world survey reports on international human resourse management

8/13/2019 World Survey Reports on International Human Resourse Management

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Harry Ramsdens goes international Deep-fried fish and chips have been a perennially popular food in

England. But they have historically been very local in their operation.One of Englands premium fishand - chip shops, Harry Ramsdens,though, founded in Guiseley, Yorkshire, in 1928, is one of the fewthat have opened shops at multiple locations. By 1994 the companyhad eight branches in Britain, with four more scheduled for opening,and one in Dublin, Ireland. Its busiest UK location is in the resort

town of Blackpool, generating annual sales of 1.5 million (US$2.3million). Harry Ramsdens managers, however, were not satisfiedwith this success, they wanted to turn Harry Ramsdens into a globalenterprise.

To this end, in 1992 the company opened its first international

operation in Hong Kong. According to finance director RichardTaylor, We marketed the product as Britains fast food, and it provedextremely successful. Within two years the Hong Kong venture wasalready generating annual sales equivalent to its Blackpooloperations. Half of the initial clientele in Hong Kong were British

expatriates, but within a couple of years, more than 80 percent ofcustomers were ethnic Chinese.


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Harry Ramsdens goes international

Emboldened by this success, Harry

Ramsdens has (as of

1999) opened additional branches in Singapore, Dublin,Ireland, Dubai, United Arab Emirates, and Melbourne,

Australia; but its biggest potential target market is seen asJapan. In an experimental shop in Tokyo, the Japanese tookto this product, despite their traditional aversion to greasy

food. So Harry Ramsdens began to look for a Japanese partner to establish a joint venture in Japan. As forthe future, Richard Taylor states their international strategy:We want Harry Ramsdens to become a global brand. In theshort term the greatest returns will be in the UK. But it wouldbe a mistake to saturate the UK and then turn to the rest of

the world. Wed probably come a cropper when weinternationalized. We need experience now.


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Global TrendsThe Business Week Global 1000 (the largest public firms in the world based on

capitalization, i.e., their market value based on their stock prices times thenumber of shares outstanding) ranked firms from twenty-one countries in their200l rankings (there were twenty-two in their 2000 rankings).

In the top 200 firms (2002 data) 105 were from the US and the other ninety-fivewere from fifteen other, non-US, countries. 1

In 2000, Business Week also included a ranking of the top 200 emerging marketfirms (this list grew from 100 firms the year before), at least half of which hadmarket capitalization large enough to qualify them for the rankings of the top1,000 firms from the twenty-one developed countries that Business Weekstudies.

This emerging market list included enterprises from twenty-five additionalcountries, for a total of forty-six countries represented.


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Specific Business drivers of Globalization Increased pressure on costs - move to where labor and other

resources are cheapest and most readily available. The search for new markets- for growth and to be able to compete

more effectively with global competitors, further consumers around theworld also seek foreign products and services.

Greater customer demands on product and service qualities.

Government policy (encouraging foreign investment through taxbenefits, or the opening up of markets through regional trade treaties,or through privatizing industries such as telecommunications, healthcare, and the mass media, or encouraging local firms to export todevelop better trade balances and to earn hard currency).

Technological development (which impacts globalization in a numberof ways, e.g., multinational firms searching the globe for the besttechnology, the best technology being made or copied everywhere,and new technology allowing smaller, more flexible manufacturingplants to be placed close to markets, no matter where those marketsare).


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Specific Business Drivers of Globalization Worldwide communication and information flow - creates global

knowledge of and demand for world-class products and services. The interdependence of nations in trading blocs, such as the

European Union, the Association of South East Asian Nations(ASEAN), Mercosur (Brazil, Argentina, Uruguay, and Paraguay), andthe North American Free Trade Agreement (NAFTA Canada, theUS, and Mexico).

The integration of cultures and values through the impact of globalcommunication and the spread of products and services such asmusic, food, and clothing, which have led to common consumerdemands around the world.

A larger, more highly educated workforce worldwide. Decreasing trade barriers and opening markets - Lead to foreign

competition higher-quality products and services at a lower cost overseas opportunities for markets and investment. E-commerce - through web site, as customers log on to that web site

and order whatever product or service is being offered.


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The increasing importance of international business

Size: Germany there are about 350 smallto medium-sized firms (SMEs with fewerthan 300 or so employees) that stilldominate their global niche markets.

Number: Companys global presence -from Developed countries as well as fromdeveloping countries.


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The increasing importance of internationalbusiness

Beginning in 1998, Business Week startedcompiling a ranking of the top 100 informationtechnology firms in the world.

