Harry Ramsdens goes international

Deep-fried fish and chips have been a perennially popular food in England. But they have historically been very local in their operation. One of Englands premium fishand- chip shops, Harry Ramsdens, though, founded in Guiseley, Yorkshire, in 1928, is one of the few that have opened shops at multiple locations. By 1994 the company had eight branches in Britain, with four more scheduled for opening, and one in Dublin, Ireland. Its busiest UK location is in the resort town of Blackpool, generating annual sales of 1.5 million (US$2.3 million). Harry Ramsdens managers, however, were not satisfied with this success, they wanted to turn Harry Ramsdens into a global enterprise. To this end, in 1992 the company opened its first international operation in Hong Kong. According to finance director Richard Taylor, We marketed the product as Britains fast food, and it proved extremely successful. Within two years the Hong Kong venture was already generating annual sales equivalent to its Blackpool operations. Half of the initial clientele in Hong Kong were British expatriates, but within a couple of years, more than 80 percent of customers were ethnic Chinese.

Harry Ramsdens goes international

Emboldened by this success, Harry Ramsdens has (as of 1999) opened additional branches in Singapore, Dublin, Ireland, Dubai, United Arab Emirates, and Melbourne, Australia; but its biggest potential target market is seen as Japan. In an experimental shop in Tokyo, the Japanese took to this product, despite their traditional aversion to greasy food. So Harry Ramsdens began to look for a Japanese partner to establish a joint venture in Japan. As for the future, Richard Taylor states their international strategy: We want Harry Ramsdens to become a global brand. In the short term the greatest returns will be in the UK. But it would be a mistake to saturate the UK and then turn to the rest of the world. Wed probably come a cropper when we internationalized. We need experience now.

Global Trends
The Business Week Global 1000 (the largest public firms in the world based on capitalization, i.e., their market value based on their stock prices times the number of shares outstanding) ranked firms from twenty-one countries in their 200l rankings (there were twenty-two in their 2000 rankings). In the top 200 firms (2002 data) 105 were from the US and the other ninety-five were from fifteen other, non-US, countries.
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In 2000, Business Week also included a ranking of the top 200 emerging market firms (this list grew from 100 firms the year before), at least half of which had market capitalization large enough to qualify them for the rankings of the top 1,000 firms from the twenty-one developed countries that Business Week studies. This emerging market list included enterprises from twenty-five additional countries, for a total of forty-six countries represented.

Specific Business drivers of Globalization

Increased pressure on costs - move to where labor and other resources are cheapest and most readily available. The search for new markets- for growth and to be able to compete more effectively with global competitors, further consumers around the world also seek foreign products and services. Greater customer demands on product and service qualities. Government policy (encouraging foreign investment through tax benefits, or the opening up of markets through regional trade treaties, or through privatizing industries such as telecommunications, health care, and the mass media, or encouraging local firms to export to develop better trade balances and to earn hard currency). Technological development (which impacts globalization in a number of ways, e.g., multinational firms searching the globe for the best technology, the best technology being made or copied everywhere, and new technology allowing smaller, more flexible manufacturing plants to be placed close to markets, no matter where those markets are).

Specific Business Drivers of Globalization

Worldwide communication and information flow - creates global knowledge of and demand for world-class products and services. The interdependence of nations in trading blocs, such as the European Union, the Association of South East Asian Nations (ASEAN), Mercosur (Brazil, Argentina, Uruguay, and Paraguay), and the North American Free Trade Agreement (NAFTA Canada, the US, and Mexico). The integration of cultures and values through the impact of global communication and the spread of products and services such as music, food, and clothing, which have led to common consumer demands around the world. A larger, more highly educated workforce worldwide. Decreasing trade barriers and opening markets - Lead to foreign competition higher-quality products and services at a lower cost overseas opportunities for markets and investment. E-commerce - through web site, as customers log on to that web site and order whatever product or service is being offered.

The increasing importance of international business

Size: Germany there are about 350 small to medium-sized firms (SMEs with fewer than 300 or so employees) that still dominate their global niche markets. Number: Companys global presencefrom Developed countries as well as from developing countries.

