IHRM Case Study 4.1: Mercator Group 17/11/2018 17/11/2018 IHRM Case Study 4.1: Mercator Group Maximilian Pulkowski Emily Coates Jia Du

Agenda Introduce Company & Case Question 1 Question 2 Question 3 17/11/2018 Agenda Introduce Company & Case Question 1 Question 2 Question 3 Conclusion Bibliography 17/11/2018

Introduction of Company & Case 17/11/2018 Introduction of Company & Case • Mercator Group: a Slovenian Corporate Group • One of largest retail chains • Focus: fast moving consumer goods, home products & technical devices • 1998 -2003: early phases of internationalisation 17/11/2018

Growth of Number of International Employees 2004: Member of EU 17/11/2018 Source: Ozbilgin et al. 2014, p.86

Question 1 In what ways does Mercator Group’s current international HRM strategy emphasise local integration in its subsidiaries? 17/11/2018

Mercator – Polycentric Approach 17/11/2018 Mercator – Polycentric Approach Mercator’s current International HRM strategy is polycentric. Staffing with HCNs means we must: Evaluate the host country’s labour market Analyse of recruitment, selection practices & employer behaviour Adapt these recruitment practices to local cultural values Idea of : ‘when in Rome, do as the Romans do’ - (Institution- based view) 17/11/2018

Polycentric approach in practice Results and effects: Polycentric approach in practice Generally: Allows local developing of subsidiaries  Better guideline for particular markets through HCNs Message that the company is willing to make a commitment to the country and its people Mercator: Subsidiaries staff locally Standardised HRM process including internal and external recruitment At the regional level, actions plans are in place to recruit scarce human resources 17/11/2018

Question 2 What was the company’s philosophy on international recruitment and selection in the early phases of its internationalisation, and how has it changed? 17/11/2018

Effects of Internationalisation Transition from ethnocentric to polycentric Use of whole talent pool rather than just internal • Impact of this IHRM Strategy on subsidiaries Local HR department plays a key role in staffing – more autonomy Recruitment of HCNs 17/11/2018

Question 3 A geocentric approach to international recruitment and selection may have advantages and disadvantages for Mercator Group. Which approach would you recommend, and why? 17/11/2018

Advantages and Disadvantages: Geocentric Approach Career managers from third countries can bring in retail experience from other countries Increases the talent pool Costs of TCNs are usually smaller The languages of South Eastern Europe are similar HCNs may not be inclined to recruit and select TCNs TCNs usually from an external environment -> knowledge of an MNC’s practices, policies and goals may be limited TCNs may have limited knowledge of local markets compared to HCNs. Advantages and Disadvantages: Geocentric Approach 17/11/2018 Source: Ozbilgin et al. 2014, p.69

Perlmutter EPG Model Perlmutter’s EPG Model covers three dimensions – ethnocentric, geocentric, and polycentric Gives a more accurate strategic profile • Awareness of firm’s purpose • Analyse firm orientation and make changes if necessary 17/11/2018

Our Recommendation Following Perlmutter’s advice: • Polycentric approach for expansion within Southeastern Europe • Develop a geocentric approach for further foreign expansion Geocentric: truly global concern to combine local and international strengths • Necessity of cultural adaptation to foster a global mind set 17/11/2018

Conclusion Boundaries of our recommendations: 17/11/2018 Conclusion Boundaries of our recommendations: • Geocentric approach is difficult to achieve An ‘ideal’ Strong sense of corporate values and shared goals is problematic with a wide distribution of power • Final point: Agrokor now a majority owner of Mercator 17/11/2018

Many thanks for your attention 17/11/2018

Bibliography Agrokor successfully closes Mercator acquisition process. (27 Jun 2014). Agrokor. Retrieved from: http://www.agrokor.hr/en/news/agrokor-successfully-closes-mercator-acquisition-process/ [accessed 20/10/2014] Farndale, E. & Paauwe, J. (1 Nov 2007). Uncovering competitive and instutinal drivers of HRM practices in multinational corporations. Human Resource Management Journal. Vol. 17, Iss. 4 p. 355-375. Kobrin, S. J. (1994). Is There a Relationship Between a Geocentric Mind-Set and Multinational Strategy? Journal of International Business Studies. Vol. 25, No. 3: p. 493-511 Ma, R. &Allen, D. G. (2009). Recruiting across cultures: A value-based model of recruitment. Human Resource Management Review Vol.19: p. 334–46. Ozbilgin, M. F., Groutsis, D., & Harvey, W. (2014). International Human Resource Management. New York: Cambridge University Press. Perlmutter, H. V. (1969). The tortuous evolution of the multinational corporation. Colombia Journal of World Business. Vol. 4: p. 9–18. Simmonds, K. (1985). Global Strategy: Achieving the Geocentric Ideal. International Marketing Review. Vol 2 Issue 1: p. 8-17 Uncovering competitive and institutional drivers of HRM practices in multinational corporations. (Elaine Farndale1,* and Jaap Paauwe Mike W. Peng (Author), Klaus Meyer International Business, 2011   17/11/2018