified - but not necessarily dictated by headquarters. The geocentric organization has the most complex organizational structure, requiring the greatest amount of communication and integration across national boundaries. In geocentric MNCs, socialization of the organizations ' values is used as a control strategy with the greatest amount of flexibility to accommodate the differences among foreign countries ' cultures. Employees in the foreign subsidiaries learn and internalize the values, behaviours, norms, etc., of the global company. They do so through contacts with the parent company and the other foreign subsidiaries, transfers and visits to various foreign locations (e.g., parent-company employees transferring abroad to develop global orientations), training from both the parent company and the subsidiaries, etc. This strategy 'permits the greatest amount of local discretion and the greatest amount of decentralization while maintaining overall integration. MNCs adopt strategic socialization processes so that their employees will have increased knowledge of the MNCs ' entire networks, and not just the networks within their own countries ' subsidiaries. The intent is to deemphasize national cultures and to replace them with an integrating corporate culture.
Conclusion
In the conclusion I want to say that international human resource management strategies highly differ from the domestic ones. The variety of international factors highly influences the ability of a company to manage its personnel. In order to achieve this objective the company’s international HR strategy should correlate with its international business strategy and consider all peculiarities of the foreign country: * National legislation * Cultural & Economical factors * Differences in labor market * National orientation * Factors of control
The company that wishes to obtain a solid position on the foreign market should precisely evaluate its corporate and HR resources and choose the right strategy of doing business internationally.

References

1) Multinational corporation management strategies and international human resources practices: bringing HRM to the bottom line. The International Journal of Human Resource Management, September 1995. Paula M. Caligiuri and Linda K. Stroh 2) Schuler, R. S. and MacMillan, I. C. (1984) 'Gaining Competitive Advantage through Human Resource Management Practices ', Human Resource Management, 23: 241-55. 3) Lengnick-Hall, C. A. and Lengnick-Hall, M. L. (1988) 'Strategic Human Resources Management: A Review of the Literature and a Proposed Typology ', Academy of Management Review, 13: 454—70 4) Milliman, J., Von Glinow, M. A., and Nathan, M. (1991) 'Organizational Life Cycles and Strategic International Human Resource Management in Multinational Companies: Implications for Congruence Theory ', Academy of Management Review, 16: 318-39 5) Prahalad, C. K. and Doz, Y. L. (1981) 'An Approach to Strategic Control in MNCs, Sloan Management Review, Fall: 5-13. 6) Wilkins, A. L. and Ouchi, W. G. (1983) 'Efficient Cultures: Exploring the Relationship between Culture and Organizational Performance ', Administrative Science Quarterly, 28: 468-81 7) Henry F.L. Chung, Ellen Rose, Pei-how Huang; Linking international adaptation strategy, immigrant effect, and performance: The case of home–host and cross-market scenario; International Business Review 21 (2012) 40–58 8) Heenan, D. A. and Perlmutter, H. V. (1979) Multinational Organizational Development : A Social Architectural Approach . Reading, MA : Addison-Wesley. 9) Egelhoff, W. G. (1988) Organizing the Multinational Enterprise: An Information Processing Perspective. Cambridge, MA: Ballinger. 10) A model of multinational enterprise subsidiary staffing composition. Tarique, Ibraiz; Schuler, Randall; Gong, Yaping. International Journal of Human Resource Management, February 2006, Vol. 17, Issue 2, p.207-224 11) Transnational management: text, cases, and readings in cross-border management. Christopher A. Bartlett, S. Goshal, J. Birkinshaw. Published by McGraw-Hill/Irwin. 2004, p.209-212. 12) International human resource strategy and its determinants: the case of subsidiaries in Taiwan. Hannon, John M., Ing-Chung Huang, Bih-Shiaw Jaw. Journal of International Business Studies; 1995, Vol. 26, Issue 3, p.531-554