The increasing importance of international business

Beginning in 1998, Business Week started compiling a ranking of the top 100 information technology firms in the world. Even though most of the companies on this list are from the US (forty-three in 2003), the 2003 list also included firms from twenty-five other countries (up from nineteen in 2001), such as Indonesia, Greece, Taiwan, Hong Kong, Denmark, Russia, Spain, India, and Mexico.
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The increasing importance of international business

In 2001, Business Week compiled a list of the global top 100 brands. Of these top 100 brands, sixty-two were American, but the remaining thirty-eight came from twelve other countries, including large countries such as Germany, France, and the UK, but also including smaller countries such as South Korea, Denmark, Finland, and Bermuda.

The increasing importance of international business

Forbes magazine also develops a ranking of international firms, ranking the top 500 based on a composite of sales, net income, assets, and market value.
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In the world Super 50, i.e., the fifty largest firms on their composite rankings for 2002, twenty-seven were from the US while the remainder were from eight other countries.

On the Forbes list of the top 500 firms (outside the US), presented on their web site, there were thirty-two countries represented and fourteen nations with at least five companies on the list. Again, these countries include not just those that are normally referred to as developed, but many developing or emerging economies, as well, including Austria, Bermuda, Brazil, China, Greece, India, Ireland, Mexico, Russia, Singapore, South Africa, Thailand, and Turkey.
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(This is a shorter list than the year before when firms from Argentina and Israel were also on the list.)

The increasing importance of international business

Types: The complexity is the growing number of firms
that derive over half of their revenues outside their home countries and the increasing number of local firms whose ownership is held by firms from another country. Larger (and more familiar) firms with greater than 50 percent of their revenues from outside their home countries include Hewlett-Packard, Intel, Xerox, Dow Chemical, McDonalds, Manpower, Eastman Kodak, Nestl, Exxon, Royal Dutch Shell, Unilever, IBM, Siemens, Volkswagen, Asea Brown Boveri (ABB), CocaCola, and Gillette.

The Increasing Importance of International Business

Many well known firms are now owned by firms from another country, including Firestone Tire (owned by Bridgestone, Japan), Chrysler (owned by Daimler Benz, Germany), Guinness (owned by Diageo, UK), Holiday Inn (purchased by Bass but now a part of Intercontinental Hotels, Great Britain), RCA (owned by Thompson, France), Ben & Jerrys Ice Cream and Best Foods (owned by Unilever, Netherlands/UK), Braun (owned by Gillette, US), Tropicana orange juice (acquired by Seagram, Canada, but recently acquired by Pepsi, US), Godiva chocolate (owned by Campbell Soup, US), Jolly Green Giant (owned by Grand Met, Great Britain), and Volvo and Jaguar (owned by Ford Motor Company).

Internationalization of a local manufacturer

The experiences of Barden, a precision ball-bearing manufacturer located in Danbury, Connecticut, illustrate how global issues can impact even a local firm. In the late 1980s, Barden had an opportunity to significantly increase its business. In order to achieve this, it had to increase its hourly labor force by about 125 employees in one year. However, the local Danbury labor market was experiencing an unprecedented low unemployment rate of about 2.5 percent. The Human Resource department thought they could do this, but indicated they would have to be very creative (using bonuses to employees for successful referrals, open houses to recruit applicants, etc.) and, importantly, by recruiting workers whose English was very poor. In the past, Barden had found that, for example, Portuguese immigrants became very reliable, long-term employees. Barden had used a buddy system to help them learn their jobs and to acquire an adequate Barden vocabulary. But it was clear that this would be inadequate to prepare in a short period of time the large new group of potential employees that had been identified. It turned out that there were a significant number of bright recent immigrants from a large but diverse number of countries (e.g., Laos, Cambodia, Brazil, Colombia, the Dominican Republic, Guatemala, Chile, Lebanon, Pakistan, Thailand, and Yemen), but who spoke little or no English.

Internationalization of a local manufacturer

To become functioning, qualified Barden employees, newcomers would have to master the basic Barden vocabulary and be able to look up standard operating procedures as well as material safety data sheets, and master basic shop mathematics, measurement processes, and blueprint reading. This was a tall order for the immigrants (many of whom, it was discovered, had received a surprisingly good education in their home countries). In order to teach these new employees enough English to pay their way, a language training firm, Berlitz, was retained to develop a special, intensive course in cooperation with Bardens training unit.

