international human resource management programme

INTERNATIONAL HUMAN RESOURCE MANAGEMENT PROGRAMME

InternationalHuman

ResourceManagementProgrammeMDGI – HRM

Joint Project

Stoà – Alumni Network


Senior FacultyMaria Rosaria Bonifacio, NOKIAFrancesca Contardi, PAGE GROUPGiovanni de Liso, ANSALDO STS HITACHISalvatore Iorio, UNILEVER


M1.International Strategic ManagementEnrico 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)


Tipologia di strategie globali• 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


Tipologia di strategie globali• 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 DecentralizationCentralization• 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 Structures1. Functional Structure2. International Division Structure3. Product Division Structure4. Geographic (Area) Division Structure5. 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 libroRisorse Umane Internazionali• Di Francesca Prandstraller e Barbara Quaquarelli


Il caso DanieliSpinte• 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 BusinessInternazionalization• A process by which firms increase

their awareness of the influence ofinternational activities on their futureand conduct transactions with firmsfrom 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 LogisticsQuestion: How can production and logistics be conducted

internationally to1. lower the costs of value creation and2. 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 ForcesRelated 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&D2. Speed to market3. 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.