Ihrm Group Final !!!!!
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Transcript of Ihrm Group Final !!!!!
ASIA PACIFIC INSTITUTE OF INFORMATION TECHNOLOGY
IN COLLABORATION WITH STAFFORDSHIRE UNIVERSITY UK
BA (Hons) in Business Administration
Group Assignment
Critical Evaluation of Transnational Form advocated by Bartlett and Ghoshal
Module Code & Title
BLB 10025-3 International Human Resource Management
Prepared By
GF 1131BA
Krishnagopi Thangavel CB003499Uma Ramiya Ratnam CB003434Ruchith Jayathilaka CB003427Vishwa Ranatunga CB002676
Date of Submission
06th June 2011
Instructor
Dr. Mahesha Samarathunga
Submitted in partial fulfillment for the
Degree of Bachelor of Arts (Hons) in Business Administration
Word Count: 1647 Words
International Human Resource Management BLB10025-3
1. Acknowledgement
The authors would like to take an opportunity to thank all those who helped to conduct
this study, therefore first the authors thank Dr. Mahesha Samarathunga for the guidance,
attention and the valuable time she spent with us throughout the completion of this
assignment.
Secondly the authors would like to thank all family members, friends and batch mates
who helped us in numerous ways in completing this assignment.
Finally the author would like to thank the institute, APIIT Lanka for providing me with
the necessary laboratory and library facilities in making this project.
The authors would also like to state that we are responsible for any errors made.
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2. Abstract
During 21st Century multinationals Corporations and globalization has become
interconnected due the ever increasing competition and expansion of businesses across
borders. (Pudelko & Harzing, 2007). Harzing and Ruysseveldt (2004) have stated that
growing globalization, divergence in consumer preference and expansion of
transportation gave birth to Multinational Corporations. In order to survive in the
aggressive globalize business environment, Multinational Corporations will have to
harmonize the opposing forces of global integration versus local responsiveness (Pudelko
& Harzing, 2007).
Since multinationals Corporations expanding their businesses across borders to various
countries with different characteristics, MNCs needs to adapt its key management areas
such as international Human Resources management (IHRM) to fulfill the organization
needs in host country or the region. IHRM is “the process of sourcing, allocating and
effectively utilizing human resources in a MNC” (Bhattacharyya, 2010). According to
Bartlett and Ghoshal, (1991 cited in Myloni, Harzing and Mirza, 2004) the HRM policies
and practices act as mechanisms for coordination and control of international operations
therefore become a crucial part in the transfer. Bartlett & Ghoshal (2000) identified that
to achieve a global competitive advantage for MNC’s, it is vital to have a key strategic
objectives. Tayeb (1998) and Liu (2004) have identified the internal and external factors
that impact on the transfer of HRM policies and practices across borders.
Hence according to Bartlett and Ghoshal (2000 cited in Harzing and Ruysseveldt, 2004)
has come forward with key organizational structures of Multi domestic, International,
Global and states three different strategic approaches, namely global approach,
multinational flexibility and worldwide learning compiled together makes the
transnational model.
The report mainly concentrates on the aims and objectives given in the following page.
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To understand the transnational model advocated by Bartlett and Ghoshal and to
discuss the other theoretical perspective of the transnational model.
To understand why transfer of employment practice across border is problematic
To critically evaluate and analyze the transnational model in relation to the chosen
MNC- The Coca Cola Company.
To identify whether the transnational model is the solution to manage across
border and to analyze whether MNCs should adopt the transnational model.
