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INTERNATIONAL HRM

OVERVIEW
Human resources managers are business organizations people managers, responsible for managing a wide range of employee responsibilities. The human resource manager in a multi-national company with divisions or subsidiaries in foreign countries has all the normal HR responsibilities plus a brace of additional tasks that are specific to offshore operations of his department. He is literally responsible for international human resource management. The primary difference between domestic human resource management and international human resource management is the added knowledge and responsibilities required due to foreign operations. These typically include language (in non-English speaking offshore organizations), the local and national regulations and laws governing business operations within a foreign country; currency exchange rates, career outlooks, company benefits and incentives and, perhaps most important. The ethics, etiquette and expectations of foreign business contacts. IHR management people must understand these differences clearly and stand ready to keep other company people informed of them to prevent embarrassing situations and unintentional affronts from occurring Basic human resources are a management activity while human resources development is considered a profession. The latter is targeted more specifically to developing personnel inside organizations through career development, organizational development and training activities. Both functions have undergone very-significant evolutions during the past several decades so that they now play major roles in staffing, managing and training people so that the will perform in an optimum manner for the organization. Today, international human resource management is the fastest-growing subset of HR due to the growing trend for global business operations. It is clear that IHRM is a growing field in multi-national business operations that will continue to offer excellent employment opportunities for people well versed in its international operations.

GENESIS
Over the last two decades, international human resource management (IHRM) has evolved into an important field of research, teaching and practice. Until recently the focus of IHRM was on how to best manage human resources (HRs) in the multinational enterprise; however, IHRM has now evolved to incorporate two more perspectives, crosscultural HRM and comparative HRM. Significant developments are taking place in the corporate world which has serious implications for IHRM. These include globalization, increasing foreign direct investments into emerging markets, growing intensity of crossborder alliances, growth of multinationals from emerging markets (such as China and India), increasing movement of people around the globe and an increasing trend in business process outsourcing to new economies. This emerging global economic scenario is creating immense opportunities for IHRM students and researchers. International Human Resource Management brings together articles which highlight the historical evolution of IHRM, discuss the contemporary issues and make projections for further developments in the field. The articles have been selected and arranged into sections in a way to help the reader better understand the developments in the field from different perspectives.

FUNCTION
International human resource management functions cover many different activities related to a business organizations employees and contractors. The first and most important is the staffing needs of the company whether staff members are company employees or outside contractors. Other functions include recruiting and training employees, ensuring that they are performing at expected levels or better, handling performance issues and making certain that personnel and management policies conform to laws and regulations. IHR management is also involved in how the company manages employee compensation and benefits, employee records and personnel policies and practices. Other international human resource management activities include ensuring workplace safety through dealing with drugs and drug problems, employee assistance, ergonomics, spirituality and diversity. In these efforts multiple sets of regulations must be used as guidelines; those of the company and those arising from being in a foreign nation with different laws, regulations and etiquettes. The multi-national responsibilities of international human resource management require schooling in psychology as well as the culture and customs of business in offshore nations.

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Impact of Socio-cultural factors on M&A (Mergers & Acquisition)

Post-merger integration is a key factor affecting the success of mergers and acquisitions. Practice, people tend to focus on a technical and organizational integration and the neglect of cultural integration, resulting in mergers and acquisitions businesses problematic. M & A is the rapid accumulation of business capital, market share of resources is an important means of expanding the market. In many cases, lack of successful mergers and acquisitions has occurred due to many problems. The high rate of failures has been associated mainly to the fact that M&As are still designed with business and financial fit as primary conditions, leaving psychological and cultural issues as secondary concerns. While as new countries enter the free-market economy, paying attention to cultural factors in M&As is becoming. The wider cultural gap and the current trend of M&As between developed and developing countries increases the urgency of understanding the effects of culture on the dynamics of IM&As and on issues such as corporate governance and local adaptation strategy. Thus, one of the reasons is that many of these enterprises ignored the post-merger integration, especially the cultural integration. Therefore, we need to understand the impact of merger integration on corporate Culture and cultural factors. Corporate culture to the acquisition of enterprises to develop international operations has brought opportunities and challenges. The objective existence of cultural differences to form a clash of cultures, and to business managers and employees will be psychologically bound to form a "culture shock" response. In an international corporate mergers and acquisitions, the cultural causes of conflict are: racial superiority, management practices, communication and misunderstandings, cultural attitudes and so on. Cultural conflict will lead to a series of consequences: 1. Ultra-conservative: Cultural conflict-affected cross-border managers and local staff of the harmonious relations, according to rigid rules and regulations control the business operation of the staff to be more alienated; At the same time, employees will work to become complacent, the manager of the program is also very difficult to implement, the results of the two sides will not make a difference. 2. A breakdown in communication: When managers and employees to a certain degree of distance from the large, bottom-up communication will be a natural break, the results of managers cannot understand the truth, the two sides in different directions farther and farther. 3. Non-rational response: Managers if they cannot correctly deal with cultural conflicts, it will by virtue emotional. Non-rational attitude can easily lead to irrational retaliation by employees, resulting confrontation and conflict more dramatic.

