1. An Essay for
EC30013 : International Human Resource
Management
Submitted To
Dr. Paul Seaman
University of Dundee
Submitted On
9 March, 2012
By
Swapnil Mali 120004897

2. Contents Page Number
1. Introduction 1
2. Business environment and HRM 1
3. Globalization and changing business environment 2
4. Changing business environment and HRM 3
5. New views of HRM 3
6. Conclusions 5
7. References 6

3. 1. Introduction
This essay is about the current business environment which encourages firms to take a more
‘international’ view of HRM. Any firm must understand what HRM means, what are the
deciding factors while taking decisions. According to bookish definition, HRM is the collection
of all the activities (like staffing, training and development, remuneration, performance
management, etc) which are performed to achieve maximum utilization of the human resources
(Dowling, E & Festing, 2011).
Current business environment has been affected a lot by globalization. Due to market open ups,
foreign direct investments; new technologies and transportations firms are able to take their
business globally (Mani, 2006). But when any firm enters into new market, it must follow the
local cultures in that market (culture includes both in public as well as in business environment).
There is a possibility of business failure if firm denies these changes. E.g. Walmart announced its
exit from Germany in 2006(Kottolli, 2006).
According to Laurent (1986) “the challenge faced by the international human resource
management is to solve a multi-dimensional puzzle located at the crossroad of national and
organizational cultures”. The purpose of this essay is to throw light on new business environment
and changing views of HRM.
2. Business environment and HRM
Business environment and HRM has relation in-between. It has been developed over the years. It
is important to understand what exactly business environment means.
Business environment which is also referred as operating environment includes all factors
affecting firm’s operations. This includes customers, competitors, suppliers, distributors, industry
trends, substitutes, regulations, government activities, the economy, demographics, social and
cultural factors, innovations, and technological developments (Qunatumiii: Competitive
Intelligence Glossary, 2012).
Managing business may be an art or a science but at the end of the day, the firm is run by human
beings rather than machines. There are many examples which support importance of HRM in
EC30013: International HRM Page 1

4. business environment. HRM was not developed few days ago; it has a history over the years.
There were many experiments which proved relation between productivity, growth and HRM.
Henry Fayol proved with his experiments that if human resource is utilised with scientific
manner, productivity can be increased to a large extent (Paul, 2009). A very famous theory of
Elton Mayo describes the importance of human relations in productivity as it proved that it’s not
the money but the social needs of workers which can improve performance (Tutor2: People-
Theories of motivation, 2012). Niklas Luhmann did come with base of international view of
HRM. According to his theories rather than thinking of highly unrealistic assumption, firm must
think about the actual facts and make human resource management more social to overcome
individualistic view of workers (Paul, 2009). This is enough to say that view of HRM is
changing over the years. It has widen more due to globalization.
3. Globalization and changing business environment
Globalization is a term that describes the interaction between different countries worldwide
leading to economic, political, technical and cultural development (Hub pages: Definition of
globalization, 2010).Multinational companies are more than just the company operating in many
countries having headquarter at London or New York. Now all the countries have potential
market to tap. Due to the organizations like WTO (World Trade Organization), NAFTA (North
America Free Trade Agreements) barriers for business have been reduced to large extent (Global
issues- International Trade, 2010).This encourages firms to take their business worldwide with
the least risk. Some generally observed responses by business due to globalization are as follows
(Turley, 2009).
• Competing with not just rivals but also with the new business environments.
• Highly appreciated innovative work.
• Global policy making.
• Multinational and multi cultured management.
• Everybody trying for economy of scale.
This does not just affect the production but also affect the buying behavior of customer. The
customers now a days demand for more quality products. Tastes of products have changed. It’s
not like that only MNCs are thinking globally, local firms also need to think about the changes in
EC30013: International HRM Page 2

5. buying behavior and need to change accordingly to sustain in the market (Tutor2u: Globalization
and business, 2012).
4. Changing business environment and HRM
Globalization allows firm to go for business process outsourcing or greater mobility of human
resources across countries (Tutor2u: Globalization and business, 2012).Parallel to this change in
business environment, view of HRM also needs to be changed. Though many firms have HRM
views as specific to countries but globalization has become a challenge for it.
E.g. Indian company starts its business in USA. What will be the salary of a person who is sent
abroad from his home country.
HRM must ensure that employee possesses sound knowledge and skill but due to globalization,
adapting to culture also becomes an important issue. Also, lots of mergers and acquisitions are
taking place nowadays. In this environment, firm should ensure that employee is not feeling
insecure and able to continue with same or greater productivity (Krishna, 2009).Problems with
the expatriates also becomes a headache. Firm must ensure about it before international
assignment (Global issues- International Trade, 2010). As huge amount of money has been spent
by firm on expatriates, it must be a success. So HRM also need to take care of family, children
and their education. Since the MNCs are based worldwide, employees get huge exposure and this
creates a demand for them. Because of swapping of jobs for more money, higher attrition rate
has become a challenge for HRM (PTI, 2012).
5. New views of HRM
New entrepreneurs are daring to go into market with high capital investments nowadays. Top
reason of early failures of business is poor execution of plans (Bradbentz, n.d.). Lack of
communication, misunderstandings, and absence of team work are the main reasons for this.
HRM should be really concerned about the commitment and team work between the employees.
Though firms are operating internationally, they need to think about local culture, behaviors of
the new market. Firms nowadays believe in Rene Dubos’s (1994) theory “Think globally and act
locally”. New views of HRM are broader and global. But the way of execution with available
human resources is a key of success.
EC30013: International HRM Page 3