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3. Table of Content
1. Acknowledgement........................................................................................................ii
2. Abstract.......................................................................................................................iii
3. Table of Content...........................................................................................................v
4. List of Figure...............................................................................................................vi
5. List of Table...............................................................................................................vii
6. List of Abbreviation..................................................................................................viii
7. Introduction..................................................................................................................9
8. Section 01...................................................................................................................10
9. Section 02...................................................................................................................13
10. Section 03...............................................................................................................16
3.1. Strategy and structure in Multinational Company (MNC).....................................16
3.2. Limitations of Multidomestic, global and international model...............................19
3.2.1. Multidomestic model........................................................................................19
3.2.2. Global model....................................................................................................20
3.2.3. International model...........................................................................................21
3.2.4. Transnational model.........................................................................................23
3.3. Transnational model in relation to the CCC...........................................................25
3.3.1. Positive outcome from transnational model in relation to the CCC.................26
3.3.2. How the CCC achieve the strategic objectives................................................27
3.4. Draw backs in transnational....................................................................................28
3.5. Successful MNC which adopt the transnational model..........................................29
11. Recommendation....................................................................................................30
12. Conclusion..............................................................................................................31
13. Appendix.................................................................................................................32
14. References...............................................................................................................35
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4. List of Figure
Figure 1 Strategic Objectives...........................................................................................16Figure 2 MNC Organizational Model..............................................................................17Figure 3 Disadvantage of Multidomestic.........................................................................19Figure 4 disadvantage of Global model...........................................................................20Figure 5 Disadvantage of international model.................................................................21Figure 6 Dilemma............................................................................................................22Figure 7 MNC strategy and structure...............................................................................23Figure 8 Characteristic of transnational model.................................................................24Figure 9 integrated model of the CCC.............................................................................25Figure 10 successful MNCs.............................................................................................29Figure 11 Different between home and host country.......................................................32Figure 12 Industry level factor.........................................................................................34
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5. List of Table
Table 1Justification of critical factors...............................................................................14Table 2 Characteristic of MNC model...............................................................................18Table 3Performance of the CCC........................................................................................26Table 4 CCC's performance...............................................................................................27
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6. List of Abbreviation
HRM – Human Resource Management
The CCC – The Coca Cola Company
MNC – Multinational Company
HQ- Head Quarters
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7. Introduction
The transfer of employment practices across borders is problematic and complex.
(Bartlett and Ghoshal, 1998). MNCs need to meet the challenge of achieving the three
objectives; Multinational Flexibility, Global Efficiency and World-wide learning
simultaneously. It is important to achieve all three pressures to survive in the competitive
environment (Bartlett & Ghoshal, 2000 cited in Harzing & Ruysseveldt, 2004: p36).
Therefore, it was argued by Bartlett and Ghoshal, that the transnational model is the
solution for managing across borders. (Bartlett and Ghoshal, 1998). Thus, the report is
providing a broad analysis of transnational model and will critically evaluate whether it
would be best for most MNC to follow the transnational model. The aims and objectives
of the report are follows,
1. To understand the transnational model advocated by Bartlett and Ghoshal and to
discuss the other theoretical perspective of the transnational model.
2. To understand why transfer of employment practice across border is problematic
3. To critically evaluate and analyze the transnational model in relation to the chosen
MNC- The Coca Cola Company.
4. To identify whether the transnational model is the solution to manage across
border and to analyze whether MNCs should adopt the transnational model.
To accomplish the above aims and objectives, information gathered from secondary data
such as, corporate website, online search, text books and journal articles to conduct a
comprehensive analysis. This report is categorized into three sections and each section
deals with the aims. The structure of the report is as follows,
Section 1 deals with aim 1
Section 2 deals with aim 2
Section 3 deals with aim 3 & 4
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Finally the report ended with recommendation and an in-depth conclusion of the whole
report.
8. Section 01
To understand the transnational model advocated by Bartlett and Ghoshal and to
discuss the other theoretical perspective of the transnational model - Theoretical
Framework
According to Bartlet and ghoshal (1986 cited in Edwards and Rees, 2004:p40) Transfer
of practices across borders is problematic. Multinational Companies constantly try to
transfer their human resources practices to their subsidiaries. Due to cultural and
institutional factors of the home and host countries, the transferring process becomes
more difficult. Multiculturalism makes managing across borders more challenging and
problematic (Harzing and Ruysseveldt, 2004:p90; Myloni, Harzing & Mirza, 2004). Most
of the Multinational Companies face the dilemma whether to be locally responsive or to
be globally integrated in the host country (Rosenzweig and Nohria, 1994 cited in Myloni,
Harzing & Mirza, 2004:p519; Jain et al. 1998). MNCs find it difficult to achieve all three
pressures - global efficiency, multinational flexibility and worldwide learning
simultaneously. In order to achieve the strategic objectives, organizations need to meet
these three pressures simultaneously (Bartlett and Ghoshal , 2000 cited in Harzing and
Ruysseveldt, 2004:p36).
