International Human Resource Management

INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Learning Objectives

By the end of this, you should be able to:

  i.            To understand the various factors affecting International Human Resource Management

ii.            To understand what are the various Staffing Policy Determinant

iii.            To understand the concept of International Negotiation

iv.            To analyze the stages involved in International Negotiation

v.            To clearly define and understand the prerequisites of an effective negotiation process

vi.            To clearly understand what are th4 various cultural problems involved in International Negotiation

vii.            To understand the determinants of bargaining power

viii.            To understand the concepts of IPR’s and Insurance cover.

INTRODUCTION

International human resource management (HRM) involves ascertaining the corporate strategy of the company and assessing the corresponding human resource needs; determining the recruitment, staffing and organizational strategy; recruiting, inducting, training and developing and motivating the personnel; putting in  place the performance appraisal and compensation plans and industrial relations strategy and the effective  management of all these. “The strategic role of HRM is complex enough in a purely domestic firm, but it is more complex in an international business, where staffing, management development, performance evaluation, and compensation activities are complicated by profound differences between countries in labour markets, culture, legal systems, economic systems, and the like.” It is not enough that the people recruited fit the skill requirement, but it is equally important that they fit in to the organizational culture and the demand of the diverse environments in which the organization functions. The strategic HRM components and requirements will depend on, inter alia, the organisational modes described in the subsection Organisational Modes in the chapter on Multinational Corporations.

FACTORS AFFECTING INTERNATIONAL HRM

The following are some of the important factors, which make international HRM complex and challenging: 

Differences in Labour Market Characteristics

The skill levels, the demand and supply conditions and the behaviour characteristics of labour vary widely between countries. While some countries experience human resource shortage in certain sectors, many countries have abundance. In the past, developing countries were regarded, generally, as pools of unskilled labour. Today, however, many developing countries have abundance of skilled and scientific manpower as well as unskilled and semiskilled labour. This changing trend is increasing significant shift of location of business activities. Hard disk drive manufacturers are reported to be shifting their production base from Singapore to cheaper locations like Malaysia, Thailand and China. While in the past unskilled and semiskilled labour intensive activities tended to be located in the developing countries, today sophisticated activities also find favour with developing countries. The changing quality attributes of human resources in the developing countries and wage differentials are causing a locational shift in business activities, resulting in new trends in the global supply chain management. India is reported to be emerging as a global R&D hub. India and several other developing countries are large sources of IT personnel. In short, the labour changing labour market characteristics have been causing global restructuring of business processes and industries. And this causes a great challenge for strategic HRM

Cultural Differences

Cultural differences cause a great challenge to HRM. The behavioural attitude of workers, the social environment, values, beliefs, outlooks etc., are important factors, which affect industrial relations, loyalty, productivity etc. There are also significant differences in aspects related to labour mobility. Cultural factors are very relevant in inter personal behaviour also. In some countries it is common to address the boss Mr. so and so but in countries like India addressing the boss by name would not be welcome. In countries like India people attach great value to designations and hierarchical levels. This makes delivering and organisational restructuring difficult.

Differences in Regulatory Environment

A firm operating in different countries is confronted with different environments with respect to government policies and regulations regarding labour.

Altitude towards Employment

The attitude of employers and employees towards employment of people show great variations is different nations. In some countries hire and fire is the common thing whereas in a number of countries the ideal norm is even lifetime employment. In countries like India, workers generally felt that while they, have the right to change organisations, as they preferred, they had a right to lifetime employment in the organisation they were employed in. In such situations it is very difficult to get rid of inefficient or surplus manpower. The situation, however, is hanging in many countries, including India.

Difference in Conditions of Employment

Besides the tenancy of employment, there are several conditions of employment the differences of which cause significant challenge to international HRM. The system of rewards, promotion, incentives and motivation, system of labour welfare and social security etc., vary significantly between countries.

Staffing Policy

With reference to the choice of the nationality of the people recruited for key management positions, there are three types of staffing policies in international business, viz., the ethnocentric approach, the polycentric approach and the geocentric approach. The salient features of these business orientations have been described under the sub heading International Orientations in chapter 1.

