CHALLENGES OF IHRM

Topics: McDonald's, Multinational corporation, Corporation Pages: 11 (1165 words) Published: April 21, 2014
An Analysis of how McDonald’s
Corporation Cope with Emerging
Human Resource Issues

Tolulope Opokiti (12048704)
Rasaq Olasunkanmi (12002534)
Ademola Adebiyi (12057819)
Isaac Orimogunje (12002127)

 Introduction of McDonalds Corporation
 Practise of MNC according to Perlmutter

 McDonald’s practise as indicated by Perlmutter’s (1969)  MNC strategy as revealed by Bartlett and Ghoshal

(1989)
 McDonald Strategy; Is Transnational? If not, what does
it practise (staffing, appraisal etc.)
 Merits and demerits of trans-nationality.
 References.

McDonald’s Corporation: An Introduction
 Founded in 1955 by Dick and Mac McDonald
 Headquarter based in Illinois, America
 More than 34,000 local restaurants worldwide
 Located in 119 countries worldwide

 Employs 1.8 million employees
 80% of the restaurants are franchised
 Hamburger University: Employee training
 McDonald’s System : Operations
 “Think Global, Act Local” Strategy

McDonalds(2013); Vignali (2001)

Perlmutter (1969)
 The article “The Tortuous Evolution of the Multinational Corporation”

explains how companies justifies their claims of being a MNC using three structures.
 The article presented the EPG model which further explains the three structures which MNCs uses for their organisational design. These are: Ethnocentric, Polycentric and Geocentric Structures.
 An important aspect of the EPG model by Perlmutter is the fact that MNCs should aim for a transition from Ethnocentrism to Polycentrism to Geocentrism; thereby, the Internalisation of MNCs.
 The transition to Geocentrism is said to create a global workforce which represents an option for the future.

Perlmutter (1969); Cornuel and Kletz (2001)

MNC Practises
 Operates in more than one country, i.e., a MNC.
Key HR issues

Ethnocentrism

Polycentrism

Geocentrism

Authority and
Decision making

High in
Headquarters

Low in
Headquarters

Countrydependent

Training and
Development

Headquarters

Subsidiary

Best Practice

Recruitment
Procedures

Headquarters

Subsidiary

Best Practice

Standard of
Appraisals

Headquarters

Headquarters

Best Practice

Rewards and
Punishment

High in
headquarters low
in subsidiary

Can be high or low
rewards for
subsidiaries

Standardized but
with local
variation

Perlmutter (1969)

McDonald’s Approaches
 Authority and decision making
 Headquarters to subsidiaries

 Recruitment procedures
 Carried out by local managers
 Criteria instructions from the headquarters
 Non-union practices

 Rewards and punishment
 Headquarter oriented
 Compensation according to local requirement

 Performance evaluation and appraisal
 Individually rated
 Carried out by local managers

Royle (2010); Marquez (2006)

Is McDonald’s Really Polycentric?
 McDonald’s system
 Standardised production (country-specific variation)
 Hamburger University : training and development
 German and British practices.

 Franchising
 Employment Practices
 Host country nationals as employees
 Home country nationals included in the executive boards of each

country.

Royle (1999); Ghanawi (2012)

McDonald’s Polycentric Approaches
 The adoption of the “Think Global, Act Local” strategy gives the

company sustainable competitive advantage because the local
managers still keep in touch with the local market; hence building a sense of customer loyalty.
 McDonald’s polycentric approaches helps with attaining greater sensitivity to local cultures due to the local manager’s attentiveness to the local markets.

Royle (2008); Vignali (2001)

German Menu

American Menu

MNC Strategies
Key HR issues

Multi-domestic

Global

International

Transnational

Human Resources Focused on local
Practices
operational needs

Formulated from
headquarters

Formulated in
headquarters but
exported for local
adaptation

Coordinated...


References: Perlmutter, H. (1969) ‘The tortuous evolution of the multinational corporation’ Columbia Journal
of World Business, 29(1) pp
Royle, T. (1999) ‘The reluctant bargainers? McDonald’s, unions and pay determination in
Germany and the UK’, Industrial Relations Journal, 30(2), pp
Royle, T. (2008) ‘Just vote no! Union–busting in the European fast–food industry: the case of
McDonald’s’, Industrial Relations Journal, 33(3), pp
Royle, T. (2010) ‘Low-road Americanization’ and the global ‘McJob’: a longitudinal analysis of
work, pay and unionization in the international fast-food industry’, Labor History, 51(2), pp.
Smerd, J. (2006) ‘McDonald’s Japan No Longer Serving Up Forced Retirement’, Workforce
Management, 85(16), pp
Vignali, C. (2001) ‘McDonald’s: “think global, act local” – the marketing mix’, British Food
Journal, 103 (2) pp
Watson, J. (2006) Golden arches east: McDonald 's in East Asia. Google book[Online]. Available
at:
ots=2jfkV9BJ11&sig=IFSKrXRlZUZdwfnuTsE3pjCaJWw#v=onepage&q&f=false (Accessed: 1st
April 2013)
Yeung, H. (1998) ‘Capital, state and space: contesting the borderless world’, Transactions of the
Institute of British Geographers, 23(3), pp
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