In a fairly short period of time six groups of eight new employees were taught through this special program. All the students were put on the payroll while they met with a Berlitz instructor for four hours a day for fifteen consecutive workdays during work hours.
The program had a number of effects, beyond enabling Barden to fill its employment needs to meet its new corporate growth strategy and to integrate this veritable United Nations group into its workforce. The confidence level of the students soared as they used their new language ability. Bardens supervisors were impressed. And the word spread to the community with the positive result of attracting new high quality recruits.

The internationalization of Human Resource Management

IHRM is about understanding, researching, applying and revising all human resource activities in their internal and external contexts as they impact the process of managing human resources in enterprises throughout the global environment to enhance the experience of multiple stakeholders, including investors, customers, employees, partners, suppliers, environment and society.

Ford Motor Company goes international

Ford Motor Company has been in business for over 100 years and when it comes to a global mind-set, Ford is ahead of most of its competitors. For a number of historical reasons, over the years Ford evolved into a collection of country and regional fiefdoms. Early in its history, Ford was like many large US companies, which often sent someone off to the UK, Canada, or Argentina to run a company just like the one back home. The first Henry Ford was in many ways an internationalist, because within a very few years of establishing the company in the US, he was quickly opening assembly plants all over the world that were essentially smaller versions of the original company in Detroit. But by the mid-1920s, and all around the world, a sense of national pride developed. Countries began to develop their own automotive companies. Suddenly, there were automotive companies in the UK, in France, Germany, Australia, and they were all making their own vehicles. Nations wanted to assert their independence and saw the automotive industry as a means of investing in their own economies. The Europeans exported, the Americans exported, and thats how the competitive game was being played.

Ford Motor Company goes international

In the 1960s, though, regionalism began to develop, with the emergence of the European Common Market, NAFTA, ASEAN, and other regional trading groups. Countries kept their own political systems and social values but formed economic trading blocks. So big companies established regional headquarters within the various major trading blocs. Ford Europe was established in this period. This was when most of the regional and functional fiefdoms (with each region becoming very independent) became firmly entrenched at Ford. (This is what is referred to in this book as the regional corporate structure, an extension of the multi-domestic structure.) The fiefdoms were excellent at what they did: they squeezed every last ounce of efficiency out of the regional model. For example, back in the period of nationalism, Ford had multiple accounting activities around the world there were fifteen in Europe alone. The regional model got it down to four: one in Europe, one in the United States, one in Asia-Pacific, and one in South America. But even with that efficiency, Ford felt that the model didnt work any more. Today Ford is moving to a fourth stage of economic evolution with the globalization of all aspects of its international operations: capital, communications, economic policy, trade policy, human resources, marketing, advertising, brands, etc. The auto industry around the world has become globalized. Germany and Japan produce cars in the US, Korea produces cars in Eastern Europe, and Malaysia and Mexico export cars and parts. In addition, the automotive industry has become an electronics driven industry. It is increasingly a business that requires huge investments in technology and intellectual capital.

Ford Motor Company goes international

So the leadership of Ford feels there is no longer a choice about globalization. For a company of Fords background and size, remaining a national or regional company is no longer a viable alternative. Auto companies around the world have global ambitions, and many of them are world-class players, such as Toyota, Honda, Volkswagen, and Daimler Chrysler. In this environment, Ford sees an incredible challenge: more markets open for business, more competitors fighting for dominance, more need for very smart people and fresh ideas. Ford feels that it cant build such a company if it holds on to a mind-set that doesnt respond swiftly to (the global) consumers needs or pay attention to the (global) capital markets. So, under the leadership originally of Jacques Nasser And now of William Ford III, Ford has begun to reinvent itself as a global organization with a single strategic focus On consumers and shareholder value. Ford realizes that, in this process, it must not try to eliminate the role of national cultures or eliminate the idea that it makes sense to have people with expertise in one function or another, but it wants to develop a sort of Fordwide corporate DNA that drives how it does things everywhere. That DNA has a couple of Key components, including a global mind-set, an intuitive knowledge of Fords customers around the world, and a relentless focus on growth. Many large, experienced, multinational firms are now trying to develop a global structure and frame of mind similar to what Ford is doing, as they all see it as necessary for successful operation in todays Globalize economy. And it is IHR which must take the responsibility to develop this corporate DNA.

