Chapter 1: International business
International hrm foceses on companies that have extended their business abroad and are
faced with related hrm issues.
1.1 internationalization and globalization
International company: if a company is not just active in his home county, but in one other or
more other countries or has divisions in numerous countries on nearly all continents.
Internationalization is used to indicate that a company has expanded its business beyond its
home country without a set minimum number of countries or limitations in type of foreign
activity.
Globalization: overarching foreign influence on a company or companies in general. People of
all different cultures, worlds and economics coming closer to each other.
The global industry assumes all companies that are active in the same field are active
worldwide.
A global player refers to a company that makes most of its profit outside its home
country.
Multidomestic industry: their market position in one country is independent of their
market position in other countries.
Factors contributing to globalization:
1. Companies that become global players: very known companies as apple.
2. Relatively small domestic markets: have no need to go abroad. Going international is
not a priority.
3. BRIC countries becoming future economic leaders: GDP represents the total value of all
products and services produced within one country, within a certain period of time, in
this case a year. BRIC: Brazil, Russia, India and china (most likely competitors, big
growth in 10 years and people buying more than to survive).
4. The availability of the internet: communication became easy and cheap. Easy access to
other countries.
5. Reduced costs of transport: costs reduced for transport. So companies do that more
often and easier.
6. Reducing barriers for trade and moving of people: companies allied with other
companies and made agreements to make transport and stuff easier for each other.
1.2 economic models
Each country has another way of leading their economy.
2 models: capitalism
- Capitalism is an economy in which the land and the companies are owned by
entrepreneurs who want to make as much profit as possible with their company.
Easily said, therefore, it is a business that belongs to one person. For example, your
house or store is your own. There is a big difference between rich and poor, for
example. In the United States capitalism is still there.
Anglo Saxon model: England, means that the individuals are expected to take care of
themselves.
Limited government interference by limiting regulations
Low tax rates
, Services preferably left to commercial parties rather than appointed as public
responsibilities
Strong emphasis in privately owned properties and businesses
Favoring tree trade, opposed to trade limitations.
Rhineland model: government interference is valued and accepted, allowing a higher level of
social security proved to those no able to provide for themselves, such as unemployed and
disabled people. The Netherlands.
These models are not for every country, do not fully encompass all elements from the models.
Communist: Russia, china and Vietnam
- Communism is a political and economic doctrine that seeks to replace private
property and a profit-based economy with common ownership of the means of
production. Examples of means of production are land, raw materials, machinery,
buildings and money.
Communist is a more radical version of socialism, (contrary of capitalism, Socialists
think the world is unfair. They think it's fair that people who work are allowed to keep
the proceeds of their work themselves. When asked why they think the world is unfair,
they answer that you have to look at the way 'production' is organized. For the
production of something you need 'means of production': - Labour (work yourself) -
Capital (tools, buildings and money) - Nature (raw materials such as oil, coal and iron),
and can therefore not be achieved without revolution.
The government is the center of all economic activities.
The do not want to work with other companies. But they do now and leaning towards
the Anglo Saxon model.
1.3 going abroad
Companies will look for opportunities abroad because of one or more of these reasons:
Brewster
Market: a new customer market
Cost advantages: producing in other countries is cheaper than in the home country.
Relocating production abroad is called outsourcing. 3 ways can be distinguished
(Brewster)
o Low skilled labor: simple Fabrik work
o Medium skilled labor: customer service
o High skilled labor: development abroad
A foreign government favorable to companies: low taxes
Internal motives for going abroad
Surplus of financial means: more investment opportunities abroad
Reducing risks: in Asia the economy is booming, so less risks there
Creating a global image: attracting more clients worldwide
1.4 entry strategies
Going from a local company into a global company steps: page 20
Multinational: a large company with offices or factories in various countries abroad but
managed from its headquarters.
Transnational: a large company who have their decision-making offices no restricted to the
headquarters but delegated to several locations worldwide. More focus on local taste.
, 1.5 capital
In the Netherlands you can loan money to start a business. In the us private investments are
more common, and becoming a partner of the company. It can be a coworker of someone with
no interest in the company.
Crowdfunding: receiving a loan from multiple individual investors. No banks or investment
funds
Debt financing: all the options to yield capital mentioned are considered debt financing
because attracting capital leads to debt.
Corporation: shares. Registration at the stock exchange and issue stocks= Equity financing:
buying shares, and change the name inc. The majority of the large companies operating
internationally are corporations.
1.6 corporation
A company that operates on a for profit basis and is listed at the stock exchange market is
called a corporation.
Stock exchange markets: digital markets with trading in shares and additional financial
products, taking place over the internet.
Shares, also called stocks, are offered at the exchange market by a corporation for an
amount that is based on the value of the company.
Shareholders are the people of companies who buys those shares.
Corporations are requested by law in the majority of countries to be managed by a board of
directors. 1 to 7 people elected by the shareholders.
The board does not have the decision making part.
Committee advise the board on issues. And have a expertise such as finance.
Managing director: to run the company on daily basis. Elected by the board.
CEO in the us
CFO is in charge of finance and reports to the CEO.
The board decide how much dividend the stakeholders get that year.
Dividend: profit per share and forms one of the reasons to becoming a shareholder. The
amount is related to the profit the company makes that year. Les profit is less dividend.
The shareholders can sell their shares.
3 USP corporation
Legal entity: a corporation is considered a legal entity by itself and therefore can buy,
sell, own enter in to a contract or sue people or companies. But also the companies can
be sue by other people. Other companies the owners need to go to court.
Limited liability: the shareholders cannot be sued.
Continuity of existence: the company will not cease to exist when shareholders die.
1.7 management
Investors as well as customers and employees can be considered stakeholders. Their definition
of the company's success varies with their interests. With those interest in mind, management
will decide on the goals for the company and how to achieve those goals, as they responsible
for steering the company in the right direction and ensure the company keeps heading that
way. Managers also are stakeholders.
Companies positions:
