International human resources management and practice

International Human Resources

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.

Multinational Corporations

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 related to furnishings, linens, and beverages items were increased dramatically (Gupta, Govindarajan and Roche 2001, pp.45-58). The management of this hotel can do an agreement with Pepsi for soft drinks, and other specific vendors for other fast turnover items, this approach can also help this hotel to convert its global presence into competitive advantage. In short, we can clearly state that creating critical mass in selecting items or fast turnover items can be helpful for global player to avail the opportunity to build centres of excellence for the development of specific technologies and/or products (Gupta, Govindarajan and Roche 2001, pp.45-58).

There are many activities that a global company performs all over the world. These activities include sales, distribution, production and procurement etc. There are various advantages of tapping into different locations and resources, for example performance enhancement, cost reduction and risk reduction (Scullion and Lineham, 2005).

Examples

Efficient performance like Nokia's cell phone product development in Nigeria.

Cost Reduction was done in a way that TI's Software development in India.

Risk reduction was done like Nike's manufacturing in Nigeria, Vietnam, & Korea (Gupta, Govindarajan and Roche 2001, pp.45-58).

There are many challenges that are faced by multinational companies during their operations for tapping into Nigeria and these obstacles and challenges are:

Low cost with low skills labour observation.

The Challenge of getting long-term benefits of best locations is to shine in synchronization across dispersed locations:

For example, HP's product named as ProLiant, ML150 design was made in Singapore, it was reviewed in Houston, and engineering design was carried out in Taiwan, manufactured in China & India (Gupta, Govindarajan and Roche 2001, pp.45-58).

One of the most desirable opportunities for a global company is that it should be ready to observe local market differences from a wide viewpoint and try to be heterogeneous as compare to the other companies in the market such as Nigeria. The segments such as language, income level, customers buying behaviour and channels of distribution should be considered very clearly. It is necessary in all types of global scale companies to some degree (Ferner 2000, pp.521-539). The example of this activity can be cellular companies or manufacturers must acclimatize their products to different languages and the magnitude of background noise on the street. By adapting national level diversity and innovation like adaptation of products, services, and processes, a global company can gain competitive advantage in the following three basic areas within Nigeria.

High Market share.

Price realization with quality or desirable product.

Competitive position

No Potential for standard Products in Nigeria

One of the major challenges of business is that when companies offer standard products to the customers then they cannot achieve a large market share. For example, the basic products of Nestle cannot be offered to those locations where customer has limited or no reach. Customers need difference in everything according to their needs and desire like close locations, innovative design etc. Standard products only fulfil the needs of uniform customers. On the other side, to meet the needs such as different features and attributes, adaptation of location market difference and innovation is to be studied very deeply (Ferner, Almond and Colling 2005, pp.304-321).

Nestle never offers and market all the products in every country, it offers those products which are demanded in that same country according to customer preferences, income level and culture of the country (Jacoby, Nason and Saguchi 2005, pp207-221).

Social and Cultural Adaptation by Global Companies In Nigeria

There are many benefits of local adaptation but with few challenges and obstacles like it creates cost imbalance due to change in attributes as per the desire of customers, managers of a global company should be able to remove any sort of trade-off between localization and cost structure of a product or service (Gupta et al. 2001, pp.45-58). For example, the same design of diaper is not applicable in all markets, Italian mother look for those types of diapers covering baby's navel but in all over Europe usual standard is acceptable by mothers. The new design for any market can increase cost of goods sold (Kim et al. 2003, pp327-344).

Secondly, local adaptations have proved to be misguided as well. For example, an American restaurant chain TGI Fridays started and launched restaurant in Korea by changing its normal dishes to Korean dishes but the customer response was negative, customers was expecting American dished in this restaurant. In short, a proper research should be collected regarding the expectation of customers and then there should a launch of business in other markets.

It is also stated and considered that local adaptation can be shift to global standardization in certain conditions such as "BusinessWeek" we foresee a diminished need over time for geography-based customization. There is music available over internet which can be listened so that customers are used to with the same music as well. Over-adaptation should be avoided in every business activity (Gupta et al. 2001, pp.45-58).

Example of McGraw hill is much helpful, they produce magazine as per country, issues and different stories of 10-12 pages so a mix of information developed in Business Week of McGraw Hill Inc. Price realization means delivering those quality and desire of products to customer that can fulfil and realize the money spent on that product. For example, green tea flavoured ice-cream was offered in Japan, the flavour enhance the value delivered to those customers (Gupta et al. 2001, pp.45-58).

The foremost opportunity for a global firm is to find best locations and take advantage of experience and knowledge. There is huge potential to operate globally in terms of getting great knowledge and it becomes necessary for a subsidiary to create some exceptional facts to exploit the resources and market opportunities of the local area. There are numerous benefits associated with transferring knowledge and experience across multiple countries. The crucial advantages associated with the sharing of knowledge and resources are:

Faster production innovation

Economical innovation

Low risk

Palio was developed in Brazil. The engineering design for use on rough roads done in Brazil was utilized when Palio was released in India (Gupta et al. 2001, pp.45-58).

Rather, tapping into best locations for activities and resources are beneficial but it is not easy to achieve those benefits because of few challenges and hurdles. These challenges are discussed as follows:

1. Sometimes subsidiaries refuse to share knowledge to other countries which can create problems.

Knowledge is solely linked with experience and it is difficult to transfer the skills to other places in the shape of documents. Moreover, implicit knowledge usually resides in people skills, behaviour patterns, and culture etc. (Morgan & Kristensen 2006, pp.1467-1490).

When MNC's enter into a local market of any country then the local population and government expect a lot of positive changes in the system. These changes can be attributed to economy, finance, and marketing and production knowledge. The major effects of international companies are on the economy of the local country by employing local people (Hedlund, 1986; Schuler et al.,1993; Taylor et al., 1996).

Reasons of Success in Nigeria and Conclusion

International Human Resource Management (IHRM) functions are aligned with the corporate strategy of all the departments such as management, services, marketing, administration, and logistics department from head office to local affiliates. There are many advantages associated by adapting different IHRM approaches such as local adaptation and centralized intergradations. The foremost advantage of having local adaptation is that HRM systems may be completely in tune with their local affiliates (Taylor et al. 1996). Apart from many advantages, sometimes local adaptation approach is proved to be weak, for example, a lack of coherence and duplication of efforts

In centralized integration approach, standards are being transferred to all associates accordingly. This approach lacks in few areas such inflexibility; restrict learning, ignorance of local possible differences (Taylor et al. 1996).

To achieve local adaptation differences, knowledge and resources and to be the market leader, every global company needs to adapt the local adaptation approach in its operations. For the purpose of attaining and exploiting economies of scale and scope, global organizations needs to be more flexible and coherent toward the functions of IHRM. International human resource management is applicable at that place in which physical existence of people is involved. When summarizing all the arguments then it is clearly visible that global level opportunities can be availed with efficient, skilled and satisfied workforce. International companies and local affiliations can get all the human resources with the help of global level approaches such as centralize integration and local adaptation.

As it is clearly stated that human resource policies are rightly associated to all the global corporate strategies because this department handles all the issues of the major and internal strength of the company and that strength is its employees all over the world. If there are completely satisfied with the facilities provided and the incentives from time to time then there is a no chance of any short production, inefficient marketing, management and legislation at any place all over the world. When skilled people are satisfied and happy with the facilities by IHRM then there is no issue associated with the opportunities to exploit at a wide scale (Adler & Ghadar 1990, pp.235-260; Milliman et al. 1991, pp.318-339; Schuler et al. 1993, pp.717-764; Taylor et al. 1996).