1. The organizational context

2. Figure 2-1: Management demands of international growth

3. The path to global status
Causes structural responses, due to:
Strain imposed by growth and geographical spread
Need for improved coordination and control across business units
The constraints imposed by host-government regulations on ownership and equity
Evolution path common but not normative

4. Figure 2-2: Stages of internationalization

5. Stages of internationalization: Exporting
Typically the initial stage of international operations
Usually handled by an intermediary (foreign agent or distributor)
Role of HR department unclear at this stage

6. Figure 2-3: Export department

7. Sales subsidiary
Replacing foreign agents/distributors with own through sales or branch offices/subsidiaries
May be prompted by:
Problems with foreign agents
More confidence in international activities
Desire for greater control
Give greater support to exporting activities
PCNs may be selected, leading to some HR involvement

8. Figure 2-4: Sales subsidiary

9. International division
Creation of a separate division in which all international activities are grouped
Resembles ‘miniature replica’ of domestic organization
Subsidiary managers report to head of international division
Objectives regarding foreign activities may determine approach to staffing of key positions
Expatriate management role of corporate HR

10. Figure 2-5: International division

11. Global product/area division
Strain of sheer size may prompt structural change to either of these global approaches
Choice typically influenced by:
The extent to which key decisions are to be made at the parent country headquarters or at the subsidiary units (centralization versus decentralization)
Type or form of control exerted by parent over subsidiary

12. Figure 2-6a: Global product division Figure 2-6b: Global area division

13. The matrix
An attempt to integrate operations across more than one dimension
Violates Fayol’s principle of unity of command
Considered to bring into the management system a philosophy of matching the structure to the decision-making process

14. Figure 2-7: The matrix

15. Problems with the Matrix Bartlett and Ghoshal
Dual reporting
Proliferation of communication channels
Overlapping responsibilities
Barriers of distance, language, time and culture
Leads to conflict and confusion
Creates informational logjams
Produce turf battles and loss of accountability
Make it virtually impossible to resolve conflicts and clarify confusion

16. Control mechanisms
“Globalization brings considerable challenges which are often under-estimated….
Every morning when I wake I think about the challenges of coordinating our operations in many different countries”
Quote by Accor CEO

17. Figure 2-10: Control mechanisms

18. Mode of operation and HRM
Not just subsidiary operations
Firms may also adopt contractual modes
Licensing
Franchising
Management contracts
Projects
And/or cooperative modes (such as joint ventures)

19. Interfirm linkages
Alliance (strategic alliance, cooperative venture, collaborative venture or corporate linkage)
A form of business relationship that:
Involves some measure on interfirm integration
Stops short of a full merger or acquisition

20. HR factors
HR issues and activities that affect the successful functioning of international joint ventures include:
Assigning mangers to the joint venture
Evaluating their performance
Handling aspects pertaining to career path
Compensation benefits