International HRM

-Managing people in a multinational context-

Terminology in IHRM

Host-Country where a subsidiary may be located. Home-Country where the firm is headquartered. Local National or National: an employee hired for employment in
his or her own country.

HCN: Host-Country National. PCN: Parent-Country National. TCN: Third-Country National: often refers to expatriate employees who
are not citizens of the home country but citizens of a third country.

Expatriate: employees who are citizens of the corporations home

country and temporarily living and working in another country.

MNC: Multinational Corporation

What is IHRM?

International human resource management (IHRM) is the systematic planning and coordination of the fundamental organizational processes of job and work design, staffing, training and development, appraising, rewarding, and protecting and representing the human resources in the international or global aspects of an organization.

IHRM Challenge

Some of the key strategic HR choices involved in international management are:

* Creating a common company culture to reduce intercountry cultural differences versus allowing foreign subsidiaries to adapt to the local culture * Sending expatriates (domestic employees) abroad to manage foreign subsidiaries versus hiring local people to manage them

The Stages of International Involvement

Stage 2: Export Operations

Stage 4: Multinational Operations

Stage 1: Domestic Operations Stage 3: Subsidiaries or Joint Ventures Stage 5: Transitional Operations

The Stages of International Involvement

Stage 1: Domestic Operations

The firms market is exclusively domestic

Stage 2: Export Operations

The firm expands its market to include other countries, but retains production facilities within domestic borders

Stage 3: Subsidiaries or Joint Ventures

The firm physically moves some of its operations out of the home country.

Wholly owned subsidiary: in international business, a foreign branch owned fully by the home country Joint venture: in international business, a foreign branch owned partly by the home office and partly by an entity in the host country (a company, a consortium of firms, an individual, or the government); a means of entering new markets where two or more independent firms agree to establish a separate firm; the firms normally own equivalent shares of the joint venture and contribute a corresponding proportion of the management team

Stage 3 (contd)

International assignments create expatriates. HRM practices must focus on the selection, training, and compensation of expatriate managers, as well as the development of policies for employees of foreign facilities.

expatriates
Subsidiary In Brazil

HQ in ParentCountry U.S.A.

expatriates
Subsidiary In Japan

Stage 4: Multinational Operations

The firm becomes a full-fledged multinational corporations (MNC) with assembly and production facilities in several countries and regions of the world.
Some decentralized of decisions making is common, but many personnel decisions are still made at corporate headquarters.

Stage 5: Transnational Operations

Firms that reach this stage are often called transnational because they own little alliance to their country of origin.
Operations are highly decentralized, with each business unit free to make HR decisions with very loose control form corporate headquarters.

Transitional Organization - Global (stateless) Corporations

Number is increasing

Awareness of national borders decreasing

Rising managers expected to know a 2nd or 3rd language

Corporate Example Nestle (Swiss)

CEO Peter BrabeckLetmathe (Austrian) Half of general managers (non-Swiss) Strong faith in regional managers who are native to the region

Strategies for Entering International Markets

Licensing entering new markets

by transferring the rights to produce and sell products overseas to a foreign firm

Franchising entering new

markets in which the franchise pays a fee for using the brand name and agrees to follow the standards and rules

Strategic Alliance cooperative

arrangements between competitors or potential competitors from different countries, possibly to establish a formal joint venture or collaboration between firms on specific projects.

Global Outsourcing subcontracting work to an outside

company that specialized in and is more efficient at doing that kind of work; engaging in the international division of labor so as to obtain the cheapest sources of labor and supplies regardless of country.

Examples of Strategic Alliances

Electric Snecma of France Toshiba IBM Mitsui General Electric GM Daewoo Texas Instrument Compel Communications Canon Hewlett-Packard Mitsubishi Caterpillar
General

Example of Global Outsourcing

-Globalized Workforce

The Maquiladora industry along the TexasMexico border: set up the Mexican plant for assembling using cheap labor. General Electric employs more than 30,000 people in appliance factories in Mexico, and is now shifting some of its engineering work to that country, as well as to India, Brazil, and Turkey.

Example of Global Outsourcing

-Globalized Production-

Of the $20,000 sticker price of a General Motors Automobile Le Mans:

$6,000 goes to South Korea, where the car was assembled $3,000 goes to Japan for sophisticated high-tech parts (engines, transaxles, electronics) $800 goes to Taiwan, Singapore, and Japan for small parts $500 goes to Great Britain for advertising and marketing services $1,000 goes to Ireland for data processing $7,600 goes to GM and its external professional firms in the United States