Even though most of the companies on thislist are from the US (forty-three in 2003), the2003 list also included firms from twenty-fiveother countries (up from nineteen in 2001),such as Indonesia, Greece, Taiwan, HongKong, Denmark, Russia, Spain, India, andMexico. 12


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In 2001, Business Week compiled a list ofthe global top 100 brands.

Of these top 100 brands, sixty-two were American, but the remaining thirty-eightcame from twelve other countries,including large countries such asGermany, France, and the UK, but alsoincluding smaller countries such as SouthKorea, Denmark, Finland, and Bermuda.


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The increasing importance of international business

Forbes magazine also develops a ranking of international firms, ranking the top500 based on a composite of sales, net income, assets, and market value. 1

In the world Super 50, i.e., the fifty largest firms on their composite rankings for 2002,twenty-seven were from the US while the remainder were from eight other countries.

On the Forbes list of the top 500 firms (outside the US), presented ontheir web site, there were thirty-two countries represented and fourteen nationswith at least five companies on the list. 15 Again, these countries include not justthose that are normally referred to as developed, but many developing or emerging economies, as well, including Austria, Bermuda, Brazil, China, Greece,India, Ireland, Mexico, Russia, Singapore, South Africa, Thailand, and Turkey.

(This is a shorter list than the year before when firms from Argentina and Israelwere also on the list.)


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Types: The complexity is the growing number of firmsthat derive over half of their revenues outside their homecountries and the increasing number of local firms whoseownership is held by firms from another country.

Larger (and more familiar) firms with greater than 50percent of their revenues from outside their homecountries include Hewlett-Packard, Intel, Xerox, DowChemical, McDonalds, Manpower, Eastman Kodak,Nestl, Exxon, Royal Dutch Shell, Unilever, IBM,Siemens, Volkswagen, Asea Brown Boveri (ABB), Coca-Cola, and Gillette.


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The Increasing Importance of InternationalBusiness

Many well known firms are now owned by firms from anothercountry, including

Firestone Tire (owned by Bridgestone, Japan), Chrysler (owned by Daimler Benz, Germany), Guinness (owned by Diageo, UK),

Holiday Inn (purchased by Bass but now a part of IntercontinentalHotels, Great Britain), RCA (owned by Thompson, France), Ben & Jerrys Ice Cream and

Best Foods (owned by Unilever, Netherlands/UK), Braun (owned by Gillette, US), Tropicana orange juice (acquired by Seagram, Canada, but recently

acquired by Pepsi, US), Godiva chocolate (owned by Campbell Soup, US), Jolly Green Giant (owned by Grand Met, Great Britain), and Volvo and Jaguar (owned by Ford Motor Company).


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Internationalization of a local manufacturer The experiences of Barden, a precision ball-bearing manufacturer located in

Danbury, Connecticut, illustrate how global issues can impact even a localfirm. In the late 1980s, Barden had an opportunity to significantly increaseits business. In order to achieve this, it had to increase its hourly labor forceby about 125 employees in one year. However, the local Danbury labormarket was experiencing an unprecedented low unemployment rate ofabout 2.5 percent.

The Human Resource department thought they could do this, but indicated theywould have to be very creative (using bonuses to employees for successfulreferrals, open houses to recruit applicants, etc.) and, importantly, byrecruiting workers whose English was very poor.

In the past, Barden had found that, for example, Portuguese immigrantsbecame very reliable, long- term employees. Barden had used a buddysystem to help them learn their jobs and to acquire an adequate Bardenvocabulary. But it was clear that this would be inadequate to prepare in ashort period of time the large new group of potential employees that hadbeen identified. It turned out that there were a significant number of brightrecent immigrants from a large but diverse number of countries (e.g., Laos,Cambodia, Brazil, Colombia, the Dominican Republic, Guatemala, Chile,Lebanon, Pakistan, Thailand, and Yemen), but who spoke little or noEnglish .


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Internationalization of a local manufacturerTo become functioning, qualified Barden employees, newcomers would have to

master the basic Barden vocabulary and be able to look up standardoperating procedures as well as material safety data sheets, and masterbasic shop mathematics, measurement processes, and blueprint reading.This was a tall order for the immigrants (many of whom, it was discovered,had received a surprisingly good education in their home countries). In orderto teach these new employees enough English to pay their way, a languagetraining firm, Berlitz, was retained to develop a special, intensive course in

cooperation with Bardens training unit.In a fairly short period of time six groups of eight new employees were taught

through this special program. All the students were put on the payroll whilethey met with a Berlitz instructor for four hours a day for fifteen consecutiveworkdays during work hours.

