International HRM: Differences with Domestic HRM and Tesco Case Study

This report delves into the critical differences between International Human Resource Management (IHRM) and Domestic HRM. It highlights the challenges multinational corporations (MNCs) face when managing human resources across international boundaries. The report explores key concepts such as staffing, performance management, and compensation, while also analyzing the impact of cultural differences and institutional factors on IHRM practices. A case study of Tesco is used to illustrate these differences, particularly its experiences in different markets like China and Japan, emphasizing the importance of understanding local market dynamics. The report further provides recommendations for improving the effectiveness of IHRM, such as the development of appropriate practices and sensitivity to local markets. The conclusion underscores the importance of understanding domestic markets before expanding internationally to avoid business failures and highlights the common problems associated with managing expatriates. This report is a valuable resource for students seeking to understand the complexities of global human resource management.

Running head: INTERNATIONAL HUMAN RESOURCE MANAGEMENT
International Human Resource Management
Name of the Student
Name of the University
Author note

1INTERNATIONAL HUMAN RESOURCE MANAGEMENT
Introduction
The essay throws light in the analysis of the differences between the International
Human Resource Management along with Domestic HRM practices. In the current scenario,
it has been analyzed that the major and actual reason for the overall failure of the
Multinational Corporations is that they are not capable of understanding the differences in
management of the HR in foreign environments.
In the assignment, the main aim and purpose is to understand the different points in
analysing difference between international and domestic HRM for making the companies
succeed in both kinds of environments. The concepts which will be discussed in the essay
includes domestic HRM, international HRM, analysis of the differences and similarities of
the same. The organization which has been analysed in the essay is Tesco which helps in
analysing the same in an effective manner.
Literature Review
As commented by Pudil et al. (2018), the world has become highly globalized as well
as competitive than before and as there are different firms which have started operating in
international marketplace, there has been extensive kind of search for the various elements of
the competitive advantage. The main component of gaining high level of competitive
advantage over the different competitors can be calculated in terms of the HRM especially in
Human Resource Management. The overall quality of the management seems to be one of the
critical elements in international HRM in comparison to the Domestic HRM.
As opined by Pokharel (2016), human resource management is considered to be the
activities which have been undertaken by the companies in efficient manner for utilising the
human resources. The different activities include staffing, performance management aspects,

2INTERNATIONAL HUMAN RESOURCE MANAGEMENT
training as well as development, compensation and benefits along with planning. As
described by Haak-Saheem, Festing and Darwish (2017), the IHRM is considered to be the
different set of activities which aims in managing the organizational kind of HR at the
international type of level for achieving the organizational goals and competitiveness against
the different national as well as international aspects which are available.
On the other hand, as opined by Garavan, McCarthy and Carbery (2017), the domestic
HRM is considered to be process of procuring, allocating along with efficiently using the
human resources in the different local countries. From the terms, it is clear that domestic
HRM works within the local or national borders and on the other hand, international HRM
works in the international market and it goes beyond the domestic market as well. In addition,
as opined by Farndale et al. (2017), the international HRM is being characterised by the
different heterogenous functions which includes the greater level of inclusion as well as
participation in the private life of different employees, unique approach in managing the
training and development processes.
Moreover, as described by Farndale et al. (2019), the international HR Managers are
required to become more diligent as there is high level of dissatisfaction in the multinational
companies in comparison to the other domestic companies. Fan et al. (2016), have
commented that the IHRM is mainly concerned with overall management of different
employees belonging to different nations as in case of the domestic HRM, it is mainly
concerned with the management of employees who belongs from the particular nation. For
instance- In case of Tesco Supermarket, while they are operating their business in the
economy of the United Kingdom, they do not have to face much difficulties as the employees
are belonging from UK or other parts near UK. Tesco UK, is considered to be domestic HRM

3INTERNATIONAL HUMAN RESOURCE MANAGEMENT
which mainly managing the limited number of the HRM related activities at the national level
(The Guardian.com 2020).
However, on the contrary, as commented by Edwards et al. (2016), the International
Human Resource Management is complicated as it is mainly affected as well as influenced
heavily by the different other cultural factors such as differences along with other
institutional factors. For instance- In case of Tesco, while they have established their
business in India or China, the culture of the different countries varies from one another. In
such scenario, the top management of Tesco faced difficulties as they were quite unaware
regarding the different cultural aspects of the customers. There was a time when Tesco
decided to step back from going in China as it failed to understand Chinese customers and it
impacted their business badly.
Due to the cultural differences, it led to the failure of Tesco in Chinese market and it
created difficulties in managing their business effectively. According to the different surveys,
it has been noticed that Tesco had mistaken the fact that the Chinese customers will be happy
with the concept of the Clubcard as it helped them in proving popular in the market of the
United Kingdom. However, it flopped in an ineffective manner in China as they were unable
to understand the different preferences of the customers in the market and it impacted their
profitability negatively. From the instance of Tesco in the market of China, it can be seen that
the International Human Resource Management is complicated as they are heavily affected
by the different external factors which includes institutional factors that create difference in
the managing of the company’s activities in the international environment.
However, in the economy of the United Kingdom, it has been noticed that the
Clubcard is one of the significant elements which has been able to make Tesco an appropriate
shopping hub for the different customers for the different retailing. Moreover, in case of the