Russo's Research shows that cultural proximity is important for the cross-border mergers and acquisitions, there are similar cultural roots mergers among state-owned enterprises and the accompanying mergers undertaken transformation program, the more easily obtained by merging party's understanding and acceptance of, and thus the success of is more likely. Specifically, cultural differences between enterprise of both the sides depends on the degree of the following factors: 1. State or national culture differences: Enterprises as the socio-economic cells, their business philosophy, values, norms and institutions are all marked with the stigma of national culture, the cultural differences between enterprises in a certain extent, reflects the cultural differences between countries. Dutch scholar Hofstede national culture made an impact on the level of management activities, which are: (1) individualism and collectivism (2) power distance (3) uncertainty avoidance (4) The values of masculinity and femininity. 2. Regional Culture: Even in the same country, due to topography, climate, soil, size and natural resources of the different cultural characteristics in different regions may differ, so have a plateau culture, cultural basin, watershed sub-culture and island culture. In China, the eastern culture and western culture, coastal and inland culture and cultural differences is also very significant. These geographical and cultural differences permeate all aspects of enterprise management, a reflection of geography, cultural patterns and management model the intrinsic link between the three. Therefore, enterprises in the implementation of cross-regional mergers and acquisitions between, the need to carefully examine regional and cultural differences, carefully select acquisition targets. 3. Ownership nature of the differences: In accordance with the nature of division of ownership, enterprises can be divided into state-owned enterprises, private enterprises, foreign-funded enterprises and joint-stock enterprises in various forms. Because of their growth trajectory, property rights relations and the business environment of the different nature of enterprises of different ownership culture, there are also large differences. For example, foreign-funded enterprises affected by the impact of foreign managers and employees and therefore culturally more open and flexible work, focusing on efficiency and results; state-owned enterprises due to the long-term special protection by the government, employees sense of competition is weak, more conservative and inflexible thinking and she is timid, afraid to make mistakes, afraid of taking risks; while private enterprises are the long-term in a highly competitive market environment, its culture may be more competition, and risk-taking. There is also industry, cultural differences, differences in firm size and maturity, and other aspects of the influencing factors. Corporate culture can be made according to different classification criteria for the classification. Handy according to the enterprise culture and Enterprise Management

features into the power-based, role-based, task-and people-oriented achievement type, these four corporate cultures reflects the trend from a dictatorship to a democratic system becomes more progressive features. Despite the cultural differences increase the difficulty of integrating mergers and acquisitions corporate culture, but it does not necessarily lead to mergers and acquisitions fail, if the two types of company culture that has a good match, which also can make up for deficiencies caused by cultural differences. In the M & A practice, Japan's Fujitsu (Fujitsu 1 ICL) and Sony (Sony one CBs) in the very focus on the pre-merger culture matching the two sides, when they decided to target enterprises mergers and acquisitions when the company would first send to the Human Resources Manager target company employees with their work for some time to understand each other's culture and situation, to see whether the two sides in corporate culture has matched. The presence of sub-culture of "cultural management" presented a new challenge, which requires the manager must be based on the characteristics of subcultural groups and flexible use of a variety of management methods, and actively guide the sub-cultural groups to meet the organization's overall interests. Thus, in M & A integration process, the sub-cultural factors must be considered to observe the nature of its features and forms. If we can actively guide the sub-cultural groups, access to subcultural groups in the key of understanding and support can make the sub-cultural groups and other members of the cultural integration into the driving force. In short, in order to achieve successful integration after mergers and acquisitions, M & A business should pay attention to pre-merger cultural assessments to identify the key cultural variables, all-round implementation of the cultural integration method, rational choice model of cultural integration, nurturing environment for good corporate culture, to carry out cross-cultural training, advocacy learning environment, improve the integration of personnel and so forth.