National Level, Company Level and HRM Practice Level are the factors influencing the
cross national transferability of HRM practices (Liu, 2004:p501). Company and Industry
Level Factors, cultural and institutional factors of the home and host countries and the
nature of individual HRM practices may constrain the HRM transfer (Myloni, Harzing &
Mirza, 2004:p522).
It can be argued that, the cultural and institutional environment becomes even more
crucial for HRM transfer to host countries that are in a transitional state (Clark et al 1999
cited in Myloni, Harzing & Mirza, 2004:p520). Cultural and institutional factors of the
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home country differ from cultural and institutional factors of the host country (Myloni,
Harzing & Mirza, 2004). Therefore, transfer of HR policies and practices to different
countries can be quite problematic (Bae et al., 1998; Hofstede, 1980; Kovach, 1994;
Rosenweig and Nohria, 1994; Yuen and Kee, 1993 cited in Myloni, Harzing & Mirza,
2004:p520). Certain HRM practices are more localized and affected by the host country’s
cultural and institutional environment, while other practices are more globalised and
affected by the home country’s cultural and institutional environment (Myloni, Harzing
& Mirza, 2004:p529). Therefore HR practices and organizations cannot be isolated from
their particular cultural environment (Laurent, 1991 cited in Khilji, 2002:p232). Lesser
the cultural and institutional distance, it is easier to transfer HR practices to host countries
which results in convergence, ethnocentrism and forward diffusion. Industry Level
factors which affect the HRM transferability are identified as follows.
Multinational companies can operate in segmented industry or in standardized industry
which are identified as Industry Level Factors. Muller (1994, cited in Elkassrawy, 2006:
p3) as stated that for segmented industries it is difficult to transfer HR practices form
home country to host country. For instance, the FMCG industry is segmented, whereas in
standardization, it is easy to transfer the HRM practices. An example for a standardized
industry is electronics industry. Nature of Individual HRM practices also affects the
HRM transferability from home country to host (Kostova, 1999 cited in Liu, 2004:p505).
Some HR practices are deeply culture rooted which results in difficult transfer while the
less culture rooted practices are easily transferable. The Company Level factors affecting
the HRM transfer are discussed below.
According to Li and Liu (2002 cited in Liu 2004:p501) “Theoretical approaches to
analyze transferability at company level exist in two main categories: organizational
cultural compatibility and resource dependency”. Cultural compatibility between the
parent company and the subsidiary is recognized as an important factor to influence the
transfer of management practices (Kostova, 1999; Taylor et al., 1996 cited in Liu,
2002:p503). An organization is unable to generate all of the resources which it needs to
operate its business therefore dependent on other actors. Researchers have argued that
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because subsidiaries rely on their parent company for resources, they are dependent to
varying degrees on the parent company (Aldrich, 1976; Pfeffer and Salancik, 1978 cited
in Liu, 2002:p503).
Under company level factors, Bartlet and Ghoshal discussed four organizational
structures namely Multi-domestic, Global, International and Transnational models to
achieve those three pressures at varying degrees at different structures (Harzing and
Ruysseveldt, 2004). Bartlet and Ghoshal argued that, the Transnational from as a solution
for manage all three pressures simultaneously (Edwards and Rees, 2006:p93). Also they
see transnational form as necessary for all organizations operating in global environments
(Bartleet and Ghoshal, 1998:p20 cited in Edwards and Rees, 2006. P: 94).
The next section will discuss the reasons due to which Bartleet and Ghoshal identified the
Transnational Form as a solution to managing across borders and the reasons due to
which it would be best for most companies.