4INTERNATIONAL HUMAN RESOURCE MANAGEMENT
Tesco in United Kingdom, the company did not let the customers down as they were aware
regarding the different activities which are performed by them in satisfying the needs of the
customers successfully. Tesco Clubcard provides the reward type of approach which keeps
the customers coming back wherein customers collect points for every purchase effectively.
The guarantee of the brand is offered to the customers through providing them with the
ultimate choice of selling products which will be effective in maintaining their growth
prospects in a successful manner.
As commented by Cooke et al. (2019), in the case of the IHRM, the human resource
managers who are working in the international kind of environment face various problems of
addressing the different issues related to HR which is related to the one or more nationality.
For instance- In case of Tesco, while implementing their business in Japan as well as USA,
these are the two countries wherein they failed miserably as the management of the company
commented that it was difficult for them in handling the high costs related to the recruitment,
training and development along with the demands of customers were difficult to be met
successfully (The Guardian.com 2020). As opined by Cooke, Veen and Wood (2019), the
culture pf Japanese market was totally different from UK as in Japan, the different
individuals preferred the high-quality products along with excellent customer service during
the shopping experience.
In such scenario, it has been noticed that Tesco is one of the large supermarkets
wherein it is difficult for them in meeting the needs of the different customers at once. It has
been seen and analyzed that it was different from UK and it affected their sales and growth
negatively and it contributed to less than 1% of the sales in the company in comparison to the
ones which are established in United Kingdom. In the year 2011, only half of the 129 Tesco
stores in Japan were profitable which was prompting the overall decision for ceasing the

5INTERNATIONAL HUMAN RESOURCE MANAGEMENT
trading there. Due to the same, Tesco failed miserably in the respective countries and it
affected their level of profitability which impacted their performance in a negative manner
(CBS News.com 2020).
As opined by Conrad and Meyer-Ohle (2019), the human resource managers in the
International Human Resource Management Environment faces the problems related to the
addressing of the HR issues of employees who are belonging from different nationality.
When Tesco was trying to set up their business in the market of France, they had the problem
related to the high level of competition from the French companies such as Carrefour or
Promodès. The different customers in the France tried to purchase the products from the local
supermarkets wherein it created high level of pressure and it created high pressure on
adjusting themselves to the different culture. However, while operating in United Kingdom,
Tesco did not feel such kind of negative attitudes as the different employees belonged from
single type of nationality which impacted the effectiveness in the respective market (CBS
News.com 2020).
Moreover, as opined by Edwards et al. (2016), the International HRM requires the
high level of involvement in their personal lives of the different employees. The HR manager
of the MNC needs to ensure the fact that when an executive is posted in a foreign country, the
HR manager needs to understand the different aspects of the compensation package which
will be making them feel that the employees are provided with utmost support. For instance-
In case of Tesco, the company tried to establish their business in the different countries,
however, there were few failures and there were few successes which helped them in
improving their growth prospects successfully. While establishing their business in Japanese
market, the key focus which was provided by them was on the mentality of the individuals

6INTERNATIONAL HUMAN RESOURCE MANAGEMENT
who will be hired as the compensation packages as the standard of living is different in
different countries (BBC.com 2020).
In such scenario, Tesco failed to understand the same in the Japan market and due to
which it created ineffectiveness and there was high level of turnover among employees. It
was the main reason due to which it affected the sales of the company in comparison to other
companies which are competitors. From the above analysis of the differences between the
International and Domestic HRM, it can be seen that there is high level of risks involved in
IHRM and it can be impacting business of the companies negatively. From the case study of
Tesco, it has been made clear that these are the different reasons such as the cultural
differences and lack of the local market knowledge which leads to the unsuccessful business
and it leads to the closure of the business in the different countries other than the parent
country. However, there are few recommendations which can be adopted for improving the
effectiveness of the implementation of business in the international markets which are as
follows:
As commented by Ayentimi, Burgess and Brown (2018), the development of the
appropriate practice within the IHRM has become essential as there are many companies
which are trying to expand their business in different international markets. Moreover, as
opined by Cooke et al. (2019), the cultural aspects are the most effective elements that needs
to be implemented by the companies for expanding their business operations in the
international market as it will be helping them in achieving the high level of profitability and
sales percentage. From the case study of Tesco, it has been made clear that the sensitivity
related to the local market such as for Japan, France, China or USA was lacking which
impacted the entire productivity of the company and it was the most ineffective elements
which impacted the growth of the company.

