IHRM Programme Overview

INTERNATIONAL HUMAN RESOURCE MANAGEMENT PROGRAMME
International
Human Resource
Management
Programme
MDGI – HRM
Joint Project
Stoà – Alumni Network

Senior Faculty
Maria Rosaria Bonifacio, NOKIA
Francesca Contardi, PAGE GROUP
Giovanni de Liso, ANSALDO STS HITACHI
Salvatore Iorio, UNILEVER

M1.
International Strategic Management
Enrico Viceconte, 16 - 12 - 2015
The objectives of the course include:
1. an understanding of the conceptual and analytical tools of strategic
management and economics as applied to international strategy;
2. an understanding of the complexity that accompanies international
operations and global supply chains as a result of geographical diversification
and changing market, and technological, conditions.

Globalizzazione
• Brainstorming
FLUSSI DI CAPITALI, MERCI, PERSONE, COSE
ARMONIZZAZIONE DELLE LEGISLAZIONI
OMOGEINIZZAZIONE DELLE CULTURE
ICT

What is globalization?
Globalization is the inexorable integration of
markets, capital, nation-states, and technologies
to a degree never seen before.
Thomas Friedman

Globalization drivers
• Increased customer demands and access to competing products and services.
• Increased technological innovation and application.
• Increased power and influence of emerging markets and economies.
• Shared R&D and global sourcing.
• Increased globalization of financial markets.
• Evolving government trade policies.
• Global trade liberalisation; Trade barriers diminishing
• Multi-national companies evolving into real global organisations
• Production out-sourcing to lower cost regions
• Improved logistics infrastructure and operations

Tipologia di strategie globali
• Integrazione globale
• Differenziazione nazionale (adattamento, segmentazione)

• International business - engages in cross-border transactions
• Multinational Corporation - has extensive involvement in
international business, owning or controlling facilities in more than
one country
• Global company - integrates operations from different countries, and
views world as a single marketplace
• Transnational company - seeks to combine the benefits of global-scale
efficiencies with the benefits of local responsiveness

• International Strategy: uses exports and licenses to penetrate the
global area
• Multidomestic Strategy: uses decentralized authority with substantial
autonomy at each business
• Global Strategy: Uses a high degree of centralization, with
headquarters coordinating to seek standardization and learning
between plants
• Transnational Strategy: Exploits economies of scale and learning, as
well as pressure for responsiveness, by recognizing that core
competencies reside everywhere in the organization

Come sarà il mondo?
• Più uniforme (“Flat”, Ghemawt)
• Più diversificato

Organization Structure
• Organization is defined by the formal structure,
coordination and control systems, and the
organization culture.
• It’s the formal arrangement of roles, responsibilities
and relationships within an organization.
• It’s a powerful tool with which to implement strategy.

Vertical Differentiation: Centralization V/S
Decentralization.
• Vertical Integration: The issue of determining where in the
hierarchy, the authority to make decisions stand.
• Centralization is the degree to which high level managers,
usually above the country level, make strategic decisions and
pass them over to lower levels for implementation.
• Decisions made at foreign subsidiary level are considered
decentralized, and those made at HQ are considered to be
centralized.

Centralization V/S Decentralization
Centralization
• Decisions made by senior level managers at HQ.
• Facilitates coordination of value chain
• Ensures decisions are consistent with strategic
objectives.
• Senior executives have authority to direct major
change.
• Preempts duplication of activities
• Reduces the risk of making wrong decisions at low
level
• Ensures consistent dealings with all stakeholders.
• Discourages initiative among lower – level employees.
Decentralization
• Decisions made by employees, who are closest
to the situation.
• Employees who directly deal with customers,
markets, etc
• Motivates employees to exercise initiative.
• Enables more flexible response to rapid
environmental changes.
• Permits to fix better accountability.
• Puts the org at risk for bad decision making.
• Cross – unit coordination is at stake for
favouritism.

Horizontal Differentiation: The Design of the
Formal Structure
• Horizontal Differentiation: The way a firm designs its
formal structure to perform the following functions;
1.Specify the set of organizational tasks.
2.Divide these tasks into jobs, departments, subsidiaries
and divisions to get the work done.
3.Assign authority relationships to get the work done in a
way that supports co. strategy.

Types of Organizational Structures
1. Functional Structure
2. International Division Structure
3. Product Division Structure
4. Geographic (Area) Division Structure
5. Matrix Division Structure

1. Functional Structure
• Specialized jobs are grouped
according to traditional business
functions.
• Ideal for Co. having a narrow
product line, sharing similar
technology.
• Helps maximize economies of scale
• Highly efficient.

2. International division structure.
• Grouping each international business activity into its
own division.
• Creates a critical mass of international expertise.
• Creates quick response to environmental changes
enabling them to deal with different markets.
• Prevents duplication of activities.
• Often struggles to get resources from domestic
divisions.
• This structure is suited for multidomestic strategies
that demand little integration and standardization
between domestic and foreign operations.
• Frustrates its ability to exploit economies of scale.

3. Product Division Structure
• These are popular among international
companies with diverse products.
• Similar products are grouped under one
product head e.g. Perfumes and
Cosmetics, each focusing on a single
product segment for its global market.
• Suited for a global strategy
• There may be duplicate functions and
activities among divisions.
• No formal means by which one product
divison can learn from another
international expertise.

4. Geographic (Area) Division Structure
• These are used when foreign operations
are large and not dominated by a single
country or region.
• Useful when managers can gain
economies of scale on a regional rather
than on global basis.
• Drawback is the potential of duplication
of work among areas as the company
locates similar value activities in several
places rather than consolidating them in
the most efficient place.

