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Learning outcomes. To evaluate critical competencies for international HRM/HRDTo understand the stages of growth and development of global businessesTo evaluate approaches to international strategy formulation To evaluate the role of HRM/HRD in achieving global strategic business objectivesTo discuss the implications of organisational culture within global organisations.
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1. The Role of IHRM & IHRD within Global Strategy Sue Shortland
2. Learning outcomes
To evaluate critical competencies for international HRM/HRD
To understand the stages of growth and development of global businesses
To evaluate approaches to international strategy formulation
To evaluate the role of HRM/HRD in achieving global strategic business objectives
To discuss the implications of organisational culture within global organisations
3. Why operate internationally? Factors influencing the decision to internationalise:
- markets
- production advantages
- people
- risk
- cost
- host government/country
4. Internationalisation trends Increase in volume of international trade
Development of global markets
International division of labour
Internationalisation of financial markets
Supranational state systems and trading alliances
Advanced information technology
Increase in volume of cross-national investment and ownership
Increase in number of joint ventures and alliances
Internationalisation of consultancy
5. Stages of internationalisation Export
Licensed
Franchising
Partnerships
Foreign direct investments
- greenfield start
- foreign takeover
- international merger
- foreign joint venture
MNC/MNE
6. IHRM - involvement in international people management Operation of parent company/subsidiary firms overseas
Government agencies and non-profit organisations
Operation of foreign firms in the home country
The employment of foreign citizens
Joynt and Morton, 1999
7. IHRM/IHRD - challenges Cultures
Policy development in several business environments
Co-ordination of activities in diverse environments
Joynt and Morton, 1999
8. Domestic v. international HRM Responsibility for a greater number of functions and activities
Requires a broader perspective
Greater involvement in employees lives
Having to change emphasis
Greater exposure to problems
Coping with greater number of external influences
Having to consider greater overall complexities in decision making
Joynt and Morton, 1999
9. Domestic v. international HRD More and different functions
Greater involvement in non-work related situations
More external influences
Different emphasis
Walton, 1999
10. The role of the IHR professional Raise, define and clarify the capabilities required to win globally
Invest, design and deliver HR practices that ensure these capabilities
Stewart Black and Ulrich 1999
11. Capabilities for global integration and local adaptation Determine the core
Achieve consistency
Build global brand equity
Get leverage and scale
Share knowledge and learning
Engender a global perspective
Stewart Black and Ulrich 1999 Determine the non-core
Allow flexibility
Honour local customs
Get focused
Experiment and create new knowledge
Ensure local accountability
12. HR investments for global integration and local adaptation
Staffing
Developing
Performance Management
Communication
Governance
Stewart Black and Ulrich 1999
13. Critical competencies for IHR managers
Build business credibility
Study execution capabilities
Demonstrate leadership
Focus on adding value
Measure and communicate results
Brake T , 1999
14. Globalisation (1) Some definitions:
A phenomenon driven by many factors, of which technology, the related mobility of people, goods and ideas, and a liberal trading environment are perhaps the most obvious.
McKenna, 2000.
15. Globalisation (2) Some definitions:
Attracting foreign investment, while increasing exports and developing international alliances to penetrate new markets
Granell, 2000.
16. Globalisation (3) Optimists versus the critics
Convergence versus divergence
Globalisation versus localisation thesis
17. Stage approaches to organisational design/growth
18. Global growth stages and HRD (1) Perlmutters model (1969):
Ethnocentric (development and use of PCNs)
Polycentric (development and use of HCNs)
Regiocentric (development and use of TCNs - regionally based)
Geocentric (development and use of TCNs - globally based)
19. Global growth stages and HRD (2) Bartlett and Ghoshal (1989) adapted by Walton (1999):
Model A (multi-domestic): nuclear aggregation of domestic strategies
Model B (international): HQ control, knowledge transfer to the locally autonomous less advanced
Model C (global): centralised hub with cross-national operations
Model D (transnational): Local responsiveness and global efficiency with knowledge transfer across boundaries
21. Classical strategy Strategy is a rational, analytical, long-term planning process undertaken in pursuit of profit maximization. It is premised on the existence of a hierarchical organisation structure, over which a chief executive officer presides. The CEO leads the senior management team in the formulation of strategy. Operational managers are responsible for strategy implementation. The main criticisms surround the neglect of human and organisational complexities and politics which militate against super-rationality and the analogy of the organisation as a military machine in which control and command are deemed not problematic. This model is naive and idealistic.
