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Discuss how international human resource management( I.H.R.M) contributes to the development and implementation of a firm's business startegy .
Discuss the following statement and provide examples to illustrate your answer
The study of international business is useful if you are going to work in a large muktinational enterprise,but it has noo relevance for individuals who are going to work in small firms.
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The internet has changed the way businesses are being run today. The ease of information transfer digitally has connected the whole world and an increase in the distribution networks and transportation hubs around the world has solidified the logistical potential. Therefore a business today can target its customers effectively around the globe.(Grosse, 1992)
There is a preconceived notion that whenever we think about international businesses, we think about the large multinational companies with multi million dollars of capital assets.These businesses are spread across geographies and attract customers from varied sections of society. However (Ghemawat, 2011)says that we are less globalized than we think we are. It's difficult for people to think beyond brands like Nike and McDonald's when it comes to a global business. Some believe that small and medium businesses (SMB) can't do well in the global arena and some believe that SMBs can do well; they just go unnoticed under the shadow of the big multinationals.
It's definitely wrong to say that a SMB cannot go global. A study conducted by portfolio.com in 2011 stated that international sales are no longer restricted to multinational organizations. Around 25% of the American SMB owners interviewed said that some part of their revenue comes from global operations, which is a growing trend as a number of SMB owners talked about getting into international operations.(Askin, 2011)
The internet has really revolutionized the way these SMBs are selling their products and services online.According to J. Jennings Moss, editor at portfolio.com, the powerful reach of the internet and the increasing number of mobile devices, have helped a number of small and medium businesses in United States move beyond the borders. These small businesses have a lot of potential and the advanced technology has given the owners a cost effective and efficient channel to take their businesses global.
One of the issues which these small businesses face in international markets is the cultural and language barriers. Social media is playing a major role in bridging these cultural gaps. According to the study, 58% of international small businesses use social media for connecting with their customers overseas.(Askin, 2011) Social Media adds trust to an international SMB and as compared to a MNC; they can add personal touches to the communication going out and can create a loyal customer base, hence increasing their presence and sales in a global market. Another study conducted by LinkedIn in collaboration with a market research firm TNS earlier this year showed that 81% of the 1000+ SMBs interviewed in North America are using social media mainly as a marketing tool, and also for educational purposes and for deriving consumer insights.(Weiss, 2014)
One of the perfect example which showcases how a SMB is benefitting from the internet is Amazon's service Fulfillment By Amazon (FBA) where the company handles a third party seller's backend operations like storage, customer service and fulfillment. A third party business simply ships its inventory to Amazon and from there Amazon takes over and manages the complete backend fulfillment once an item is purchased.Out of the total sales in the third quarter of 2013, around 40% came from third party sellers.(Faggiano, 2014) In a 2013 survey on the Amazon FBA program site, 73% of the participants noted a unit sales increase of 20% after joining the FBA program.
The success of a SMB in an international market depends on the kind of business they are involved in. It's easier to sell services online as compared to products, because they can be transferred digitally. However product segment is also gaining momentum and has the potential to become one of the fastest growing businesses.