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Recruitment and training

Recruitment and selection are the process through which an organization takes in new members. Recruitment involves attracting a pool of qualified applicants for the position available. Selection requires choosing from this pool the candidate whose qualifications most closely match the job requirements.

Classifying employees: Traditionally, employees in international organizations are

classified as one of four types: Home country nationals: Employees who are citizens of the country where the MNC is headquartered. These employees commonly are called Expatriates, or simply Expats. There are varieties of reasons for using homecountry nationals. One of the most common is to start up operations. Another is to provide technical expertise. A third is to help the MNC maintain financial control over the operation.
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Host country nationals: Local employees who are hired by MNC. For a number of reasons, many multinationals use host-country managers at the middle and lower-level ranks: Many countries expect the MNC to hire local talent, and this is a good way to meet this expectation. U.S. firms tend to rely heavily on host-country managers.
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Third-country nationals: Employees who are citizens of countries other than the one in which the MNC is headquartered or the one in which they are assigned to work by the MNC. Available data on third-country nationals (TCNs) are not as extensive as those on home- or host-country nationals. Third-country nationals are more typically found in MNCs that have progressed through the initial and middle stage of internationalization and now are in more advance stages. A number of advantage have been cited for using TCNs. One is that the salary and benefit package usually is less than that of home-country nationals, although in recent years, the salary gap between the two has begun to diminish. A second reason is that the TCN may have a very good working knowledge of region and/ or speak the same language as the local people.
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Inpatriates: In recent years a new term has emerged in international management- Inpatriates. An inpatriate is an individual from the host country or a third country national who is assigned to work in the home country. This growing use of inpats is helping MNCs better develop their global core competencies. As a result, today a breed of multilingual, multiexperienced, so called global managers or transnational managers is truly emerging.
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Sources of recruitment:

College recruitment: MNEs recruit through universities at home and abroad to find capable nationals of the countries in which they have foreign operations.
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Management Inventories: Some companies have centralized personnel record systems, which include data on home- and foreign- country nationals. These data includes not only the usual technical and demographic data but also information on adaptive capabilities.
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Adaptability assessment: Companies usually know more about their employees technical capabilities than about their adaptive ones; thus they must focus on measuring adaptability for foreign transfer purpose. The evidence supports a positive relationship between vigorous procedures and adjustment and performance.
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The help of local companies: One way to staff foreign operations is by buying an existing foreign company and using the personnel already employed; however companies should consider the possible efficiency problem of acquisition. Companies also may tie in closely with local companies in the expectation that the latter will contribute personnel to the operation as well as hire new personnels.
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Selection criteria for international assignment:

The following sections examine some of the most commonly used selection criteria for overseas assignments I more depth. Adaptability to cultural changes: Overseas managers must be able to adapt to change. They also need a degree of cultural toughness. Research shows that many managers are exhilarated at the beginning of their overseas assignment. Organizations examine a number of characteristic in determining whether an individual is sufficiently adaptable.
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Independence and self- reliance: In foreign assignments, managers often must be more self reliant.
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Physical and emotional health: Most organizations require good physical and emotional health in their overseas employees. The psychological ability of individuals to withstand culture shock is also considered.
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Age, experience, and education: Most MNCs strive for a balance between age and experience. There is evidence that younger managers are more eager for international assignments. Many companies consider an academic degree to be of critical importance to an international executive.
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Language training: MNCs should provide proper language training to employees before selecting them for foreign assignment.
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Motivation for a foreign assignment: Although individuals being sent overseas should have a desire to work abroad, this usually is not sufficient motivation. International management experts contend that candidate also must believe in the importance of the job and even have something of an element of idealism or a sense of mission.
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Spouse and dependents or work-family issue: If the family is not happy, the employee often perform poorly and may either be terminated or simply decide to leave the organization. One popular approach in appraising the familys suitability for an overseas assignment is called adaptability screening. This process evaluates how well the family is likely to stand up to the rigors and stress of overseas life.
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Other considerations: Applicants also can take certain steps to prepare themselves better for international assignments such as , enhance their technical skills, conferring with colleagues who have had experience in the assigned region, speaking with expatriate and foreign nationals about the assigned country etc.
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4>Training and Development (Global)

