Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/1 Chapter 2 The organizational context Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/2 Chapter objectives • structural responses to international growth • control and coordination mechanisms (cont.) In this chapter, we examine how international growth places demands on management, and the factors that impact on how managers of internationalizing firms responds to these challenges. We start with the premise that the human resource (HR) function does not operate in a vacuum, and that HR activities are determined by, and influence, organisational factors. We cover the following areas: Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/3 Chapter objectives (cont.) • mode of operation used in various international markets • effect of responses on human resource management approaches and activities. It builds upon material covered in Chapter 1 to provide a meaningful global and organizational context for drawing out the international dimension of human resource management – the central theme of this book. Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/4 Figure 2-1: Management demands of international growth Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/5 The path to global status • Causes structural responses, due to: – Strain imposed by growth and geographical spread – Need for improved coordination and control across business units – The constraints imposed by host-government regulations on ownership and equity • Evolution path common but not normative Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/6 Figure 2-2: Stages of internationalization Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/7 Stages of internationalization: Exporting • Typically the initial stage of international operations – Usually handled by an intermediary (foreign agent or distributor) – Role of HR department unclear at this stage Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/8 Figure 2-3: Export department Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/9 Sales subsidiary • Replacing foreign agents/distributors with own through sales or branch offices/subsidiaries • May be prompted by: – Problems with foreign agents – More confidence in international activities – Desire for greater control – Give greater support to exporting activities • PCNs may be selected, leading to some HR involvement Use with International Human Resource Management ISBN 1-84480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/10 Figure 2-4: Sales subsidiary [...]... exerted by parent over subsidiary Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 13 Figure 2- 6 a: Global product division Figure 2- 6 b: Global area division Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 14 The matrix • An attempt to integrate... bring into the management system a philosophy of matching the structure to the decision-making process Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 15 Figure 2- 7 : The matrix Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 16 Problems... Figure 2- 8 : The networked organization Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 19 Figure 2- 9 : US, European and Japanese structural changes Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 20 Control mechanisms “Globalization brings... are often under-estimated… Every morning when I wake I think about the challenges of coordinating our operations in many different countries” Quote by Accor CEO Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 21 Figure 2- 1 0: Control mechanisms Use with International Human Resource Management ISBN 1-8 4480013-X Published... confusion Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 17 Beyond the matrix • Less hierarchical structural forms – Heterarchy – Transnational – Networked firm Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 18 Figure 2- 8 : The networked... management role of corporate HR Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 11 Figure 2- 5 : International division Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 12 Global product/area division • Strain of sheer size may prompt structural... Dowling and Denice Welch 2/ 22 Mode of operation and HRM • Not just subsidiary operations • Firms may also adopt contractual modes – – – – Licensing Franchising Management contracts Projects • And/or cooperative modes (such as joint ventures) Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 23 Figure 2- 1 1: Linking operation... focuses on wholly owned subsidiaries and international joint ventures (cont.) Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 28 Chapter summary (cont.) • How international growth affects the firm’s approach to HRM Firms vary from one another as they go through the stages of international development, and react in different... and control through corporate culture, drawing out HRM implications (cont.) Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 27 Chapter summary (cont.) • The various modes – such as wholly owned, franchising, management contracts and international joint ventures – used by multinationals for foreign market entry and expansion... decisions (cont.) Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 29 Chapter summary (cont.) • Stages of development, organizational forms and mode of operation should not be taken as normative Research does suggest a pattern and a process of internationalization but firms do vary in how they adapt to international operations . Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 12 Figure 2- 5 : International division Use with International Human Resource Management. with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 8 Figure 2- 3 : Export department Use with International Human Resource. Welch 2/ 6 Figure 2- 2 : Stages of internationalization Use with International Human Resource Management ISBN 1-8 4480013-X Published by Thomson Learning © Peter Dowling and Denice Welch 2/ 7 Stages