CHAPTER 1: Internationalization of HRM
IHRM: study and application of all HRM activities as they impact the process of managing humen resources in
enterprises in the global environment
MNE (Multinational enterprise), MSEs (small and medium-sized enterprises), NGOs (non-governmental
organizations).
Drivers of Internationalization:
1. Trade agreements
- Trade treaties between countries, Less trade barriers and open markets, Government supports cross-
border trades and investments, Centre of global trade is moving from West to East
2. Search for new markets and reduced costs
- Global competition, Competition forces organizations to search new markets and lower costs (other
countries)
3. Rapid and extensive global communication
- Technological revolution → global communication easier and faster, Spreading information of people
globally, Creates global expectations about quality of life
4. Rapid development and transfer of new technology
- New technologies are developed around the world and available everywhere, New technologies →
manufacture products and deliver services with quality and prices, Modern education and information
technology allows everyone to play a role globally
5. Improving global education and global talent pool
- Improving education around the → firms produce good products and services, No country has an
overriding advantage in the global economy, Talent pool allows firms to operate anywhere.
6. Increased travel and migration
- International travel is easier, quicker and cheaper, Increasing employment in other countries
7. Knowledge sharing
- International firms export their philosophies and techniques to their subsidiaries, spreading knowledge and
their company culture everywhere
8. E-commerce
- World Wide Web made is possible to conduct virtually, A website makes a organization or individual
global.
9. Homogenization of culture and consumer demands
- integration of culture and values → common consumer demands, differences between cultures remain →
firms need to be sensitive for this
Internationalization/globalization: refer to the ever-increasing interaction, interconnectedness and integration of
people, companies, cultures and countries.
Global niche markets: new product, new service, unknown, specialized, not much competition.
Dilemma HR manager: Implementing global policy or responding to local issues.
Measure of Internationalization: number of enterprises across borders, growth foreign investment, trade between
countries.
Focus HR:
1. International firm: developing policies and practices form the centre out to all foreign operations.
→ HR manager in headquarters of a MNE only deals with IHRM issues.
2. Home-country subsidiarie: Integrate local culture and organizational culture into the local operations.
3. Domestic firm: local hospitals, no IHRM. Deals with: hiring employees from different countries and competition
IHRM vs domestic HRM: IHRM more HR functions and activities (expacts), broader expertise and perspective, more
involvement in peoples lives, more external factors (visa’s).
IHRM tasks: merging cultures, developing strategies for managing different languages, address different expectations
of employees, global HR strategies, Global staffing and global compensation and benefits
CHAPTER 2: Strategic International HRM
Stages of Internationalization: Each stage has a method for market entry. The market entry choices depends on the
MNE strategy, timing and options available.
1. Portfolio Investment: beginning to invest in foreign firms
exporting: and export products
1
, 2. Sales subsidiary: a local sales office (more formal) responsible for international sales
3. Licensing: locating local firms who can manufacture their products
Franchising: creating package of key ingredients for success and franchises to overseas investors
Contracting: firms increasingly sub-contract all manufacturing firms abroad
4. Wholly-owned subsidiaries: Greenfield= open field in order to build subsidiary brownfield= purchasing
existing facilities to develop subsidiaries.
Maquiladora: A kind of subsidiary with special characteristics who are interesting to foreign parents (attracting
investments and special treatments). A twin plant: US and Mexico
5. International Joint Ventures: Two or more firms create a new business (to make new products)
International Merges and Acquisitions: One of the preferred market entry methods in both developed and
emerging markets.
International Alliances, Partnerships and Consortia: Different from joint ventre, it is not legal. It’s a
partnership or agreement. Just a corporation.
Auxiliary methods of Internationalization: → methods to extent the internationalization
1. Outsourcing: firms contract out business processes to other firms
2. Off-Shoring: outsourcing business processes to other countries for lowering costs
3. Born-Global firm: Almost immediately operates in global markets due to the nature of its products (IT)
Difference outsourcing vs off-shoring: outsourcing a process to a foreign company where you have business, give
another company the right to do something for you → off-shoring buying company in foreign company and do it
yourself.
Success outsourcing depends on: support of client organization, communication to affected employees and the
firms ability to manage the service providers
Issues when going offshore: Expertise in manging remote locations, cost of labor, language skills.
MNE Business strategy:
- gives a direction for managing subsidiaries.
- Integration: the way which subsidiaries and the HQ are a unified whole
- Local responsiveness or differentiation: the way subsidiaries respond to local differences
4 types of strategy
- International: low local, low integration
Exporting and importing products, licensing or sub-contracting, no or small sales office overseas
- Multi-domestic: High local, low integration
Responding to local market, subsidiaries are specialized at local market and independent → so firm wants
integration with the regional HQ at a regional subsidiary.
- Global: Low local, High integration
One strategy for all the countries
Transnational: High local, High integration.
A global network where each subsidiary has responsibility
Global Transnational
Unified strategy implemented for all Maximizes responsiveness and integration
countries regardless of their cultural and by being global and multi-domestic at the
national differences; see Mcdonalds same time; as a local firm with global
Integration
expertise, technology and resources
International Multi-Domestic
Simplest business strategy, requiring
limited local responsiveness and limited Responds to the high needs, values, and
integration; licensing or subcontracting demands of a local market; see cars
Local Responsiveness
HQ International orientation and MNE strategy
Three ways of domination of the HQ over subsidiary
1. Ethnocentrism: own culture/standard is dominant
2
IHRM: study and application of all HRM activities as they impact the process of managing humen resources in
enterprises in the global environment
MNE (Multinational enterprise), MSEs (small and medium-sized enterprises), NGOs (non-governmental
organizations).
