International Business

International Business Management deals with the maintenance and development of a multinational operation across national borders, whose manager has the knowledge and the skills to manage and handle cross-cultural processes, stakeholders and business environments in a right way.

Implications for International HRM

Diversity of various types in a global company suggests that HRM practices have to be tailor-made to suit the local conditions. Such practices can be seen in the context of different HRM functions.

Recruitment and Selection

A global company has the following alternative approaches to recruitment and selection of employees:

  1. Ethnocentric-all key positions, in headquarters as well as subsidiaries, are staffed by parent-country nationals.
  2. Polycentric-key positions in subsidiaries staffed by host-country nationals and those in headquarters staffed by parent-country nationals.
  3. Regiocentric-key positions staffed by host-country nationals within particular geographical regions (such as continent-wise).
  4. Geocentric-key positions in headquarters as well as subsidiaries staffed by people based on merit, irrespective of their nationality.
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Abey Francis

International Human Resource Management (IHRM) – HRM from an International Perspective

International Human Resource Management

International Human Resource Management (IHRM) 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 functions from an international perspective.

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 labor markets, culture, legal systems, economic systems, and the like.

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Abey Francis

The Effects of Globalization on Multinational Corporations

Globalization is the competition in an international market. The growth rate of developing nations and their acquisitions of previously first-world owned corporations indicates that the developed world no longer has the upper hand economic growth in the west has been miniscule in comparison. Success in this new global market requires the ability to accommodate the different needs of diverse consumer groups. Companies can achieve this through product and process innovations and maximize profits. Entrepreneurship is also increasingly recognized and as an alternative course to fortune as opposed to trading rare commodities.

Companies from emergent economies are following the lead of their developed counterparts, issuing stocks and encouraging investment.… Read the rest

Abey Francis

What is CounterTrade?

Countertrade constitutes an estimated 5 to 30 percent of total world trade. Countertrade greatly proliferated in the 1980s. Perhaps, the single most important contributing factor is  Least Developed Countries (LDC’s) decreasing ability to finance their import needs through bank loans.

Countertrade, one of the oldest forms of trade, is a government mandate to pay for goods and services with something other than cash. It is a practice, which requires a seller as a condition of sale, to commit contractually to reciprocate and undertake certain business initiatives that compensate and benefit the buyer. In short, a goods-for-goods deal is countertrade.… Read the rest

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Abey Francis

National Competitive Advantage Theory of International Trade – Porters Diamond Model

It is a fact that Porter (1990) never focused primarily on the factors determining the pattern of trade, yet his theory of national competitive advantage does explain why a particular country is more competitive in a particular industry. If, for example, Italy maintains competitive advantage in the production of ceramic tiles and Switzerland possesses the competitive advantage in watches, it can be interpreted that the former will export ceramic tiles and the latter will export watches and both of them will import goods in which their own industry is not competitive.

Why is this there a difference? Porter explains that there are four factors responsible for such diversity.… Read the rest

Abey Francis

Neo-Factor Proportions Theory

Extending Leontief’s view, some of the economists emphasize on the point that it is not only the abundance (scarcity) of a particular factor, but also the quality of that factor of production that influences the pattern of international trade. The quality is so important in their view that they analyse the trade theory in a three-factor framework instead of two-factor framework taken into account by Heckscher and Ohlin. The third factor manifests in the form of:

  1. Human capital: It is the result of better education and training.Human capital should be treated as a factor input like physical labor and capital. A country with human capital maintains an edge over other countries with regards to the export of commodities produces with the help of improved human capital.
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Abey Francis