1. IHRM Case Study 4.1: Mercator Group
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IHRM Case Study 4.1: Mercator Group
Maximilian Pulkowski Emily Coates Jia Du

2. Agenda Introduce Company & Case Question 1 Question 2 Question 3
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Agenda
Introduce Company & Case
Question 1
Question 2
Question 3
Conclusion
Bibliography
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3. Introduction of Company & Case
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Introduction of Company & Case
• Mercator Group: a Slovenian Corporate Group
• One of largest retail chains
• Focus: fast moving consumer goods, home products & technical devices
• : early phases of internationalisation
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4. Growth of Number of International Employees
2004: Member of EU
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Source: Ozbilgin et al. 2014, p.86

5. Question 1
In what ways does Mercator Group’s current international HRM strategy emphasise local integration in its subsidiaries?
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6. Mercator – Polycentric Approach
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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)
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7. 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
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8. 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?
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9. 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
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10. 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?
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11. 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
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Source: Ozbilgin et al. 2014, p.69

12. 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
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13. 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
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14. Conclusion Boundaries of our recommendations:
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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
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15. Many thanks for your attention
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16. Bibliography
Agrokor successfully closes Mercator acquisition process. (27 Jun 2014). Agrokor. Retrieved from: [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
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
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
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
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