When a company follows the strategy of choosing only from the citizens of the parent country to work in host?

Inhaltsverzeichnis Show

• Multidomestic Strategy
• Global Strategy
• Transnational Strategy
• Image description
• Media Attributions
• Policy brief & purpose
• Policy elements
• What is ethnocentric staffing?
• What is polycentric staffing?
• What is regiocentric staffing?
• What is geocentric staffing?
• International recruitment and selection process

1. Understand what a multidomestic strategy involves and be able to offer an example.
2. Understand what a global strategy involves and be able to offer an example.
3. Understand what a transnational strategy involves and be able to offer an example.

A firm that has operations in more than one country is known as a multinational corporation (MNC).The largest MNCs are major players within the international arena. Walmart’s annual worldwide sales, for example, are larger than the dollar value of the entire economies of Austria, Norway, and Saudi Arabia. Although Walmart tends to be viewed as an American retailer, the firm earns more than one-quarter of its revenues outside the United States. Walmart owns significant numbers of stores, as of mid-2014, in Mexico (2,207),  Brazil (556), Japan (437), the United Kingdom (577), Canada (390), Chile (386), Argentina (105), and China (400). Walmart also participates in joint ventures in China (328 stores) and India (5). Even more modestly sized MNCs are still very powerful. If Kia were a country, its current sales level of approximately $42 billion (in 2012) would place it in the top 75 among the more than 180 nations in the world (Wal-Mart Stores Inc., 2014).

Multinationals such as Kia and Walmart have chosen an international strategy to guide their efforts across various countries. There are three main international strategies available: (1) multidomestic, (2) global, and (3) transnational (Figure 7.23 “International Strategy”). Each strategy involves a different approach to trying to build efficiency across nations while remaining responsive to variations in customer preferences and market conditions.

Multidomestic Strategy

A firm using a  sacrifices efficiency in favor of emphasizing responsiveness to local requirements within each of its markets. Rather than trying to force all of its American-made shows on viewers around the globe, MTV customizes the programming that is shown on its channels within dozens of countries, including New Zealand, Portugal, Pakistan, and India.

Figure 7.23: International Strategy [Image description]

Similarly, food company H. J. Heinz adapts its products to match local preferences. Because some Indians will not eat garlic and onion, for example, Heinz offers them a version of its signature ketchup that does not include these two ingredients.

Figure 7.24: Baked beans flavored with curry? This H. J. Heinz product is very popular in the United Kingdom.

Global Strategy

A firm using a  sacrifices responsiveness to local requirements within each of its markets in favor of emphasizing efficiency. This strategy is the complete opposite of a multidomestic strategy. Some minor modifications to products and services may be made in various markets, but a global strategy stresses the need to gain economies of scale by offering essentially the same products or services in each market.

Microsoft, for example, offers the same software programs around the world but adjusts the programs to match local languages. Similarly, consumer goods maker Procter & Gamble attempts to gain efficiency by creating global brands whenever possible. Global strategies also can be very effective for firms whose product or service is largely hidden from the customer’s view, such as silicon chip maker Intel. For such firms, variance in local preferences is not very important.

Transnational Strategy

A firm using a  seeks a middle ground between a multidomestic strategy and a global strategy. Such a firm tries to balance the desire for efficiency with the need to adjust to local preferences within various countries. For example, large fast-food chains such as McDonald’s and KFC rely on the same brand names and the same core menu items around the world. These firms make some concessions to local tastes too. In France, for example, wine can be purchased at McDonald’s. This approach makes sense for McDonald’s because wine is a central element of French diets.

• Multinational corporations choose from among three basic international strategies: (1) multidomestic, (2) global, and (3) transnational. These strategies vary in their emphasis on achieving efficiency around the world and responding to local needs.

1. Which of the three international strategies is Kia using? Is this the best strategy for Kia to be using?
2. Identify examples of companies using each of the three international strategies other than those described above. Which company do you think is best positioned to compete in international markets?

References

Standard & Poor’s Ratings Services. (2014).  Stock report on Walmart.  Retrieved from http://www.standardandpoors.com/ratings/en/us?rpqSearch=NO&pageNav=No&searchText=Walmart%20stores%20Inc.&searchField=Entity

Wal-Mart Stores Inc.  (2014).  Our Locations.  Retrieved from http://corporate.walmart.com/our-story/our-business/locations/

Image description

Figure 7.23 International Strategy

“What’ for dinner?” is a question Of interest to folks Of nations. The answer depends, in some part, on the international strategy of the corporations that provide foods, drinks, and condiments worldwide. Firms choose between the potential trade-offs between efficiency in production/distribution and responsiveness to local market preferences. Below we provide examples of how a firm’s decision may provide some answers to how you might fill your belly.

	Low local responsiveness	High local responsiveness
High global efficiency	A global strategy – where minor or no modifications to products and services are made – and is used by iconic products such as Tabasco.	Nestlé uses a transitional strategy where some products are available worldwide while some others are only sold in selected markets.
Low global efficiency	n/a	Heinz uses a multidomestic strategy where foods are customized to be responsive to local tastes.

Return to Figure 7.23

Media Attributions

A firm that has operations in more than one country.