Ethnocentric Approach

Under the ethnocentric staffing policy, all key management positions in the company are filled by parent home) country nationals. This approach is regarded appropriate where the organizational mode of the company is international (see the subsection Organizational Modes in the chapter on Multinational Corporations for explanation of the terms international, multinational, global and transnational). This practice was very widespread among American and European corporations (such as Procter & Gamble and Philips) at one time. In many Japanese and South Korean firms today, such as Toyota, Matsushita, and Samsung, key positions in international operations are still often held by home-country nationals.16 According to the Japanese Overseas Enterprise Association, in 1996 only 29 per cent of foreign subsidiaries of Japanese companies had presidents who were not Japanese. In contrast, 66 per cent of the Japanese subsidiaries of foreign companies had Japanese presidents?

Polycentric Approach

A company with a polycentric staffing policy recruits host country nationals to manage subsidiaries while parent country nationals occupy the key positions at the corporate headquarters. This approach is regarded appropriate for multinational corporations.

Geocentric Approach

Geocentric staffing policy connotes seeking the best people from anywhere in the world for managing the organisation. This strategy is regarded appropriate for global and transnational corporation

Staffing Policy Determinants

The important factors influencing the staffing policy are the following.

1. The Cultural Dimension: It should be pointed out that given the need to co-ordinate activities world-wide, and therefore the necessary ability of foreign subsidiary top executives to communicate directly with corporate headquarters, MNCs from some countries (e.g., Japan, South Korea, Taiwan) may need to depend more heavily upon home-country nationals because relatively few foreigners are fluent in the mother tongue of the home country. In contrast, language is less likely to prove a major restricting influence on the staffing policies of MNCs where English is the mother tongue. Japanese MNCs have been accused of adopting very ethnocentric staffing policies, and limiting job opportunities for non-Japanese nationals.

2. Subsidiary Characteristics: When the MNC establishes a new subsidiary or plant, it is likely to ensure that someone already very familiar with corporate culture heads the operation. Thus, initially the staffing policy is likely to be ethnocentric but become less so as host-country nationals are ‘socialized’ into corporate culture.

3. Parent Company Characteristics: As indicated under the sub-section Staffing Policy, the strategic predisposition of the MNC, in terms of its EPRG (ethnocentric, the polycentric, regiocentric, geocentric) profile, will influence staffing policy.

4. Host Country Characteristics: Host country characteristics like the social environment, government policies, host country human resource characteristics; government policies etc. also may influence the staffing policy.

5. Costs: The cost is also an important consideration in formulating the staffing policy when there are significant variations between nations the salary reveals.

INTERNATIONAL NEGOTIATION

In a number of cases the foreign market entry and strategy implementation involve negotiation with the government of the foreign country and / or foreign firm. International business plans “are always often implemented through, face-to-face negotiations with business partners and customers from foreign countries. The sales of goods and services, the management of distribution channels, the contracting for marketing research and advertising services, licensing and franchise agreements and strategic alliances all require managers from different cultures to sit and talk with one another to exchange ideas and express needs and preferences. Executives must also negotiate with representatives of foreign governments who might approve a variety of their marketing actions’ or in fact be the actual ultimate customer for goods’ and services. In many countries governmental officials may also be joint venture partners, and in some cases vendors. Successful negotiation demands threadbare analysis and evaluation of the commercial and their impressive presentation and proper understanding and appreciation of the cultural nuances of the negotiating party and skilfully navigating the negotiation process accordingly. It is rightly said that “negotiation is both an art and a science. The science of it requires analyzing the relative bargaining strengths of each party and the different strategic options available to each party and assessing how the other party might respond to various bargaining ploys. The art of negotiation incorporate interpersonal skills, the ability to convince and be convinced, the ability to employ a basketful of bargaining ploys, and the wisdom to know when and how to use them. In the context of international business, the art of negotiation also includes understanding the influence of national norms, value systems, and culture on the approach and likely negotiating tactics of the other party as well as sensitivity to such factors in shaping a firm’s approach to negotiations with a foreign government

4 Cs of Negotiation

The negotiation process has been characterized as occurring within the context of four Cs They are:

Common interests

Conflicting interests

Compromise

Criteria 

Quite obviously, only when there are some perceived common interests that the question of negotiating a project arises. If both parties conceive substantial benefits from the proposal both the parties would be keenly interested to negotiate. If the mutual benefits are very unbalanced, the extent of interest of the parties would also vary. There are a number of possible areas of conflict between the interests of both the parties. These include the quantum of investment, proportion of equity participation by the two parties, method of financing choice of technology, sourcing, local content/value addition, and location of the project, terms and conditions of sales, management and so on. When there is conflict it will have to be resolved by a trade off or compromise. The trade off will be influenced by factors such as the relative importance of the project to the negotiating parties, the alternatives available to both the parties, their relative bargaining power etc. There should also be proper criteria laid down for implementation and evaluation.

