Chapter 2

Strategic Importance of Understanding the External and Organizational Environments (pgs 36-39)
Over time, HR practices give rise to organization's culture (personality), traditions (history), and rules &amp; regulations (a set of values) Elements of the Environment HR Triad Line managers: investigate potential new markets; develop understanding of selected countries; investigate new technologies; understand and communicate vision/mission/values; recognize and promote company's desired culture; assist HR professionals in setting company culture to implement strategies.
 * Exhibit 2.1: Corporate Leader's Views of Human Capital (pg 36)
 * External Environment - encompasses local, national, and multinational conditions that confront an organization
 * Economic Globalization
 * Political Landscape
 * Industry Dynamics
 * Labor Markets
 * Country Cultures
 * Legal Institutions (Chapter 4)
 * Unions (Chapter 14)
 * Organizational Environment - conditions within the organization itself.
 * Technology
 * Company Culture
 * Business Strategy

HR Professionals: investigate foreign labor markets qualifications and conditions; educate org in issues of global expansion; provide resources for managers/employees to learn about cultural differences; apply HRIM for competitive advantage; align HRM system with vision, mission, values; develop HR policies to create desired company culture; with line managers develop company culture to implement strategies.

Employees: Develop understanding of effect of global conditions con company, other cultures, and unique aspects of own culture; continuously develop skills needed to use new technologies; contribute to the mission; behave consistently with the values; understand company culture; learn behaviors and skills needed to implement firm's strategies; assist other employees with needed behaviors and skills.

Economic Globalization (pgs 39-42)
Many foreign firms are expanding into the US Competing on Cost versus Competing on Knowledge Worldwide operations Regional trade zones
 * US market very open compared to other top markets.
 * Has put intense pressure on domestic companies to compete
 * Some US manufacturers are diversifying products &amp; services so as to compete in industries where cost pressures are less severe.
 * Do so by leveraging accumulated knowledge in a field to move into a new industry
 * American firms are expanding into global market.
 * Allows smaller countries to benefit from economies of scale in consumer markets and gain easier access to large labor pool.
 * NAFTA - has lead to removal of nearly all tariffs between Canada, US, and Mexico
 * Maquiladoras - factors set up along US-Mexico border, using low-skilled, low-paying labor.
 * CAFTA - Central American Free Trade Agreement, between the US, El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica.
 * EU - "An institutional framework for the construction of a united Europe."
 * 27 countries
 * Creates single market through removal of trade barriers
 * Single currency removes conversion costs and increases economic stability
 * Removed some border restrictions
 * Numerous directives relevant to employment
 * ASEAN - Association of Southeast Asian Nations;
 * APEC - Asian-Pacific Economic Cooperation
 * 21 member countries, including US, Japan and China

Political Landscape (pgs 42-43)
NGOs - international Non-Governmental Organizations ILO - International Labor Organization SAI - Social Accountability International WTO - World Trade Organization
 * Housed within the U.N.
 * Mandate: promote social justice and internationally recognized human and labor rights
 * Formulates international labor standards
 * Promotes socially responsible approaches to conducting business
 * SA 8000 - Social Accountability 8000
 * Certification process
 * Companies must satisfy standards in child labor, forced labor, health and safety, collective bargaining, discrimination, disciplinary action, working hours, and compensation.
 * Founded in 1995
 * Almost 150 member countries
 * Only global body able to enforce its decisions though its own court
 * Promotes global harmonization of trade agreements

Industry Dynamics (pgs 43-46)
Companies in the same industry typically experience similar patterns of growth and common industry culture. Industry Life Cycles - A series of stages that create certain similarities in the issues that industry members face and the solutions they adopt. Mergers and Acquisitions (M&amp;A)
 * Nascent
 * Firms are competing to establish a distinctive reputation and to create customer loyalty.
 * Rapid Growth
 * Acquiring new talent and retaining employees more central. Job hopping becomes more common.
 * Mature
 * A few large firms all strive to increase efficiency while improving the quality of their products.
 * Common to shrink size of firm’s core workforce and use contingent workers
 * Exhibit 2.2: Contingent Workers in the US Workforce (pg 44)
 * Decline and Renewal
 * Products and services of industry become obsolete
 * Repeated downsizing and businesses closing
 * Long-time industry employees face long-term unemployment due to obsolete skills
 * Occur when firms seek to be fast growing, efficient, profitable, flexible, adaptable and future-ready.
 * In computer and biotech, major objective of M&amp;A is to gain access to skills and talents of people employed by another company.
 * Objectives of M&amp;As:
 * Increase market share
 * Increase geographic reach
 * Fill out product lines
 * Respond to new deregulation
 * Types:
 * Merger
 * Acquisition
 * Takeover
 * HR stages of M&amp;A (Exhibit 2.3, pg 45)
 * Precombination
 * Combination
 * Solidification and Assessment (AKA Vertical Integration)
 * Reasons for M&amp;A failures
 * Most M&amp;A in US fail to achieve financial objectives
 * Many fail due to culture clashes, incompatibility, and loss of key talent.