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9. Section 02
To understand why transfer of employment practice across border is
problematic
According to Schuler & Rogovsky (1998, cited in Harzing, 2004) it has been argued that
human assets are an emerging source of competitive advantage for MNCs. Bartlett &
Ghoshal (1991, cited in Harzing, 2004) have argued that HRM policies and practices are
becoming crucial because they can act as mechanisms for co-ordination and control of
international operations. Values and HR systems help to shape organizational culture and
the people who operate within and also influence that culture; and MNCs therefore
attempt to transfer their HRM practices abroad. (Adler and Bartholomew, 1992, cited in
Harzing, 2004).
According to Harzing et al, (2004) the critical factors that need to be taken in to account
when MNCs engage in the transfer of HRM practices across border are as follows.
Company level factors
Cultural factors between home and host country (Refer appendix 1 & 2)
Institutional factors between home and host country
Industry level factors (Refer appendix 3)
Nature of the individual HRM practice transferred.
HRM practices, like most management practices, are based on cultural beliefs that reflect
the fundamental values and assumptions of the national culture in which the organization
is embedded (Harzing and Ruysseveldt, 2004). National differences are major factors that
complicate the process of HRM transfer to subsidiaries. Differences in the economic
development phase, disparities in national culture and institutions can be problematic
issues, while characteristics of business systems and HRM practice can either facilitate
the absorption of best practice (Zhang, 2003 cited in critical analysis, 2011). As shown on
the following page (Table 1), the critical factors are briefly explained.
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Critical factors Why transfer is problematic?
Company level
factors
The transfer will be problematic due to the strategy and
structure of MNCs, resource dependency and MNC’s
culture.
(Harzing et al, 2004)
Cultural factors
The transfer will be problematic when the cultural
difference between home and host country is high.
The HRM practices influence by the home country
culture, norms and values. Also when the MNC’s willing
to transfer the HRM practices, it will be reject or block
by the subsidiaries.
(Harzing et al, 2004)
Institutional factors
The transfer will be problematic due to political and
educational institutions of the country and legal
framework of the home and host country.
(Harzing et al, 2004)
Industry level
factors
The transfer will be problematic due to characteristics
and the nature of the industry in which the MNC’s
originate.
(Harzing et al, 2004)
Nature of the
individual HRM
practice
transferred.
The transfer will be problematic due to some HRM
practices (such as recruitment and selection) which are
influenced by the home country cultural and institutional
factors.
If the necessary background is not in the host country,
the HRM practices will be appose by the subsidiary.
(Harzing et al, 2004)
Table 1Justification of critical factors
Source: Authors work
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When the home country transfer the HRM practices to various host countries, there are
some options to host countries whether,
To accept HRM practices directly from home country
To ignore home country HRM practices and to adopt local practices developed by
host country.
To accept partly from home country practices and rest from local/ host country
practices
To adopt local practices partly and rest from home country but before implication
the HRM practices will be adjusted according to host country cultural and
institutional factors.
The next section will critically analyze the transnational model with relevant scenarios.
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10. Section 03
To critically evaluate and analyze the transnational model in relation to
the chosen MNC- The Coca Cola Company.
3.1. Strategy and structure in Multinational Company (MNC)
Transfer of HRM practices is problematic due to handing the three pressures as shown in
figure 1 and which leads MNC to the dilemma of Local Responsiveness and Global
Integration (Bartlett & Ghoshal, 2000 cited in Harzing, 2004: p36).
Figure 1 Strategic Objectives
Source: Author’s work according to Bartlett & Ghoshal (2000 cited in Harzing, 2004).
Bartlett and Ghoshal (1998 cited in Edward & Reese, 2006: p91) identified 4 types of
organizational models to achieve the above pressures as show in figure 2. The MNC’s
need to achieve all three pressures simultaneously in order to survive in the competitive
environment.
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Strategic Objectives
Global Efficiency Multinational
FlexibilityWorldwide Learning
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Figure 2 MNC Organizational Model
Source: Author’s work according to Bartlett & Ghoshal (1998 cited in Edward & Reese, 2006)
The characteristics of organization models are given below in the table 2.
