Implications of Multinational Corporations - Essay Example

Implications of a MNC Table of Contents Introduction 3 Impact of Culture on Organisation 3 Human Resource Strategies/ Functions 4 Conclusion 9 References 10 Introduction A multinational corporation (MNC) or a multinational enterprise (MNE) is a conglomerate that controls production processes and distributes various services in more than one country. It is also referred to as international corporation. As the enterprise operates in numerous countries and derives a section of its revenue from the operations outside of its home country, hence it is considered as a multinational corporation. Moreover, due to worldwide operations of an multinational organisation, its functions and strategies are also highly exaggerated by the diverse cultural norms and policies of varied countries. Therefore, the organisations have to adopt and implement the specific cultural standards of diverse countries so as to sustain an efficient and effective functioning. Thus, an organisation which can successfully accept and maintain different cultural customs would lucratively operate in a profitable manner (Schein, 2010). Impact of Culture on Organisation ‘Culture’ is a term which emerged as a fundamental concept of anthropology, encircling all human phenomena that are not a part of human genetics. Culture is defined as the human ability to categorise and signify the diverse experiances, beliefs, customs, traditions and languages with those of its own. Culture generally differs from one person to the other. It can be reffered to as the combined programing of the brain distinguishing the members of one cluster or category of people from the other. It may occur among the organisational groups, nations, regions, genders or different organisations (Schein, 2010). Moreover, the culture affects the performance and the decision making of the organisations as well. Thus, an ethnic organisational culture is one that can inspire and stimulate the presentation of the employees thereby enhancing the growth and development of the organisation. Therefore, proper decision making process helps in accomplishment of the organisational goals and objectives in the long run (Tierney, 2008). Nartional culture means the cultural norms in a specific nation. It might include certain charesteristics such as languages, religion, ethnic and racial identity, lifestyle and education among others. Moroever, national culture is not conceived as the only culture, or the totality of customs within a nation, but it refers to the cultural distinction among the members of one nation from that of the other. Hence, culture of different nations widely offers significant impact on the operations of the multinational organisations as well as on the employee behaviour, which might prove to be beneficial or detrimental for both (Geert Hofstede, 2008). Thus, it can be affirmed that it is essential for a multinational organisation with headquaters in Norway and subsidiaries across the globe to maintain and follow strategic international human resource management (SHRM) practices. It is regarded as one of the fundamental factors necessary for the welfare and sustainability of the organisation in the competitive environmental scenario (Geert Hofstede, 2008). Human Resource Strategies/ Functions In this era of globalisation and free market economies, innovative market opportunities and challenges are opening every day for the multinational corporations (MNCs) to expand their businesses in the world. However, this can be possible only when it follows the best human resources practices which would be beneficial for the growth and development of the business. Moreover, it would also help in enhancement of the brand image and the position of the organisation in the market among others. Apart from this, as the organisations contain diverse workforces, so they should shape their HR policies and strategies in such a way that they facilitate each and every employee of the organisation (MbaTools, 2012). Work environment is one of the significant HR practices which should be followed and maintained by all the MNCs operating in diverse locations. This is due to the fact that as the organisations comprise of assorted workforces, so the working environment acts as the motivating factor for the employees. A secure and cheerful working environment helps to enhance the satisfaction and contentment of the employees as well as improves the commitment towards the work. Moreover, if the superior authority looks into the work of each and every employee of the organisation then it improves the gratification level, resulting in the enhancement of the performance of the employees of diverse attitudes, beliefs and cultures. Moreover, it would be advantageous for the employees with diverse culture to adjust and accept an informal and participative organisational environment. Hence, it is one of the significant practices that should be updated or maintained so as to cope up with the changing oganisational needs and wants (British Columbia Museums Association, 2007). Apart from the above described factor, the other significant aspect which is essential for a multinational organisation operating in dissimilar locations and situations is performance incentives based on the culture of the varied locations. Performance incentive is one of the exciting factors for the employees of the organisation. It might include bonus system, salary hike, promotion and appreciation from the superiors among others. The performance incentive may vary from one subsidiary to the other based on the cultural environment of the specific organisation. Thus, if an employee’s performance is appreciated with a ‘pat on the back’ or in may be in form of bonus, then it would enhance the dedication and employee morale which may be beneficial both for the organisation and the employee as well. Apart from these, the performance of the empolyees working in the MNCs are also entirely dependent on the working environment as well. If the coworkers are not cooperative or helpful then it might become difficult for an employee to retain an excellent performance in the long run, thereby hindering the growth of the organisation (Mahmood, 2012). Furthermore, along with performance incentives, the other significant feature which needs to be updated in the HRM practices is sharing of knowledge and implementing training and development programs. As the multinational organisations encompass diverse employees, it should follow the technique of sharing of knowledges among the hierarchy which might prove beneficial for the growth for the organisation (Sparrow & et. al., 2004). This strategy can be clearly observed in MNCs such as Microsoft which proved to be quite succesful in its international operations thereby enhancing innovative technologies and strategies beneficial for the organisation. Moreover, the organisation also follows execution of various training and development programs based on the skills and abilities of the employees thereby enhancing the proficiencies which might augment the growth of