5. Matrix Division Structure
• This tries simultaneously to deal with competing
pressures for global integration and local responsiveness.
• Institutes overlaps among functional and divisional forms.
• Gives functional, product, and geographic groups a
common focus.
• It makes each group share responsibility for foreign
operations and enables each group exchange information
and resources more willingly.
• Drawbacks- Stop championing their group’s unique
needs, and thereby eliminate the multiple knowledge-
generating and decision making relationship that it is
supposed to engage.
CEO

Dal libro
Risorse Umane Internazionali
• Di Francesca Prandstraller e Barbara Quaquarelli

Il caso Danieli
Spinte
• Competitività: vantaggi di
costo
• Impiego di competenze in
bacino più vasto
• Vicinanza ai clienti asiatici
• Logistica
HR policy
• Localizzazione: si è assunti
in Tailandia

Come saranno le aziende?

Con quale velocità?
• Per salti (fusioni e acquisizioni)
• Quindi una maggiore enfasi sull’integrazione tra culture aziendali e
nazionali

Il caso di Massimo Lupi
“Think global, act local!”

Network organizations

Il sistema Procter & Gamble della tecnologia

In today’s global economy, firms must decide
• where to locate productive activities
• what the long-term strategic role of foreign production sites should be
• whether to own foreign production activities or outsource those activities
• how to manage a globally dispersed supply chain and what the role of Internet-based
information technology should be in the management of global logistics
• whether to manage global logistics or outsource

Concepts of Global Business
Internazionalization
• A process by which firms increase
their awareness of the influence of
international activities on their future
and conduct transactions with firms
from other countries
Globalization
•The global economic integration of
many formerly national economies
into one global economy

The new global manager
• Managers are responsible for utilizing human, financial,
informational, and physical resources in ways that facilitate their
organization’s overall objectives in turbulent and sometimes hostile
environments about which they often understand very little.
• These challenges can be particularly problematic when operations
cross national boundaries.

Strategy, Production, and Logistics
Question: How can production and logistics be conducted
internationally to
1. lower the costs of value creation and
2. add value by better serving customer needs?
• Production refers to activities involved in creating a product
• Logistics refers to the procurement and physical transmission of
material through the supply chain, from suppliers to customers

Technological Forces
Related to the products
• Various subcomponents and technologies available in different regions and
locations
• Successful firms need to use these resources quickly and effectively.
• Locate research, design, and production facilities close to these regions.
• Frequently collaborate, resulting in the location of joint facilities close to one of
the partners.
• Global location of research-and-development facilities driven by two main
reasons:
• As product cycles shrink, locate research facilities close to manufacturing facilities.
• Specific technical expertise may be available in certain areas or regions

Technological Forces
“Access to special technologies” -- e.g.
• India & China -- IT/software technologies
• Taiwan -- Electrical & computer engineering
“Integrating R&D and manufacturing”
Many companies outsource manufacturing to Asian countries. It may be necessary to have R&D
locally. Why?
1. Use local human resources for R&D
2. Speed to market
3. easier to integrate with manufacturing

Global Cost Forces
• Often dictate global location decisions
• Costs of cheaper unskilled labor more than offset by the increase in
other costs associated with operating facilities in remote locations.
• In some cases cheaper labor is sufficient justification for overseas
manufacturing.
• Other global cost forces have become more significant
• Cheaper skilled labor (Engineers) is drawing an increasing number of
companies overseas.

Global Operations (supply chains) are Not
Simple
• Infrastructure in developing countries
• Cultural, language, labor skill differences
• Government stability, legal systems, regulations
• Currency exchange rate fluctuation
• Duties & tariffs
• Different corporate tax rates
• Import/export quotas
• Local content rules
• Product design issues (local customer needs)
• Longer transportation lead times
• Quality/reliability of local suppliers

Nike: the logistics challenge of global business
• Nike: re-created the sport shoe as “high-tech, high-
performance” products that is an icon of youth
subculture, with a price to match!
• Core business:
• state-of-the-art R&D capabilities
• ruthless low-cost manufacturing
• “Air Max Penny” basketball shoe:
• designed in Oregon and Tennessee
• manufactured in South Korea and Indonesia
• from 52 components sourced from Japan, South Korea, Taiwan,
Indonesia and USA.
• (Long lead times!)

Nike: the logistics challenge of global business
• Nike markets over 300 new shoe design each year, leading to costly overstocks if
sales forecasts not achieved.
• Distribution in USA is outsourced to third-party logistics providers with IT linkage to
Nike’s global sales and customer support systems, enabling sales/inventory
information to be accessible to all decision makers concerned.
• When the supply chain is global and the products are fashion-oriented, the
management of logistics becomes a key determinant of business success or failure.

The new organisational paradigm
• Traditionally, organisations are hierarchical, vertical and functionally
defined
• Current and future business environment:
• focus on “speed”, just-in-time, short product life-cycles
• volatile demand
• flexibility in customer requirements
• Challenge: how to be a responsive organisation?

Distinguishing features of the responsive
organisation
• Focus will shift:
• From functions to processes
• From profit to performance
• From products to customers
• From inventory to information
• From transactions to relationships

Summary
• Continuing trend towards globalisation
• global brands, global sourcing, focussed factories serving the world market
• Increased complexities: longer supply chains, more out-sourcing
• Need to balance the varying needs of local markets against the economic
advantages of standardised procedures/products
• Challenge: a flexible and agile supply chain yet achieves economies of scale/scope
• Requires organisational change within firm and with supply change partners
• Integrated logistics planning; information technologies

Assignement
• Identify the concepts of internationalization and globalization of
business.
• Explain the evolving role and problems with multinational
corporations in the global environment.

IHRM Programme Overview

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