c


cc
m
 


Ú Expansion of volume
Ú Àeographic Expansion
Ú ertical integration
Ú 3roduct diversification
a  


Ú xeep pace with competition

Ú each a larger market
Ú eap higher profits
Ú 3rolong the lifecycle of their products

a

 
 


Ú Àrowth of MNCs
Ú Evolution of HM as the major determinant of success or failure of International business
Ú HMs role in implementation and control of international firms
Ú ahift from traditional hierarchical organization structures to network MNCs.
Ú apid growth of small and medium enterprises
Ú ahortage of international management talent

  


Ú 

  

Àuided by domestic market extension concept:
Domestic strategies, techniques, and personnel are perceived as superior
International customers are considered as secondary
International markets are regarded primarily as outlets for surplus domestic production
International marketing plans are developed in-house by the international division

Ú 3 
  

Àuided by the multidomestic market concept:
Focuses on the importance and uniqueness of each international market
Likely to establish businesses in each target country
Fully decentralized, minimal coordination with headquarters
Marketing strategies are specific to each country

Ú 

  
 


Àuided by the global marketing concept:
World regions that share economic, political, and/or cultural traits are perceived as distinct markets
Divisions are organized based on location
egional offices coordinate marketing activities

Ú À 
  

Àuided by the global marketing concept:
The world is perceived as a total market with identifiable, homogenous segments
Targeted marketing strategies aimed at market segments, rather than geographic locations
Achieve position as low-cost manufacturer and marketer of product line
3rovides standardized product or service throughout the world
G 

  




    

Ú More number of functions and activities
Ú Needs expansion of one¶s area of expertise
Ú ahould get more closely involved with employee¶s lives
Ú ahould be involved with greatly expanded and constantly changing mix of employees
Ú ahould cope with more external influences
Ú ahould face greater exposure to problems and liabilities
Ú Additional responsibilities like translational of language
Ú Management of differential compensation
Ú More emphasis on activities like international relocation and orientation
Ú Diversity management
Ú More contacts with government officials
Ú More coordination and travel
Ú More risk management
Ú More public relations work


 


 
 m




 

In the functional structure, above, the employees are working in departments based on what they are doing
i.e. we have engineering department, maintenance department, finance department, research department,
Warehouse department, purchasing department. This structure enhances the experience of each function. For
example, all the maintenance engineers are working in the same department and thus they will exchange
knowledge and support each other. This structure saves money because of the economies of scale. This
structure makes the coordination between different departments more difficult than other structures. It also
does not allow for flexibility because of the centralization.

G  
a

Divisional structure divides the employees based on the product/customer segment/geographical location.
For example, each division is responsible for certain product and has its own resources such as finance,
marketing, warehouse, maintenance etc. This structures is a decentralized structure and thus allows for
flexibility and quick response to environmental changes. It also enhances innovation and
differentiation strategies. On the other hand, this structure results in duplication of resources because, for
eg. we need to have warehouse for each division. Obviously, it does not support the exchange of knowledge
between people working in the same profession because part of them are working in one division and the
others are working in other divisions
Matrix atructure:

Matrix structure combines both structures. For example, we can have a functional structure and then assign a
manager for each product. aome employees will have two managers: functional manager and product
manager. This type of structure tries to get the benefits of functional structure and also of divisional
structure; however, it is not easy to implement because of the dual authority. This structure is very useful for
multinational companies.

It is important to keep in mind that each managerial decision has its pros and cons. aometimes you may feel
that divisional or matrix structures are the recent trends and that you need to re-engineer your structure.
Obviously, this is not true. Many organizations still have functional structure and are doing very well. It is
very important to select the structure that best suits the organisation. What is your strategy? How many
products do you have? What type of technology are you using? How big is your company/organization?

Management should take necessary actions to decrease the disadvantages of the chosen structure and to
enhance it¶s the positive effects. For example, if we think the divisional structure is the best type for our
condition then we should have tools to exchange knowledge between engineers working in different
divisions. These tools can include forums on the LAN and conferences to exchange knowledge. Conversely,
if we adopt functional structure, we can form teams from different functions to solve problems and develop
our products.