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Multi-domestic organizational model
International organizational model
Global organizational model
Transnational organizational model
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Multidomestic model
McDonalds
Global model
Apple Company
International model
Microsoft Company
Network structure
Dilemmas Locally responsive Globally integrated Globally integrated
Strategic objective Multi flexibility Global efficiency Worldwide learning
Structure Decentralized federation Centralized hub Coordinated federation
Application of Perlmutter’s Theory
Polycentric strategy Geocentric strategyCombination of polycentric and
ethnocentric structure
Convergence/Divergence/ cross vergence
Divergence Convergence Convergence and divergence
Table 2 Characteristic of MNC model
Source: Author’s work
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3.2. Limitations of Multidomestic, global and international model
3.2.1. Multidomestic model
McDonald is considered as a multidomestic company because they adjust to the cultures
of their host countries. The figure 4explains the disadvantage of adopting the multi
domestic model to McDonald’s. (Corporate website, 2011)
Figure 3 Disadvantage of Multidomestic
Source: Author’s work
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It only achieves multinational flexibility. So it reduces the possibility of improving competitive advantages.
Strategic Objectives
It has less awareness for and faces greater difficulty in transferring HR practices and knowledge across countries
Transfer HR practices
It leads to an elimination of originality of the activity or a product and reduce the economies of scale.
Locally responsive
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3.2.2. Global model
Apple Inc adopted global model because it produces and supplies standardized product
worldwide. The figure 5 explains the disadvantage of adopting the global model to Apple
Inc. (Corporate website, 2011)
Figure 4 disadvantage of Global model
Source: Author’s work
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It only achieves the global efficiency. So it creates a thread to the company in the competitive environment.
Strategic Objective
All key decisions are made at home country (HQ) and transfered to subsidiaries. Due to host country cultural and institutional factors, tranfer will get rejected
Transfer HR practices
It is only concern about the international intergration and its ignores the local responsive ness.
Global Integration
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3.2.3. International model
Yahoo Inc is adopted the international model and it transfers all HR practices from head
quarters where it develops the core architecture. The figure 6 explains the disadvantage of
adopting the international model to Yahoo Inc. (Corporate website, 2011)
Figure 5 Disadvantage of international model
Source: Author’s work
After the evaluation of above MNC models, it is clearly identified that the above models
do not successfully achieve the three pressures (refer figure 1) simultaneously. Therefore
in order to obtain the strategic objectives the transnational model has to be applied.
Shown on the following page is the dilemma of local responsiveness versus global
integration of the organizational model.
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It only achieve worldwide learning . So it reduces the possibility of improving competitive advantages.
Strategic Objectives
Lack of local responsiveness and inability to realize location economies. Also failure to exploit experience curve effects
Globally integreated
Globally Integrate
Locally R
esponsive
High
HighLow
TransnationalGlobal
Multidomestic
Multidomestic
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Figure 6 Dilemma
Source: Author’s work according to Bartlett & Ghoshal (2000 cited in Harzing, 2004)
An organization that uses both global integration and local responsiveness is said to be
using the transnational model, which is further explained in the following page.
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Transnational
Multinational Flexibility Worldwide LearningGlobal Efficiency
InternationalMultidomesticGlobal
The Coca Cola Company
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3.2.4. Transnational model
According to Bartlett & Ghoshal, 2000 cited in Edward & Rees (2006: p94) the
transnational model is offering the solution to competing the pressures by obtain all three
pressures simultaneously. Thus, according to Bartlett Ghoshal (1998 cited in Edwards &
Rees, 2006) the Coca-Cola Company pursues a ‘transnational organizational model’.
