International HRM Practice: A Case Study of Microsoft in India and Sri Lanka

This report examines the complexities of international human resource management (IHRM) through the lens of Microsoft's expansion into India and Sri Lanka. It analyzes the challenges of entering a global market, including cultural differences, legal regulations, and economic factors. The report proposes a merger and acquisition strategy for Microsoft in these countries, evaluating its benefits and limitations. It also explores the impact of cultural shock on expatriate employees and discusses strategies for preparing and motivating them for overseas assignments. The report concludes with recommendations for Microsoft to effectively manage its international workforce and achieve sustainable growth in these emerging markets.

MICROSOFT
INTERNATIONAL HRM PRACTICE

Table of Contents
INTRODUCTION..........................................................................................................................2
TASK 1.........................................................................................................................................3
A IDENTIFY AND DISCUSS THE COMPLEXITIES INVOLVED IN ENTERING A GLOBAL MARKET
................................................................................................................................................3
B PROPOSES ONE POSSIBLE INTERNATIONAL DEVELOPMENTAL STRATEGY THAT
MICROSOFT MIGHT ADOPTS IN INDIA AND SRI LANKA. EVALUATE THE BENEFITS &
LIMITATIONS OF PROPOSED STRATEGY AND DISCUSS HOW THE HR FUNCTIONS COULD BE
AFFECTED BY IMPLEMENTING IT WITHIN PROPOSAL............................................................5
TASK 2.........................................................................................................................................7
EVALUATE SRI LANKA USING IDEAS FROM HOFSTEDE'S MODEL OF CULTURAL
DIMENSIONS OR OTHER SOURCES TO PREPARE A SHORT REPORT ON SRI LANKA FOR
FUTURE EXPATRIATES............................................................................................................7
B HIGHLIGHTS THE ISSUES OF ‘CULTURAL SHOCK’ TO DISCUSS WHAT MEASURES SHOULD
BE TAKEN TO PREPARE AND MOTIVATE AN EXPATRIATE EMPLOYEE FOR A NEW OVERSEAS
ASSIGNMENT. SUPPORT THE DISCUSSION BY EVALUATING DIFFERENT TYPES OF REWARD
& COMPENSATION PRACTICES THAT COULD BE OFFERED TO MOTIVATE AN EXPATRIATE
FOR A NEW OVERSEAS ASSIGNMENT....................................................................................9
CONCLUSION AND RECOMMENDATIONS................................................................................11
BIBLIOGRAPHY..........................................................................................................................12
1

INTRODUCTION
To cope up with the increasing and mounting phase of globalisation, the businesses are in
need to adopt respective business processes in a context to developing globalisation
process. To facilitate a successful business, the organizations are dependent on the human
resources and managing them is a function based on the expansion and integration of
responsibilities for holding a great position in the international market (Brewster, et. al.
2016). The international human resource management describes that the approach ‘one-
size-fits-all’ is not useful anymore to manage the workforce in the international business
market. IHRM stands for international human resource management and it is a concept
described as organizations using a set of actions and methodologies for managing the
human resource at an international level (Sparrow, et. al. 2016).
This analysis is based on the multinational company Microsoft. The company was founded in
the year 1975 and it is known as the leading software solutions, devices and services across
the globe. It is an American company and has subsidiaries in more than 100 countries
(Microsoft, 2018). Microsoft was the first company to focus on the international market
together with domestic market and this was the main concept which made the company
grow globally (Shaw, 2014). The development in the hardware of the computers made it
easily accessible for the companies and even families too since the year 1995 and as
Microsoft was already number 1 in the development of user-friendly operating systems; it
grew the opportunities for the company to develop globally. The Microsoft operating
system Windows '95 was the major product designed by the company which opened the
door of a mass market for Microsoft. This made the company focus on the global market of
operating systems for personal computers (Shaw, 2014).
2

TASK 1
A IDENTIFY AND DISCUSS THE COMPLEXITIES INVOLVED IN ENTERING A
GLOBAL MARKET
Making the business globalised describes approaching new customers to enhance the profit
margin but to grow potentially, there are some risks and challenges a company face while
establishing an overseas area. To hire talented, skilled and trustworthy employees is the
biggest challenges a company face when developing internationally (Hitt, 2016). There are
many factors to be considered by the companies when expanding globally.
The most important factor and complexity for the companies is the company’s structure at
an international level along with the team locations (News, 2017). It is the biggest challenge
for the companies to follow the international company structure and hiring experts from
local market will be helpful as they are more knowledgeable regarding the target market of
the company. Finalising the structure makes the company focus on the legal issues and
regulations of the international country of the target market. Understanding the rules and
regulations of the international market is a very complex feature to gain a comprehensive
understanding of the target market (News, 2017). As the rules, regulations and taxation
policies of a country differ from another, focusing on the tax implications and trading laws
makes the company to business success in the international market. Adopting the
regulations and employment policies that are different from the USA has made Microsoft
achieve great global expansion (Bartlett and Beamish, 2018).
Managing the accounting functions of the multinational organizations is one of the most
complexes and challenging part as adopting the most appropriate accounting strategy is
helpful for the organizations to enhance the profit revenue. Adopting the best and global
pricing technique to position the brand value in the market is a challenging part as it can
also cause the company to face loss sometimes (News, 2017). Considering the competitive
strategy and still gaining a good profit share is a complex strategy.
3

