Transcript Human Capital: Institutional Patterns

MN5131
HRM in International
Mergers and Acquisitions
Strategic Alliances
Key aims –
expand product, geographic and/or customer reach
share strategies and vision
handle environment more effectively
Different forms, e.g. –
merger
international joint venture (IJV)
wholly-owned subsidiary
turnkey agreement
Mergers –
cyclical: boom in 1990s
key means of international reorganisation
International Joint Ventures (IJVs)
How do we define an IJV?
Why do companies enter into IJVs?
increase market power by combining resources
reap economies of scale
reduce risk by sharing it
cooperate and avoid competition
regain competitive edge
symbolic benefits
transfer of technology / management systems
different opportunities for different companies
What are the critical success factors?
Factors influencing IJV success and failure
trust between the partners
trust within the project
compatible national systems & cultures
compatible organizational systems & cultures
Key HR issues in strategic alliances
assignment of execs / promotion of managers
cultural empathy / negotiation skills
Criteria for success? – HRM auditing
(i) partner selection
(ii) start up
(iii) venture management
China
Recent trends
growth of FDI (M&As, IJVs, partnerships)
largest number of MNC affiliates in any economy (24m people)
attractive location for MNCs (cheap labour, consumer markets)
shift in mode of market entry (from IJVs to M&As / WFOEs)
shift in R&D investments (from the ‘triad’ to China)
Getting into China
complex local ‘rules of the game’
role of intermediaries
influence of central, regional & local government
Key difficulties in China
transparency of laws and regulations
customs and export procedures
complexity of tax laws and government regulations
contracting based on informal connections (guanxi)
lack of formal legal contracts
intellectual property rights (IPR) not well protected
importance of group orientation, clear hierarchies, keeping face
recruiting, managing and motivating personnel
skill shortages and weaknesses in Chinese management
important areas for HR interventions
International Mergers
Major HR issues
Outcomes depend on context / rationale
Corporate transformation through M&As
Poor performance of mergers
Pressures to integrate – “home country effects”
Legacy of distinct national systems - “host country effects”
The search for balance – “merger of equals”
The political dimension to M&As
Role of the HR function
HRs Contribution to International M&As
8 key policy areas:
understand strategic rationale, constraints & opportunities
ensure cultural “due diligence” prior to deal
move quickly but fairly in appointment of new mgmt teams
identify realistic “synergy” targets
comprehensive data on reward & costs of harmonisation
establish flexible project management process
communication – consistent, truthful and timely
HR as “business-partner” – practical & financially-astute solutions