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CHAPTER 2: Creating the international organization: Strategy and structure. Learning objectives (chapter 2). Describe the evolution of the multinational enterprise and explain the global organizational structures used by MNEs Describe the choices for entry into international business

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learning objectives chapter 2
Learning objectives (chapter 2)
  • Describe the evolution of the multinational enterprise and explain the global organizational structures used by MNEs
  • Describe the choices for entry into international business
  • Explain the IHR implications of cross-border acquisitions, IJVs, and alliances
  • Describe the record of success and failure of cross-border acquisitions and joint ventures
  • Design a proper due diligence program in cross-border acquisitions and partnerships and explain its importance
  • Describe the HR issues in managing cross-border acquisitions and partnerships
overview chapter 2
Overview chapter 2:
  • Global organizational structure
  • Managing the cross-border acquisition and joint venture/partnership
  • Organizational structure and design
  • IHRM and global organizational design
  • Research on structure and performance of the MNE
  • The global learning organization: The tie that binds
complexities of international business
Complexities of international business
  • Number of countries involved
  • Protection of foreign investments
  • Political uncertainty
  • Competitors
  • Operational differences abroad
global competitive advantage
Global competitive advantage
  • Adapt to local market differences
  • Exploit global economies of scale
  • Exploit economies of global scope
  • Tap into the best locations for activities and resources
  • Maximize knowledge and experience transfer between locations.
evolution of the mne
Evolution of the MNE
  • Stages of internationalization
  • Eight strategies:
    • Internationalization through export
    • International division or global product division
    • Multi-country/multi-domestic strategy
    • Regionalization
    • The global firm
    • The transnational firm
    • The born global firm
    • The globally integrated enterprise
1 export
1. Export
  • Little impact on HR and the organization of the firm
2 international division or global product division
2. International division or global product division
  • International responsibilities of the HR department can expand dramatically and become much more complex
3 multi country multi domestic strategy
3. Multi-country/multi-domestic strategy
  • Coordinate HRM activities and practices of the many subsidiaries
  • International assignees from the home office will be relocated
4 regionalization
4. Regionalization
  • Manage HR from a regional headquarters
5 the global firm
5. The global firm
  • The world is one market
  • Dominant HQs
  • Strong organizational culture
  • Global organizational branding
6 the transnational firm
6. The transnational firm
  • Final stage of globalization (Bartlett & Ghoshal)
  • Balance of global integration, local responsiveness and knowledge sharing
7 the born global firm
7. The born global firm
  • Operate instantly around the globe
  • IT focus
8 the globally integrated enterprise
8. The globally integrated enterprise
  • Integrated approach to deliver value to employees and customers worldwide
  • Talent and expertise within the MNE flow to where it creates most value
choice of method of entry into international business ib
Choice of method of entry into international business (IB)
  • Licensing and sub-contracting
  • Outsourcing
  • Off shoring
  • Wholly owned subsidiary
  • Mergers and acquisitions (M&As)
  • International joint ventures (IJVs)
  • Strategic alliances, partnerships (e.g. research) and consortia
maquiladora
Maquiladora
  • Unique form of international partnership between the U. S. and Mexico
  • Special form of foreign subsidiary with special characteristics favorable to the foreign parents
  • Take advantage of low-cost Mexican labor
managing the cross border acquisition joint venture partnership
Managing the cross-border acquisition & joint venture/partnership
  • Record of success and failure
    • Higher rate of failure than success
  • HR implications and considerations
    • Due diligence
    • Process of integration
    • Process of acculturation
designing the organizational structure of global firms
Designing the organizational structure of global firms
  • Integrates activities
  • Coordinates policies and practices
  • Organizational components
  • Additional factors
coordination mechanisms
Coordination mechanisms
  • Balance common policies with local approaches
  • Reduced size of business units
  • Informal linkages
  • Global networks
empirical shortcomings
Empirical shortcomings
  • Manufacturing industry slant
  • More emphasis placed on strategy issues rather than management and organization issues
  • Failure to capture temporal context
knowledge is power
Knowledge is power
  • Intellectual and social capital
  • Knowledge sharing
  • Facilitate learning on a global basis
  • Utilize full skill sets
key terms
Key terms
  • Export
  • International division or global product division
  • Multi-country and multi-domestic organizations
  • Regionalization
  • The global firm
  • The transnational firm
  • The born-global firm
  • The globally-integrated enterprise
  • Licensing and sub-contracting
  • Outsourcing
  • Off-shoring
  • Wholly-owned subsidiary
  • Global mergers and acquisitions
  • International joint ventures
  • International alliances, partnerships, and consortia
  • Maquiladoras
  • Cross-border/dispersed/virtual teams
  • Informal global networks
  • Global learning organization
  • Global integration
  • Local responsiveness
  • Due diligence