Companies seeking to trade and business internationally choose universal payment
methods as there are high chances of unavailability of the payment methods in the host
country that are of the home country of the company (News, 2017). While establishing an
overseas area, one of the most challenging parts faced by the companies is fluctuation in
the currency rates (News, 2017). The business strategy considered by the company should
be well focused on the observation of the exchange rates. Microsoft avoids the complexity
of high fluctuation of the currency by paying the production costs and amount of suppliers
in the same currency in which it is selling.
Expanding internationally is not easy and the problem of cultural difference and
communication difficulties are generally faced by the companies. An efficient business
strategy also includes a good communication facility and using it effectively can break or
make the business deals. Cultural differences have a great influence on the product and
service demand in the market (News, 2017). To meet the overseas need, the focus
concentrated on the cultural values of the international market is helpful for the companies.
4

B PROPOSES ONE POSSIBLE INTERNATIONAL DEVELOPMENTAL STRATEGY
THAT MICROSOFT MIGHT ADOPTS IN INDIA AND SRI LANKA. EVALUATE THE
BENEFITS & LIMITATIONS OF PROPOSED STRATEGY AND DISCUSS HOW THE
HR FUNCTIONS COULD BE AFFECTED BY IMPLEMENTING IT WITHIN
PROPOSAL
The Asian market is one of the most beneficial markets for Microsoft and it is mainly
focused on the selling of IT services to companies and individual customers in Asia. The
major focus of this report is in the two Asian countries Sri Lanka and India. The subsidiaries
of the company are already well established in both countries so the developing strategy
adopted by the company is merger and acquisition (Story, et. al. 2014). The strategic remix
model of the acquisition will be best considered for Microsoft as it is based on combining
the capabilities and acquired assets with the prevailing assets to save the operational costs
or create fresh trade. The merger of the company will be focused on the combination of
Microsoft with other company with the approval of the board of directors of both the
companies. The merger will make the other company terminate its activities and become a
part of Microsoft.
The businesses are benefited by the acquisition and merger concept as it makes the
companies recruit new skilled and specialist person for the job along with the enhancement
of the new department for the business expansion process. It also makes the company
invest a high amount in making the business huge (Yan and Luo, 2016). Apart from this,
there are some drawbacks and complexities faced by the company such as the cultural
difference between the companies merged and objective convergence of the companies.
The legal and financial difference between the companies creates limitations for the merger
and acquisitions and they also influence the working of the human resources (Yan and Luo,
2016). At the initial level, the changed cultural and adopting the culture of Microsoft for the
employees of the merged company affects their working and may also result in less effective
outcomes. It is the responsibility of the company to make the new workforce work
effectively by providing them healthy working environment.
5

The structural change of Microsoft after adopting the strategies of the merger and
acquisition will be helpful to the local market and recruited local employees will benefit the
company to gain market satisfaction and improve the demand. This will also change the
recruitment and selection process of the company and provide better growth opportunities
to recruit innovative employees for attracting local market demand (Giuliani, 2016). Merger
and acquisition also eliminate the position and departmental gaps which improves the
employment relationship in the company.
Before adopting the merger policy, Microsoft should analyse the legalities of India and Sri
Lanka and expected regulation and business change policies of government to overcome the
future issues. It may cost profit of the company for some time but the proper establishment
of the merger and acquisition process will help it expand and generate more revenue in
near future (Giuliani, 2016).
6