The program had a number of effects, beyond enabling Barden to fill itsemployment needs to meet its new corporate growth strategy and to integratethis veritable United Nations group into its workforce. The confidence level ofthe students soared as they used their new language ability. Bardenssupervisors were impressed. And the word spread to the community with thepositive result of attracting new high qu ality recruits.


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The internationalization of HumanResource Management

IHRM is about understanding, researching, applying andrevising all human resource activities in their internal andexternal contexts as they impact the process ofmanaging human resources in enterprises throughoutthe global environment to enhance the experience ofmultiple stakeholders, including investors, customers,employees, partners, suppliers, environment andsociety .


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Ford Motor Company goesinternational

Ford Motor Company has been in business for over 100 years and when it comes toa global mind-set, Ford is ahead of most of its competitors. For a number of historicalreasons, over the years Ford evolved into a collection of country and regional fiefdoms.Early in its history, Ford was like many large US companies, which often sent someoneoff to the UK, Canada, or Argentina to run a company just like the one back home. Thefirst Henry Ford was in many ways an internationalist, because within a very few years of

establishing the company in the US, he was quickly opening assembly plants all over theworld that were essentially smaller versions of the original company in Detroit.

But by the mid-1920s, and all around the world, a sense of national pride developed.Countries began to develop their own automotive companies. Suddenly, there wereautomotive companies in the UK, in France, Germany, Australia, and they were allmaking their own vehicles. Nations wanted to assert their independence and saw theautomotive industry as a means of investing in their own economies. The Europeansexported, the Americans exported, and thats how the competitive game was being played.


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Ford Motor Company goes internationalIn the 1960s, though, regionalism began to develop, with the emergence of the EuropeanCommon Market, NAFTA, ASEAN, and other regional trading groups. Countries kept

their own political systems and social values but formed economic trading blocks. So bigcompanies established regional headquarters within the various major trading blocs.Ford Europe was established in this period. This was when most of the regional andfunctional fiefdoms (with each region becoming very independent) became firmlyentrenched at Ford. (This is what is referred to in this book as the regional corporate structure, an extension of the multi -domestic structure.) The fiefdoms were excellent at what they did: they squeezed every last ounce of efficiency out of the regional model. Forexample, back in the period of nationalism, Ford had multiple accounting activities aroundthe world there were fifteen in Europe alone. The regional model got it down to four:one in Europe, one in the United States, one in Asia-Pacific, and one in South America.But even with that efficiency, Ford felt that the model didnt work any more.

Today Ford is moving to a fourth stage of economic evolution with the globalization of all

aspects of its international operations: capital, communications, economic policy, tradepolicy, human resources, marketing, advertising, brands, etc. The auto industry aroundthe world has become globalized. Germany and Japan produce cars in the US, Koreaproduces cars in Eastern Europe, and Malaysia and Mexico export cars and parts. Inaddition, the automotive industry has become an electronics driven industry. It isincreasingly a business that requires huge investments in technology and intellectualcapital.


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Ford Motor Company goes internationalSo the leadership of Ford feels there is no longer a choice about globalization. For acompany of Fords background and size, remaining a national or regional company is no

longer a viable alternative. Auto companies around the world have global ambitions, andmany of them are world-class players, such as Toyota, Honda, Volkswagen, andDaimler Chrysler. In this environment, Ford sees an incredible challenge: more marketsopen for business, more competitors fighting for dominance, more need for very smartpeople and fresh ideas.

Ford feels that it cant build such a company if it holds on to a mind -set that doesnt

respond swiftly to (the global) consumers needs or pay attention to the (global) capital markets. So, under the leadership originally of Jacques Nasser And now of William FordIII, Ford has begun to reinvent itself as a global organization with a single strategic focusOn consumers and shareholder value. Ford realizes that, in this process, it must not tryto eliminate the role of national cultures or eliminate the idea that it makes sense to havepeople with expertise in one function or another, but it wants to develop a sort of Ford-wide corporate DNA that drives how it does things everywhere. That DNA has a couple ofKey components, including a global mind- set, an intuitive knowledge of Fords customers around the world, and a relentless focus on growth. Many large, experienced,multinational firms are now trying to develop a global structure and frame of mind similarto what Ford is doing, as they all see it as necessary for successful operation in todaysGlobalize economy. And it is IHR which must take the responsibility to develop thiscorporate DNA.