Labor Markets (pgs 46-50)
US Labor Market Global Labor Market
 * Slow Growth
 * Impending retirement of the baby boomers
 * US colleges will graduate only 198,000 students to fill the shoes of 2 million Baby Boomers scheduled to retire each year through 2018.
 * Women fueled previous grow, now most are working.
 * Skills Shortage
 * Especially for high-tech, computer-related, and "new economy" jobs
 * Expected shortage of Project Engineers for construction industry
 * Demographics of workforce likely to change
 * Firms are attempting to keep employees on the job past retirement age.
 * Competition for Employees
 * Immigrants
 * Constituted almost half of recent net labor force increases
 * Expected to increase in developing countries and decrease in developed.
 * Labor Costs
 * Exhibit 2.5: Hourly Compensation Costs by country (pg 49)
 * Where the Skills Are
 * Lack of skilled labor in domestic US market
 * 50% of Chinese college students major in engineering compared to 5% in US.
 * ~50% of college students are in developing countries.
 * Exhibit 2.6: Sampling of Test Scores for 8th Graders Around the World (pg 50)
 * Health Issues
 * Increased medical costs in developing countries due to HIV/AIDS

Country Culture (pgs 50-53)
Cultural Differences Dimensions of Country Culture Consequences of Country Culture - The need for HR practices to be congruent with the country culture to enable global success.
 * How companies are managed.
 * How work is designed.
 * How employees expect to be treated.
 * How managers manage (styles).
 * GLOBE Dimensions (Global Leadership and Organizational Behavior Effectiveness)
 * Use of incentives
 * Attitudes towards work
 * Empowerment
 * In the US, Mexico and Poland, employees respond well to being empowered
 * In India, empowerment is viewed negatively and with confusion

Technologies (pgs 53-56)
The process of making and using tools &amp; equipment plus the knowledge used in the process. Factories and Mass Production Technologies Computer technologies Virtual Workforce Human Resources Information Management (HRIM)
 * Introduced standardized procedures, routine and depersonalized work
 * Created the need for skilled workers and managers
 * Increased productivity
 * Customized products
 * Empowered workforce
 * Employees work anytime and anywhere, often on an as-needed basis.
 * Benefits
 * Telecommuting can reduce real estate expenses
 * Increase empowerment
 * Challenges
 * Employees may feel isolated from employer and/or co-workers
 * If highly monitored, may become demoralized
 * Possible misunderstandings in electronic interactions
 * Possible productivity issues
 * Management tool that tracks of employees, provides HR support, and facilitates HR planning

Company Culture (pgs 56-60)
Company Culture Defined Leadership Vision Mission Values Company Subcultures
 * The unique pattern of shared assumptions, values, and norms that shape the socialization activities, language, symbols, and ceremonies of people in the organization.
 * Assumptions, values, and norms that form the base of a culture can only be inferred from a culture’s more visible elements—its socialization activities, language, symbols, and ceremonies.
 * Creating its vision
 * Defining its mission
 * Upholding its values
 * Top management's view of the kind of company it is trying to create.
 * Defines a company's business and provides a clear view of what the company is trying to accomplish.
 * Provides more guidance for developing plans to implement the vision
 * The strong enduring beliefs and tenets that the company holds dear and that help to define the company and differentiate it from other companies.
 * state how employees are expected to behave
 * Exists when assumptions, values, and norms are shared by some - but not all - organizational members.
 * Includes geographic region, business units, M&amp;A organizations, and demographic groups.
 * Benefits
 * Diversity
 * Challenges
 * Difficulty for M&amp;A targets to acquire new culture
 * Demographic minority may feel that their subculture is not valued as highly
 * Exhibit 2.9: Generations Present in the US Workforce (pg 59)

Business Strategies (pgs 60-63)
A set of integrated and coordinated commitments and actions intended to achieve stated business goals. Types:
 * Acts as guide
 * Most closely linked to the nature of company's business.
 * Total Quality
 * TQM
 * ISO 9000
 * Six Sigma
 * Low Cost
 * Low Cost Leader (EG Wal-Mart)
 * Customer Service
 * Can differentiate from competitors by offering higher quality customer service
 * Innovation
 * Often need highly educated employees from specific fields

Current Issues (pgs 63-65)
Aging Workforce Chapter 1 Chapter 3
 * Responses to expected labor shortages:
 * Making it more attractive for employees to not retire.
 * Reducing the turnover rates of all employees.
 * Outsourcing some work.
 * Offshoring some work.
 * Encouraging more immigration of skilled workers.
 * Increasing the use of technology and automation.
 * Seeking greater involvement in educational programs to help prepare younger workers.