UNIT 5 mibo

8/6/2019 UNIT 5 mibo

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INTERNATIONAL HUMAN

RESOURCE MANAGEMENT


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GLOBAL RECRUITMENT

Recruitment means searching for the

prospective candidates & stimulating them to

apply for jobs.

The accurate information provided by the

global company attracts the qualified & repels

the unqualified candidates.


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SOURCES OF GLOBAL RECRUITMENT

1. Parent Country Nationals:

Parent Country Nationals are employees of

the company or its subsidiaries located in

various countries who are the citizens ofthe country where the companys

headquarters are located.

These are generally managers, head ofsubsidiary companies, trouble shooters &

experts.


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SOURCES OF GLOBAL RECRUITMENT

2. Host Country Nationals:

Host Country Nationals are the employees

of the company who are the citizens of the

country where the subsidiary is located.

3. Third Country Nationals:

Third Country Nationals are the employees

of a companys subsidiary located in acountry, which is not his home country.


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GLOBAL SELECTION PROCESS

Global business firms need people with

higher order skills, balanced emotions,

ability to adjust to multi-cultural

environment. Hence, the selection process of Global

companies vary from that of a domestic

company.

There are three type of approaches followed

in selection policies in Global business viz.

Ethnocentric Approach

Polycentric/ Regiocentric Approach

Geocentric Approach


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THE ETHNOCENTRIC APPROACH

The basic reason for firms following thisapproach are:

Non availability of qualified personnel inhost country.

To maintain a unified corporate culture.

The Ethnocentric Approach of Selectionsuffers from the following disadvantages:

The staff of the host country feelsfrustrated.

Cultural myopia


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THE POLYCENTRIC APPROACH

The reasons for adopting this approachincludes:

Host country nationals are familiar with theculture of the country.

Level of job satisfaction of the employees ofthe subsidiaries is enhanced.

Reduces the overall cost of staff ofsubsidiaries.

However,

This approach limits the mobility ofemployees among subsidiaries & betweensubsidiaries & headquarters.

Organizational culture of the parent companycannot be completely adopted in the

subsidiaries.


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THE GEOCENTRIC APPROACH

Global firms follow this approach due to

the following reasons:

To have the most appropriate Human

Resource.

To meet the challenges of cultural

diversity.

To avert the problems of cultural myopia.

Limitations:

Implementation of this approach takes

time, as the MNC has to train & develop

the people in multi cultures.

Expensive implementation.


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EXPATRIATES

Expatriates are the employees & their

family members working or living in foreign

countries.

The parent country nationals working inforeign subsidiary & third country nationals

are expatriates.

International Adjustment is the degree to

which the expatriate feels comfortable

living & working in the host culture.

Expatriates have a strong desire to reduce

Cultural Shock.


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CULTURAL SHOCK

Cultural Shock is the frustration &

confusion that result from being

bombarded by uninterpretable cues.

Researchers found that to a large degreeculture shock follows a general pattern of a

U shaped curve which is divided into 4

stages:

Honeymoon stage

Culture shock stage

Adjustment stage

Mastery stage


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CULTURAL ADJUSTMENT CURVE


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DIMENTIONS OF INTERNATIONAL

ADJUSTMENT

Degree of adjustment

Work Adjustment

Interaction Adjustment

General Adjustment

Organization Culture

Organization Culture

Novelty

Social Support

Non Work

Culture Novelty

Family-Spouse

Adjustment

Individual

Self efficacy

Relational skills

Perception skills

Job

Role Clarity

Role discretion

Role novelty

Role conflict


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TRAINING & DEVELOPMENT

Even the most valuable employees in the

Global companies fail to work & stay with

the company due to poor Training &

Development efforts.

Training & Development for global jobs are

necessary to match employee

specifications with the job requirements &

organizational needs.

It results into improved job knowledge &

morale of the human resources.


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CROSS CULTURAL TRAINING

Cross Cultural training enables the

expatriates to learn the cultural norms,

values, aptitudes, attitudes, beliefs,

behaviors, practices of the host country.

Cross Cultural training includes:

Fact oriented training

Attribution training

Cultural awareness training Cognitive- Behavior Modification

training

Experimental training


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PERFORMANCE APPRAISAL IN

GLOBAL COMPANIES

Performance appraisal is a method of

evaluating employee behavior relating to

expected work, including both qualitative &

quantitative aspects of job performance.

Appraising the performance of expatriate

employees objectively is very difficult.

Hence, global companies give moreweightage to the self appraisal done by the

foreign employee himself rather than by

the appraisers.


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GLOBAL STRATEGIC

MANAGEMENT


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GLOBAL STRATEGIC MANAGEMENT

According to Certo & Peter, Strategic Management is a

continuous, iterative cross functional process aimed at

keeping an organization as a whole, appropriately

matched to its environment.

Global Strategic Management is concerned with deciding

on strategy to be followed in the Global Market &

planning how that strategy is put into effect.

Strategic Management of a global company is distinct

from that of a domestic company due to its peculiarities.


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PROCESS:

1. Analyzing the existing mission & goals:

Most of the companies initially start as domestic firms

& transform into a global company at a laterstage.

The company finds that the existing mission

statement would be redundant when it significantly addsproduct or country portfolios to the existing portfolio.

The global company, therefore prefers to reformulate

the existing mission statement.


