Impact of Corporate Strategy on HRM

This assignment explores the relationship between corporate strategy and human resource management (HRM). It requires students to examine how different strategic approaches, such as innovation or cost leadership, impact HRM practices like recruitment, training, and performance management. Students should analyze relevant theories and provide examples of how companies successfully align their HRM strategies with their overall business goals.

Running Head: Human Resource Management
mercator group
International Dimensions of HRM

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Table of Contents
1.0 In what ways does Mercator Group’s current international HRM strategy emphasise local
integration in its subsidiaries?.........................................................................................................2
2.0 What was the company’s philosophy on international recruitment and selection in the
early phases of its internationalisation, and how has it changed?...................................................4
3.0 A geocentric approach to international recruitment and selection may have advantages and
disadvantages for Mercator Group. Which approach would you recommend, and why?...............6
References........................................................................................................................................9

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1.0 In what ways does Mercator Group’s current international HRM strategy
emphasise local integration in its subsidiaries?
Mercator Group is the largest retail chain stores and corporate group of Slovenia in the South-
eastern as well as in Central Europe. This organization acts as an agent between the buyers and
the suppliers and they sells renowned brand’s products in the domestic as well as in international
market. Apart from this, they also sell various food products, drinks, and household products
under their own brand name at reasonable prices (Liu, TSOU Y & Wang, 2010). Additionally,
they also provide tour and travels services to tourists in Slovenia. It was found in 1949 and till
1990s, they used to operate their trading activities in the domestic market but after that period,
they started expanding their business in the international market. Today they had more than 1428
stores across the different regions of the globe. Mercator Group has set their primary focus on
fast emerging markets with the fast emerging products in the global market such as consumer
goods, technical devices and household items. The retail network of Mercator Group includes
shopping malls, supermarkets, hypermarkets, convenience stores located in Slovenia and in
Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Macedonia, Montenegro, Serbia,
etc. countries of Europe region (Miller & Solberg, 2012).
With the effect of their development in the international market, they have also developed certain
strategies in relation with the human resource management. Along with the stores in the different
locations in the global market, they have various subsidiaries companies too. For those,
subsidiaries companies, they have developed international human resource management
strategies for integrating its subsidiaries companies (Münstermann, Eckhardt & Weitzel, 2010).

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In relation with the international development, organization needs to adopt some effective as
well as efficient strategies through which appropriate results could be attained in the global
market. Apart from this, it is very crucial from the perceptive of the growth and the satisfaction
of the employees. The basic motive behind adaptation of the internationalisation is to adopt the
centralised policy system in which all the subsidiaries and the other companies of the
organization could perform their functionalities in the same manner. Initially, Mercator Group’s
subsidiaries were established in Croatia, Serbia and Bosnia between 1998 and 2003. International
Human Resource Management strategies adopted by the Mercator Group helps them to integrate
its subsidiaries in various ways. It helps them to enhance the subsidiaries companies from the
initial level to the developed version (Nielsen, et. al., 2013). As the subsidiaries were quite small
and their functionalities were limited. With the limited functions such as international supervise
marketing post, one post for management and operation, number of employees were also less at
that time but after the adaptation of the international HRM policies, organization has more than
24, 000 employees across the global market. With the implementation of the centralised policy
system for all the subsidiaries, recruitment and selection procedures of the organization have
gained adequate advantages. With the regards to this, Mercator Group is being capable enough to
gain sufficient number of talented and skilled employees who can help the organization to attain
their desired goals and the objectives. The strategies adopted by the organization are linked with
the employees benefits as well as they provide adequate opportunities to its existing employees
to get promoted for higher posts. They believe in internal job promotions rather appointing
external staff members. In order to enhance the performance of the organization as well as to
develop positive image in the employees’ mind-sets, this strategy is quite impressive as well as

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effective (O’Reilly, et. al., 2015).The implementation of these policies helps the organization to
fulfil its customer’s needs in relevance with the particular target market (Olivera, et. al., 2013).
Implementation of these strategies in the workplace of the subsidiaries companies will help the
organization to arrange the resources of the organization in an appropriate manner through which
desired objectives could be attained. Apart from this, it will also help the organization to attain
the competitive advantage in the domestic as well as in international market. The major
components of the International Human Resource Management activities are the recruitment,
selection, training and development, performance appraisals, and the dismissal activities in
relevance with the benefit of the organization (Patton, 2011).

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2.0 What was the company’s philosophy on international recruitment and selection in
the early phases of its internationalisation, and how has it changed?
International recruitment and the selection strategies define the procedure that the policies should
be centralised for all the subsidiaries of the organization. This helps the organization to set the
standards for the organization as well as to develop centralised criteria to match up with the
objectives of the organization. International and recruitment selection procedure states the
appointment of the right person at the right position. This helps the organization to fulfil its
needs as well as this also helps the organization to attain its desired goals and the set targets. The
initial phases of the international recruitment and selection process are performed in order to
appoint the adequate person for the adequate position. Apart from this, in order to analyse the
requirement of the organization and to fulfil the same, recruitment and selection process is
implemented. This helps the company to fulfil its needs in relevance with the appointment of the
appropriate candidates (Petroni, Venturini & Verbano, 2012).
Prior to this, Mercator Group was used to appoint the candidates from their headquarters in order
to serve for their subsidiaries. Mercator group was using the centralised appointing procedure in
which all the candidates were used to send from headquarter of the organization to manage the
functionalities of its subsidiaries (Purce, 2014). After the implementation of the
internationalisation process within the workplace, the procedure used by the Mercator Group has
been changed. With the effect of internationalisation, organization’s subsidiaries are appointing
the required candidates at their places only. Centralised recruitment procedure has been replaced
with the implementation of the internationalisation within the workplace of Mercator Group
(Robertson, 2011).