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The shift to being a global companyThe Cleveland-based Ferro Corporation, a $1 billion manufacturer ofcoatings, plastics, specialty chemicals and ceramics, has been asuccessful international enterprise for almost three-quarters of acentury and is now becoming a model For being a global company.

Several of its foreign operations, particularly those In Europe and Latin America, have existed for as much as seventy years. About two thirdsof its employees are non-US nationals, and over 60 percent of itsrevenues and profits are derived from foreign operations. Despite itsimpressive international record, only recently has Ferro begun to seeitself as a global company. According to David B. Woodbury, vice-president of human resources, There was quite a bit of sharing of

information and technology .

Among our operations in various countries, but each foreign division orsubsidiary operated highly independently, formulating much of its ownStrategy for manufacturing, marketing, finance and human resources. .


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The shift to being a global company

Since then Ferro has reorganized its corporate structure to focus onproducts and business lines across international borders. Each business thinks of the world as its marketplace now, says Woodbury. Were developing broad -based global strategies, with increasedcommunications and a greater sharing of assets throughout the world.

High on that list of shared assets is human resources. We realize there is a strong need for global managers, says Woodbury. We have to identify, train and develop people with an international outlook, skillsand experience. Like all other facets of the corporation, Human

Resources has to evolve into a global operation


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Cap Gemini-Sogeti: A transnational organization

Cap Gemini- Sogeti (CGS) is Europes biggest computer software and services

group. CGS has taken all available means (organic growth, acquisitions, andalliances) to become Europes No. 1 in computer services and consulting. The original merger of Cap, a computer services group, and Sogeti, a businessmanagement and information processing company, brought togetheroperations in the UK, the Netherlands, Switzerland, and Germany, with a headoffice in France. Further acquisitions brought in a large number of small groupsthroughout Europe and the US. This expanded its coverage to IT consulting,customized software, and education and training. CGS is already highlydecentralized, but when any of its branches reaches 150 personnel, it splits it intwo. This gives the firm greater flexibility in responding to variations in localdemand.

CGS has developed information pooling systems to ensure that innovativeSolutions developed in one country or business will be rapidly disseminated toother countries and businesses. These include electronic bulletin boards andextensive electronic and voice mail facilities, plus the organizational culture ofinformal networks of professionals who work frequently together in projectteams.


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Cap Gemini-Sogeti: A transnational organization

The challenges for this fast-growing transnational have major HRcomponents, e.g., integrating its wide variety of organizations into agroup with a common Culture capable of working within a complex webof ownership relationships, while benefiting from the strengths of therelationships that exist between its family of committed, semi -autonomous professionals. Internally, CGS and its IHR team worked toclarify and coordinate roles, objectives, systems, and resources,particularly its skilled professional staff, across countries and markets.

Its Genesis project took two years to achieve this, but now CGS sees

itself as coming much closer to achieving its aim to be a modernTransnational company.


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Choice of business form for entryinto international business

Portfolio investment Partial ownership Export Wholly-owned sales subsidiary/local sales office International division or global product division License Contract/subcontract Manufacture/assembly Service International joint venture Alliances, partnerships (e.g., research), and consortia Franchise


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International orientation Ethnocentrism

Polycentrism or regio-centrism Geocentrism


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Strategic IHRM: matching HRM to IBstrategy

Human Resource policies and practices Procure- (Recruit, select, train, assign) Manage- Pay, benefits, PM, H&S, LR, Info sys Out process: Retirement, layoff, termination, downsizes, divestiture

International Business Strategy Export Subcontract/ license JVs/Partnerships/ Alliance Foreign Subsidiary

Type of International employee Short term assignee (PCN, TCN) Long term assignee ( PCN, TCN) Local hires (HCN, TCN) Immigrants Refugees


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Forms of international business Direct import/export Counter trade

Pure barter Clearing arrangements Switch trading Counter purchase

Buy back Portfolio investments Contract manufacturing Licensing Turnkey projects Foreign manufacturing/service centers/stores

Wholly-owned subsidiaries Joint ventures Investments/equity participation

Alliances/partnerships/consortia


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Evolution of the multinational enterprise Foreign inquiry

Simple export The export manager The export department and direct sales Sales branches and subsidiaries Assembly abroad

Production abroad Contract Licensing Direct investment Joint venture Wholly-owned

Acquired Turnkey Integration of foreign affiliates Global / transnational firm

world survey reports on international human resourse management

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