To sacrifice efficiency in favor of responsiveness to varying preferences across countries.

To sacrifice responsiveness to local preferences in favor of efficiency.

Involves balancing the desire for efficiency with the need to varying preferences across countries.

Policy brief & purpose

Our international recruitment policy refers to practices and strategies we employ to hire people all over the world. We explain approaches to international recruitment and when to use each one.

Scope

This policy applies to all employees, offices and branches of our company regardless of location.

‘Parent country’ refers to the country our company was founded or is headquartered in.

‘Host country’ is a country other than our parent country where our company has employees and operations.

We’ll take our employees’ wishes and plans into account when deciding on transfers and relocations. We will never use international transfers as a means to discipline employees or to retaliate against them.

Policy elements

There are four approaches to international recruitment: ethnocentric, polycentric geocentric, regiocentric. We’re mainly a [geocentric company/ polycentric company/ etc.] but we may occasionally shift to other approaches based on our needs.

Here’s a description of each of these approaches with recommendations on how and when to use them:

What is ethnocentric staffing?

The ethnocentric approach to recruitment means that we hire people from our parent country to fill positions all over the world. For example, if we want to fill an executive role in a foreign country, we could:

• Relocate one of our existing employees who’s a permanent resident of our parent country.
• Hire a person from our parent country who lives or wants to live in the host country.

We use the ethnocentric method when [opening a new branch at a new country, so it’d be easier for our company’s policies and procedures to be transferred from the parent country to the new branch]. As a rule, expatriates from our parent country should comprise less than [20%] of a foreign office so that we minimize the total hiring costs and avoid missing the pulse of the local community.

What is polycentric staffing?

The polycentric approach to recruitment means that we hire locals to fill our positions in a host country. For example, we could advertise on local job boards or create a contract with a local recruitment agency.

We use the polycentric approach when [we need the skills of locals to conduct our business. For example, if we want to expand our clientele to a specific country, we’d hire a local professional who knows the market and can coordinate our sales operations.] We’ll apply one of the other approaches if we haven’t found qualified candidates after [four months].

What is regiocentric staffing?

The regiocentric approach to recruitment means that we hire or transfer people within the same region (like a group of countries) to fill our open positions. For example, we might decide to transfer employees within Scandinavian countries. So if we want to hire someone in Sweden (a host country) we could transfer one of our employees from Denmark, a host country in the same region.

We use the regiocentric approach when [the costs of transferring an employee from a host country are lower than transferring them from the parent country.] When deciding to use this approach, take into account any language or cultural barriers that may exist.

What is geocentric staffing?

Geocentric approach to recruitment is hiring the best people to fill our positions without regard to where they come from or where they live. This means:

• Hiring remote employees. We use this option when we want to hire someone at a place where we don’t have offices. For example, if we want a customer support agent in another time zone to support our customers there.
• Relocating our employees. This includes both bringing foreign talent into our parent country and relocating people to a new host country. We use this approach when we need someone to be physically present at a specific location, but the best person for the job is living elsewhere.

To use the geocentric approach, we need to have a global outlook on recruitment. For example, whenever a position opens at a host country or our parent country, the hiring team could:

• Advertise on global job boards first, before using local job boards mentioning the location of the job clearly. Also, advertise on job boards focused on remote work when possible.
• Source candidates online without looking at their current location.
• Check our global employee database to find internal candidates who may wish to relocate.
• Ask recruiters to suggest candidates they met at international career fairs or events.
• Ask for referrals from our existing employees, as they may have someone in their network who could fit in this position and be willing to relocate.

International recruitment and selection process

Whenever a position opens, hiring teams should follow this process:

1. Decide which staffing approach is most suitable for this particular case. Use this policy to determine whether the regiocentric, ethnocentric or polycentric approach suits best. Discuss the budget with finance to make sure you’re able to apply the chosen approach and whether another one could work equally well with lower costs. If there’s no particular reason to use any of them, then the [geocentric approach] should prevail.
2. Determine the recruitment methods that work for this approach. For example, if you decided on the polycentric approach, then consider local job boards and locally-based recruiters in the host country.
3. Allocate your budget. To make sure you can coordinate recruitment activities, look into your budget. For example, if you’ve chosen the ethnocentric approach, you’ll need to factor in relocation costs for your new hire. Also, you may decide you need to meet candidates from the host country in-person so pay attention to travel expenses. Work with [finance/ HR] to determine the available resources.
4. Evaluate candidates. When it comes to resume and phone screening, we evaluate all candidates the same way. You could also use video interviews for remote candidates. Each role will demand a different skillset, but to make sure our employees can work well together, look for people who:
   • Are self-motivated and can work independently (especially if their manager is remote).
   • Can communicate well even through cultural and language barriers.
   • Have a global mindset.
   • Are tech-savvy.
     • Also, depending on the approach you’ll use, make sure to discuss if a candidate is legally permitted to work in the country where the open position is. If it’s agreed upon, discuss immigration procedures.
5. Close the hire and discuss paperwork. Once a candidate accepts a job offer, ask HR how to proceed with any legal procedures regarding visas, immigration policies or taxes. Be in close collaboration with the new hire until everything is resolved.