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Their major subsidiaries are situated in Serbia, Bosnia, Herzegovina and Croatia and all of these
subsidiaries have developed a separate Human Resource Department which operates in order to
analyse the requirement of the organization in terms of human resources and newly developed
departments also helps the organization to fulfil its needs. This has also lead to generation of
various employment opportunities for local public. Due to development of the HR departments at
the subsidiaries, they are responsible to analyse the requirement of their workplace and the
appointment of the adequate candidate should be done in order to attain the organizational goals
and the objectives. Policies amended in relevance with the recruitment and the selection
procedure has helped the organization to enhance the international posts. Subsidiaries will be
able to perform their functionalities in relevance with the recruitment and the selection process
locally and the involvement of headquarter will only be in crucial activities such as appointment
of some important and key positions. Mercator Group’s growth rate has increased with the effect
of the development of HR departments at all subsidiaries (Robertson-Kraft & Duckworth, 2014).
Now the subsidiaries can fulfil their requirements in relevance with the human resources because
prior to this, candidates were used to hire at the headquarters of the organization. Due to this,
international posts will be increased at the subsidiaries and the chances of growth for the
organizational members will also be increased. They are involved in the appointment of the local
people as well as in the appointment of the international posts as well (Rothenberg & Gardner,
2011).

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(Source: Mercator.si, 2017).
Growth of the organization can be assumed with the above figure. Organizational growth rate is
increasing rapidly and due to this, number of employees within the workplace has also been
increased. This is the major reason for the enhancing organizational performance rapidly
(Sadikoglu & Zehir, 2010).

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3.0 A geocentric approach to international recruitment and selection may have
advantages and disadvantages for Mercator Group. Which approach would you
recommend, and why?
Geocentric approach is the approach used for appointing appropriate candidates at the right
position in order to fulfil the business’ needs. This approach is mainly used by the multinational
corporations and the candidate is being appointed should have the ability, talent, etc. to fulfil the
requirement of the particular designation (Scott, McMullen & Royal, 2012). With the effect of
this approach, organization could get the most suitable candidate for the position because the
candidates are appointed irrelevance to their nationalities. This approach is the crucial element of
the global business strategy and this could only be implemented by the MNC’s and as Mercator
Group is also a MNC and do believe in the strategy of appointing the most suitable candidate
globally for the vacant position at the workplace. As geocentric approach is a crucial part of
global business strategies, hence; the implementation of this type of strategy could only be
performed and implemented by the organization which is performing their functionalities as truly
globally. Adaptation and the implementation of this approach have various limitations because
Human. It has been easily adopted by the Mercator Group through fulfilling all the requirements
of the factors which affects the human resource operations (Snape & Redman, 2010).

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(Source: businessjargons.com, 2017).
Advantages of Geocentric Approach
 With the appointment of the international candidates will help the organization to gain
the knowledge in relevance with their operation styles. It will also leads to the
development of contacts across the borders (Tanford, Raab & Kim, 2011).
 The candidate appointed from the global market for a certain designation would help the
organization to attain the adequate objectives from the particular area.
 Unfair treatment amongst the employees, discrimination practices, etc. will be reduced.
These activities occur where group of same nationalities or the same religion’s people
used to work with an individual or a group of individuals with different colour, religion,
etc.
 International experiences, talents of candidates will help the other organizational
members to learn from them (Van Hoorn, Waller & Hasselbring, 2012).

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 Mercator Group treats all the candidates of the organization equally irrelevance to their
nationalities which will lead to the reduction of unfair practices in the workplace.
 With this, subsidiaries will be able to perform their functionalities independently and
separately.
 This strategy helps the organization to gain adequate competitive advantage in the global
market.
 It will lead to enhancement in the innovations which will enhance the organizational
goodwill in the global market.
 This helps the organization to develop positive image in the employees’ as well as in
consumer’s mind-sets in relevance with the adaptation of the strategies used for
performing the organizational activities.
Disadvantages of the Geocentric Approach
 The initial limitation is the huge cost of training for the international candidates. In
order to teach them the organizational functionalities, culture, etc. high cost will be
incurred.
 Task given to the particular person cannot be shifted to another employee due to
difference in their talents and skills (Vergara & Estévez, 2014).
 In order to control all the internal candidates, centralised controlling system is required
which is another factor for increasing the cost.
 Identification of the candidate’s talent, skills in relevance with the job’s requirement
will be a time consuming process (Williams, et. al., 2015).
 Another factor is present with this approach relevant to the high cost. As MNCs prefer
to use this approach to appoint the most suitable person for the desired potion. In order

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to perform the same, organization needs to adopt some advanced strategies linked with
the spreading awareness regarding the job (Williams, Abbott & Heery, 2011).
To perform this function, organization has developed a separate department which consist of
talented human resource people who has the responsibility to identify the talented employees for
the organization. Apart from this function, Mercator Group has also used the strategy of internal
job postings i.e. existing employees of the organization are given opportunities for handling the
international posts (Zaharie & Osoian, 2013).
Hence, it could be recommended that Mercator Group has attained adequate amount of success
and growth with the adaptation of the geocentric approach for the purpose of the recruitment and
the selection procedure of the organization. This approach has various advantages as well as this
approach is effective enough in order to enhance the organizational performance in the global
market (Zipf, 2016).

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