Discuss the main factors and issues that the Sparkle corporation took into consideration when decided to allow individual factories in different countries to carry on with their own approaches to HRM.

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The sparkle corporation

-Case Study-

Cristian Ioan Scarlat

Student number @00269707

International Human Resource Management

Business Studies with International Business Management

University of Salford

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Since the beginning, Sparkle corporation focused on extending towards Eastern Europe, Russia, China and South-East Asia, thus plunging into new markets where trends, way of thinking, consumer behaviour among other factors, were very different. The group is divided into five main Business Segments, each dealing with design, distribution, financial services, building systems and transportation. The five segments are subdivided into fifty international Business Areas, with 200,000 employees in total working for the Sparkle corporation with the head office located in Zurich. Significant decentralisation was originally introduced in late 1980s with local customer focus, but soon enough the company was facing a hybrid form between polycentric and geocentric policy, a combination between a multinational that develops policy on a worldwide basis and the type where policy making in entirely developed to the country and individual business units. The multi-domestic corporation developed its slogan as "being local worldwide", with claims of it being "the most successful cross-border merger in Europe".

In order for the group's main customers, governments and public utilities, as well as private consumers to perceive sustained good performance even after the firms' new local acquisitions, Sparkles' CEO created from the beginning a multitude of accountable small businesses. Local operations, reporting to international Business Area centres were incorporated as separate legal entities, and started exercising individual HRM approaches in order to create transparency, accountability, remove barriers of communication and information, but also to discover excess costs and low-performing units. Furthermore, responsibility was allocated all the way to the lowest possible level in the firm as a management principle, strengthening Sparkles' image of a well managed, open minded organisation.

A study by Lawrence and Lorsch (1967 cited Jackson 2002 p.44) states that 'One of the key aspects of the strategic management of modern organisations is the balance between differentiation and integration'. Jackson (2002 p.44) argues that 'While flexibility is required in the way business is conducted differently in different locations, there is a need to integrate activity and coordinate not only business activity, but the way people are developed and deployed within the international organisation. Generally the more complex an operating environment the more differentiation is required.'. Sparkle chose this approach on HRM for its individual factories in different countries to better understand the local market and for coping with geographical and cultural differences, to ensure the products suit the local markets. As each factory differentiated their HRM approaches, a more effective cross-company learning was structured, aiming to make best practice management in one factory be easily transferrable to others. Sparkle has run a policy of massively reducing the staff of head office in the acquired companies to eliminate national loyalty. The company was faced with issues like local resource dependency, level of unionization different to each country, local regulatory and other pressures, and chose to heavily invest in organisational learning. Managers, followed by supervisors and employees on different levels were sent to observe and learn the differences in policy and approach on business in the other factories and in the head office in Zurich, in order to build common values, enhance employee motivation and diminish the HR managers' control over them, as well as to enlarge their expectations. The practices were "eye-opening", expatriate views in the firm's management being able to lift the improvements of newly acquired companies to up to 40-50 per cent in productivity or costs related to quality and inventory, as well as lead time. Porter (1985, 1991 cited Morley et al. 2006 p.329) states that ' In their persistent quest to optimise profitability, MNCs face complex choices about their global market positioning strategies. Central to these choices are decisions about the emphasis placed on cost leadership, differentiation by quality and innovation, and on the scope of products produced and services offered'. The choice of keeping the existing management and workforce in a newly acquired company is focused on the belief that they are the best people in the position of improving the business performance, with a specific business awareness. Local workforce has the best capacity to adapt and respond to different circumstances, and it affects how people think, solve problems and make decisions in the company. Sparkle often surprises the management of newly acquired companies through quality systems, making quality every workers concern. More recent studies conducted by Briscoe et al. (2009) state that 'People working for organisations that operate in the international arena (whether in business, government, or the non-profit sector), including HR practitioners, need a context into which they can place the culture(s) they know and the new ones they encounter, so they can modify their own and their firms' behaviours in order to be more effective in both business and social situations. They need a way to cope with the significant constraints imposed by cultural differences between countries. Indeed, dealing with these cultural differences may provide the most important factor in determining whether or not their international ventures succeed or fail.'.

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In my opinion, these were the main factors and issues that the Sparkle corporation took into consideration when decided to allow individual factories in different countries to carry on with their own approaches to HRM. The goal was to achieve economies of scale trough a diverse polycentric HRM approach.

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More and more multinationals are recording the importance and use of expatriates or intermediate and long-term international assignees. The transfer of personnel from one country to another is driven by Sparkle's aim to start new operations, for development of management in the ...

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