7/23/2013 MBA Summer 2011 1

Strategic
International
Human Resource
Management
M. Khasro MIAH Ph.D.
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The development of international business strategy
from three different perspectives;
The development of Strategic IHRM;
The links and relationships between strategic
international business and SIHRM;
The critical international strategic decision
involving the centralization or localization of
strategic IHRM policy and practice;
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IB
Regularly perform
an environmental
analysis or scan

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Develop
global
strategies
External treats and
opportunities
Internal treats and
opportunities
Firms
Vision and
objectives
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Challenge of External and Internal
effects
Uncertainty
Future importance of
Resources &Capabilities
Environmental changes
Complexity
Interrelationships
Intraorganizational
Conflicts
Political forces
Differences of opinion
Result: Managing R&Cs
is Challenging

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Evaluation
and
control
Organizational
vision, mission
and goals
Environmental
scanning
Strategy
formulation
Strategy
implementation
Basic elements of the strategic management
process
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Mgt. positioning
the firm in its Chosen
Market arena
People
(HR)
Game plan
Investing
money
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Strategies are developed in either or
both of two ways:
Proactively (making changes to improve something before
problems happen) : as a forward-looking plan to
deal with anticipated market forces; or
Reactively : as a response to what the firm
is experiencing in the marketplace;
But strategy developed stem from a
combination of these forces;

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There are two very compelling needs:
First :
need to actively shape how their firm's will
be conducted;
Second:
need is that of molding the independent
decisions and actions initiated by
Departments, Managers and employees
across the company into a coordinated ,
company wide game plan;
Both motives have become increasingly
complex in current business environment.
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It is much more complex way:
When a firms STRATEGIC PLANING
GOES INTERNATIONAL
Because,
4 Managements began to develop;
4 Implemented global strategic plans; and
4 Firms also began to concern themselves with
Global Human Resources;
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+The degree of internationalization and
geographic scope:
+The basic choices ( by a firm) for entry into
international business;
+The extent of global mind-set or global
orientation of the firm and its executive;

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Degree of decentralization and
geographic scope:
Firms Go international but WHY
Facing competition from outside its national
borders;
Seeks cheaper resources;
Expand markets in other countries;
It such case Firms obviously affects every
function of the orga., including HRs.
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IB strategy categories the degree
of internationalization of the firm
-International;
-Multinational or multi-domestic;
-Regional;
-Global;
-Transnational;
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Internationalization
A firm makes the initial decision to
go international
CExport to foreign customers in one country or;
CImport of one or a few products;
But recently STRATEGIC INVOLVEMENT has extended:
CFinding new markets;
CCheap raw materials to licensing;
CSubcontracting of manufacturing
CSourcing of Mfing. Inputs;


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Multi-country/ Multi-domestic
A firm decides to establish
4subsidiaries in multiple countries,
4Typically operating independently
within each country;
4Independently operations in other
countries;

( LINCOLN ELECTRIC pursued this
strategy)
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Regionalization
A firm may decide initially to
conduct its international business on
a regional basis
i.e.., Ford Motor Company
First organizing to conduct business
in only one or two regions
Europe or Latin America then
Asia and other region;
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The global firm
OBlind to national borders;
OBest technology and innovative ideas are
sought everywhere and applied to markets
throughout the world;
Product and services are created where
O cost are the lowest;
Oquality is the highest;
Otime to delivery is the shortest;
Odelivered wherever demand is sufficient;
Oresources (money, material, parts, insurance, even
people) are sought from wherever the best quality
for cost can be found;

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Transnational firm
Bartlett and Ghoshal suggested that many
firms were evolving into a new form of IB
Termed transnational
It has a global focus
Similar to be global firm but
Differs from the GF
Developing global products and
services;
Transnational works hard to localize
but
It is like a local firm;
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Choice of business form for entry into
international business
Go international
Faced with a number of choices for implementing this
strategy
Identifying general IHR Strategies for staffing and
helping to achieve organizational IB Strategies:
CExporting;
CLicensing;
CSubcontracting;
CForming joint ventures;
CAlliances and partnerships
CUsing FDI through wholly-owned subsidiaries;
CAcquisition; Greenfield exercise, or turnkey project
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To obtain vital raw materials or
technology;
To spread the risks;
To improve competitive advantage;
More cost-effective and;
Efficient in the face of increased
globalization and markets;

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Alliances, Partnerships and Consortia
MNE developing and using alliances,
partnerships, joint ventures and
other kinds of linkages to Go
international
To gain access to
Technology; Research and
laboratories; which
Gain competitive advantage in the
global economy

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Forms of International Business
Direct import/export
Counter trade
4 Pure barter;
4 Clearing arrangements;
4 Switch trading;
4 Counter purchase;
4 Buy back;
Portfolio investments;
Contract manufacturing;
Licensing;
Turnkey projects;
Foreign manufacturing/ service centers/ stores
4 Wholly owned subsidiaries;
4 Joint venture;
4 Investment /equality participation;
Alliances/partnerships/consortia
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Evolution of the MNE
Foreign
enquiry
Global/transnational firm
Integration of foreign
affiliates
Production abroad
Contract
Licensing
Direct investment
Joint venture
Wholly-owned
Acquired
Turnkey

Simple
export
The export
manager
The export department
and direct sales
Sales branches and
subsidiaries
Assembly
abroad
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Short-term
assignee
(PCN,TCN)
Long-term
assignee
(PCN-TCN)
Local hires
(HCN, TCN)
Immigrants
Returnees
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Human resource policies and practices
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Figure 2.3
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The Model: HR Policy and Practices
Figure 2.3 displays HR policies and practices grouped by areas of
the HR responsibilities that are important in the International
arena, whether managing the international assignee population or
managing local workforces in foreign subsidiaries and joint
ventures;

