Culture, Political, Economic and Social Contexts of Nigeria Under the Subject of International Human Resource Management.
This paper is solely related to the International human resources practices, the uses of international human resources aspects as well as implementation within Nigeria. The paper has been explored several positive and negative aspects of Nigeria related to IHRM and whether it is feasible for global companies to operate and use the labor of Nigeria for making higher profits over there.
International HRM growth and significance
After attaining global scale, any company may be bound to utilize numerous resources and opportunities like global scale, scope, local differences adaptation and tap into best resources and locations associated with global presence in Nigeria and other countries. These are important opportunities in Nigeria because after exploiting such opportunities, the global image can be transformed into top global image (Hollinshead 2010, pp.233-262).
The opportunities can be explored and obtained through employing balance between centralized integration and local adaptation approaches through the policies of international human resource functions which can rightly be possible in the selected country (Hollinshead 2010, pp.187-202).
When companies achieve global scale then they should not be unperturbed but they may have many opportunities to avail by carrying global scale. The basic idea of exploring this issue is to see what companies are doing and what they should do after reaching to global level (Hollinshead 2010, pp.303-324).
In this report, it has been discussed that what the major obstacles and challenges associated to these opportunities as well as how centralized integration and local adaption supports to exploit all these opportunities to make a global company in the country of Nigeria, a top level and best country of the globe. There are several examples of huge companies such as Pepsi, Coke, Microsoft, HP, Dell and Motorola to understand the statement in a very obvious and straightforward mode within Nigeria (Hollinshead 2010, pp.39-61).
Institutional and Cultural influences on International HRM
It has been argued that world's economies such as Nigeria are quickly transforming into one global economy, and the differentiation pressures to maintain a global presence and numerous opportunities that flourish therein have considered as most important. The geographic diffusion, mix cultures, new legal and social systems, imports and exports, goods, services and people that the international firm faces adjoins a need for capability and sensitivity is not found in the domestic firm of Nigeria. The development of domestic industries through the potential positive consequence of multinational corporations' (MNCs) activities, notably via the avenues of transfer of technological and management expertise and sustained economic growth, are among the foremost expectations. Social and economic development depends on several factors, such as investments from the private and public sector in education, health, safety, infrastructure, and technological innovation, and private companies. MNCs as well as local Small and Medium Enterprises (SMEs) have a crucial role to play in this regard. However, having companies set up in a given area such as Nigeria in itself is not a guarantee for fostering development (Hollinshead 2010, pp.167-194).
The global scope of business activity has expanded dramatically since the decade of 1970s. Before entering into Nigeria it is important to read some major points.
Since then not only has the scope increased but also firms has increase their international operations in a number of ways. The global presence of a firm looks at the whole world as one market. But as per the experience of global MNEs, running a global company is more complicated than managing a multinational or international firm.
Difficulties of IHRM in Nigeria
Companies do not attain global level effortlessly; they have to pass through different stages and challenges to come up to global levels (Bjorkman & Lervik 2007, pp.320-355). The global scale is only possible when they will plan, target and subsequently desire to acquire top ranking. They can exploit global scale by getting resources of Nigeria such as cheap labour, technology, low shipment cost, and other expenditures (Deeg & Jackson 2008, pp.540-561).
There are three costs involved in the production or cost of production. For example, if you produce electricity by purchasing material such as furnace oil in bulk, cheap labour and low overheads so that you can reduce the average production' cost and attain the global economies of scope. This cost can be less costly in Nigeria (Bamber, Lansbury, and Wailes, 2004).
For example, Man diesel and Power management utilized both centralizes and local adaptation approach to minimize labour cost in host countries and in Germany. They use both key experts from head office and host country general managers to run and manage operations in all the countries of the world as per their International HR policy (Man Diesel Turbo 2012).
Economies of Scale and Scope in Nigeria
When companies achieve economies of scale then they should come up strongly to market its products all over the world. "The more companies market its products as per local adaptation, the more they get customers and increase sales in a great way." When the revenue achieves then companies achieve economies of scope. After reaching at the economies of scope, there is no going back, it means companies rarely get losses at that level. The opportunity related to Economies of scope may be available in Nigeria. For example, Nestle earns a lot of profits in Nigeria last year suppose $10 billion but this year profit declined to $5 billion, so reduction in profit is the loss of Nestle (Brewster, Sparrow and Vernon, 2006).
In short, companies may reach economies of global scope by leveraging their market power and by providing coordinated services in countries like Nigeria. There are challenges that hinder global organizations towards global scope destination greatly which are as follows:
Need for central coordination
Being locally responsive (Briscoe, Schuler and Claus, 2009).
The basic idea of achieving economies of scale is same because when more units of a good or a service can be produced on a great scale with less material and labour costs, economies of scale is said to be attained. Alternatively, this means that as a company grows and production units increase, a company can have a superior option to reduce its costs. According to theory, it is stated that economic growth may be achieved when economies of scale are observed (Edwards & Kurnvilla 2006, pp.1-21).
For example-When a company buys inputs in bulk - for example, potatoes used to make French fries at a fast food chain - it can take advantage of volume discounts. (In turn, the farmer who sold the potatoes could also be achieving ES if the farm has lowered its average input costs through, for example, buying fertiliser in bulk at a volume discount. These types of advantage are available in Nigeria for any company planning to enter into this market.
Expansion of Business in Nigeria due to low labour
Some researchers argued that global presence automatically expands and enhances operations and assets of the company. With large sales volume, a company can achieve economies of scale and sales can be increased by efficient marketing and production strategies as per the situation and condition (Edwards & Zhang 2008, pp.33-58). These strategies are made by efficient professionals from the head quarters or from the local associated branches and offices where the same country employees also operate (Edwards, Rees and Coller 1999, pp.286-306).
The balance of local adaptation is also essential because same culture, locations, languages and people are different in which it is important to handle the operations related to human resource management very carefully. In short, local management have better idea that how to perform normal HR activities and global policies implementation. Their roles can be ranged from General Managers to janitorial staff (Edwards & Kurnvilla 2006, pp.1-21).
Economies of scale is an opportunity for becoming a greater firm but it can automatically achieved when companies decrease fixed, capital and operating cost of production as well as pooling purchasing power by spreading fixed over larger volumes of production (Edwards and Rees, 2006).
Staffing the Multinational enterprise: expatriation and managing and working across borders.
For example, research and development cost of certain pharmaceuticals companies is treated as assets in terms of patents and formulas such as a pill or liquid medicine development and invention by the help of experts of Nigeria (Harzing and Ruysseveldt, 2011). In case of Merck Pharmaceuticals, if they are benefiting from research and development through heavy volume of sales for several years then they are reducing average per unit cost along with operating and capital cost. So, the fixed cost related and onetime fee of scientist can be used to reduce average per unit cost and reaching economies of scale (Battered 1997).
There is another example is suitable to this approach like by spreading purchasing of fast running items over few selected suppliers can also convert global presence of firm into global competitive advantage. A case of Marriot is very important, this hotel invested in lodging business and due to this business, its purchase…