Case Analysis: Internationalization of human resources at OBI
Internationalization of activities is a strategic approach of developing enterprises’ performance. This is because globalization of operations attracts various benefits to the business. For example, a global market is characterized with opportunities such as new market and diverse consumers that enable the company grow its profits and distribute its risks. This means that OBI’s consideration of internationalizing its operations is a calculative strategy. However, successful internationalization of company’s activities is challenging because of the diverse nature of the global market (Banfield & Kay, 2008). A significant factor to consider when operating a global business is the challenge of internationalizing human resources. The presented case highlights effort of OBI in internationalizing their human resource. Critical examination of this case can review important concepts about the procedure of globalizing human resources. This paper examines the case of OBI in its endeavor of globalizing its operation with the intention of enhancing knowledge of internationalization of human resource. Initially, the paper examines how the firm utilized its multi-domestic strategy strengths when adjusting its structure to a transnational model. Furthermore, the study evaluates the rationale behind the company’s strategy of creating “Centers of Competency.” Lastly, the paper examines the effect of shifting from multi-domestic to a transnational scheme on the organization’s culture and Human Resource.
OBI took advantage of various strengths of its multi-domestic strengths when assuming a transnational structure. For example, the company utilized it domestic reputation in establish joint ventures with local enterprises. This provided OBI with the opportunity of growing its activities while retaining full operation control. Following this strategy, the company was able to develop its activities considerably. The company understands the concern of the partners who would decline the idea of joint venture in the fear of losing their authority (Dowling, Festing & Engle, 2008). Consequently, the company initially allowed its affiliates to remain autonomous and access support from the company’s headquarters at their will and through informal procedures. However, as the company developed, it utilized its increased authority to convince its affiliates into adopting a centralized operation strategy.
The idea of creating “Centers of Competency” highlights the company’s concealed strategy of implementing its centralized scheme of operation that was facing resistances. OBI understood that a centralized model was essential for successful transitional to a transnational business. However, the company could not have pressured its affiliates into embracing the system because such a practice would ruin relations. Consequently, the company had to design a friendly or harmonized strategy that was acceptable (Banfield & Kay, 2008). The company allowed each domestic operation to establish solutions to its problems. However, the company examined the models adopted by each country acknowledging states with the best interventions as “Centers of Competency” for particular essential procedures. Centers of competency were to act as good examples of strategies that the company needs its affiliate to follow. This meant that procedures such as recruiting, performance management and training among others needed to coincide with the strategies practiced in “Centers of Competency,” although they might be executed autonomously. This case highlight that the strategy allowed OBI to initiate its desired operational procedures in one country and apply them to other countries with time. This was an informal approach of executing centralized administration.
Shifting from a multi-domestic to transnational model meant that OBI had to adjust it organization culture to assume a multi-dimensional approach. Internationalization attracts multifaceted issues in business operations and the firm must establish a diverse culture that is capable of addressing such concerns (Chitakornkijsil, 2010). For example, shifting to a transnational model demanded the company to developing inclusive operational strategies that accounts for all scenarios presented by various partners. Furthermore, the organization’s culture needed to be flexible in order to have the capability of addressing diverse setups. This becomes essential because a strategy that is effective in one country may fail to work in another (Isidor, Schwens, & Kabst, 2011). Adopting a transnational model also obliged OBI into embracing international perspectives and values. Aligning the company’s values with the concerns and expectations of the global community became essential in order to enhance acceptability of the company’s activities (Mura, 2012).
Furthermore, adoption of a transnational model affected the OBI’s human resources strategies because of the need of accommodating the varied aspects of the global community (Perkins, Shortland & Perkins, 2006). For example, the company had to assign each country’s operations a vital role in establishment of HR policies. This became essential in ensuring that the company was operating under HR policies that are sensitive to the concepts of diversity and equal representations (Harzing & Ruysseveldt, 2004). Particularly, OBI had to adopt a HR plan that is capable of handling high flexibility and differences in economic, legal and cultural aspects. Any transnational company should account for these important factors because they affect activities of enterprises considerably (Mura, 2012). For example, companies that assume procedures that clashes with cultural believes or legal guidelines are likely to face resistances and suffer legal penalties (Hitt, Bierman, Uhlenbruck & Shimizu, 2006). Consequently, OBI had to adopt a diverse HR strategy that accounts for the concerns characterizing all stakeholders in the global market.
It is apparent that internationalization of business activities demands strategic management of human resources. OBI utilized its multi-domestic strengths in enhancing its transnational plan by establishing joint ventures with local partners. The concept of “Centers of Competency” enabled the company implement its centralized operation plan. Furthermore, shifting from a multi-domestic to a transnational model affected OBI’s organization culture and HR strategies making them assume an international dimension. From the analysis, one can identify the need of utilizing business’s strengths when venturing the global market. Furthermore, organizations should utilize strategic approaches in implementing their essential internalization procedures that may face resistances and ensure that their HR procedures are diverse and inclusive in order to succeed in the international market.
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