Training is a process of altering employee behavior in a way that increases the probability of goal attainment. This training process is particularly important in preparing employees for assignments because it helps ensure that their full potential will be tapped. One of the things that training can do is to help expatriate managers better understand the customs, cultures and work habits of the local people and thus avoid blunders in the organization. The Impact of Overall Management Philosophy on Training: The type of training that is required of expatriates is influences by the firms overall philosophy of international management. For example .some companies prefer to send their own people to staff an overseas operation; others prefer to use locals whenever possible. Briefly four basic philosophic positions of multinational corporations (MNCs) which can influence the training program are: 1. An ethnocentric MNC puts home-office people in charge of key international management positions. The MNC headquarters group and the affiliated world company managers all have the same basic experiences, attitude and beliefs about how to manage operations. 2. A polycentric MNC places local nationals in key positions and allows these managers to appoint and develop their own people .MNC headquarters give the subsidiary managers authority to manage their operations just as long as these operations are sufficiently profitable.

3. A regiocentric relies on local managers from a particular geographic region to handle operations in and the around that area . 4. A geocentric MNC seeks to integrate diverse regions of the world through a global approach to decision making. These philosophical positions can be found in the multinational arena and each puts a different type of headquarter ,but polycentric MNC will rely on the local managers to assume responsibility for seeing that the training functions is carried out. REASONS FOR TRAINING: There are many reasons which can be categorized into two general categories : Organizational reasons: These relate to the enterprise at large and its efforts to manage overseas operations more effectively .One primary reasons is to avoid ethnocentrism ,the belief that ones way of doing things is superior to that of others .training can thus help in understanding of how to interact with local personnel that expatriates are not as effective as host-country managers . Another reasons for training is to improve the flow of communication between the home office and the international subsidiaries and branches. Effective communication can reduce confusions and minimize problems. Finally, another such reason under this category is to increase overall efficiency and profitability. it has been found that the organizations that closely tie training and human resource strategy to their business strategy perform better than the one who dont do so.

Personal reasons: The training programs are sometimes designed to improve the personal shortcomings in areas like politeness, punctuality, tactfulness, orderliness, sensitivity, reliability, tolerance and empathy. There can be problems in foreign language problems which can be dealt with the training programs .One of the biggest problems that managers have in an overseas assignment is arrogance .These can be dealt with and avoided with proper training . Training can also help to improve the management style .it has been found that some changes is needed in the management styles. ,including their leadership ,decision making, communication ,and group work .More exchange of ideas and better communication is required between subordinates and managers coupled with more team work. The specific training approach used must reflect both the industrial and cultural environment, which in turn is a decisive factor in raising performance of the organization.

Types of training program:

There are many types of multinational management training programs, either superficial or specific: Standardized Vs Tailor Made: Some management training is specific, or generic Participants are taught how to use specific decision making tools .These tools do not have to be culturally specific. Small firms rely on standard programs .Larger MNCs are increasingly turning to specifically designed video and power -point programs for their training and development needs. Tailor made training programs are created for the specific needs of the participants. Inputs for these offerings is usually obtained from managers who currently are working in the country to which the participants will be sent as well as from local managers and personnel who are citizens of the country .These programs are often designed to a new set for a new culture .However, there are post departures training programs that are conducted on site .One of the common types of training in both standards and tailor made training is self evaluation .Participants in such training are provided personal insights about their behavior

5>PERFORMANCE APPRAISAL-GLOBAL TRENDS

Introduction
The performance appraisal process has become the heart of the human resource management system in the organizations. Performance appraisal defines and measures the performance of the employees and the organization as a whole. It is a tool for accessing the performance of the organization. The important issues and points concerning performance appraisal in the present world are: The focus of the performance appraisals is turning towards career development relying on the dialogues and discussions with the superiors. Performance measuring, rating and review systems have become more detailed, structured and person specific than before. Performance related pay is being incorporated in the strategies used by the organizations. Trend towards a 360-degree feedback system