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PROCESS:

2. Organizational analysis of a Global Business Firm:

The organizational analysis requires a detailed study of

the following aspects of the global company & its

subsidiaries or marketing department:

Marketing

Production

Finance

Human Resources

Organization Structure


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ORGANIZATION STRUCTURE

Managing Director

ManagerR&D

ManagerFinance

ManagerProduction

ManagerMarketing

Asst. ManagerNorth India

Asst. ManagerSouth India

Asst. ManagerExports


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ORGANIZATION STRUCTURE

Managing Director

ManagerR&D ManagerFinance ManagerProductionManagerMarketing

CEO China CEO Atlanta


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PROCESS:

3. Analysis of International Environment:

The strategist formulates alternative strategies to exploit

the opportunities provided by using company strength.Global Business environment factors include:

Political-Legal Factors

Economic Factors

Technological Factors Social Factors


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PROCESS:

4. Formulation of alternative corporate level strategies:

Stability Strategies

Growth Strategies

Retrenchment Strategies

Combination Strategies


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PROCESS:

5. Formulation of alternative Business Unit Level

strategies:

The global companies formulate business unit level

strategies based on the corporate level strategies,

organizational strengths & environmental opportunities.

The important strategies at this level include:

A. Low Cost Leadership StrategyB. Focus or Niche Strategy

C. Differentiation Strategy


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PROCESS:

6. Selection of Best among the alternative strategies:

The strategists analyze the alternative strategies, rank

them & select the best among them. The techniques for

strategic analysis could be:

BCG Matrix

GE Matrix


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PROCESS:

7. Strategy implementation:

The factors for strategy implementation includes:

Partner selection

Organizational structure

Behavioral implementation

Marketing implementation

Financial implementation

Production implementation

Human Resource implementation


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PROCESS:

8. Strategy Evaluation & Control:

Strategic Control includes:

Establish standards of management process

Implementation

Measure the performance of the process

Compare the performance with the standards

Take corrective steps


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PROCESS:8. Strategy Evaluation & Control:

The specific areas of strategic evaluation include:

Financial measures

MNC Host country Relationship

Contributory Relationships

Reinforcing Relationships Frustrating Relationships

Undermining Relationships


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INTERNATIONAL BUSINESS ETHICS

Business Ethics primarily concerned with the

relationship of business goals & techniques to specific

human needs.

It studies the impact of acts on the good of the

individual, the firm, the business community & the

society as a whole.

An international strategy is a strategy or course of

action that does not violate the accepted principles &

code of conduct.


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ETHICAL DILEMMAS

Managers confront very real ethical dilemmas.

The ethical obligations of a multinational corporation

toward employment conditions, human rights, corruption,

environmental pollution, and the use of power are notalways clear cut.

Ethical dilemmas are situations when none of the

available alternatives seems ethically acceptable.


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APPROACHES TO INTERNATIONAL

BUSINESS ETHICS

CULTURAL RELATIVISM:

Cultural relativists uphold that cultures differfundamentally from one another, and so do the moralframeworks that structure relations within differentsocieties.

In international relations, cultural relativists determinewhether an action is 'right' or 'wrong' by evaluating itaccording to the ethical standards of the society withinwhich the action occurs.


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BUSINESS ETHICS

UTILITARIANISM (Teleological Approach):

This theory defines morality in terms of the maximization

of net expectable utility for all parties affected by a

decision or action.

As most clearly stated by Mill, the basic principle of

utilitarianism is:

Actions are right to the degree that they tend to

promote the greatest good for the greatest number.


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BUSINESS ETHICS

KANTIAN ETHICS (Deontological Approach):

Kantian ethics is based upon the teachings of the

philosopher, Immanuel Kant.

According to Kant, the concept of motive is the most

important factor in determining what is ethical. More

specifically, Kant argued that a moral action is one thatis performed out of a sense of duty.


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INTERNATIONAL

FINANCE &

ACCOUNTING


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EVOLUTION OF INTERNATIONAL

MONETARY SYSTEM

Bimetallism (Before 1875)

Classical Gold Standard(1875-

1914)

Interwar Period (1914-1944)

Bretton Woods System (1945-1972)

Flexible Exchange Rate Regime (1973 till

now)


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MONETARY SYSTEM

1. Gold Standard:

Britain adopted gold standard in 1816 &

were followed by Germany in 1871 &

subsequently by the other countries of theworld.

A gold standard is a monetary system in

which the unit of value in which prices &

wages are customarily expressed & in

which the debts are usually contractedconsist of the value of a fixed quantity of

gold in an essentially free gold market.


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MONETARY SYSTEM

2. Bretton Woods System:

The collapse of gold standard led to the

Bretton Woods Conference in July 1944.

It introduced a new exchange rate systemi.e. the adjustable peg system.

Under Bretton Woods, US Dollar was the

key currency.

This system broke down in19

70 due tohuge accumulation of dollar with

Germany & Japan & USAs deficit due to

over valued currency.


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MONETARY SYSTEM

Since 1971, world has been operating

under hybrid system of:

Clean Floating

Dirty Floating Crawling Peg

Currency Block

Target Zone Arrangement


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MONETARY SYSTEM

3. International Monetary Fund:

Main function of IMF is to manage

international liquidity & finance short term

balance of payment problems of membernations.

In order to improve international liquidity

position, IMF created Special Drawing

Rights.


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EXCHANGE RATE UNDER

FREE EXCHANGE MARKETS

Fixed Exchange Rate: Government fixesthe rate of exchange at which foreigncurrency can be bought& sold.

Floating Exchange Rate: Government fixesthe range of foreign exchange rate withinwhich foreign exchange is allowed tofluctuate according to the demand & supply

of foreign currency in the market.

Flexible Exchange Rate: Exchange rate isdetermined the market forces.


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THEORIES OF FOREIGN

EXCHANGE RATE

Mint Parity Theory

PPP Theory

BOP Theory

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