Stages of Negotiation

A Negotiation normally involves the following five stages:

1. Preparation: This stage involves background research, collection and analysis of data and preparation of the plan and strategy for presentation and negotiation. Understanding the cultural nuances of the negotiating party and the dynamics and other characteristics of the negotiating team or individual is also an essential part of this stage. It is observed that the best negotiators are the Japanese because they will spend days trying to get to know their opponents. The worst are Americans because they think everything works in foreign countries as it does in the USA.

2. Non-task Sounding: This refers to the time at the beginning of the negotiation meeting devoted to introduction and getting acquainted. In other words it is the time spent on interpersonal relationship building by talking subjects other than the task or business, such as personal and family matters and general subjects of common interests. The nature of non- task sounding may be influenced by cultural differences, For example, the non task time is normally short in respect of the Americans who would like to get into the business straight away quickly, but people of several cultures would like to have long informal time. Non-task sounding is very useful. It helps one to understand the characteristics of the persons with whom to negotiate. “Learning about a client’s background and interests also provides important clues about appropriate communication styles. There is a definite purpose to these preliminary non-task discussions. Although most people are often unaware of it, such time almost always is used to size up one’s clients. Depending on the results of this process, proposals and arguments are formed using different jargon and analogies. Or it may be decided not to discuss business at all if clients are distracted by other personal matters or, if the other person seems untrustworthy.”

3. Task-Related Information Exchange: Task related information exchange starts after establishing a good personal relationship. This stage involves exchanging information in an effort to provide the background, establish common facts, and set the contexts of negotiations. This stage is expected to provide both the parties by each other with all the information required in sufficient detail and clearly. However, cultural differences often create problems. All the required information may not be divulged, deliberately or otherwise, the language and expression may create problems of understanding, sometimes even feeding misunderstanding.

4. Persuasion: This stage is characterized by attempts to make the other party accept the counterparts desired set of exchanges. Both the parties normally try this with each other  “This step of negotiations is considered by many to be the most important. No side wants to give away more than it has to, but each knows that without giving some concessions, it is unlikely to reach a final agreement. The success of the persuasion step often depends on: (1) how well the parties understand each other’s position; (2) the ability of each to identify areas of similarity and differences; (3) the ability to create new options; and (4) the willingness to work toward a solution that allows all parties to walk away feeling they have achieved their objectives.” There may not be a clear separation between the third and forth stages as the task-related information exchange stage may be characterized by each side defining and refining the needs and preferences. Persuasion requires a lot of tact based on a clear understanding of the organisational, cultural and personal characteristics of the negotiators. 5. Agreement: The negotiation is finally concluded if a mutually acceptable exchange is agreed upon. As indicated in the four Cs of negotiation, conflicts of interests would be resolved by tradeoffs or compromise leading to the agreement.

Prerequisites for Effective Negotiation

Cateora and Graham suggest four steps which can lead to more efficient and effective international business negotiations. They are:

1. Selection of the appropriate negotiation team.

2. Management of preliminaries, including training, preparations, and manipulation of negotiation settings.

3. Management of the process of negotiations, that is, what happens at the negotiation table?

4. Appropriate follow-up procedures and practices.

Cultural Problems in International Negotiations

Important problems in international negotiations caused by cultural differences include those pertaining to the following:

