Changes due to a new subsidiary in China of a MNE
The Case IKEA
1 IHRM: A Key Factor For Success Of A MNE – An Introduction 1.1 The three components of IHRM – a description
1.2 Key elements concerning IHRM – the details
1.2.2 Training and Development
1.2.3 Performance measurement
2 The expansion of a Swedish MNE to China – an example
2.1 Sweden and China – a comparison
2.2 The “IKEA way” – an international company from Sweden 2.3 Changes due to an expansion of IKEA to China – the example 2.3.1 Recruitment
2.3.2 Training and development
2.4 Employing Swedish expatriates in China
3 A Swedish Company enters China – a conclusion
1 IHRM: A Key Factor For Success Of A MNC – An Introduction
“IHRM is important (…) because the conduct of business is increasingly international in scope and managing human resources is critical to the successful conduct of global business.”
(Dennis R. Briscoe, Randall S. Schuler 2004)
The Academy of Management Journal pointed out:
“It is instrumental (…) to harness the productive potential of their employees in order to achieve superior performance” (Mark A. Youndt et al. 1996)
This point of view is very likely to be true as technique develops faster and faster and thereby technical competitive advantages are levelled out really quick. Consequently the effective management of human resources (HRM) as the second element of a company’s capital seems more and more to be the crucial element for success.
Due to the increasing number of multinational corporations(MNC) and the fact that business isn’t done nationally anymore the pattern of HRM have been extended to international human resource management (IHRM) for the businesses mentioned. These companies have to evaluate their HRM whether they still support the most effective way the international business is run. The way the business is done concerning the international human resources is outlined by a firm’s IHRM policies can be seen in their IHRM practices. Alan M. Rugman et al. (2003, p. 329) states that IHRM is the process of selecting, training, developing, and compensating personnel in overseas positions.
1.1 The three components of IHRM – a description
R.S. Schuler et al.(1993) published an integrative framework of IHRM in MNEs which mentions three main components of IHRM: the issues, the functions and the policies and practices.
The issues deal with the problems and needs of the MNE between and within the subsidiaries. As it is one company an ideal mixture of differentiation and integration must be fund, supported and adopted. It must be able to react and perform locally as good as possible on the one hand. But on the other hand there is the essential need for global coordination, implementation and control of strategies.
What to do
Secondly the functions were mentioned including outlining the HR orientation and allocating the resources. This includes everything concerning the HR like staffing, training, compensation, etc. as earlier mentioned.
How to do it
These two lead to the policies which constitute the guidelines for the MNE and it’s subsidiaries. They set the frame for the management. It is possible that the guidelines are a non specific statement as well as a clear advice for every affiliate. Policies can regard the way individuals are managed in general or the also can implement initiatives or visions. On the whole IHRM policies have also to be suitable for realising the overall strategy developed for the international business by the headquarters.
The last mentioned policies will be the key issue of this work but it is necessary and useful to give an overview of the complexity of the subject as they influence the changing policies. So for this reason we will firstly have a closer look on...