The document discusses the challenges that multinational corporations face when outsourcing activities to emerging economies, including differing philosophies between the MNCs and host countries, cultural differences, and managing global operations and human resources across borders. It also examines some of the ethical issues MNCs may encounter abroad, such as dealing with sweatshops, ensuring plant safety standards, and preventing bribery and corruption. Questions are provided to prompt discussion on strategies for international expansion and managing a multinational workforce.

1. Human Resource management in
multinational corporations:
Challenges of MNCs outsourcing activities
in emerging economies
Ahmed R Shaki
PhD Candidate in HRM, UUM, Malaysia
Visiting PhD Student, EBS and TTU

2. International, Multinational and Global
Organizations
• International company – transports its business
outside home country; each of its operations is a
replication of the company's domestic experience;
structured geographically; and involves subsidiary
general managers.
• MNC- is any business that owns and controls
production or service facilities in two or more
countries. Examples include Ford, Wal-Mart, Cemex,
Nokia, Sony, etc.
• Global organizations – treat the entire world as though
it were one large country; may be the entire company
or one or more of its product lines; may operate with a
mixture of two or more organizational structure
simultaneously.

3. Questions for the Class?
• Why Do Companies Go Abroad?
• Do we have a strategy for becoming an
international firm?
• What type of managers will we need to be
successful?
• What will be the impact of cultural norms on our
HR policies.
• How will we choose whether to send
expatriates or use local employees.
• How do we move people to different locations

4. Just an Example:
• Expats in India
• Market leaders like Nokia, LG, Suzuki, IBM and
Samsung have seen the number of expats in their
Indian subsidiaries swell.
• Nokia has nearly 100 Finns at key positions in
India.
• Samsung has 25 Koreans
• LG has 30 Koreans
• Maruti has 15 Japanese
• Huawie has approx.125 Chinese
working at their offices in India.

5. I
M
P
A
C
T
O
N
Globalists Antiglobalists
Consumers Free trade promotes lower
costs, etc.
Benefits the wealth at the expense
of the poor
Employees Faster economic growth
Higher wages
Improved working conditions
Places profits above people
Environment Creates resources needed to
address environmental issues
Exploits and destroys ecosystems
More pollution
Developing
Nations
Promotes national economic
development, higher standard of
living, better working conditions,
cleaner environments.
World financial institutions conspire
to keep poor nations in debt
Human Rights Creates cultures that support law
and free expression.
Spreads economic / political
freedom to far corners
Corporations pursing profits ignore
human rights violations, abuse of
workers, free speech, etc.
Pros and Cons of Globalization
Source: Center for the Study of American Business, 2010.

6. Parent-country Nationals
Advantages
 Control and co-ordination
by HQ is maintained.
 Promising managers get
international experience.
 PCNs may be the best
people for the job.
 Assurance that the
subsidiary will comply
with company objectives
policies etc.
Disadvantages
 HCNs promotion
opportunities are
limited.
 Adaptation to host
country may take a
long time.
 PCNs may impose an
inappropriate HQ
style.
 Compensation
differences between
PCNs and HCNs may
cause problems.

7. Host-country Nationals
Advantages
• No problems with language
and culture.
• Reduced hiring costs.
• No work permits required.
• Continuity of management
improves since HCNs stay
longer in positions.
• Govt. policy may force hiring
of HCNs.
• Promotional opportunities not
limited - so higher morale
among HCNs.
Disadvantages
• HQ may have less control
over operations.
• HCNs may still have
limited career
opportunities outside the
subsidiary.
• Hiring HCNs limits
opportunities for PCNs to
gain overseas
experience.

8. MNC-Host Country Challenges
• Differing philosophies between MNCs and host
countries
• Cultural differences
• Business / government differences
• Management and control of global operations
 Organizational structure
 Human resource management
• Exploration of global markets
 Modify or redesign products appropriate for
the intended market
 Be sensitive to the impacts of products
 Be sensitive to politically-vulnerable products

9. Ethical Issues in Global Business
• Ethical issues tend to be worse in less
developed countries (LDCs)
Legal/ethical structure less developed
Temptation to apply lower standards

14. Sweatshops
• Wide-spread criticism of unfair/unsafe labor
practices
 Focus on textiles (e.g., Nike, Wal-Mart, Gap,
Reebok)
 Nike case
• More than 530,000 people employed in factories
that make Nike products
• In 1996, Michael Jordon under $20 M
endorsement contract
• Questions on Nike case
 Why should Nike be held responsible for what
happens in factories that it does not own?
 Does Nike have a responsibility to ensure workers
receive a “living wage”?
 Are contracts with MJ (and others such as Tiger
Woods) unethical?

15. Plant Safety
• Bhopal Tragedy (1984)
 Poisonous gas leak at Union Carbide plant killed
at least 2,000 people and injured about 200,000
 Up to 150,000 people still suffering mental
/physical problems
 Main issue: low standards in host country and
Union Carbide did not enforce appropriate
standards
• $460 M settlement, but payments slow due to
corruption
 Note: this led to “Responsible Care” program in
the chemical industry

16. Social Accountability Standard
1. Child Labor (min age 14 or 15)
2. Forced Labor
3. Health and Safety
4. Freedom of Association and Right to Collective
Bargaining
5. Discrimination
6. Discipline (no physical/mental abuse)
7. Working Hours (48 hr/wk, min one day off)
8. Compensation
9. Management Systems

17. Bribery and Corruption
• Corruption:
 Involves behavior on the part of officials, in the
public and private sectors, in which they
improperly and unlawfully enrich themselves
and/or those close to them.
• Bribery:
 Offering something (usually $) in exchange for
gaining an illicit advantage
 Example: Lockheed Martin bribe to Japanese
firm led to resignation of Japanese Prime-
Minister.

18. Company-Situation Analysis:
SWOT
• Strengths: distinctive capability, resource
or skill
• Weaknesses: competitive disadvantage
compared to competitors
• Opportunities: favorable conditions in the
environment
• Threats: unfavorable conditions in the
environment

19. Key Success Factors
- Experience of firm in business
- Cost position for raw materials
- Cost position for production
- R&D quality
- Financial assets
- Product quality
- Quality of human resources