6. Due to globalization and reduced barriers between countries firms now are able to recruit
diversified talent from all over the world. This talent is from different part of world with
different skills and knowledge. But most important is that they have different culture as well. So
it’s a new task for HRM to build relation with all and make them comfortable in working
environment so that they feel like family and help to produce better quality work.
As people come from all over the world, it’s necessary to study the stereotypes. It’s not to
discriminate them but to understand them and help them in appropriate manner to adapt with
new environment as soon as possible. More concern towards the stake holder has become a key
of newly changed HRM. Especially talking about the expatriates, the incentives given to them
are more intellectual rather than monetary one. Greater involvement of employees in design and
execution helps to keep them attached to the firm, also it helps to increase self motivation in
employees.
High skilled workers are treated as assets of the firm. Therefore more investments towards the
training and developing programs take place all over the world. Also significant increase can be
observed in the number of management development programs. Firms also tend to train and
develop workers in wide variety of skills, it is referred as “Multiskilling” or cross training
(Dutkowsky, 2012).Firms expect that the employees should take initiative and come with new
solutions. They should grab the new technologies from all over the world. All of these will help
to improve decision making capability of the employees. This ultimately will lead to improve
and speed up the whole developing process.
More focus has been given on the two-way communication, information sharing, and problem
solving techniques. These policies can help in better performance via self motivated employees.
Last but not the least, as the firms are operating worldwide, communication skill becomes
essential for all. Much effort has been put to develop this skill to avoid misunderstanding and
develop better communication.
EC30013: International HRM Page 4

7. 6. Conclusions
From the discussion above, some conclusions can be drawn which are as follows-
1. Business environment and HRM are developing parallel to each other.
2. As the businesses are developing worldwide, HRM is also going with worldwide approach.
3. Success of the MNCs is now dependent on the performance of HRM in managing the human
resources across the border efficiently.
4. Development of communication skill of employees helps to achieve better communication and
avoid misunderstanding.
5. International approach of HRM will help firms to increase their productivity and help to
sustain in the new business environment.
EC30013: International HRM Page 5

8. 7. References
Bradbentz, n.d., Why do so many new business fail , viewed 7 March 2012,
<http://www.squidoo.com/starup_failures>
Dowling, E & Festing, 2011, International human resource management,Thomson,Uk
Dutkowsky, S, 2012, Trends in Training and Development - THE NEW ECONOMY, TRAINING
IN U.S. COMPANIES, WHO DOES THE TRAINING IN CORPORATIONS, viewed 7 March
2012, <http://careers.stateuniversity.com/pages/852/Trends-in-Training-Development.html>
Eblen, 1994, Think globally act locally, viewed 7 March 2012,
<http://capita.wustl.edu/ME567_Informatics/concepts/global.html>
Global issues- International Trade, 2010, viewed on 6 March 2012,
< http://www.americans-world.org/digest/global_issues/intertrade/environment.cfm>
Hub pages: Definition of globalization, 2010, viewed 7 March 2012,
<http://hotbabefatchicks.hubpages.com/hub/Definition-of-Globalization>
Kottolli ,A, 2006, Trans-cultural Business Failure: Wal-Mart Exits Germany, viewed 6 March,
2012, <http://arunkottolli.blogspot.com/2006/08/trans-cultural-business-failure-wal.html>
Krishna, C, 2009, Globalization and its impact on business environment, Viewed on 7 March
2012, <http://www.indianmba.com/Faculty_Column/FC1057/fc1057.html>
Laurent , 1986, Human resource management, viewed 6 March 2012,
<http://www.mendeley.com/research/crosscultural-puzzle-international-human-resource-
management/>
Mani, 2006, Human resources – Impact of globalization on HR, viewed 6 March 2012,
<http://en.allexperts.com/q/Human-Resources-2866/IMPACT-GLOBALISATION-HR.htm>
Paul, 2009, Classical and neo-classical theories of management, viewed 7 March 2012,
<http://classnotesmadeeasy.blogspot.com/2009/07/classical-and-neo-classical-theories-of.html>
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9. PTI, 2012, Attrition rate at front-end sales level is a challenge: PepsiCo, 2012, viewed 6 March
2012,
< http://articles.economictimes.indiatimes.com/2011-07-22/news/29803422_1_attrition-rate-big-
challenge-pepsico-india>
Qunatumiii: Competitive Intelligence Glossary, 2012, viewed 6 March 2012,
<http://www.quantum3.co.za/CI%20Glossary.htm>
Turley, J, 2009, Redrawing the map- Globalization and the changing world of business, viewed
7 March 2012, <http://www.ey.com/GL/en/Issues/Business-environment/Redrawing-the-map--
globalization-and-the-changing-world-of-business---Five-business-responses-to-globalization>
Tutor2u: Globalization and business, 2012, viewed 6 March 2012,
<http://tutor2u.net/business/external/globalisation_effects.htm>
Tutor2: People- Theories of motivation, 2012, viewed 6 March 2012,
<uhttp://tutor2u.net/business/gcse/people_motivation_theories.htm>
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