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INTERNATIONAL HUMAN
RESOURCE MANAGEMENT
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GLOBAL RECRUITMENT
Recruitment means searching for the
prospective candidates & stimulating them to
apply for jobs.
The accurate information provided by the
global company attracts the qualified & repels
the unqualified candidates.
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SOURCES OF GLOBAL RECRUITMENT
1. Parent Country Nationals:
Parent Country Nationals are employees of
the company or its subsidiaries located in
various countries who are the citizens ofthe country where the companys
headquarters are located.
These are generally managers, head ofsubsidiary companies, trouble shooters &
experts.
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SOURCES OF GLOBAL RECRUITMENT
2. Host Country Nationals:
Host Country Nationals are the employees
of the company who are the citizens of the
country where the subsidiary is located.
3. Third Country Nationals:
Third Country Nationals are the employees
of a companys subsidiary located in acountry, which is not his home country.
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GLOBAL SELECTION PROCESS
Global business firms need people with
higher order skills, balanced emotions,
ability to adjust to multi-cultural
environment. Hence, the selection process of Global
companies vary from that of a domestic
company.
There are three type of approaches followed
in selection policies in Global business viz.
Ethnocentric Approach
Polycentric/ Regiocentric Approach
Geocentric Approach
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THE ETHNOCENTRIC APPROACH
The basic reason for firms following thisapproach are:
Non availability of qualified personnel inhost country.
To maintain a unified corporate culture.
The Ethnocentric Approach of Selectionsuffers from the following disadvantages:
The staff of the host country feelsfrustrated.
Cultural myopia
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THE POLYCENTRIC APPROACH
The reasons for adopting this approachincludes:
Host country nationals are familiar with theculture of the country.
Level of job satisfaction of the employees ofthe subsidiaries is enhanced.
Reduces the overall cost of staff ofsubsidiaries.
However,
This approach limits the mobility ofemployees among subsidiaries & betweensubsidiaries & headquarters.
Organizational culture of the parent companycannot be completely adopted in the
subsidiaries.
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THE GEOCENTRIC APPROACH
Global firms follow this approach due to
the following reasons:
To have the most appropriate Human
Resource.
To meet the challenges of cultural
diversity.
To avert the problems of cultural myopia.
Limitations:
Implementation of this approach takes
time, as the MNC has to train & develop
the people in multi cultures.
Expensive implementation.
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EXPATRIATES
Expatriates are the employees & their
family members working or living in foreign
countries.
The parent country nationals working inforeign subsidiary & third country nationals
are expatriates.
International Adjustment is the degree to
which the expatriate feels comfortable
living & working in the host culture.
Expatriates have a strong desire to reduce
Cultural Shock.
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CULTURAL SHOCK
Cultural Shock is the frustration &
confusion that result from being
bombarded by uninterpretable cues.
Researchers found that to a large degreeculture shock follows a general pattern of a
U shaped curve which is divided into 4
stages:
Honeymoon stage
Culture shock stage
Adjustment stage
Mastery stage
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CULTURAL ADJUSTMENT CURVE
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DIMENTIONS OF INTERNATIONAL
ADJUSTMENT
Degree of adjustment
Work Adjustment
Interaction Adjustment
General Adjustment
Organization Culture
Organization Culture
Novelty
Social Support
Non Work
Culture Novelty
Family-Spouse
Adjustment
Individual
Self efficacy
Relational skills
Perception skills
Job
Role Clarity
Role discretion
Role novelty
Role conflict
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TRAINING & DEVELOPMENT
Even the most valuable employees in the
Global companies fail to work & stay with
the company due to poor Training &
Development efforts.
Training & Development for global jobs are
necessary to match employee
specifications with the job requirements &
organizational needs.
It results into improved job knowledge &
morale of the human resources.
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CROSS CULTURAL TRAINING
Cross Cultural training enables the
expatriates to learn the cultural norms,
values, aptitudes, attitudes, beliefs,
behaviors, practices of the host country.