Procurement: Recruit, Select, train, assign;
Management: Pay, benefits, performance management,
health and safety, labor relations, Information
system;
Out processing: retirement, layoff, termination, downsize,
divestiture;

These three areas of HR policy and practice very dramatically from
country to country and from type of employee to type of employee
To isolate the specific intersections of three variables :
+ The form of IB activity and strategy
+ The type of IB employee and
+ The IHR policy and practices that combines the first two together

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The Model: Organizational Outcomes
integrating IHRM and IB Strategy
Intersection of the three components
of this model that SIHRM can gain its
greatest value;
To assess the desired firm outcomes
for the interactions of three
components of IHR;
Intersection of the three components
can provide a new level of
understanding for SIHR;

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International employee types linked with
traditional categories
O Parent country nationals:
O Domestic internationalities;
O Short-term foreign agencies;
O Long-term foreign agencies;
O Permanent transfers;
O Permanent cadre;
O Returnees;
O Second generation expertise;
O Reward or punishment
assignees;


O Third Country Nationals
O Immigrants (a)
O Immigrants (b)
O Internships
O Self-initiated foreign work
experiences

O Host-country nationals

O Local hires
O International transferences


O Multiple categories

O International commuters;
O Long-term business trips;
O Boomerangs;
O Just-in-time assignees;
O Outsourced;
O Virtual expertise
O Retirees;
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Organizational Objectives
The following organizational objectives that are used to achieve the
internationalization strategies:
* Technology transfer;
* Organizational learning and knowledge transfer;
* marketing/sales;
* Control: accounting/finance and operations
* Management/supervision
* Competitiveness;
* Training of locals;
* Career development; development of international experience and perspectives
* Cost control;
* Customer/vendor/regulator/community satisfaction
* Performance enhancement; improve productivity;
* ROI ( return on investment)
* Revitalization ( innovation) and renewal;
* Union-management relations;
* Societal contribution and environmental impact;
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To possible interaction of this sort of the three
components of the model might include consideration of
this sort of question:
If T T is important for use of a joint
venture;
Which type of international employee will
best achieve this transfer of T and
what will be the best ways to recruit,
hire, prepare and manage such
international employees?
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Individual Employee Outcomes
Performance/productivity ( efficiency and
effectiveness);
Job satisfaction and motivation;
Retention and commitment;
But which type of IB assigned to which
international Org. Strategy will produce the
best performance
Highest job satisfaction and
best commitment
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In addition,
Organizational and individual level
outcomes at the intersection of the
three components of interest to
SIHRM
Model suggests that there are some
issues that cut across all the
components and influence the
content of every cell .
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This include:
+The degree of orga. Centralization Vs. localizations;
+Culture ( national and organizational)
+Organizational concerns for cost and effectiveness and;
+The concerns for all the multiple stakeholders of the
MNE;
+Influence choice;
+Implementation of IS;
+Choice and M of type of International Employee and
priority and assessment of various organizational and
employee outcomes;

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What type of employee is most appropriate
for each IB strategy?

What is the best way to
recruit/select/train/assign each type of employee
in each particular IB strategy?

What is the best way to manage each type of
employee in each particular IB strategy?
What do you know now? and

What do we still need to determine?
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A practitioner might focus on a particular
cell
Try to understand best practice in that
area;
Attempt to prescribe :
IHR practices for any organization;
Particular situation applies;
Can draw adequate conclusions from IHR
literature;
Seek guidance about how best to staff
and manage such an international
workforce;

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Given consensus
About culture
Cost and orga
structure
National and
Corporate cultures
Will influence
methods for such
Staffing and managing

Develop strategic
focus
Attempt to
Prescribe
IHR
applied particular
situation
Desired outcomes
Technology transfer
Control, ROI

Implementing
HR Strategies
for successful
achievement of international
vision and objectives
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Centralization Vs Localization
Centralization is the concentration of
authority and Decision making toward the
top (HQ) of an organization;
Decentralization is the dispersion of
authority and decision making to
operating units throughout the
organization;
Centralization and localization is becoming
a major dilemma for IHRM and large
global firms;
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How you create a business advantage
and able to optimize a business globally?
OTo specialize in the production of
components;
OTo drive economics of scale as far as you
can;
OTo rotate managers and technologies
around the world;
OTo share expertise and solve problems;

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But you also want to have deep local
roots everywhere you operate-
Building products in the countries
where you sell them;
Recruiting the best local talent from
the Universities;
Working with the local government
to increase exports
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Convergence :
use of parent-company policies and
procedures throughout a firms global
operations.
MNEs face strong incentives to
maximize economics of scale in research
and development;
Purchasing; Production and markets and
Encounter relatively low barriers to the
dissemination of technologies and best
practices.

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Operate as quasi-independent
companies( multi-domestic or
regional strategy)
Adapted to local circumstances and
Markets with very little interference
from headquarters;

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Divergence
Attempts by local subsidiaries to
become centers of excellence;
Universal techniques and procedures(
globally applied) are implemented (in
varying ways) within differencing
countries.
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Culture and
institutional influences
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Firm strategies to
internationalize and
parent country
cultures
Parent company
policy and procedures
Local subsidiaries
to become centre of
excellence (localization)
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Firm strategies to
Multi domestic
and regional
adapted to local
circumstances
MNEs involve
HRM function with
their Strategic
decisions related
to integration Vs
decentralization