Developing countries suffer from the lack of research. Most of research on organization structure based on
studying Japanese, American and European companies but it is rare to find a research based on a sample of
Indian companies. That is a challenge for managers working in developing countries because the research
does not really tell them what to do and what to expect. The differences in cultures can affect the results of
adopting certain structure in certain part of the world. aometimes, you deal with the same organization in
different parts of the world and get very different standard of service. This shows that this multinational
organization failed to reach the same results in the developing country.
Management should not think they are going to double their profits because they adopted flat structure (less
number of management layers). If this structure re-engineering is not part of a certain strategy, it will not
work. For example, if we adopt flat structure and then transfer the authorities of the middle management to
the top management then we are increasing centralization and decreasing our flexibility. aimilarly, if we
adopt functional structure and allow for the duplication of resources, then we will get the disadvantages of
the functional structure and will lose one of its main advantages which is economies of scale.

Many companies have combination between functional, divisional and matrix structure Many of the
decentralized companies will have one or two department centralized such as human resources or marketing.

Whatever structure you have, the results are the most important. The results are not your perception that you
are the best. Measure yourself compared with similar companies. Do you need one week to take a decision
that they make in one hour? Are your employees motivated more than those in other companies? Are you
developing new products and services faster than other companies? Are you achieving your main strategy?
The answers to these questions will enable you to take a better decision as to the selection of structure.



 

a


ecruitment ± Defined as searching for and obtaining potential job candidates in sufficient numbers for and
quality so that the organization can select the most appropriate persons for its job needs

aelection ± Defined as the process of gathering information for the purposes of evaluating and deciding who
should be employed in particular jobs.

aources for Employee ecruitment

Ú Job posting Websites

Ú Company¶s Websites
Ú Employee eferral 3rogramme
Ú External ecruiters
Ú Internal ecruiters
Ú Ads in Local Media
Ú Company¶s Intranet
Ú Campus ecruiting
Ú Temporary to 3ermanent Hiring
Ú Ads in 3rofessional Association Media
Ú Email Lists/ Discussion Àroups
Ú Ads in National Media
Ú §logs

a


There are four issues that need to be dealt with in the context of staffing global businesses

Ú Linking staffing plans with the evolution of MNCs

Ú ataffing Orientation
Ú Managing Expatriates
Ú Female Expatriates


Models of organization structure of MNCs

3 

Developed in the late 1960s, 3 

 
 0


Õ  

  - overseas operations are managed primarily to protect the company's competitiveness in
the home market. Communication and information is top down and all strategic decisions are steered from
corporate headquarters. aubsidiaries sell products designed and manufactured by parent with little or no
local control.
D 3 
  - overseas subsidiaries take more responsibility adapting designs and manufacturing product
to meet local needs. aubsidiaries are managed as independent units with minimum interference from
headquarters.

  À 
  - all units of the organization are in close communication. Àlobal market segments are
defined and technology is transferred rapidly to sell more or less the same product worldwide maximizing
economies of scale both in production and  D.

 
À   


Developed in 1989, §arlett and Àhoshal offered the transnational as the ideal type. They distinguished
multinational organizations, global organizations, international organizations and transnational
organizations.

Multi-national organisation (also known as multi-national corporations (MNCs) are organizations "that carry
out commercial activities for profit in more than one country." They may often have their headquarters
based in one country, but their activities extend across international borders.

In Àlobal organisations the organization has a centralized global scale operations based on knowledge
development that is retained at the centre, and on the implementation of the parent company¶s strategies. It
responds to the trends of growing globalization of tastes, fashions and consumer demands.

International organization is an ideal type and is put forward as something towards which many cross border
companies ought to be striving. The organization exploits the parent company¶s knowledge and adapts it
world wide. aources of core competencies are centralized but other competencies are decentralized. The role
of the overseas operations is to adapt the parent company¶s competencies to the local environment.