1. Language and non-verbal behaviours

2. Values

3. Thinking and decision making processes

Some problems may arise when negotiators are not able to properly communicate in a common language. Even when the same language is used, problems may arise due to different meanings for the same word in different cultures or because of different connotations when used in different contexts. Cross-cultural differences in non-verbal communication are sometimes very perplexing. A particular gesture or symbol may have quite different connotations in different cultures. For example, the symbol Thumps up signals approval in the United States, Britain and Russia, but regarded highly offensive in Iran and is considered a rude gesture in Australia. There are also significant cross-cultural differences in values. For” example, peoples differ in their adherence to time, promises etc. Similarly, business ethics vary substantially. Culture can also have a significant impact on by whom and how decisions are made. Research has identified at least three fundamental aspects of decision making that differ significantly by culture.28 Decision by consensus is characteristics of collectivist-oriented cultures such as Japanese. Secondly, how decisions are made also varies by culture. One of the key factors that influence decisions is the role of information in the decision making process. In the United States and Sweden, managers emphasize rationality and utilise quantitative information. By contrast, French, Italian, and Argentinean managers emphasise past experience and qualitative information over quantitative data in making decisions. These examples further illustrate that the type of information that managers pay attention to and utilize in decision making can vary. Thirdly, culture also seems to plays significant role in the extent to which managers are comfortable in making decisions in uncertain environments. For example, managers from the United States, Germany, and Scandinavia seem to have the highest tolerance, while managers from Italy, Iberia, and Japan seem to have much Lower tolerance for making decisions in circumstances of uncertainty. These differences in tolerance can have a variety of implications. For example, if managers from Germany and Iberia are trying to an agreement concerning a joint venture in the context of significant uncertainty, they may clash and differ in their willingness to make decisions.

Governmental Versus Company Strength in Negotiations

In many instances government is a party in international business regulations. There are several governmental factors which are difficult to change and therefore will have to be taken as given. However, the relative bargaining powers can influence the terms. There are two viewpoints of the governmental authority, viz., the hierarchical view and the bargaining view.

Hierarchical view In a hierarchical view of governmental authority, companies accept international business regulations as “givens,” in which case they comply with, circumvent, or avoid operating because of the regulations. Companies will comply when the regulations don’t unduly constrain their desired mode of operations, when benefits are sufficiently attractive in spite of regulations, and when they cannot practically alter the regulations to their benefit. Companies will circumvent regulations they find unacceptable through Loopholes, legal or illegal. Avoidance is simply the reverse of compliance as a company decides not to operate in a given locale because of its regulations

Bargaining view

The bargaining school theory holds that the negotiated terms for a foreign investor’s operations depend on  How much the investor and host country need each other’s assets.3D If either a company or a country has assets that the other strongly desires and if there are few (or no) alternatives for acquiring them, negotiated concessions may be very one-sided. The bargaining relationship between companies and governments depends very much on whether the parties see agreements as zero-sum (one party’s gain equals the other party’s loss) or positive-sum (both parties have net benefits) gains. In the former, relationships may conflict because the parties think they lose by making any concessions. In the latter, the relationship may be seen as a partnership of cooperation and interdependence. Determinants of Bargaining Power Negotiation are defined as “the process of bargaining with one or more parties to arrive at a solution that is acceptable to all.” The relative bargaining strength would, therefore, influence the terms and conditions of the agreement. The important factors which determine the relative bargaining power are the following:

1. Relative Importance of the Project: If the project negotiated is very important for one party and not very important for the other, the relative bargaining power of the former would be weak. It may be noted that the importance may depend not only on the intrinsic value of the project negotiated, but also on other factors such as the strategic importance of it. For example, a project that gives an entry to a country may have a lot of strategic importance.

2. Alternatives: The number of alternatives available to each party is another important factor that determines the relative bargaining power. If one party has several options (for example, several other parties are keenly interested in the project under negotiation) and the other party does not have this advantage, the former would have a stronger bargaining power.

3. Urgency: The time available for taking up and executing the project is another influencing factor. If the time left for this is very short, this is likely to weaken the bargaining power of the project sponsor/owner. Longer time would facilitate exploring more alternatives and better evaluations.

4. Strengths: The strengths, including reputation, is another factor that influences the bargaining power. For example, a company, which is very resourceful and reputed, would have greater bargaining power than one, which is weak on these.

Company Strengths include factors such as financial soundness, technological capabilities, previous experiences, particularly in the project area considered, track records, business diversity (for example a host country government may prefer company in diverse businesses, other things being equal, because of the possibility of several businesses getting benefited in different ways), marketing expertise, ability to export the products from foreign investment and of others, etc. The Country Bargaining Power depends on factors such apolitical stability, level of economic development and size of the national market, economic policies and business friendliness of the nation, the ability to act as a regional or global hub, etc.