Drivers of Internationalization:
1. Trade agreements
- Trade treaties between countries, Less trade barriers and open markets, Government supports cross-
border trades and investments, Centre of global trade is moving from West to East
2. Search for new markets and reduced costs
- Global competition, Competition forces organizations to search new markets and lower costs (other
countries)
3. Rapid and extensive global communication
- Technological revolution → global communication easier and faster, Spreading information of people
globally, Creates global expectations about quality of life
4. Rapid development and transfer of new technology
- New technologies are developed around the world and available everywhere, New technologies →
manufacture products and deliver services with quality and prices, Modern education and information
technology allows everyone to play a role globally
5. Improving global education and global talent pool
- Improving education around the → firms produce good products and services, No country has an
overriding advantage in the global economy, Talent pool allows firms to operate anywhere.
6. Increased travel and migration
- International travel is easier, quicker and cheaper, Increasing employment in other countries
7. Knowledge sharing
- International firms export their philosophies and techniques to their subsidiaries, spreading knowledge and
their company culture everywhere
8. E-commerce
- World Wide Web made is possible to conduct virtually, A website makes a organization or individual
global.
9. Homogenization of culture and consumer demands
- integration of culture and values → common consumer demands, differences between cultures remain →
firms need to be sensitive for this
Internationalization/globalization: refer to the ever-increasing interaction, interconnectedness and integration of
people, companies, cultures and countries.
Global niche markets: new product, new service, unknown, specialized, not much competition.
Dilemma HR manager: Implementing global policy or responding to local issues.
Measure of Internationalization: number of enterprises across borders, growth foreign investment, trade between
countries.
Focus HR:
1. International firm: developing policies and practices form the centre out to all foreign operations.
→ HR manager in headquarters of a MNE only deals with IHRM issues.
2. Home-country subsidiarie: Integrate local culture and organizational culture into the local operations.
3. Domestic firm: local hospitals, no IHRM. Deals with: hiring employees from different countries and competition
IHRM vs domestic HRM: IHRM more HR functions and activities (expacts), broader expertise and perspective, more
involvement in peoples lives, more external factors (visa’s).
IHRM tasks: merging cultures, developing strategies for managing different languages, address different expectations
of employees, global HR strategies, Global staffing and global compensation and benefits
CHAPTER 2: Strategic International HRM
Stages of Internationalization: Each stage has a method for market entry. The market entry choices depends on the
MNE strategy, timing and options available.
1. Portfolio Investment: beginning to invest in foreign firms
exporting: and export products
1
, 2. Sales subsidiary: a local sales office (more formal) responsible for international sales
3. Licensing: locating local firms who can manufacture their products
Franchising: creating package of key ingredients for success and franchises to overseas investors
Contracting: firms increasingly sub-contract all manufacturing firms abroad
4. Wholly-owned subsidiaries: Greenfield= open field in order to build subsidiary brownfield= purchasing
existing facilities to develop subsidiaries.
Maquiladora: A kind of subsidiary with special characteristics who are interesting to foreign parents (attracting
investments and special treatments). A twin plant: US and Mexico
5. International Joint Ventures: Two or more firms create a new business (to make new products)
International Merges and Acquisitions: One of the preferred market entry methods in both developed and
emerging markets.
International Alliances, Partnerships and Consortia: Different from joint ventre, it is not legal. It’s a
partnership or agreement. Just a corporation.
Auxiliary methods of Internationalization: → methods to extent the internationalization
1. Outsourcing: firms contract out business processes to other firms
2. Off-Shoring: outsourcing business processes to other countries for lowering costs
3. Born-Global firm: Almost immediately operates in global markets due to the nature of its products (IT)
Difference outsourcing vs off-shoring: outsourcing a process to a foreign company where you have business, give
another company the right to do something for you → off-shoring buying company in foreign company and do it
yourself.
Success outsourcing depends on: support of client organization, communication to affected employees and the
firms ability to manage the service providers
Issues when going offshore: Expertise in manging remote locations, cost of labor, language skills.
MNE Business strategy:
- gives a direction for managing subsidiaries.
- Integration: the way which subsidiaries and the HQ are a unified whole
- Local responsiveness or differentiation: the way subsidiaries respond to local differences
4 types of strategy
- International: low local, low integration
Exporting and importing products, licensing or sub-contracting, no or small sales office overseas
- Multi-domestic: High local, low integration
Responding to local market, subsidiaries are specialized at local market and independent → so firm wants
integration with the regional HQ at a regional subsidiary.
- Global: Low local, High integration
One strategy for all the countries
Transnational: High local, High integration.
A global network where each subsidiary has responsibility
Global Transnational
Unified strategy implemented for all Maximizes responsiveness and integration
countries regardless of their cultural and by being global and multi-domestic at the
national differences; see Mcdonalds same time; as a local firm with global
Integration
expertise, technology and resources
International Multi-Domestic
Simplest business strategy, requiring
limited local responsiveness and limited Responds to the high needs, values, and
integration; licensing or subcontracting demands of a local market; see cars
Local Responsiveness
HQ International orientation and MNE strategy
Three ways of domination of the HQ over subsidiary
1. Ethnocentrism: own culture/standard is dominant
2
