Stages of Mnc Essay Example

Stages of Mnc Paper 1. The modern organizations have two main approaches toward internationalization. Either the first born global where these organizations are international from their inception or the organization is rapidly internationalized due to demand for the unique product/service. The second is the stage approach to internationalization this focuses on stages that the organization moves through to reach multinational enterprise MNE status. The movements through stages are influenced by â€Å"strain from growth and geographical distance, decision that coordination and business units need more management and host-government restrictions related to ownership and equity. † (Dowling, Festing, Engle, 2009) The stage approach begins with Export stage where increasing totals of exporting products/services creates the need to establish a presence in the international location. The Human Resources function becomes unclear, due to (marketing /developing export departments) manages the development of this international exporting arms staffing, and international intermediaries. The domestic headquarters â€Å"owns† the process, and continues exporting while building its market presence to enhance relationships and market experience in the new location’s business environment. Sales Subsidiary stage is the result of established strategic relationships in the international location the HR function of training and development prepares expatriates to manage the developing branches in the international locations. HR function is also actively staffing international locations in this stage. We will write a custom essay sample on Stages of Mnc specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Stages of Mnc specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Stages of Mnc specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The Foreign production stage is where production is taking place in the new branches, which resemble the domestic location. The domestic HR function is staffing, however there are international branches developing their individual HR departments. The HRM in the international branches start to implement policy and procedures, which are appropriate for their locations. The staffing managed by both domestic and international HR includes a greater number of home country nationals. The organization is now considered an MNE and facilitates internationalization challenges by changing to a network organizational structure. 2. Human Resource challenges in the network firm are: a. The HRM function for developing transnational management insuring enough managers who can perform across the different international locations. b. HRM must directly meet the challenge to insure effective policies i. e. compensation and performance management, this includes adherence to individual locations taxation laws and government requirements. Maintain equity in the MNE compensation policies including rewards and incentives. c. Implement existing structure of control. The stress on formal communication channels as distance from location to location is increasing and coordination and communication throughout the MNE is less effective. HRM uses international conferences in key subsidiary locations as a way to build cross-border teams made up of staff from several different subsidiaries. This creates a network of functional teams, and promotes cross border relationship building throughout the MNE. The use of this informal control provides another communication channel. 3. MNEs from China and India differ from Japanese, European, and US in their process of internationalization due to the history of â€Å"network/family control â€Å"of business in China. This will make it difficult to maintain control once the organization moves move beyond the region, therefore internationalization will begin with export branches established in neighboring countries. Emerging market MNEs for China and India have been found to be more often family-owned. Family ties and parental networks are important as determinant of international activity† The other differences would be government â€Å" (Lou Tung, 2007) the role of the home country government is very important in determining firm strategy, for regulating outward FDI from emerging markets. Government policies prohibited outward FDI until recently. † (Lou Tung, 2007)