TASK 2
EVALUATE SRI LANKA USING IDEAS FROM HOFSTEDE'S MODEL OF CULTURAL
DIMENSIONS OR OTHER SOURCES TO PREPARE A SHORT REPORT ON SRI
LANKA FOR FUTURE EXPATRIATES
A study was conducted by Prof. Greet Hofstede describing the cultural influence of a place
on the business. There are five cultural dimensions discussed by Hofstede which are not
easy to recognize. It is very important for Microsoft to study the Sri Lankan culture before
adopting any development and expansion strategy there. The different cultural dimensions
of Hofstede’s model are as follows:
Figure: Hofstede’s cultural model
[Source: http://www.thebusinesszoom.com/hofstedes-5-dimensions.html]
 Power Distance: The degree to which the individuals at a low level in the company
accept the changes took place because of the merger and acquisition is considered
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as power distance. Sri Lanka is 68th rank in PDI (Power Distance Index) which is less
than India but greater than United States (De Silva, 2017). This suggests that it will
be a great country to get developed for Microsoft (Irfan, 2016).
 Individualism/Collectivism (IDV): The mentality of the individuals in the organization
in context to “I” and “WE” is considered as IDV (Individualism vs. Collectivism. Asian
countries are considered to be working as a family (Upadhyaya and Rittenburg,
2015). The IDV (Individualism vs. Collectivism) ranking of Sri Lanka is 50 and is
considered to be greater than that of India. It is a heritage of Tamil and Sinhala
people which makes them live in unity and work together to achieve the same
objective. Microsoft will be beneficial in form of employee relation in Sri Lanka (Irfan,
2016).
 Masculinity/Femininity (MAS): Equal rights and opportunities are given to people in
Sri Lanka despite their gender as the Buddhist culture is followed there. Women are
considered to be more qualified there and the president and prime minister’s
position is also handled by a lady once. Women are also honoured for their skills and
bravery in Sri Lanka (Kumar, et. al. 2016). The MAS for Sri Lanka is less than India,
USA and UKA and is 40. It will be beneficial for Microsoft to cope up with the equality
act and provide equal opportunities to men and women (Irfan, 2016).
 Uncertainty avoidance (UAI): In case of uncertainty avoidance, Sri Lanka has a fewer
score as the Tsunami disaster caused the lives of 50000 people once (De Silva, 2017)
 . The uncertain risks are higher in Sri Lanka than the USA but less than India as a
terrorist attack are common in India. The UAI for the country is 45 (Irfan, 2016).
 Long-term/Short-term orientation (LTO): The long-term orientation is decreasing for
Sri Lanka. The exploration in Sri Lankan areas are less but the development related
to infrastructure is gradually increasing (De Silva, 2017). This shows that LTO value of
Sri Lanka is greater than India but less than Japan and that is 62 (Irfan, 2016).
8

B HIGHLIGHTS THE ISSUES OF ‘CULTURAL SHOCK’ TO DISCUSS WHAT
MEASURES SHOULD BE TAKEN TO PREPARE AND MOTIVATE AN EXPATRIATE
EMPLOYEE FOR A NEW OVERSEAS ASSIGNMENT. SUPPORT THE DISCUSSION
BY EVALUATING DIFFERENT TYPES OF REWARD & COMPENSATION
PRACTICES THAT COULD BE OFFERED TO MOTIVATE AN EXPATRIATE FOR A
NEW OVERSEAS ASSIGNMENT
When a person moves from one culture to another culture, the experience is considered as
the cultural shock. The person gets a feeling of disorientation in a new culture and may get
ignored because of not aware of the place which happens because of the immigration
process. This happens with the people shifting to a new place because of their job or
business (Gunn, 2017). There are 4 phases of the cultural shock.
Figure: Cultural shock process
[Source: https://worldreliefdurham.org/culture-shock]
9

There are 5 phases of cultural shock that our honeymoon, rejection, regression, recovery
and reverse culture phase. There are many cultural problems faced by the individuals in this
shock such as linguistic obstacle, generation gap, technology gap, expertise
interdependence, invention reliance, reminiscence, job enslavement, cultural skill set, etc.
there is no way for anyone to overcome the problem of cultural shock as different cultural
constraints affects different person differently (Ang and Van Dyne, 2015). Providing cross-
cultural training to employees will help companies to satisfy employees towards their job.
As Microsoft is established globally and it is common to expatriate employees from one
place to another because of various reasons, providing cross-cultural training will be helpful
for the company to generate optimal outcomes. It will help the company to function
smoothly. The conduction of the training and cultural program will help Microsoft to make
its employees get aware of the communication styles and languages (Goldstein and Keller,
2015).
Adopting the process of providing compensation and rewards to employees as a part of
intrinsic and extrinsic motivation will be helpful for Microsoft to satisfy employees. Providing
them facilities of accommodation and conveyance makes the employees feel gratified
towards their job and company (Goldstein and Keller, 2015). Apart from this, providing
employees financially great opportunities and promotion with extra bonus motivates the
employees to work more effectively to generate a great outcome for the development of
the company. This also makes the employees develop on their own and for their own
welfare.
Providing employees spouse assistant, repositioning stipends, tax equalization payment,
Foreign Service inducement and other benefits along with basic salary motivates them and
enhance their morale for achieving success in the job they have been migrated for (Ang and
Van Dyne, 2015).
10

CONCLUSION AND RECOMMENDATIONS
The report was based on the concept of international management of human resources of
the organization. It plays a very important role for the organization in the expansion strategy
of the company. There are various issues and problems faced by the company to settle in
overseas areas but still, by fulfilling the development strategy properly with accurate
measures provide high chances to the organization to gain high market value and share. This
report was based on the case study of Microsoft which is a very successful and one of the
most developed companies in the global market.
There are various issues such as cultural issues, legal, political, etc. are faced by the
companies while settling in the global market. Accurate management of the human
resources makes the company develop effectively. Microsoft has always valued its
employees and tried to provide them better and essential benefits which are the reason for
the global expansion of the company smoothly. It is recommended to the company to adopt
the process of cultural training to make its employees aware of the distinct environmental
culture of a place which will make the employees motivated towards their work and gain
optimal results.
11

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