7INTERNATIONAL HUMAN RESOURCE MANAGEMENT
Conclusion
In the era of the globalization, it has been noticed that there is a high trend which is
taking place between the companies for shifting their business from one place to other. In
such scenario, it is becoming the huge pressure on them for understanding the domestic
market before expanding their business as there are differences in the international and
domestic market and it can be impacting their business drastically. The dealing with
expatriates are the common problems which creates problem in maintaining effectiveness in
the process of managing business.
For achieving the high level of competitive advantage in the different markets, the
first and foremost criteria which needs to be implemented by the companies for becoming
successful is the understandability of the market wherein they are preferring to operate such
as the purchasing power of the customers, salary and organizational structure which are
followed by them in the market which will be making them aware of the scenario and they
will be capable of gaining competitiveness in the market as well. Therefore, it can be
concluded that the different companies need to properly consider how the different kind of
policies as well as procedures which will be impacting the employees before implementing
them appropriately.

8INTERNATIONAL HUMAN RESOURCE MANAGEMENT
References
Ayentimi, D.T., Burgess, J. and Brown, K., 2018. A conceptual framework for international
human resource management research in developing economies. Asia Pacific Journal of
Human Resources, 56(2), pp.216-237.
BBC.com 2020 Tesco: Where it went wrong (online) Retrieved from
https://www.bbc.com/news/business-30886632 [Accessed on 18th February 2020]
CBS News.com 2020 Why Did Tesco Fail in the USA (Online) Retrieved from
https://www.cbsnews.com/news/why-did-tesco-fail-in-the-us/ [Accessed on 18th February
2020]
Conrad, H. and Meyer-Ohle, H., 2019. Overcoming the ethnocentric firm?–foreign fresh
university graduate employment in Japan as a new international human resource development
method. The International Journal of Human Resource Management, 30(17), pp.2525-2543.
Cooke, F.L., Veen, A. and Wood, G., 2017. What do we know about cross-country
comparative studies in HRM? A critical review of literature in the period of 2000-2014. The
International Journal of Human Resource Management, 28(1), pp.196-233.
Cooke, F.L., Wood, G., Wang, M. and Veen, A., 2019. How far has international HRM
travelled? A systematic review of literature on multinational corporations (2000–
2014). Human Resource Management Review, 29(1), pp.59-75.
Edwards, T., Sanchez-Mangas, R., Jalette, P., Lavelle, J. and Minbaeva, D., 2016. Global
standardization or national differentiation of HRM practices in multinational companies? A
comparison of multinationals in five countries. Journal of International Business
Studies, 47(8), pp.997-1021.

9INTERNATIONAL HUMAN RESOURCE MANAGEMENT
Fan, D., Xia, J., Zhang, M.M., Zhu, C.J. and Li, Z., 2016. The paths of managing
international human resources of emerging market multinationals: Reconciling strategic goal
and control means. Human Resource Management Review, 26(4), pp.298-310.
Farndale, E., Horak, S., Phillips, J. and Beamond, M., 2019. Facing complexity, crisis, and
risk: Opportunities and challenges in international human resource
management. Thunderbird International Business Review, 61(3), pp.465-470.
Farndale, E., Raghuram, S., Gully, S., Liu, X., Phillips, J.M. and Vidović, M., 2017. A vision
of international HRM research. The International Journal of Human Resource
Management, 28(12), pp.1625-1639.
Garavan, T.N., McCarthy, A. and Carbery, R., 2019. An ecosystems perspective on
international human resource development: A meta-synthesis of the literature. Human
Resource Development Review, 18(2), pp.248-288.
Haak-Saheem, W., Festing, M. and Darwish, T.K., 2017. International human resource
management in the Arab Gulf States–an institutional perspective. The International Journal
of Human Resource Management, 28(18), pp.2684-2712.
Pokharel, B., 2016. Triumph over failure of expatriate in an international assignments from
the international human resource management perspective. International Journal of Business
and Management, 11(5), p.310.
Pudil, P., Dvorak, J., Komarkova, L., Mikova, I. and Pribyl, V., 2018, May. Analysis of
investment into further education as a part of international and domestic HRM.
In Proceedings of the international conference on management, leadership &
governance (pp. 302-308).

10INTERNATIONAL HUMAN RESOURCE MANAGEMENT
The Guardian.com 2020 Tesco admits defeat and pulls out of Japan (Online) Retrieved from
https://www.theguardian.com/business/2011/aug/31/tesco-japan-pull-out-philip-clarke
[Accessed on 18th February 2020]
The Guardian.com 2020 Tesco: why did it all go so wrong? (Online) Retrieved from
theguardian.com/commentisfree/2014/sep/22/tesco-pursuit-of-profit-britains-biggest-
supermarket [Accessed on 18th February 2020]