International Asset Protection

Company’s investments and other assets in foreign countries may face the risk of expropriation. ‘Governments are therefore concerned about the protection of the interests of their national companies in the foreign countries. The potential risk was more before the worldwide liberalization set in the 1980s.Important protective measures n this respect include the following:

Coercion and Pressure

Until the Second World War, home countries used military force and coercion to ensure that host governments could give foreign investors prompt, adequate, and effective compensation in cases of expropriation, under a concept known as the international standard of fair dealing. It may be noted that the home countries of the companies involved were developed ones and the host countries were developing nations and these host countries had little to say about this standard. In a two conference held at The Hague in 1930 and at Montevideo in1933, participating developing countries got established a treaty stating that “foreigners may not claim rights other or more extensive than nationals.”Although military action or coercion of the old style are not much appreciated today, developed countries still use pressure of one or other sort to make developing countries to fall in line, such as trade pressures, aid, and influence with international lending agencies. Further, as the dependency theory holds, developing economies have practically no power as host countries when dealing with MNEs. Their assets are of little importance in bargaining. Again, MNEs can enlist the loyalties of their home governments’ local elites to maintain their power.

Bilateral and Multilateral Agreements

There are a number of Bilateral and Multilateral Agreements, Conventions, Treaties etc. between nations which seek to protect international assets and rights and to settle disputes. There has in fact been a spurt in the investment treaties (BITs).The number of BITs quintupled during the 1990s reaching a total of 1,941 by end-2000 and shooting up to 2,099 by the end of 2001. In recent years, the developing countries constituted the largest number involved in the new BITs. They have also intensified the practice of concluding BIT among themselves (66 in 2001, compared with 36 in 2000). The least developed countries (LDCs) have also shown a keen interest in entering into BITs. A total of 23 LDCs were involved in the conclusion of 51 BITs in 2001. Of these, 13 were signed among the LDCs themselves, 24 with the rest of the developing world, 12 with developed countries and two with economies in transition. At the regional and interregional levels, the number of investment-related instruments continues to grow, especially in the form of free trade and investment agreements. The number of bilateral treaties for the avoidance of double taxation (DTTs) also increased, reaching a total of 2,118 at the end of 2000 and 2,185 by the end of 2001.There are several international arrangements for settlement of disputes. The WTO now is an important international organisation seeking to protect intellectual property rights and settle international trade disputes.

Insurance Cover

There are public and private insurers who provide insurance covers against political risks associated with exports and foreign investments. For example, the public sector Export Credit Guarantee Corporation of India (ECGC) provides such insurance covers. Coverage in respect of international investments is also available through World Bank’s Multilateral Investment Guarantee Agency (MIGA).

Protection of IPRs

Protection of Intellectual Properties (see the chapter on WTO for a description of Intellectual Properties) has been receiving considerable international attention. The World Intellectual Property Organization (WIPO) is an international organization dedicated to helping to ensure that the rights of creators and owners of intellectual property are protected worldwide and that inventors and authors are, thus, recognized and rewarded for their ingenuity. The number of member States belonging to WIPO in 2002 was 179, which is a reflection of the crucial importance and relevance attached to the work of the Organisation. The roots of the World Intellectual Property Organization go back to Paris Convention of 1883, which gave birth to the first major international treaty designed to help the people of one country obtain protection in other countries for their intellectual creations in the form of industrial property rights, known as: inventions (patents); trademarks; industrial designs.

The Paris Convention entered into force in 1884 with 14 member States, which set up an International Bureau to carry out administrative tasks, such as organizing meetings of the member States. In1886, copyright entered the international arena with the Berne Convention for the Protection of Literary and Artistic Works.

The aim of this Convention was to help nationals of its member States obtain international protection of their right to control, and receive payment for, the use of their creative works such as: novels, short stories, poems, plays; songs, operas, musicals, sonatas; and drawings, paintings, sculptures, architectural works.

set up an International Bureau to carry out administrative tasks.

