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Canada (161,886)
Commerce (1,696)
Chapter 13


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Frances L Tuer

CHAPTER 13 MANAGING HUMAN RESOURCES GLOBALLY Companies are attempting to gain a competitive advantage which can be provided by in international expansion:  Countries with emerging economies are new markets with large numbers of potential customers.  Many companies are building production facilities in other countries as a means of capitalizing on those low labour costs for unskilled jobs (e.g. maquiladora plants).  Rapid rise in telecommunications and information technology enables work to be done more rapidly, efficiently and effectively. - Most organizations function in a global economy - International competition is the number one factor affecting HRM Current Global Challenges European Economic Union - The EU is a confederation of most of the European countries agreeing to engage in free trade with one another with commerce regulated by the European Commission - Complex economic and legislative framework - Makes Europe on of the largest free market in the world North American Free Trade Agreement (NAFTA) - An agreement between Canada, US, and Mexico that has created a free market larger than the European Economic Community Two effects of employment in NA 1. Many low skilled jobs went south decreasing opportunities for Canadians and Americans 2. It has increased employment for Canadians and Americans with higher level skills The Growth of Asia - Japan, China, Singapore, Hong Kong and Malaysia are significant economic forces. General Agreement on Tariffs and Trade (GATT) - An international framework of rules and principles for reducing trade barriers around the world. - Established the WTO to resolve disputes among GATT members Factors Affecting HRM in Global Markets Culture - the set of important assumptions that members of a community, organization share Importance of culture in HRM - Often determines the other three factors affecting HRM in global markets: Country`s laws, human capital, economic systems - Often determines the effectiveness of various HRM practices Hofstede Cultural Dimensions - different potential problems of managing employees from different cultures Power Distance (PD): How a culture deals with hierarchical power relationships. Individualism-Collectivism (ID): Degree to which people act as individuals rather than as members of a group. Masculinity-Femininity (MA): Describes the division of roles between the sexes within a society. Uncertainty Avoidance (UA): Describes how cultures seek to deal with an unpredictable future. Long-term/short-term orientation (LT): Describes how a culture balances immediate benefits with future rewards. Implications of Culture for HRM Cultural characteristics influence the ways managers behave in relation to subordinates, as well as the perceptions of the appropriateness of various HRM practices 1. Cultures differ strongly on things such as how subordinates expect leaders to lead, how decisions are handled within the hierarchy and what motivates individuals. 2. Cultures may influence the appropriateness of HRM practices. 3. Cultures can influence compensation systems. 4. Cultures can influence communication and coordination processes in organizations. 5. Cultural diversity programs focuses on understanding the cultures of others in order to better communicate with them. Education Human Capital Human Capital refers to the productive capabilities of individuals  the knowledge, skills and experience that have economic value Variable that determine a country's human capital: Educational opportunities available to the labour force  Countries with low human capital attract facilities that require low skills and low-wage levels.  Countries with high human capital are attractive sites for direct foreign investment that creates high-skill jobs. Political Legal System The political/legal system dictates the requirements for certain HRM practices such as training, compensation, hiring, firing and layoffs - Laws of a particular country often reflect societal norms about what constitutes legitimate behaviour. - Legal system is an outgrowth of the culture, reflecting societal norms:  Canada has led the world in eliminating discrimination in the workplace and employment equity laws.  Germany has provided employees with a legal right to "codetermination" in the workplace.  The EEC provides fundamental social rights of workers: freedom of movement and freedom to choose one's occupation and be fairly compensated. Economic System - A country's culture is integrally tied with its economic system 1. Under socialist systems, there is little economic incentive to develop human capital because there is no monetary reward for doing so, but ample opportunity exists because education is free. 2. In capitalist systems, the opposite situation exists. The cost of education is higher but economic incentives exist through individual salaries. - Economic systems affect HRM directly through taxes on compensation packages - Every country varies in terms of its culture, human capital, legal system and economic systems. These variation directly influence the types of HRM that is to be developed. Managing Employees in a Global Context Parent Country - The country in which the company's corporate headquarters are located e.g. Canada is the parent country of RIM Host Country - The country in which the parent country organization seeks to locate a facility Third Country - Country other than the host country or parent country a company may or may not have their facility Expatriate - employees sent by a company in one country to manage operations in a different country Three types of expatriates:
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