Transnational organization seeks to integrate the separate forces operating in the international market place.
The forces are global integration, the trend towards greater integration of global tastes, local differentiation;
the demand of local and national tastes and of protectionism from national government towards
multinational organization structure, worldwide innovation; the cost of innovation is great and it is more cost
effective when the  D cost is centralized and are adapted internationally.


 

Developed in 1992 by §rowster, Hegewisch and Holden, stress is on the need for organizational flexibility.
 3  
 
 

 
 

 
Ú ecruitment
Attracting a pool of qualified applicants for the positions available
Ú aelection
Choosing the candidate whose qualifications most closely match the job requirements

a  


Ú 3arent Country National (3CN)
Ú Host Country National (HCN)
Ú Third Country National (TCN)



 




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Ethnocentric approach
3CN¶s usually staff important positions at headquarters and subsidiaries
3olycentric approach
HCN¶s generally work in foreign subsidiaries
3CN¶s manage headquarters positions
egiocentric approach
3CN¶s and managers from the region²either HCN¶s or TCN¶s²staff regional headquarters
positions
HCN's primarily staff local subsidiaries
Àeocentric approach
Chooses the most suitable person for a position

a


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Ú Need a balance between internal corporate consistency and sensitivity to local labor practices
Ú Consider cultural values
Ú Must comply with local labor laws
a

  


 




aelecting staff for international undertaking is a difficult task which includes the following steps

Ú Identifying a suitable person

Ú 3redicting his or her performance in a new culturally potentially very different environment
Ú Dealing with personal and family related issues and problems
Ú Devising an appropriate compensation package
Ú Complying with host country regulations
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Technical and managerial competencies of the person to perform the required tasks. esearch indicates that
technical criteria is the most important selection criteria for organization. It is usually done on the basis of
past performance evaluation.

m      

Certain individual traits and characteristics can have an impact on the success and failure of an international
assignment; Cultural empathy, adaptability, diplomacy, language ability, positive attitude, emotional
stability and maturity. Ability to implement technical and managerial skills and feel comfortable in a foreign
environment. aometimes difficult to determine.

  ! 


apouse may not adjust to a foreign environment
Adjustment level of the spouse depends on several factors, such as the adjustment of the expatriate and the
spouse¶s own opinion of the international assignment.
A higher level of organizational support in the early stages of expatriation usually correlates with a higher
level of adjustment by the spouse.

m 
 ! 

Not interested to work in the host country (emoteness of job location, social upheavals, safety risks, very
low standard of living and lack of recreational opportunities etc.)
3ressure living in repressive cultures and countries (e.g. China, aaudi Arabia and other totalitarian Islamic
states in the Middle East)
Denial of work permits to female expatriates.


 
  ! 

aituational factors influence staff selection. Examples Organisation¶s staffing approach may require sending
more expatriates to work in certain regions and locations than otherwise.
3artner organizations may be involved in the selection of expatriate staff, for example, on international joint
ventures
Certain specific skills like training may be used as a selection criterion.

"




It is the most important situational factor.
xnowledge of the host country¶s language is considered critical for many senior-level positions along with
the ability to communicate effectively.
xnowledge of the host country¶s language helps expatriates and their families feel more comfortable in
the new environment

  
|nexpected international vacancies may arise for which positions have to be quickly filled by expatriates
and which may preclude the use of screening tests
A potential expatriate may refuse the international assignment due to family considerations (Children¶s
welfare and education, parental care, single parents)
esearch studies undertaken reveal that many potential expatriates are reluctant or unwilling to taken on
international assignments because of the career implications of their spouses, e.g. loss of jobs and career
opportunities, difficulty in finding new employment in the expatriate¶s host country.
aome companies are now offering assistance programmes for the benefit of their expatriates¶ spouses
(employment hunting, networking, intra-company employment, commuter marriages, on-assignment career
support)
Female Managers - atudies reveal that female expatriates make up a very small proportion (< 10% percent)
of the total expatriate population. 3ossible reasons are:
Females are less desirous than males of international assignments
Females are less likely to be offered international assignments
There are a comparatively smaller number of females with the requisite skills to be sent on international
assignments.
Many repressive cultures discourage the sending of female expatriates and in many repressive cultures males
do not like reporting to females.