(Refer figure 8)
Figure 7 MNC strategy and structure
Source: Author’s work
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Characteristics of transnational model
Figure 8 Characteristic of transnational model
Source: Author’s work according to Bartlett & Ghoshal (2000 cited in Harzing, 2004)
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Transnational Model
Integrated network
Acheive 3 strategic objectives
simultaniously
Locally responsive and globally
intergrate
Regeocentric approachPresence of centers
of exellence Allows forward
diffusion and reverse diffusion
Cross vergence
The Coca Cola CompanyAtlanta
uni
The Coca Cola CompanyEurasia
The Coca Cola CompanyPacific
uni
The Coca Cola CompanyEurope
uni
The Coca Cola CompanyLatin America
uni
The Coca Cola CompanyNorth America
uni
The Coca Cola CompanyAfrica
uni
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3.3. Transnational model in relation to the CCC
According to the corporate website (2011) the Coca Cola Company is a global business
that operates on local scale in every community where they do business. Coca-Cola
Company is one of the most successful transnationalized MNCs, headquartered (HQ) in
Atlanta, USA and it is the world’s leading and the largest manufacturer and distributor
which operates in 206 countries, markets more than 500 brands, 3500 beverage products
and 300 bottling partners, and sells 1.7 billion servings a day. (Corporate website, 2011).
Figure 9 integrated model of the CCC
Source: Authors work (2011)
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3.3.1. Positive outcome from transnational model in relation to the CCC
Characteristics Performance of the CCC
Integrated network
Due to this integrated network the CCC can have forward
diffusion as well as reverse diffusion
(Bartlett & Ghoshal (2000 cited in Harzing, 2004)
strategic objectives
The CCC achieves three pressures through transnational model
in order to gain competitive advantage to survive in the
competitive environment.
(Bartlett & Ghoshal (2000 cited in Harzing, 2004)
Locally responsive
and globally integrate
Employees and resources move freely and act locally where the
structure of a MNC is neither locally responsive nor globally
integrated.
(Bartlett & Ghoshal (2000 cited in Harzing, 2004)
Regiocentric approach
CCC enables its subsidiaries to make their own decisions
regarding recruitment & selection and wages which describe
their decentralized and Regiocentric structure.
(Bartlett & Ghoshal (2000 cited in Harzing, 2004)
Presence of centers of
excellence
The company becomes a kind of network with different centers
for different activities and each center can have a strategic role
of particular area.
(Bartlett & Ghoshal (2000 cited in Harzing, 2004)
Crossvergence
Through this the CCC share knowledge and transfer best
practices to and from subsidiaries worldwide.
(Bartlett & Ghoshal (2000 cited in Harzing, 2004)
Table 3Performance of the CCC
Source: Author’s work
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3.3.2. How the CCC achieve the strategic objectives
Strategic objectives The CCC’s performance
Global efficiency
CCC is the trend towards greater integration of
global tastes.
The product trends , as is the demand for the same
consumer product by CCC around the world
(Jackson, 2002)
Multinational flexibility
All subsidiaries are decentralized and independent
Allows subsidiaries to work as local companies.
It implements product variety widely according to
the host country market (customer needs and
interest)
(Jackson, 2002)
Worldwide learning
Worldwide sharing of best practices with
subsidiaries.
Respond to the rapidly changes of the market
through new products and technologies.
(Jackson, 2002)
Table 4 CCC's performance
Source: Author’s work (2011)
With the analysis given above on CCC, it can be said that CCC utilizes the transnational
model to its utmost potential.
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To Access whether transnational model is a solution for managing across borders.
With the explanation given on the page before on CCC, it can be said that the
transnational model is the best solution in managing across borders. However there are
some issues that exist within this model, this is explained below.
3.4. Draw backs in transnational
Even though Bartlett and Ghoshal argued that transnational model is a solution for
managing across borders, still there are some drawbacks which question the success of
this model. Most MNCs known as transnational organizations are not 100 % successful.
Their operations are not worldwide and operation is limited to regional basis (Rugman
and Verbeke ,1993). According to Ghoshal & Nohria (1989 cited in London & Hart,
2004:p5) “Researchers, using data from MNC practices, have explored which country-
level strategy is the best fit for a subsidiary”. With organizational politics taking place in
transnational organizations, situations occur where subsidiaries are not willing to work or
align with the HQ’s decision. (Edwards & Rees, 2006). According to London and Hart
(2004) “transnational model of national responsiveness, global efficiency and worldwide
learning may not be sufficient in emerging markets in the developing world”. They also
stated that Western-style patterns of economic development may not occur in these
business environments.