both i.e. employeee as well as organisation as a whole. Hence, it would be favourable to maintain participative organisational culture, with free flow of information and knowledge so as to enhance the development and intensification of the organisation. This is necessary for an organisation with diverse employees and varied ideas, facts and experiences. Thus, sharing of knowledge and training and development programs among the hierarchy might help to device new information and facts which would be feasible to cope up with the challenging environmnetal conditions (British Columbia Museums Association, 2007). Therefore, it can be affirmed that the human resource managers or directors should always update or revise the strategies so that they might be viable for the growth and development of the organisation and the employees. In addition, as the MNC is a Norway based organisation, it is essential to maintain a planned human resource management which would be beneficial to handle with the international business strategies or challenges to sustain in the international market. Human resource management (HRM) is the administration of an organisations individual resources or workers which should be continuously innovated or updated so as to sustain in the competitive environment. This is because people or employees are the fundamental assets of the organisation which are primarily responsible for the growth and development (Bratton, 2012 ). Thus, the organisational goals can be achieved only by proper selecting and motivation of the employees. On the other hand, in this competitive environment, strategic human resource management (SHRM) is gaining additional momentum due to the rising acknowledgement among the academic world and the business traditions. This is due to the relationship between the employees and the accomplishment of the organisation (The World Bank Group, 2010). SHRM is a step to prepare differentiated HRM policies across the nations and cultures so as to make the organisation successful in the long run. SHRM is the relationship between the organisation’s policies or strategies and the HRM operations. It is mainly concerned with the effective involvement of HRM towards the overall efficacy of the organisation, thereby ensuring the proper management of the people in the organisation to meet the objectives and goals. Moreover, the organisations adopting the SHRM practices and policies are more flexible to the changes of the environment so as to cope up with the altering trends of the situations. However, they vary from one organisation to the other as they entirely depend on the situtaions in which the organisation is operating (Solberg & Durrieu, 2006). Thus, it is one of the significant aspects of modern era so as to fulfill the organisational objectives and goals. Hence, SHRM is an intentionally driven organisational process so as to manage the international business tactics. International business aproaches are the strategies utilised by an organisation so as to cope up with the competitive challenges of the environment. It can be also be reffered to as the marketing strategies adopted by the multinational organisations so as to enhance the profitability of the organisation and to reduce the associated business risks. Hence, the most common international marketing strategies adopted by the organisations are competitive strategies, operation mode startegies, standardisation strategies and pace strategies. The competitive strategies are mainly utilised by the MNCs so as to fight with the competitors in the market to enhance their sustainability, growth and position of the organisation among others. Moreover, in order to compete with the challenges, the organisation should continuously innovate the techniques and policies of the operational process so as to satisfy the needs and the wants of the customers thereby improving the corporate image and turnover (Johnson, 2009). This can be possible only with the help of proper recruitment of experienced and efficient employees by following the process of SHRM in the organisation. Along with this, appropriate standardisation of the processes as well as apt allocation of the work responsibilities are also essential for the upliftment and improvemenet of the organisation. Moroever, in order to sustain the image among others in this competitive world, it is necessary to follow the pace strategies of global marketing. It is a policy to maintain speed in the market of the same sector so as to retain the market share (Johnson, 2009). Conclusion Conclusively, it can be observed that the organisations should continuously innovate and develop new product strategies or product lines so as to retain the market demand and the position among others. These international business strategies can be fulfilled only if the MNCs follow the above discussed policies related to HRM. Thus, it can be concluded that the HRM policies of the MNCs should be at per with the business strategies and the locations in which the organisation is operating so as to accomplish the goals. References Bratton, J., 2012. Strategic Human Resource Management. Strategic Management. [Online] Available at: http://www.iim.org.uk/wp-content/uploads/brattongold-ref-devanna1.pdf [Accessed February 06, 2012]. British Columbia Museums Association, 2007. Best Practices. Human Resources Management. [Online] Available at: http://www.museumsassn.bc.ca/Images/Best%20Practices%20Modules%202/Human%20Resource%20Management%20FINAL.pdf [Accessed February 06, 2012]. Geert Hofstede, 2008. Culture. National Level. [Online] Available at: http://www.geerthofstede.nl/culture.aspx [Accessed February 06, 2012]. Johnson, R., 2009. Strategic International Human Resource Management towards achieving Sustained Competitive Advantage. Human Resource Management, Vol. 7, pp. 63-79 Mahmood, M., 2012. Strategy, Structure and HRM Practices in Multinational Subsidiaries: European MNCS In A Developing Country Context. IHRM Policy Orientations and Standardization of HRM Practices. [Online] Available at: http://www.wbiconpro.com/430-Monowar.pdf [Accessed February 06, 2012]. MbaTools, 2012. Best Practice V. Best Fit. Best Practice Model. [Online] Available at: http://www.mbatools.co.uk/Revision%20Sheets/OMP/BEST%20PRACTICE.pdf [Accessed February 06, 2012]. Schein, E. H., 2010. Organizational Culture and Leadership. John Wiley and Sons. Sparrow, P. & et. al., 2004. Globalizing Human Resource Management. Routledge. Solberg, C. A. & Durrieu, F., 2006. Strategic Developments In International Markets. Strategic Dimensions. [Online] Available at: http://impgroup.org/uploads/papers/5675.pdf [Accessed February 06, 2012]. Tierney, W. G., 2008. The Impact of Culture On Organizational Decision-Making: Theory and Practice in Higher Education. Stylus Publishing, LLC. The World Bank Group, 2010. International Trade Strategy Approach Paper: Background To The Strategy And Issues For Discussion. International Strategies. [Online] Available at: http://www.obela.org/system/files/wbg_trade_strategy_discussion_paper(approach).pdf [Accessed February 06, 2012]. Read More