The shift to being a global company

The Cleveland-based Ferro Corporation, a $1 billion manufacturer of coatings, plastics, specialty chemicals and ceramics, has been a successful international enterprise for almost three-quarters of a century and is now becoming a model For being a global company. Several of its foreign operations, particularly those In Europe and Latin America, have existed for as much as seventy years. About two thirds of its employees are non-US nationals, and over 60 percent of its revenues and profits are derived from foreign operations. Despite its impressive international record, only recently has Ferro begun to see itself as a global company. According to David B. Woodbury, vicepresident of human resources, There was quite a bit of sharing of information and technology . Among our operations in various countries, but each foreign division or subsidiary operated highly independently, formulating much of its own Strategy for manufacturing, marketing, finance and human resources.
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The shift to being a global company

Since then Ferro has reorganized its corporate structure to focus on products and business lines across international borders. Each business thinks of the world as its marketplace now, says Woodbury. Were developing broad-based global strategies, with increased communications and a greater sharing of assets throughout the world.

High on that list of shared assets is human resources. We realize there is a strong need for global managers, says Woodbury. We have to identify, train and develop people with an international outlook, skills and experience. Like all other facets of the corporation, Human Resources has to evolve into a global operation

Cap Gemini-Sogeti: A transnational organization

Cap Gemini-Sogeti (CGS) is Europes biggest computer software and services group. CGS has taken all available means (organic growth, acquisitions, and alliances) to become Europes No. 1 in computer services and consulting. The original merger of Cap, a computer services group, and Sogeti, a business management and information processing company, brought together operations in the UK, the Netherlands, Switzerland, and Germany, with a head office in France. Further acquisitions brought in a large number of small groups throughout Europe and the US. This expanded its coverage to IT consulting, customized software, and education and training. CGS is already highly decentralized, but when any of its branches reaches 150 personnel, it splits it in two. This gives the firm greater flexibility in responding to variations in local demand. CGS has developed information pooling systems to ensure that innovative Solutions developed in one country or business will be rapidly disseminated to other countries and businesses. These include electronic bulletin boards and extensive electronic and voice mail facilities, plus the organizational culture of informal networks of professionals who work frequently together in project teams.

Cap Gemini-Sogeti: A transnational organization

The challenges for this fast-growing transnational have major HR components, e.g., integrating its wide variety of organizations into a group with a common Culture capable of working within a complex web of ownership relationships, while benefiting from the strengths of the relationships that exist between its family of committed, semiautonomous professionals. Internally, CGS and its IHR team worked to clarify and coordinate roles, objectives, systems, and resources, particularly its skilled professional staff, across countries and markets. Its Genesis project took two years to achieve this, but now CGS sees itself as coming much closer to achieving its aim to be a modern Transnational company.

Choice of business form for entry into international business

Portfolio investment Partial ownership Export Wholly-owned sales subsidiary/local sales office International division or global product division License Contract/subcontract Manufacture/assembly Service International joint venture Alliances, partnerships (e.g., research), and consortia Franchise

International orientation Ethnocentrism Polycentrism or regio-centrism Geocentrism

Strategic IHRM: matching HRM to IB strategy

Human Resource policies and practices
Procure- (Recruit, select, train, assign) Manage- Pay, benefits, PM, H&S, LR, Info sys Out process: Retirement, layoff, termination, downsizes, divestiture

International Business Strategy

Export Subcontract/ license JVs/Partnerships/ Alliance Foreign Subsidiary Short term assignee (PCN, TCN) Long term assignee ( PCN, TCN) Local hires (HCN, TCN) Immigrants Refugees

Type of International employee

Forms of international business

Direct import/export Counter trade
Pure barter Clearing arrangements Switch trading Counter purchase Buy back

Portfolio investments Contract manufacturing Licensing Turnkey projects Foreign manufacturing/service centers/stores
Wholly-owned subsidiaries Joint ventures Investments/equity participation

Alliances/partnerships/consortia

Evolution of the multinational enterprise

Foreign inquiry Simple export The export manager The export department and direct sales Sales branches and subsidiaries Assembly abroad
Production abroad Contract Licensing Direct investment Joint venture Wholly-owned Acquired Turnkey

Integration of foreign affiliates Global / transnational firm