In 1893, these two small bureaus united to form an international organization called the United International Bureau for the Protection of Intellectual Property (best known by its French acronym BIRP!). Based in Berne, Switzerland, this small organization was the predecessor of the World Intellectual Property Organization of today. As the importance of intellectual property grew, the structure and form of the Organization changed as well. In 1960, BIRPI moved from Berne to Geneva to be closer to the United Nations and other international organizations in that city. A decade later, following the entry into force of the Convention Establishing the World Intellectual Property Organisation, (BIRPI) became WIPO, undergoing structural and administrative reforms and acquiring a secretariat answerable to the member States. In 1974, WIPO became a specialized agency of the United Nations system of organizations, with a mandate to administer intellectual property matters recognized by the member States of the UN.WIPO expanded its role and further demonstrated the importance of intellectual property rights in the management of globalize trade in 1996 by entering into a cooperation agreement with the World Trade Organisation (WTO).In 1898, BIRPI administered only four international treaties. Today its successor, WIPO, administers 23 treaties (two of those jointly with other international organisations) and carries out a rich and varied program of work, through its member

States and secretariat, that seeks to:

·         Harmonize national intellectual property legislation and procedures

·         Provide services for international applications for industrial property rights

·         Exchange intellectual property information

·         Provide legal and technical assistance to developing and other countries

·         Facilitate the resolution of private intellectual property disputes

·         Marshal information technology as a tool for storing, accessing, and using valuable intellectual property information.

The most successful and widely used of these treaties is the Patent used of these treaties is the patent cooperation treaty (PCT), which implements the concept of a single international patent application which has legal effect in the countries which are bound by the treaty and which are designated by the applicant. Once such an application is filed, an applicant receives valuable information about the potential patent ability of his invention (through the international search report and the optional international preliminary examinations report) and has more time than under the traditional patent system to decide in which of the designated countries to continue with the application. Thus, the PCT system consolidates and streamlines patenting procedures and reduces costs, providing applicants with a solid basis for important decision-making.

As pointed out in the chapter on WTO intellectual property is an important concern of the WTO.

Summary

Operations ‘management is becoming increasingly global in its scope. Operations management involves a number of strategic decisions such as make or buy?; if buy, from where to buy?; to go for partnering or not?; in which country and place to locate the manufacturing or other facilities; logistical factors and so on. The business system involves the integration and management of diverse activities. On the one extreme, a firm may undertake all of these different activities, carrying on the whole production process and doing all the other operations encompassing the business system. On the other extreme, a firm can outsource most of these. Operations management, in fact, is, to a very large extent, supply chain management. “A company’s supply chain encompasses the coordination of materials, information, and funds from the initial raw material supplier to the ultimate.” “The ultimate objective is to deliver products to market with variety, responsiveness, timeliness and efficiency. Corporate strategy must include organizing, coordinating and executing the process of product flow as a competitive necessity and as a source of potential competitive advantage. The strategic requirements of international business determine the extent, characteristics and strategic direction of the supply chain.”One of the critical considerations in the supply chain management is make or buy. Globalization, having increased the scope of sourcing, has made the make or buy question more relevant. The make or buy decision is influenced by a number of factors such as organizational, technological, cost, supply etc. Buy strategy is greatly benefited by the opportunities for global sourcing. Buyer-supplier relationship known as partnering / relationship marketing which is “is a process where a customer firm and supplier firm form strong and extensive social, economic, service, and technical ties over time, with the intent of lowering total costs and/or increasing value, thereby achieving mutual benefit,” is emerging as a very important strategic element in industrial marketing. In other words, the conventional win-lose approach is giving way to a dynamic and enduring win-win mind set.

Logistics is a very important component of operations management. Logistics encompasses the total movement concept, covering the entire range of operations concerned with the movement of materials and products to, through, and out of the firm to the consumer. It includes a variety of activities such as inventory management, warehousing and storage, transportation’s, materials handling, order processing, distribution, communications, packaging, salvage and scrap disposal, returned goods handling, customer service etc. Location of the manufacturing facilities is one of the most important of the global operations management decisions. The success of a global manufacturing strategy depends on four key factors: compatibility, configuration, coordination, and control. Compatibility in this context is the degree of consistency between the foreign investment decision and the company’s completive strategy. Manufacturing Configuration refers to the strategy of centralization or dispersion of manufacturing facilities. There are broadly three broad categories of manufacturing configuration, viz., centralized facility, regional facilities, and multi-domestic facilities. The choice of the configuration strategy is influenced by several factors such as scale economies, nature of technology and skill requirements, firm strategies such as internalization or externalization, international orientation and the organizational mode of the company, foreign market prospects and other characteristics etc.

