IBUS2002 Chap.2 MNC Strategy and Human Resource Management
MNC Strategy and Human Resource Management
Strategy before people
Multinationals matter as employers because they control investment and job creation and choose where both go. The Week 2 materials separate corporate, business and functional levels of strategy, and first, second and third orders of decision. People management is usually a third-order matter: decided after the firm has chosen what to do and how to organise it.
That is why the chapter explains employment practice by working back from the reason a firm expanded abroad.
Motives, models and politics
Firms expand for natural resources, larger markets, labour-based efficiency or other efficiencies.
Labour-intensive efficiency seeking relies on low wages and intensive work, leaving sites footloose and jobs insecure, while capital-intensive expansion pays for high skill and productivity and tends to be more secure. One firm can run both, which produces workforce segmentation.
The chapter also treats MNCs as political actors that spend heavily to influence employment regulation, and it uses a Japanese trading company case to show how restructuring changed recruitment, grading and promotion while training stayed central.
Using the chapter in answers
The orders of strategy give you a reliable opening move for any question about why a multinational manages people the way it does.
State the entry motive, identify the activity, then show how the employment model follows. When a question mentions regulation, add the political dimension: firms lobby over the rules as well as reacting to them, which makes their size an analytical fact rather than background.
What this chapter covers
- 01
Levels and orders of strategy
- 02
Reasons for international expansion
- 03
Labour-intensive and capital-intensive efficiency seeking
- 04
Workforce segmentation
- 05
Multinationals as political actors
Worked example · free
Trace a hiring decision back through the orders of strategy
- 2Identify the first-order decision and its motive.
- 2Identify the second-order organising choice.
- 2Place the contract decision at the third order and explain the constraint.
Key terms
- Third-order issue
- A third-order issue is a decision about how plans are carried out, made after the firm has settled what it will do and how it will organise.
- Workforce segmentation
- Workforce segmentation is the division of one firm's employees into groups managed under different employment models.
- Efficiency-seeking expansion
- Efficiency-seeking expansion is international investment aimed at lowering costs, including unit labour costs, rather than reaching new customers.
- Corporate political activity
- Corporate political activity is spending and lobbying by firms to influence the regulation that governs them, including employment rules.
MNC Strategy and Human Resource Management FAQ
Why are human resources described as a third-order issue?
Multinationals first decide what they will do and then how to organise the business. Decisions about managing people come afterwards, when plans are put into action, so employment practice usually reflects earlier strategic choices rather than driving them.
What separates labour-intensive from capital-intensive expansion?
Labour-intensive sites compete on low wages, lower skill and intensive work, so they can move easily and jobs are insecure. Capital-intensive sites pay for high skill and smarter working, and sunk investment limits mobility, which makes employment more secure.
What changed at the Japanese trading company in the Week 2 case?
Recruitment widened to mid-career, late-career and foreign professionals, grades were cut from nine to six, and promotion moved towards performance rather than seniority. Training remained central, with three weeks of orientation and a year of formal on-the-job training.
Exam move
Draw the three orders of decision as a ladder and place five HR practices on it, explaining for each which earlier decision constrains it. Then build a two-column comparison of labour-intensive and capital-intensive efficiency seeking with rows for wages, skills, productivity, mobility, security and likely employment practice.
Use the trading company case to practise linking each HR change to a strategic driver such as global competition, an ageing population or government mobility schemes. Write one short answer explaining why multinationals are political actors, using the food delivery regulation task from the workshop as your example of a live policy debate.
Finish by explaining workforce segmentation in fewer than 120 words, with a retailer that employs its own sales staff but sources production from other firms.
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