Module 1: Unit 5: International Human Resource Management
Def. International Human Resource Management (IHRM) HRM issue and problems arising from the
internationalisation of business, and the HRM strategies, policies and practices which firms pursue in response to the
internationalisation process.
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1. Whya
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fC
lT
vF do Organisations Decide to do Business Abroad?
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2. Types of Organisations Used Internationally
→ When an organisation intends to sell its products in an overseas market, it can do so by exporting its
products. The Business who then sells the product on their half (as a third party) is known as an
Intermediary.
→ Licensing occurs when an organisation leases the right to another party to use its intellectual property in
exchange for a fee.
→ Franchising is a special form of licensing, an independent organisation called a franchisee is allowed to
operate a business under the name of the franchise holder, also in return for a fee.
→ Management Contracts one organisation sells its management expertise to an organisation in another part
of the world.
→ An organisation may initially form an alliance that allows the organisation to make direct investment
gradually, while sharing its risk with a knowledgeable, experienced partner. It will thereby enter a strategic
alliance or joint venture.
→ Multinational organisation corporations that are registered in more than one country or that have
operations in more than one country.
→ Types of Multinational Enterprises (MNEs):
o Multinational: The multinational pattern is predominantly a collection of decentralized and
autonomous operating units that are directed towards their own national markets.
o Global: The global pattern is distinguished by a high degree of integration managed form
headquarters and designed to take advantage of the economies of scale from worldwide activities
that are geared towards distributing standardized products to global markets. The management of
foreign operations is required to implement strategies determined at head office.
o International: The international structure is the best regarded as an intermediate type, combining
the decentralized and centralized elements of the multinational and global types.
o Transnational: The transnational structure provides an integrated network of highly interactive units
that encourage all parts of the organization.
, 3. What Impact does Going global have on Activities of HR Professional?
There are 5 important differences between domestic and international operations. International operations have:
→ More functions
→ More heterogeneous functions
→ More involvement in employees’ personal lives
→ Changes in emphasis as the workforce mix varies
→ More external influence
4. Recruitment
Ethnocentric
Approach
International
Regiocentric Polycentric
Approach Recruitment Approach
Approaches
Geocentric
Approach
→ When an organisation relocates home country staff to its foreign operations, they are known as PCNs and are
also called expatriates. This is the ethnocentric approach. PCNs are appropriate for global strategy type
organisations but aren’t appropriate for multi-domestic type organisations.
→ Hiring host country personnel, known as HCNs, is the polycentric approach.
→ Hiring employees from another country, known as third-country nationals (TCN’s) is called the regiocentric
approach
Def. International Human Resource Management (IHRM) HRM issue and problems arising from the
internationalisation of business, and the HRM strategies, policies and practices which firms pursue in response to the
internationalisation process.
rO
p
s
e
c
A
o
G
w
ti
n
tuR
ih
1. Whya
m
y
k
bd
fC
lT
vF do Organisations Decide to do Business Abroad?
g
2. Types of Organisations Used Internationally
→ When an organisation intends to sell its products in an overseas market, it can do so by exporting its
products. The Business who then sells the product on their half (as a third party) is known as an
Intermediary.
→ Licensing occurs when an organisation leases the right to another party to use its intellectual property in
exchange for a fee.
→ Franchising is a special form of licensing, an independent organisation called a franchisee is allowed to
operate a business under the name of the franchise holder, also in return for a fee.
→ Management Contracts one organisation sells its management expertise to an organisation in another part
of the world.
→ An organisation may initially form an alliance that allows the organisation to make direct investment
gradually, while sharing its risk with a knowledgeable, experienced partner. It will thereby enter a strategic
alliance or joint venture.
→ Multinational organisation corporations that are registered in more than one country or that have
operations in more than one country.
→ Types of Multinational Enterprises (MNEs):
o Multinational: The multinational pattern is predominantly a collection of decentralized and
autonomous operating units that are directed towards their own national markets.
o Global: The global pattern is distinguished by a high degree of integration managed form
headquarters and designed to take advantage of the economies of scale from worldwide activities
that are geared towards distributing standardized products to global markets. The management of
foreign operations is required to implement strategies determined at head office.
o International: The international structure is the best regarded as an intermediate type, combining
the decentralized and centralized elements of the multinational and global types.
o Transnational: The transnational structure provides an integrated network of highly interactive units
that encourage all parts of the organization.
, 3. What Impact does Going global have on Activities of HR Professional?
There are 5 important differences between domestic and international operations. International operations have:
→ More functions
→ More heterogeneous functions
→ More involvement in employees’ personal lives
→ Changes in emphasis as the workforce mix varies
→ More external influence
4. Recruitment
Ethnocentric
Approach
International
Regiocentric Polycentric
Approach Recruitment Approach
Approaches
Geocentric
Approach
→ When an organisation relocates home country staff to its foreign operations, they are known as PCNs and are
also called expatriates. This is the ethnocentric approach. PCNs are appropriate for global strategy type
organisations but aren’t appropriate for multi-domestic type organisations.
→ Hiring host country personnel, known as HCNs, is the polycentric approach.
→ Hiring employees from another country, known as third-country nationals (TCN’s) is called the regiocentric
approach