Even thought transnational firms have some limitation, it would be the best solution when
compare to the other organizational models. (Refer figure). According to E- notes,
(2011) transnational strategy allows for the attainment of benefits inherent in both global
and multidomestic strategies. The subsidiaries are integrated into the overall corporate
structure across several dimensions, and each of the subsidiaries is empowered to become
centers of excellence. It is a management approach in which an organization integrates its
global business activities through close cooperation and interdependence among its HQ,
operations, and international subsidiaries, and its use of appropriate global information
technologies (Zwass, 1998 cited in e-notes, 2011).
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3.5. Successful MNC which adopt the transnational model
Following are the successful transnational organization worldwide. (Refer table 6)
Figure 10 successful MNCs
Source: Rugman and Verbeke, 1993
According to foundation (2011) with over 53% of the world's largest economies today
being Trans-national Corporations (TNCs) their impact and responsibilities are global
and it is crucial in order to gain a competitive advantage over other MNC’s.
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11. Recommendation
According to the above analysis and critical evaluation, it is evident that other
organizational models namely global, international and Multidomestic models do not
achieve the strategic objectives successfully. Transnational model is the only way for
companies to achieve all three pressures simultaneously. So in favor of Bartlett and
Ghoshal, it is recommended to adopt transnational model as a solution to managing
across border for MNCs and it should be adopt by the MNCs in order to achieve global
competitive advantages while managing the dilemma of locally responsive and globally
integrate.
Transnational firms have higher degrees of coordination with low control dispersed
throughout the organization and under the transnational model; a MNC’s assets and
capabilities are dispersed according to the most beneficial location for a specific activity.
Simultaneously, transfer across border is interdependent, and knowledge is developed
jointly and shared worldwide.
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12. Conclusion
The objectives of this report was to critically discuss and evaluate the transnational form
which advocated by Bartlett and Ghoshal as a solution to managing across border. The
report of the three sections is well analyzed and provided with a clear and critical
recommendation on whether the transnational model is a solution to managing across
border and it would be best for most MNCs to follow the transnational model.
The report identifies the section one to understand the transnational model advocated by
Bartlett and Ghoshal and to discuss the other theoretical perspective of the transnational
model.
The second section identifies the critical factors that influence the transfer across border
and it explains why transfer across border is problematic.
The third section distinguishes the four types of MNC’s organizational model and it is
founded the success story of the transnational model in relation to the CCC. Finally the
section argues in favor of transnational model as it is the solution to managing across
border.
So therefore recommendations are provided in the end of the report as the transnational is
the solution to managing across border and MNCs should adopt this model in order to
survive in the competitive environment.
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13. Appendix
Appendix 1
Distance between Home and Host country factors.
Figure 11 Different between home and host country
(Source: Authors’ work, 2011)
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Appendix 2
Cultural and institutional factors- how it affects transfer of chosen MNC
Cultural Factors
Compared to other Asian countries the cultural factors between Sri Lanka and US are
relatively low. According to Chandrakumara and Sparrow, (2003) and Nanayakkara
(1993) it is highlighted that Sri Lanka been a colony under many western nations, it has a
major control on the life style of the Sri Lankans. Also the management practices adopted
by westerners are still extensively employed in Sri Lanka.
In addition to that Sri Lanka is following a westernized education system where most
students are doing their studies in international languages and in foreign universities. Sri
Lankans tend to work in foreign countries and this gives MNC to have experience,
innovative and flexible work force to work with, this was discussed by Myloni et al
(2004)
Language gap between Sri Lanka (Sinhala, Tamil) and USA (English, French,
Spanish) has a greater effect on certain decision making.
Tayeb, (1998) considered Language as an important factor when entities or MNC
transfer its existing practice and policies to subsidiaries.
According to theories by scholars the cultural distance between SL and USA is high, but
the foreign influence in Sri Lanka during Last Five centuries has enable to mitigate
certain barriers in transferring foreign firm’s practices and policies to Sri Lanka. Since
CCC’s global strategy is to localize its global practices in the Host country, “Think
globally acts globally “CCC (2010) allows to minimize the distance between host country
and home country through utilization of better practices such as transnational model.
