IHRM Chapter 2 International Human Resource Management Managing

IHRM Chapter 2 International Human Resource Management Managing people in a multinational context The organizational context

Discussion Questions 1. Firms typically goes through stages as they grow internationally – what stages will Winch-It undertake / follow as it plans for overseas operations ? 2. How might these stages affect the H R function ? 3. What are the specific HRM challenges for an organisation the size of Winch-It in planning for overseas ? 4. Country of origin influences the firm’s approach to organisation structure. Given Asia as a target, what types of organisation structure might be expected ? v IHRM Chapter 2 2

Chapter Objectives We learn: • Structural responses to international growth • Control and coordination mechanisms, including cultural control. • Effect of responses on human resource management approaches and activities. v IHRM Chapter 2 3

Terms bamboo network firm M&A clan control born global social capital matrix structure corporate culture heterarchy structure transnational structure multinational network chaebols greenfield building approach v IHRM Chapter 2 4

Figure 2 -1 v Management demands of international growth IHRM Chapter 2 5

The path to global status Organizational structures change due to: 1. Strain imposed by growth and geographical spread. 2. The need for improved coordination and control across business units. 3. The constraints imposed by host-government regulations on ownership and equity. v IHRM Chapter 2 6

Figure 2 -2 v Stages of internationalization IHRM Chapter 2 7

Figure 2 -3 v Export department structure IHRM Chapter 2 8

Figure 2 -4 v Sales subsidiary structure IHRM Chapter 2 9

Figure 2 -5 v International division structure IHRM Chapter 2 10

MNEs’ two major issues of structure 1. The extent to which key decisions are to be made at the parent-country headquarters or at the subsidiary units (centralization versus decentralization). 2. The type or form of control exerted by the parent over the subsidiary unit. v IHRM Chapter 2 11

Figure 2 -6 a v Global product division structure IHRM Chapter 2 12

Figure 2 -6 b v Global area division structure IHRM Chapter 2 13

Figure 2 -7 v Global matrix structure IHRM Chapter 2 14

International matrix structure is difficult Matrix is all but unmanageable because of: 1. Dual reporting, which leads to conflict and confusion. 2. The proliferation of communication channels which creates informational logjams. 3. Overlapping responsibilities, which produce turf battles and a loss of accountability. 4. The barriers of distance, language, time and culture, which often make it very difficult for managers to resolve conflicts and clarify confusion. v IHRM Chapter 2 15

Figure 2 -8 v The networked organization IHRM Chapter 2 16

The multi-centered networked organization Management involves less hierarchical structure and features 5 dimensions: 1. Delegation of decision-making authority to appropriate units and levels. 2. Geographical dispersal of key functions across units in different countries. 3. Delayering of organizational levels. 4. De-bureaucratization of formal procedures. 5. Differentiation of work, responsibility and authority across the networked subsidiaries. v IHRM Chapter 2 17

Figure 2 -9 v The role of MNE culture of origin IHRM Chapter 2 18

Figure 2 -10 v Control strategies for multinational firms IHRM Chapter 2 19