Cross Cultural training includes:
Fact oriented training
Attribution training
Cultural awareness training Cognitive- Behavior Modification
training
Experimental training
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PERFORMANCE APPRAISAL IN
GLOBAL COMPANIES
Performance appraisal is a method of
evaluating employee behavior relating to
expected work, including both qualitative &
quantitative aspects of job performance.
Appraising the performance of expatriate
employees objectively is very difficult.
Hence, global companies give moreweightage to the self appraisal done by the
foreign employee himself rather than by
the appraisers.
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GLOBAL STRATEGIC
MANAGEMENT
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GLOBAL STRATEGIC MANAGEMENT
According to Certo & Peter, Strategic Management is a
continuous, iterative cross functional process aimed at
keeping an organization as a whole, appropriately
matched to its environment.
Global Strategic Management is concerned with deciding
on strategy to be followed in the Global Market &
planning how that strategy is put into effect.
Strategic Management of a global company is distinct
from that of a domestic company due to its peculiarities.
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GLOBAL STRATEGIC MANAGEMENT
PROCESS:
1. Analyzing the existing mission & goals:
Most of the companies initially start as domestic firms
& transform into a global company at a laterstage.
The company finds that the existing mission
statement would be redundant when it significantly addsproduct or country portfolios to the existing portfolio.
The global company, therefore prefers to reformulate
the existing mission statement.
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GLOBAL STRATEGIC MANAGEMENT
PROCESS:
2. Organizational analysis of a Global Business Firm:
The organizational analysis requires a detailed study of
the following aspects of the global company & its
subsidiaries or marketing department:
Marketing
Production
Finance
Human Resources
Organization Structure
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ORGANIZATION STRUCTURE
Managing Director
ManagerR&D
ManagerFinance
ManagerProduction
ManagerMarketing
Asst. ManagerNorth India
Asst. ManagerSouth India
Asst. ManagerExports
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ORGANIZATION STRUCTURE
Managing Director
ManagerR&D ManagerFinance ManagerProductionManagerMarketing
CEO China CEO Atlanta
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GLOBAL STRATEGIC MANAGEMENT
PROCESS:
3. Analysis of International Environment:
The strategist formulates alternative strategies to exploit
the opportunities provided by using company strength.Global Business environment factors include:
Political-Legal Factors
Economic Factors
Technological Factors Social Factors
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GLOBAL STRATEGIC MANAGEMENT
PROCESS:
4. Formulation of alternative corporate level strategies:
Stability Strategies
Growth Strategies
Retrenchment Strategies
Combination Strategies
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GLOBAL STRATEGIC MANAGEMENT
PROCESS:
5. Formulation of alternative Business Unit Level
strategies:
The global companies formulate business unit level
strategies based on the corporate level strategies,
organizational strengths & environmental opportunities.
The important strategies at this level include:
A. Low Cost Leadership StrategyB. Focus or Niche Strategy
C. Differentiation Strategy
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GLOBAL STRATEGIC MANAGEMENT
PROCESS:
6. Selection of Best among the alternative strategies:
The strategists analyze the alternative strategies, rank
them & select the best among them. The techniques for
strategic analysis could be:
BCG Matrix
GE Matrix
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GLOBAL STRATEGIC MANAGEMENT
PROCESS:
7. Strategy implementation:
The factors for strategy implementation includes:
Partner selection
Organizational structure
Behavioral implementation
Marketing implementation
Financial implementation
Production implementation
Human Resource implementation
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GLOBAL STRATEGIC MANAGEMENT
PROCESS:
8. Strategy Evaluation & Control:
Strategic Control includes:
Establish standards of management process
Implementation
Measure the performance of the process
Compare the performance with the standards
Take corrective steps
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GLOBAL STRATEGIC MANAGEMENT
PROCESS:8. Strategy Evaluation & Control:
The specific areas of strategic evaluation include:
Financial measures
MNC Host country Relationship
Contributory Relationships
Reinforcing Relationships Frustrating Relationships
Undermining Relationships
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INTERNATIONAL BUSINESS ETHICS
Business Ethics primarily concerned with the
relationship of business goals & techniques to specific
human needs.
