International Business: Causes, Stages, and HR Management

Posted on Feb 19, 2025 in Business Administration and Management (BAM)

Causes of Internationalization

  • Increased sales: Access to a larger number of customers and increased purchasing power.
  • Acquisition of resources: Obtaining products, services, capital, and technology.
  • Diversification of sales and supplies: Prevents and reduces fluctuations and changes in price.
  • Minimizing competitive risk: Reduces the competitive advantage of competitors.

Why are International Businesses Proliferating?

  • Rapid growth and expansion of technology (fax, internet, e-mail, transport, international communications).
  • Liberalization of government policies on transboundary movement (commercial and resources).
  • Integration of institutions necessary to support and facilitate international commerce (banking, insurance).
  • Increased global competition, taking advantage of differences in cost and experience.

Stages of Internationalization

  1. Domestic Activities: The market for the firm is purely domestic.
  2. Export Operations: The company extends its market to include other countries but maintains production facilities within its national borders.
  3. Subsidiaries: The company physically moves some operations to another country.
  4. Multinational Operations: The company becomes a truly multinational corporation (MNC) with production and assembly facilities in various countries and regions. Often, there is some decentralization of decisions, but many personnel decisions are still made at the company headquarters.
  5. Transnational Operations: These are transnational corporations, and very little remains unique to the country of origin. Activities are decentralized, and each business unit is free to make its own personnel decisions; the headquarters exercises little control.

Guidelines for the Study of International Human Resource Development (IHRD)

Comparative Vision

  • Basic unit of analysis: national labor markets.
  • Examines situational factors as determinants of HRD:
    • Legislation
    • Role of HRD in the organization
    • Intervention-level (state/union)
    • HR Practices in different cultural settings

Multi-Vision

HR issues and challenges arising from the internationalization of the company.

Subsidiary Overview

Analysis of the transfer and adaptation of Human Resource Practices (HRP) to the environmental conditions of the various subsidiaries.

Central Perspective

Expatriate Management Practices Transfer.

Characteristics of a Successful International Company

  • Efficiency: Better use of resources.
  • Research: Greater dedication of resources to R&D.
  • Adaptation to the environment: Flexibility and rapid adaptation to changing environments.
  • Global vision: Gaining competitive advantage by coordinating several markets.

Typology of International Business Management

  • Ethnocentrism: The direction of subsidiaries and key positions are occupied by people of the country of origin, and practices are like the matrix.
  • Polycentrism: Management responsibility rests with host-country people, and practices conform to local practices.
  • Geocentrism: Positions are occupied by highly qualified professionals, regardless of nationality, with extensive international background and global vision.

International Human Resources Management: The HRD Cycle

  • Job Design
    • Obtain individual satisfaction
    • Promote flexible working
  • Classification and Evaluation
    • Job analysis and description
    • Job evaluation
  • Recruitment
    • Content and Requirements
    • Identifying sources
  • Selection and Socialization
    • Identify skills
    • Development of valid procedures
    • Interview
    • Incorporation
  • Training
    • Identifying key competencies
    • Developing appropriate types and techniques
    • Evaluations
  • Performance Management
    • Identifying critical elements
    • Performance standards development
    • Management: continuous improvement process
  • Compensation
    • System design factors
    • Compensation plans
    • Compensation and Performance