22. Evolutionary strategy Market unpredictability militates against heavy investment in strategic plans. The market, not managers, secure profit maximization and determine strategies. Managers need to keep their options open, and the firms that survive are the fittest and most efficient. Criticisms stem from a failure to acknowledge that large firms, with oligopolistic power can select markets, and that firms may be able to differentiate and adapt in order to survive.
23. Processual strategy The strategy emerges from the day-to-day activities of the firm, rather than being a function of the market. Hence the strategy is a continuous, formative and adaptive process (adaptive rationality) or a pragmatic response to events in which managers continually make compromises and adjustments. This approach acknowledges the limits of human cognition, the imperfections of human behaviours and action and the realities of organisational life. Formulation and implementation are inextricably entwined, and may emerge, such that they are only identifiable in hindsight. The firm's core, distinctive competences lie at the heart of a firm's competitive advantage and sustainability.
24. Systemic strategy Organisations can plan ahead and formulate strategies that are appropriate to particular contexts, but strategic goals and processes are shaped by social and economic systems and factors such as culture. Hence, it acknowledges a range of contextual factors beyond those observed in the Anglo-Saxon cultures of the USA and the UK, including the role and strength of financial institutions and different political regimes. There can be no single strategic model. Competitors' strategic position can only be understood with reference to social or industry sector factors.
25. Blue ocean strategy Red oceans are all the industries in existence today - the known market space. In red oceans, industry boundaries are defined and accepted and the competitive rules of the game are known. As the market space gets crowded, prospects for profits and growth are reduced and cut-throat competition turns the red ocean bloody. This is where most businesses compete today. Blue oceans, in contrast, represent all the industry that is not in existence today, unknown market space untainted by competition. In blue oceans, demand is created rather than fought over, and there is ample opportunity for growth.
Ref: Kim & Mauborgne, 2006.
26. Red vs. Blue Ocean Strategy Red Ocean Strategy
Compete in existing market space
Beat the competition
Exploit existing demand
Make the value-cost trade-off
Align the whole system of a firms activities with its strategic choice of differentiation or low cost Blue Ocean Strategy
Create uncontested market space
Make the competition irrelevant
Create and capture new demand
Break the value-cost trade-off
Align the whole system of a firms activities in pursuit of differentiation and low cost
27. Organisational culture Corporate culture is the pattern of basic assumptions that a given group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid, and therefore to be taught to new members as the correct way to perceive, think and feel in relation to those problems. (Schein 1984)
28. Strategy, organisational culture and IHRM Sociability versus solidarity:
Networked organisations
Mercenary organisations
Fragmented organisations
Communal organisations
Goffee and Jones 1999
29. Networked organisations Knowledge of local markets is critical success factor
Corporate success is an aggregate of local success
Few opportunities for learning between divisions or units
Strategies are long term
30. Mercenary organisations Capacity to act swiftly in a highly co-ordinated way
Economies of scale/competitive advantage from corporate centres of excellence
Nature of competition is clear
Corporate goals are clear and measurable
31. Fragmented organisations Innovation produced primarily by individuals, not groups
Standards are achieved primarily through input rather than process
Few learning opportunities between individuals
Low levels of work interdependence
32. Communal organisations Innovation requires team working across functions and locations
Measurable synergies and opportunities for teamworking
Strategies are long term and emergent
Business environment is dynamic and complex
33. IHR strategies Networked firm:
Remuneration sustains equity
Recruitment of compatible people
Training concerns shared norms
Leadership focuses on interpersonal skills
Development of cross-cultural awareness and communication
34. IHR strategies Mercenary firm:
Careful measurement of performance
Rigorous recruitment/loss processes
Golden handcuffs for high performers
Leadership development via contests
35. IHR strategies Fragmented firm:
Little focus on working together
Minimal interference from organisation
Retain tacit knowledge of individuals
Support for rare individuals
36. IHR strategies Communal firm:
Values organisational cohesion
Values compatibility
Leadership development ensures competencies to lead and follow