Public Domain Human resource management in international business presents issues that are different from those in domestic or local business. The nature and characteristics of international business are more complicated than domestic or local business. As such, it is necessary to account for different types of human resource management issues in international business. HR managers must also choose the right staffing policy approach based on the needs of the organization.
General approaches[ edit ] In general terms, there are two main approaches, Different approach of international business are opposite but complement each other in some ways, to strategic management: The Industrial Organizational Approach based on economic theory — deals with issues like competitive rivalry, resource allocation, economies of scale assumptions — rationality, self discipline behaviour, profit maximization The Sociological Approach deals primarily with human interactions assumptions — bounded rationality, satisfying behaviour, profit sub-optimality.
An example of a company that currently operates this way is Google Strategic management techniques can be viewed as bottom-up, top-down, or collaborative processes. In the bottom-up approach, employees submit proposals to their managers who, in turn, funnel the best ideas further up the organization.
This is often accomplished by a capital budgeting process. Proposals are assessed using financial criteria such as return on investment or cost-benefit analysis. Cost underestimation and benefit overestimation are major sources of error. The proposals that are approved form the substance of a new strategy, all of which is done without a grand strategic design or a strategic architect.
The top-down approach is the most common by far. In it, the CEO, possibly with the assistance of a strategic planning team, decides on the overall direction the company should take. Some organizations are starting to experiment with collaborative strategic planning techniques that recognize the emergent nature of strategic decisions.
The strategy hierarchy[ edit ] In most corporations there are several levels of management. Strategic management is the highest of these levels in the sense that it is the broadest - applying to all parts of the firm - while also incorporating the longest time horizon.
It gives direction to corporate values, corporate culture, corporate goals, and corporate missions. Under this broad corporate strategy there are typically business-level competitive strategies and functional unit strategies.
Corporate strategy refers to the overarching strategy of the diversified firm. Such a corporate strategy answers the questions of "in which businesses should we compete? According to Michael Porter, a firm must formulate a business strategy that incorporates either cost leadership, differentiation or focus in order to achieve a sustainable competitive advantage and long-term success in its chosen arenas or industries.
Functional strategies include marketing strategies, new product development strategies, human resource strategies, financial strategies, legal strategies, supply-chain strategies, and information technology management strategies.
Each functional department attempts to do its part in meeting overall corporate objectives, and hence to some extent their strategies are derived from broader corporate strategies.
Many companies feel that a functional organizational structure is not an efficient way to organize activities so they are reengineering reengineered according to processes or SBUs. A strategic business unit is a semi-autonomous unit that is usually responsible for its own budgeting, new product decisions, hiring decisions, and price setting.
An SBU is treated as an internal profit centre by corporate headquarters. An additional level of strategy called operational strategy was encouraged by Peter Drucker in his theory of management by objectives MBO. It is very narrow in focus and deals with day-to-day operational activities such as scheduling criteria.Managers in international business must understand social science disciplines and how they affect different functional business fields.
To maintain and achieve successful business operations in foreign nations, you must understand how variations in culture and traditions across nations effect business . Approaches to Recruitment in IHRM Though the general aim of any recruitment policy is to select the right people for the right task at the right time, the HR department of international companies may adopt one of the following three specific approaches available for recruiting employees for global operations.
Business people with an education in international business also had a significantly higher chance of being sent abroad to work under the international operations of a firm.
There are three main international strategies available: (1) multidomestic, (2) global, and (3) transnational (Figure “International Strategy”). Each strategy involves a different approach to trying to build efficiency across nations while remaining responsive to variations in customer preferences and market conditions.
Approaches to International Business Development In Europe & Go-To-Market Basics EuroDev Group Harris. Mark de Vries Jeff Coffed. • 75% of the initial international hiring's are unsuccessful • 75% of the international alliances fail.
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