a

aelection test entails the use of certain personal and other related criteria with a view to determining
whether a person is suitable or not for an inter- national expatriate assignment.
3roblems with such tests relate to their
Ú eliability
Ú Culture boundedness


     a


Mendelhall and Oddou propose a four-dimensional approach linking specific behavioral tendencies to
probable inter-national performance:

Ú aelf orientation ± adaptive concern for self-preservation self-enjoyment and mental hygiene
Ú 3erceptual expertise in accurately understanding the behavior of the host country nationals
Ú Others orientation- Degree of concern about the host country nationals and the expatriateµs desire to
affiliate with them
Ú Cultural toughness - Difference between the expatriateµs country and the host countryµs cultural,
social, political, economic etc. environment and its implication for the expatriate.
  a  

‡ Willing and motivated to go overseas
‡ Technically able to do the job
‡ Adaptable
‡ Àood interpersonal skills and be able to form relationship
‡ Àood communication ability
‡ aupportive families

     


Inability of spouse to adjust
Manager¶s inability to adjust
Other family problems
Manager¶s personal or emotional maturity
Inability to cope with larger overseas responsibility
Lack of technical competence
Difficulties with new environment

     m m




Ú Work experience with cultures other than one¶s own
Ú 3revious overseas travel
Ú xnowledge of foreign language
Ú Ability to integrate with different people, cultures, and type of business organisation
Ú The ability to sense developments in the host country and accurately evaluate them
Ú The ability to solve problems within different frameworks and from different perspectives
Ú aensitivity to subtle differences of culture, politics, religion and ethics in addition to individual
differences
Ú Flexibility in managing operations on a continuous basis, despite of lack of assistance and gaps in
information

#
 
There are two major types of adjustments that an expatriate must make when going on an overseas
assignment.
Ú Anticipatory adjustment
Carried on before he leaves for the assignment
It is influenced by following factors
- predeparture training
Area studies that include environmental briefing and cultural orientation
Cultural assimilators
Language training
aensitivity training
Field experience
- 3revious experience
Ú In-country adjustment
Takes place on site
It is influenced by following factors
- Ability to maintain a positive outlook in high pressure
- Jobs as reflected by the role he plays in managing, authority he has to make
decisions, newness of work-related challenges and the amount of role conflicts
Ú Organisation culture
- Non work factors ± toughness with which he faces new
cultural experience, family adjustment with new country
- aocialisation factor ± to know what is what and who is who
   
   

 


  
  

(1) Achievement
(2) ecognition
(3) Work Itself
(4) esponsibility
(5) 3romotion
(6) Àrowth

   
   

 


  
  

 


Ú Managers acquire international skills

Ú Coordinate and control operations dispersed activities
Ú Communication of local needs/strategic information to headquarters
Ú Transfer home country practices, knowledge, expertise to locals

"    

Ú Transformational Ability
Ú Transactional Ability

aince expatriates often hold positions at senior level, their leadership ability is one of the prerequisite factors
that contribute to the success of expatriate managers. Expatriates who practice transformational leadership
have high levels of expectation and self-confidence and are thus willing to work harder to accomplish
difficult goals. They are likely to view the overseas assignments with the excitement and challenge that
make them see overseas assignments as a positive opportunity to develop themselves.


  
"  
$ 


Ú individualized consideration
Ú raise subordinates self-confidence and self-esteem
Ú self-development.




G 
 





    

 




Cultural training : aeeks to foster an appreciation of the host-country¶s culture

Language training : Can improve expatriate¶s effectiveness, aids in relating more easily to foreign culture
and fosters a better firm image
3ractical training : Ease into day-to-day life of the host country and adapt alien life of the host country and
culture ex-feel Like ³at Home´.

Development programs designed to increase the overall skill levels of managers through:
:
On going management education
otation of managers through a number of jobs within the firm to give
broad range of experiences
|sed as a strategic tool to build a