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[ 1 ]. Schuler, R. S. and MacMillan, I. C. (1984) 'Gaining Competitive Advantage through
Human Resource Management Practices ', Human Resource Management, 23: 241-55.
[ 2 ]. Lengnick-Hall, C. A. and Lengnick-Hall, M. L. (1988) 'Strategic Human Resources
Management: A Review of the Literature and a Proposed Typology ', Academy of
Management Review, 13: 454—70.
[ 3 ]. Milliman, J., Von Glinow, M. A., and Nathan, M. (1991) 'Organizational Life Cycles and
Strategic International Human Resource Management in Multinational Companies:
Implications for Congruence Theory ', Academy of Management Review, 16: 318-39
[ 4 ]. Multinational corporation management strategies and international human resources practices: bringing HRM to the bottom line. The International Journal of Human Resource Management, September 1995. Paula M. Caligiuri and Linda K. Stroh
[ 5 ]. Prahalad, C. K. and Doz, Y. L. (1981) 'An Approach to Strategic Control in MNCs, Sloan Management Review, Fall: 5-13.
[ 6 ]. Heenan, D. A. and Perlmutter, H. V. (1979) Multinational Organizational Development : A Social Architectural Approach . Reading, MA : Addison-Wesley.
[ 7 ]. Prahalad, C. K. and Doz, Y. L. (1981) 'An Approach to Strategic Control in MNCs, Sloan Management Review, Fall: 5-13.
[ 8 ]. Wilkins, A. L. and Ouchi, W . G. (1983) 'Efficient Cultures: Exploring the Relationship between Culture and Organizational Performance ', Administrative Science Quarterly, 28: 468-81
[ 9 ]. Henry F.L. Chung, Ellen Rose, Pei-how Huang; Linking international adaptation strategy, immigrant effect, and performance: The case of home–host and cross-market scenario; International Business Review 21 (2012) 40–58
[ 10 ]. International human resource strategy and its determinants: the case of subsidiaries in Taiwan. Hannon, John M., Ing-Chung Huang, Bih-Shiaw Jaw. Journal of International Business Studies; 1995, Vol. 26, Issue 3, p.531-554
[ 11 ]. Transnational management: text, cases, and readings in cross-border management. Christopher A. Bartlett, S. Goshal, J. Birkinshaw. Published by McGraw-Hill/Irwin. 2004, p.209-212.
[ 12 ]. Egelhoff, W. G. (1988) Organizing the Multinational Enterprise: An Information Processing
Perspective. Cambridge, MA: Ballinger.
[ 13 ]. A model of multinational enterprise subsidiary staffing composition. Tarique, Ibraiz; Schuler, Randall; Gong, Yaping. International Journal of Human Resource Management, February 2006, Vol. 17, Issue 2, p.207-224

References: 3) Lengnick-Hall, C. A. and Lengnick-Hall, M. L. (1988) 'Strategic Human Resources Management: A Review of the Literature and a Proposed Typology ', Academy of Management Review, 13: 454—70 4) Milliman, J., Von Glinow, M 5) Prahalad, C. K. and Doz, Y. L. (1981) 'An Approach to Strategic Control in MNCs, Sloan Management Review, Fall: 5-13. 6) Wilkins, A. L. and Ouchi, W. G. (1983) 'Efficient Cultures: Exploring the Relationship between Culture and Organizational Performance ', Administrative Science Quarterly, 28: 468-81 7) Henry F.L 8) Heenan, D. A. and Perlmutter, H. V. (1979) Multinational Organizational Development : A Social Architectural Approach . Reading, MA : Addison-Wesley. 9) Egelhoff, W. G. (1988) Organizing the Multinational Enterprise: An Information Processing Perspective. Cambridge, MA: Ballinger. 10) A model of multinational enterprise subsidiary staffing composition 11) Transnational management: text, cases, and readings in cross-border management. Christopher A. Bartlett, S. Goshal, J. Birkinshaw. Published by McGraw-Hill/Irwin. 2004, p.209-212. [ 1 ]. Schuler, R. S. and MacMillan, I. C. (1984) 'Gaining Competitive Advantage through Human Resource Management Practices ', Human Resource Management, 23: 241-55. [ 2 ]. Lengnick-Hall, C. A. and Lengnick-Hall, M. L. (1988) 'Strategic Human Resources Management: A Review of the Literature and a Proposed Typology ', Academy of [ 3 ]. Milliman, J., Von Glinow, M. A., and Nathan, M. (1991) 'Organizational Life Cycles and Strategic International Human Resource Management in Multinational Companies: [ 5 ]. Prahalad, C. K. and Doz, Y. L. (1981) 'An Approach to Strategic Control in MNCs, Sloan Management Review, Fall: 5-13. [ 6 ]. Heenan, D. A. and Perlmutter, H. V. (1979) Multinational Organizational Development : A Social Architectural Approach . Reading, MA : Addison-Wesley. [ 7 ]. Prahalad, C. K. and Doz, Y. L. (1981) 'An Approach to Strategic Control in MNCs, Sloan Management Review, Fall: 5-13. [ 8 ]. Wilkins, A. L. and Ouchi, W . G. (1983) 'Efficient Cultures: Exploring the Relationship between Culture and Organizational Performance ', Administrative Science Quarterly, 28: 468-81 [ 9 ] [ 12 ]. Egelhoff, W. G. (1988) Organizing the Multinational Enterprise: An Information Processing Perspective