Introduction:-

This essay makes an analysis on the current business environment and its influence on
the International view of HRM. The globalisation of the Current Business environment gives rise to
many Opportunities and uncertainties which requires a wider knowledge to perform the HRM
Policies, shifts the role of play from the Domestic HRM to IHRM. The essay thus focuses on the
importance of the International HRM in dealing with the firms in the present business environment.

The Analysis of the Current Business Environment-

The globalization of the business environment lead many national firms to operate
internationally which made the firm to concentrate more from a domestic HRM activities to a more
broader International HRM activities. The Organizations today differ on the basis of its
Organizational Structure(Japanese vs United States of America vs Germans) and on the resources
availability (Land, Labour and capital) which are used to operate the business. [P. Dowling, M.
Festing & A. Engle SNR(2008) , “ International Human Resource Management” (fifth edition),
South-Western Cengage Learning ]. A change in the Globalization leads to a change in the
economy which leads to a change in the Organizational structure and functions leading to the
changes in the HRM policies.

Factors affecting the firms in the current business environment:-

The Present Business Environment is affected by the Political, Economical factors and
socio-cultural factors. These Political and Economical factors(corrupt officials, physical danger to
staffs, age and sex barriers, stability of the Government, work visas, minimum working hours,
labour costs, unemployment, per capita income), Socio-cultural factors( culture, language, beliefs,
demographic features) makes the HRM personnel to expand their activities into an Internationalized
business context.
The Mergers, acquisitions and the International Joint Ventures has made the firms to
cross its National borders which influenced the International HRM to focus upon the Culture and
Nationality of the firms.
Ex:- the training, career planning and performance related pay is more famous in those firms in
U.S.A compared to that of Japan and Germany.

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Employees in the Current Business environment:-

The modern Business Environment concentrates on the employee well being and
workplace innovation, in which employees are given chances to interact with each other in the
office atmosphere rather than an isolated situation, leading to increased creativity and productivity.
The nationality of an employee which is a major driver of the employee's compensation and the
multi cultured assumptions in a firm are the main concerns focused by the IHRM”. The competency
and the sustainability of the employees in a multi cultured Organizational structure can be achieved
by the IHRM policies and procedures in turn helps the firm to have a sustainable competitive
advantage.
[P. Dowling, M. Festing & A. Engle SNR(2008) , “ International Human Resource Management”
(fifth edition), South-Western Cengage Learning ].

The Expatriate employees:-

The Globalization of the Businesses lead to the labour migration from Developing countries to the
Developed countries termed as “Expatriates”, in search for more academic qualification, standard of
living, more career growths, improved international communications. Many Multi National firms
have their own “ International Human Resource Services” sections to take care of the expatriate
employee's health care, compensation package, accommodation and food related issues e.t.c.
In some countries the government will guide the MNC firms to give preferences to the local
candidates in that country compared to the foreign expatriates.

[P. Dowling, M. Festing & A. Engle SNR(2008; p 3-4) , “ International Human Resource
Management” (fifth edition), South-Western Cengage Learning ].

To manage the global business environment and the culture across the geographic regions
the HR manager should be efficient enough to identify the challenges of working in a global
organization. The IHRM will focus on the contracts, compensation packages, about the precautions
taken to avoid the poaching of trained candidates, reduce employee turnover and absent ism.

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Importance of International HRM to the matters concerned with the current business
environment-

The domestic HRM is applicable only within the national boundaries of the Country, it is the
International HRM which plays an efficient role in those firms which function across the National
borders. So more than a local knowledge is necessary in an International Business sector. When a
firm buys an another firm or set up a sales team in the foreign area, the HR Manager of the parent
firm will be responsible for the other firms Human Resource activities as well as to the foreign sales
team.
Most of the International Business failures are due to the lack of proper management of
activities related to the Human Resources. So the IHRM team should take care of certain matters to
motivate the expatriate employees and for the success of the firm in the current globalist Business
environment.
 The HR manager should deal with the International Taxation laws- the taxation
laws are different in different countries and complicated. Ex:- The taxation law in the UK
compared to the tax free rules in U.A.E.
 The HR manager should deal with the matters concerned with the International
relocation of the employees like the pre-departure training, travel arrangements and
immigration, accommodation, academics for the children, compensation package etc.
 The language translation services comes under the responsibility of the HR
manager in an International firm. Ex:- if we go to work in a firm in the Middle east, they
will definitely translate our documents to their Arabic language.
 The HR manager should consider the local people in that particular country for the
recruitment purpose in a MNC firm.
 More interaction into the employees personnel life such as the dealing with the
family issues(visa arrangements for the wife and kids), insurance arrangements, initial
finances to the expatriate employees etc. is important for an International HRM manager
compared to the domestic HRM manager in which these activities are carried out by the
employees itself.
 The expenditure involved in the International recruitment purposes is very high
compared to the domestic recruitment in turn pressurize the activities of the IHRM.
 The HR manager should consider about the government regulations in each country
like the labour cost(most important factor for the fixed cost of the firm). The labour costs
will be higher in developed countries and cheaper in less developed countries.

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The variables that differentiate Domestic HRM and IHRM
They are:-
 The cultural factors within the firms in the current global environment have a good
influence in the IHRM activities.

 The Industry in which the firm operates (competitive factors in the industry) also affects the
IHRM activities.

Ex: the firms in the domestic airline industry(Air Deccan in India)compared to those firms in the
extensive competitive international airline industry( British airways). The HRM activities
differentiate in the recruitment purposes(dress codes, language purposes, multi cultured staffs).

 If the firms depend more on the home country for their business activities compared to the
global business activities they will be less affected by the global factors like the risk and
uncertainty.

Ex: Most of the firms in the USA operate within the USA because of the large market and the
opportunities within it.

 The top level senior managers with a good level of international experience is also an added
value for the MNC's.
Thus the current business environment have a high impact on making the HRM activities move
from the domestic view to a more International view considering the employees career
development in a global environment.

[P. Dowling, M. Festing & A. Engle SNR(2008; p 9-17) , “ International Human Resource
Management” (fifth edition), South-Western Cengage Learning ].

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The IHRM functions fall under 3 distinct themes. They are:-

The Cross-cultural management states about the culture(values and beliefs) which differs from
country to country, the comparative HR and IR system shows about the differences in the
Organization structure between nations and the IHRM in the multi national context states about the
ways in which Human Resources are managed in the current business environment in different
nations.

Thus for the current Business environment, it is mandatory to have a more view on the IHRM
activities. The HR manager in a MNC firm will have to think globally and formulate the HR
policies globally considering the employees and the business(competition) among the world
economy.

Conclusion:-

The essay can be concluded by stating that the current globalisation of the
business environment has transformed the Domestic HRM to a more View on the International
HRM. The political and legal factors, socio-cultural factors affects the MNC's and such firms are in
need of those HRM people who have wide knowledge on the International business, Labour laws,
Financial matters(Exchange rates, compensation and tax information), cultural differences in
various countries, local labour markets(skilled and unskilled labourers). The Domestic HRM
players cannot play in a wide globalist market with their local knowledge and that made the IHRM
players to enter the MNC's . The essay also focused on the importance of the IHRM and the ways
in which their activities concentrated on the current business environment.

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