The document discusses several aspects of international human resource management (IHRM) in the context of globalization. It defines globalization and explains how it has led to greater integration of economies and societies worldwide. This has impacted HRM through issues like unfamiliar laws and practices across countries. The document also outlines five stages of internationalization for companies and four common modes of entry into foreign markets, including licensing, joint ventures, exporting, and foreign direct investment through wholly owned subsidiaries.

1. The Context Of IHRM

2. Meaning of Globalization
Globalization is the tendency of businesses, technologies, or philosophies to
spread throughout the world, or the process of making this happen. The
global economy is sometimes referred to as a globality, characterized as a
totally interconnected marketplace, unhampered by time zones or national
boundaries.
Globalization implies the opening of local and nationalistic perspectives to a
broader outlook of an interconnected and interdependent world
with free transfer of capital, goods, and services across national frontiers.
However, it does not include unhindered movement of labor and, as
suggested by some economists, may hurt smaller or
fragile economies if applied indiscriminately.

3. Globalization Push & Pull Factors

4. Major HR Challenges of Globalization
Greengard (1995) defined globalization as the system of interaction among the countries of
the world in order to develop the global economy. Globalization refers to the amalgamation
of economics and societies around the world which means that world trade and financial
markets are becoming more integrated. Growing internationalization of business has its
impact on HRM in terms of problems of unfamiliar laws, languages, practices, competitions,
attitudes, management styles, work ethics etc (Srivastava & Agarwal). Globalization has an
effect on employment patterns worldwide. It has contributed to a great deal of outsourcing
which is one of the greatest organizational and industry structure shifts that change the way
business operates (Drucker, 1998). Globalization is also seen as changing organizational
structures where expenses can move up or down as the business climate dictates (Garr,
2001). As a result HR managers have to confront with more heterogeneous functions and
more involvement in employee's personal life.

5. Stages of Internationalization
Stage 1: Domestic
Operations The firm’s market is exclusively domestic.
Stage 2: Export Operations The firm expands its market to include other
countries, but retains production facilities within domestic borders.
Stage 3: Subsidiaries or Joint Ventures The firm physically moves some of its
operations out of the home country.
Stage 4: Multinational Operations The firm becomes a full-fledged multinational
corp. (MNC) with assembly and production facilities in several countries and regions
of the world.
Some decentralization of decision making is common, but many personnel decisions
are still made at corp. headquarters.

6. Stages of Internationalization
Stage 5: Transnational Operations Firms that reach this stage are often called
transna-tional because they owe little allegiance to their country of origin.
Operations are highly decentralized, with each busi-ness unit free to make
personnel decisions with very loose control from corp. headquarters.

7. Modes of entry
 Licensing
 Licensing includes franchising, Turnkey contracts and contract manufacturing.
 Licensing is where your own organization charges a fee and/or royalty for the use
of its technology, brand and/or expertise.
 Franchising involves the organization (franchiser) providing branding, concepts,
expertise, and infact most facets that are needed to operate in an overseas market,
to the franchisee. Management tends to be controlled by the franchiser. Examples
include Dominos Pizza, Coffee Republic and McDonald’s Restaurants.

8. Modes of Entry
 Joint Ventures (JV)
 Joint Ventures tend to be equity-based i.e. a new company is set up with parties
owning a proportion of the new business. There are many reasons why companies
set up Joint Ventures to assist them to enter a new international market:
 Access to technology, core competences or management skills. For example,
Honda’s relationship with Rover in the 1980’s.
 To gain entry to a foreign market. For example, any business wishing to enter China
needs to source local Chinese partners.
 Access to distribution channels, manufacturing and R&D are most common forms
of Joint Venture.

9. Modes of Entry
 Exporting
 There are direct and indirect approaches to exporting to other nations. Direct
exporting is straightforward. Essentially the organization makes a commitment to
market overseas on its own behalf. This gives it greater control over its brand and
operations overseas, over an above indirect exporting. On the other hand, if you
were to employ a home country agency (i.e. an exporting company from your
country – which handles exporting on your behalf) to get your product into an
overseas market then you would be exporting indirectly.