It studies the impact of acts on the good of the
individual, the firm, the business community & the
society as a whole.
An international strategy is a strategy or course of
action that does not violate the accepted principles &
code of conduct.
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ETHICAL DILEMMAS
Managers confront very real ethical dilemmas.
The ethical obligations of a multinational corporation
toward employment conditions, human rights, corruption,
environmental pollution, and the use of power are notalways clear cut.
Ethical dilemmas are situations when none of the
available alternatives seems ethically acceptable.
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APPROACHES TO INTERNATIONAL
BUSINESS ETHICS
CULTURAL RELATIVISM:
Cultural relativists uphold that cultures differfundamentally from one another, and so do the moralframeworks that structure relations within differentsocieties.
In international relations, cultural relativists determinewhether an action is 'right' or 'wrong' by evaluating itaccording to the ethical standards of the society withinwhich the action occurs.
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APPROACHES TO INTERNATIONAL
BUSINESS ETHICS
UTILITARIANISM (Teleological Approach):
This theory defines morality in terms of the maximization
of net expectable utility for all parties affected by a
decision or action.
As most clearly stated by Mill, the basic principle of
utilitarianism is:
Actions are right to the degree that they tend to
promote the greatest good for the greatest number.
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APPROACHES TO INTERNATIONAL
BUSINESS ETHICS
KANTIAN ETHICS (Deontological Approach):
Kantian ethics is based upon the teachings of the
philosopher, Immanuel Kant.
According to Kant, the concept of motive is the most
important factor in determining what is ethical. More
specifically, Kant argued that a moral action is one thatis performed out of a sense of duty.
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INTERNATIONAL
FINANCE &
ACCOUNTING
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EVOLUTION OF INTERNATIONAL
MONETARY SYSTEM
Bimetallism (Before 1875)
Classical Gold Standard(1875-
1914)
Interwar Period (1914-1944)
Bretton Woods System (1945-1972)
Flexible Exchange Rate Regime (1973 till
now)
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EVOLUTION OF INTERNATIONAL
MONETARY SYSTEM
1. Gold Standard:
Britain adopted gold standard in 1816 &
were followed by Germany in 1871 &
subsequently by the other countries of theworld.
A gold standard is a monetary system in
which the unit of value in which prices &
wages are customarily expressed & in
which the debts are usually contractedconsist of the value of a fixed quantity of
gold in an essentially free gold market.
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EVOLUTION OF INTERNATIONAL
MONETARY SYSTEM
2. Bretton Woods System:
The collapse of gold standard led to the
Bretton Woods Conference in July 1944.
It introduced a new exchange rate systemi.e. the adjustable peg system.
Under Bretton Woods, US Dollar was the
key currency.
This system broke down in19
70 due tohuge accumulation of dollar with
Germany & Japan & USAs deficit due to
over valued currency.
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EVOLUTION OF INTERNATIONAL
MONETARY SYSTEM
Since 1971, world has been operating
under hybrid system of:
Clean Floating
Dirty Floating Crawling Peg
Currency Block
Target Zone Arrangement
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EVOLUTION OF INTERNATIONAL
MONETARY SYSTEM
3. International Monetary Fund:
Main function of IMF is to manage
international liquidity & finance short term
balance of payment problems of membernations.
In order to improve international liquidity
position, IMF created Special Drawing
Rights.
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EXCHANGE RATE UNDER
FREE EXCHANGE MARKETS
Fixed Exchange Rate: Government fixesthe rate of exchange at which foreigncurrency can be bought& sold.
Floating Exchange Rate: Government fixesthe range of foreign exchange rate withinwhich foreign exchange is allowed tofluctuate according to the demand & supply
of foreign currency in the market.
Flexible Exchange Rate: Exchange rate isdetermined the market forces.
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THEORIES OF FOREIGN
EXCHANGE RATE
Mint Parity Theory
PPP Theory
BOP Theory