ULUSLARARASI İŞLETME - Deneme Sınavı - 9

Market capitalism, centrally-planned
socialism, centrally-planned capitalism, and
market socialism are the four traditionally
defined economic systems.

A Political environment consists of
governmental institutions, political parties,
pressure groups, and organizations through
which power is exercised over various
organizations and people in a society

Low cultural distance means
perceptions of the home, and the host countries
are similar. For example, Romania and Turkey
might be different in many aspects, but marketers
might perceive them as two very similar countries.

Market potential is a measure that combines
the size of the market and the competitive
advantage used to compare markets.

Product is defined as anything that can be
offered to a market for attention, acquisition,
use or consumption that might satisfy a want
or need.

The strategic goals of international businesses are efficiency, flexibility, and learning. Leadership is not necessarily a strategic goal of international businesses.

Although strategies of international businesses and strategies of domestic businesses might be very similar, variables that must be taken into consideration in the strategy formulation process are much more
complicated for international businesses. The strategies of international businesses focus on more than one country, and they are implemented in more than one country. International business managers formulate strategies to perform activities that create value at a global scale,
operate in important markets, and establish value-adding international partnerships. On the other hand, both international and domestic businesses must formulate strategies to use their organizational resources effectively and efficiently,

Flexibility refers to an organization’s ability to respond to uncertainties by adjusting its objectives with the support of its superior knowledge and capabilities. While uncertainties cause threats for many businesses, for those who have a high level of strategic flexibility, such uncertainties
could be turned into opportunities. On the other hand, efficiency refers to how an organization utilizes its resources while achieving its goals. These resources include human resources, monetary resources, and capital resources, that should not be wasted or kept idle. Learning refers to product and process development skills that are entirely new to the current experiences of the firm as well as to the knowledge and skills that are familiar with the organizations’ current experiences..

Although there are different approaches, this chapter in our textbook focuses on two main strategy preferences, namely product-market
strategies and competitive strategies.Competitive strategies in the strategy literature is the one developed by Michael Porter. According to Porter, strategic decisions made by the managers have essential effects on the competitive position of the business. Such competitive advantages were often expressed in terms of the additional added value which the more successful firms in an industry were able to generate compared to its market rivals in that industry. Differentiation strategy is one of the these three generic strategies for businesses, each of which aims to help organizations achieve a competitive advantage. Market penetration, market development, product development, and diversification strategies are product-market strategies introduced by Igor Ansoff in 1957.

The notion of strategy has evolved from a more internal perspective into a more complicated perspective that takes products, markets, and customers into consideration. In the traditional view, strategy development was considered to be a top management activity. However, the current view suggests that all levels of the organization should have a role in the strategy development process.

At the initial stage, the organization would be most likely to build a department to handle international activities. There are several options for the business at this stage such as establishing an import / export department, a foreign trade department, an international sales department, or  an international division. However, as the scope of global activities expands further, businesses seek further and more advanced alternatives and solutions for organizational design decisions.  From this standpoint, there are several organizational design options for international businesses: Global product structure, global area structure, global functional structure, and matrix structure are commonly used by international businesses.

All information, authority, and decision making related to foreign efforts are channeled to international division, so there is one central clearing point for international activities.

Organizations with diverse products and services prefer product structure. Products and product groups are central to this organizational structure. All international operations are also organized around these products and product groups. Organizations that adopted a global product structure may also have regional experts. Thus, they can determine the region-specific needs more accurately and respond to these needs faster. Feedback obtained from different countries would
be channeled into the process of determining better product strategies.

According to global functional structure, businesses are organized
around the main functions such as marketing, finance, production, and R&D. So, this organizational structure supports and enhances specialization within the international organization.

A matrix structure is a hybrid organizational design option that blends two organizational responsibilities, such as functional structure and product structure or regional structure and product structure. If the environmental conditions call for meeting regional needs, a combination of regional and product structures for the matrix structure would be more likely. Because, market and customer needs are better understood
since global product structure focuses on products and customer groups. Similarly, businesses can quickly respond to diversified  regional needs and expectations in global area structure.

IHRM is usually more complicated than  domestic human resources management. In order to understand the complexity of IHRM, we need to understand its three dimensions. The dimensions of IHRM are activity dimension, regional dimension, and employee-group dimension. IHRM consists of different activities (i.e., recruitment and selection, training and development, performance appraisal and compensation, labor relations, leadership) which form the first dimension. The second dimension is related to the regional aspect which includes whether HRM is carried out in the home country, host-country, or other countries; and the third dimension is concerned with different employee groups, i.e., whether they are homecountry nationals, host-country nationals, or from other countries (third-country nationals) (Morgan, 1986;Morschett, Schramm-Klein, and Zentes, 2015)

External influences of the government and national culture:  Employees must be hired, evaluated, and compensated in ways consistent with the country and regional customs and regulations. Laws govern work hours, the firm’s ability to dismiss or lay off employees, and severance compensation. These regional customs and regulations are frequent challenges in large MNEs. 

The mix of foreigners versus locals: Foreign subsidiaries are frequently staffed from the home country, the host country, and/or
third countries. The mix of staff depends on several factors, including the international experience of the firm, the cost of living in a foreign location, and the availability of qualified local staff. As a result, the mix of foreigners and locals complicate IHRM.

The need for an international compensation policy: Proper
compensation packages become an issue, especially when there are higher costs of living in the host countries. Compensation packages may need to include allowances for housing, education, and other facilities
that are not readily available in the host country. Establishing a fair and comparable compensation scale, regardless of nationality, is a frequent challenge in large MNEs.

The need for defining the positioning of the product: Defining the positioning of the product is not within the scope of IHRM function. It is an issue within the scope of the marketing function.

An MNE is said to be following an ethnocentric approach when strategic decisions are made at the headquarters; and critical positions in both
the domestic and foreign operations of an MNE are filled by personnel from the parent country (PCNs) with no or minimal autonomy delegated
to the foreign subsidiaries. (Patel and Budhwar, 2017: 120).

Aiming for an optimal allocation and synergy effects, the geocentric approach emphasizes interdependencies and strives for a collaborative
approach between the headquarters and subsidiaries as well as among subsidiaries. With a geocentric staffing policy, the HRM strategy tends
to be consistent across all subsidiaries, utilizing the best people for all the critical jobs throughout the organization, whatever their nationality is or whatever the geographical location of the post to be filled is. In other words, the local operation may choose PCNs, HCNs, or TCNs depending on the operation’s specific needs according to geocentric approach.

Many international employees experience what is called the reverse culture shock upon returning home. One reason for this to happen is that the  expatriate and his/her family assume that things have stayed the same at home, while in fact, friends may have changed, moved; or new managers may have been hired along with new employees. Thus, a training and development called repatriation is undertaken to  help expatriate managers make the transition back to their home country.