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Industry Level Factors
Analysis of the segmented and standardized has an effect on transferring Practices & policies from home country.
Figure 12 Industry level factor
Source: Compiled by Authors (2011); Rugman and Verbeke (1993); Bartlett and Ghoshal (1998)
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Industry level factors
Easy to transfer-Electronics
Ex: LG, Cannon, Sony
StandardizedSegmented industries
Difficult to transfer-Fast food
Ex: McDonalds, Pizza hut, star bucks.
Easy to transfer –Motor vehicles
Ex: Toyota, BMW, Jaguar
Pharmaceutical
Ex: Johnson & Johnson, GlaxoSmithKline, Roche
Difficult to transfer- FMCG
Ex: P& G, Uniliver
Food industry
Ex: Cadbury, Nestle, Kraft,
International Human Resource Management BLB10025-3
14. References
Bartlett, A.C, and Goshal, C. (1998) Managing across borders: The transnational solution, 2nd edition, Boston: Harvard Business School Press.
Chandrakumara, A. and Sparrow, P. (2004), “Work orientation as an element of national culture and its impact on HRM policy-practice design choices: lessons from Sri Lanka”,
Critical analysis, (2011) Globalization and HRM, [Online], available at: http://www.criticalanalysis.net.au/content/Globalisation-and-HRM.pdf [Accessed on 03rd June 2011]
Edward, T. & Rees, C. 2006. International Human Resource Management. India, Pearson Education.
Edwards, T., and Rees, C. (2006) International Human Resource Management, 3rd edition, India: Dorling Kindersley
E-notes, (2011) transnational organization, [Online], available at: http://www.enotes.com/management-encyclopedia/transnational-organization [Accessed on 28th June 2011]
Foundation for GAIA, (2011) transnational corporation, [Online], available at: http://www.foundation-for gaia.org/index.ph?option=com_content&view=article&id=59&Itemi [Accessed on 05th June 2011]
Harzing, A.W. & Ruysseveldt, J.V. 2004. International Human Resource Management.2nd Ed, London, SAGE Publication Ltd
Harzing, A.W., and Ruysseveldt, J.V. (2004) International Human Resource Management, 2nd edition, London: SAGE Publication Ltd
Jackson, T., (2002) International HRM; a cross culture approach, Delhi: SAGE publication.
Khilji, S.E., (1999). “Modes of convergence and divergence: an integrative view of multinational practices in Pakistan”, International Journal of Human Resource Management, vol. 13, no. 2, pp. 232–253.
Liu, W. (2004). “The cross-national transfer of HRM practices in MNCs: An integrative research model”, International Journal of Manpower, vol. 25, no. 6, pp. 500-517.
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Myloni, B., Harzing, A. W. & Mirza, H. (2004). “Host Country Specific Factors and the Transfer of Human resource Management Practices in Multi National Companies”, International Journal of Manpower, vol. 25, no. 6, pp. 518-534.
Pudelko, M. & Harzing, A.-W., (2008), 'The Golden Triangle for MNCs: Standardization towards Headquarters Practices, Standardization towards Global Best Practices and Localization, International Human Resource Journal, Vol. 1, pp. 01-19
Rugman, A., and Verbeke, A. (2004) Regional transnational and Triad strategy, United Nations, New York and Geneva.Tayeb M. H. 2005, International Human Resource Management, Oxford University Press, New York
Tayeb, M., (1998), Transfer of HRM practices across cultures: An American company in Scotland, The International Journal of Human Resource Management, Vol 9, No. 2, pp. 332-358
The Coca Cola Company, (2010) Our company, [Online], available at: http://www.thecoca-colacompany.com/ourcompany/index.html [Accessed on 01st June 2011]
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Work Load Matrix
TasksRuchith
(CB003427)Vishwa
(CB002676)Uma
(CB003434)Krish
(CB003499)
Abstract
Introduction
Chapter 1
Chapter 2
Chapter 3
Conclusion
References
Appendix
Signature
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