Coordination and Control, which are two sides of the same coin, refer to the integration, monitoring and taking of required actions to ensure that the implementation of the plans progress as envisaged. The location of production facilities of a global corporation may be influenced by a number of factors such as the nature of organization, cost, exchange rate variations, availability and cost of inputs (including land and infrastructure), logistical factors, product life cycle and pattern of demand, nature of product, government policies and regulations, social and political factors etc. The selection of the foreign market(s) to do business is influenced by a number of firm- related and the market-related factors. Firm related factors include the international marketing objective, resources, mission and international orientation of the firm. The’ market related factors may be broadly grouped into general factors and specific factors. General factors are factors general to the market as a whole (macro environment)whereas the specific factors are factors which are specific to the industry concerned ( mostly micro environment).One of the challenging areas of international human management is the international human resource management (HRM). International HRM involves ascertaining the corporate strategy of the company and assessing the corresponding human resource needs; determining the recruitment, staffing and organizational strategy; recruiting, inducting, training & developing and motivating the personnel; putting in place the performance appraisal and compensation plans and industrial relations strategy and the effective management of all these.

It is not enough that the people recruited fit the skill requirement, but it is equally important that they fit in to the organizational culture and the demand of the diverse environments in which the organization functions. There are several important factors which make international HRM complex and challenging. The skill levels, the demand and supply conditions and the behaviour characteristics of labour vary widely between countries. Cultural differences cause a great challenge to HRM. The behavioural attitude of workers, the social environment, values, beliefs, outlooks etc., are important factors, which affect industrial relations, loyalty, productivity etc. A firm operating in different countries is confronted with different environments with respect to government policies and regulations regarding labour. The attitude of employers and employees to towards employment of people show great variations among different nations. Besides the tenancy of employment, there are several conditions of employment the differences of which cause significant challenge to international HRM. The system of rewards, promotion, incentives and motivation, system labour welfare and social security etc., vary significantly between countries With reference to the choice of the rationality or the people recruited for key management positions, there are three types of staffing policies in international business, viz., the ethnocentric approach, the polycentric approach and the geocentric approach. Under the ethnocentric staffing policy, all key management positions in the company are filled by parent (home) country nationals. A company with a polycentric staffing policy recruits host country nationals to manage subsidiaries while parent country nationals occupy the key positions at the corporate headquarters. Geocentric staffing policy connotes seeking the best people from anywhere in the world for managing the organization. The staffing policy is influenced by several factors such as cultural factors, subsidiary characteristics, parent company characteristics, host country characteristics and cost. In a number of cases the foreign market entry and strategy implementation involve negotiation with the government of the foreign country and / or foreign firm. Successful negotiation demands threadbare analysis and evaluation of the commercial and their impressive presentation and proper understanding and appreciation of the cultural nuances of the negotiating party and skilfully navigating the negotiation process accordingly. The negotiation process has been characterized as occurring within the context of four Cs, viz., common interests, conflicting interests, compromise and criteria. A negotiation normally involves five stages, namely, preparation, on-task sounding, task related information exchange, persuasion and agreement. Important problems in international negotiations caused by cultural differences include those pertaining to language and non-verbal behaviours, values, and thinking and decision making processes.

In many instances government is a party in international business negotiations. There are several- governmental factors which are difficult to change and therefore will have to be taken as given. However, the relative bargaining powers can influence the terms. There are two viewpoints of the governmental authority, vs. the hierarchical view and the bargaining view.

In a hierarchical view of governmental authority, companies accept international business regulations as “givens,” in which case they comply with, circumvent, or avoid operating because of the regulations. The bargaining school theory holds that the negotiated terms for a foreign investor’s operations depend on how much the investor and host country need each other’s assets. The important factors which determine the relative bargaining power are the relative importance of the project to each party, the number of alternatives available to each party, time available for taking up and executing the project, and the relative strengths. Company strengths include factors such as financial soundness, technological capabilities, previous experiences, particularly in the project area considered, track records, business diversity (for example a host country government may prefer company in diverse businesses, other things being equal, because of the possibility of several businesses getting benefited in different ways), marketing expertise, ability to export the products from foreign investment and of others, etc. The bargaining power of a country depends on factors such as political stability, level of economic development and size of the national market, economic policies and business friendliness of the nation, the ability to act as a regional or global hub, etc. A company’s investments and other assets in foreign countries may face the risk of expropriation. Governments are therefore concerned about the protection of the interests of their national companies in the foreign countries. Important protective measures in this respect include the use of military force, coercion and pressure tactics; bilateral and multilateral agreements, conventions, treaties etc. between nations which seek to protect international assets and rights and to settle disputes.