 The problems in the implementation of the performance appraisal processes are being anticipated and efforts are being made to overcome them. In India, the performance appraisal processes are faced with a lot of obstacles, the most prominent being the lack of quantifiable indicators of the performance. GLOBAL TRENDS Need for global performance appraisal The dissatisfaction of these managers is of concern given the important role they play in MNCs. MNCs dominate the competitive landscape, and have a significant influence on patterns of international trade and investment. MNCs profoundly affect the process of globalization principally through their subsidiaries, which, therefore, places an immense dependence on the subsidiary, and as a consequence, a strong reliance on the manager of the subsidiary. These managers, commonly called host country managers (HCMs), are responsible for the performance of the subsidiary and the implementation of strategically critical tasks, such as the management of a number of staff and the achievement of the revenue and profitability targets of the subsidiary. The HCM must be able to manage these tasks within the objectives and guidelines handed down by the MNC. Thus, the MNC's control of the subsidiary and its HCM are a central integrating function in the MNC. Performance management and particularly PA is a strategic human resource management (HRM) process. These mechanisms enable the MNC to continuously evaluate and improve individual, subsidiary unit and corporate performance against clearly defined, preset objectives that are directly linked to company strategy. Thus, an effective PA creates a mechanism that can ensure the HCM and their overseas subsidiaries are acting in accordance with the parent MNC's interests. While there is wide recognition of the importance of PAs, most MNCs have not effectively managed their international appraisals. It has been argued that mismanagement of international PAs is primarily due to information asymmetry and goal incongruence between the parent company and its subsidiaries. The emergence of following concepts and the following trends related to Performance appraisal can be seen in the global scenario: 360 Degree Appraisal 360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees performance comes from all the sources that come in contact with the employee on his job. Organizations are increasingly

using feedback from various sources such as peer input, customer feedback, and input from superiors. Different forms with different formats are being used to obtain the information regarding the employee performance. erformance Appraisal According to a wall street journal headline, "Teams have become commonplace in U.S. Companies". Most of the performance appraisal techniques are formulated with individuals in mind i.e. to measure and rate the performance of the individual employee. Therefore, with the number of teams increasing in the organizations, it becomes difficult to measure and appraise the performance of the team. The question is how to separate the performance of the team from the performance of the employees. A solution to this problem that is being adopted by the companies is to measure both the individual and the team performance. Sometimes, team based objectives are also included in the individual performance plans. Rank and Yank Strategy Also known as the "Up or out policy", the rank and yank strategy refers to the performance appraisal model in which best-to-worst ranking methods are used to identify and separate the poor performers from the good performers. Then the action plans and the improvement opportunities of the poor performers are discussed and they are given to improve their performance in a given time period, after which the appropriate HR decisions are taken. Some of the organizations following this strategy are Ford, Microsoft and Sun Microsystems.

6>Compensation system

Common elements of compensation packages: The overall compensation package often will vary from country to country. There are however five common elements in the typical expatriate compensation package. These includes following: Base salary: It is the amount of money that an expatriate normally receives in the home country. Expatriate salaries typically are set according to the base pay of the home countries. The base pay also serves as the benchmark against which bonuses and benefits are calculated.
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Benefits: Approximately one third of compensation for regular employees is benefits. These benefits compose a similar or even large, portion of expat compensation. MNCs often provide expatriates with extra vacation and with special leaves. The MNC typically will pay the airfare for expats and their families to make an annual visit home, for emergency leave, and for expenses when a relative in the home country is ill or dies.
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Allowances: Allowances are an expensive feature of expatriate compensation package. One of the most common part is a cost-of-living allowance---a payment for the difference between the home country and the overseas assignment. Relocation expenses typically involve moving, shipping, and storage charges that are associated with personal furniture, clothing, and other items that the expatriate and his or families are taking to the new assignment. Housing allowance, education allowance, and hardship allowance are some other allowance which is being provided to the employees when they are assigned to overseas assignments.
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Incentives: In recent years some MNCs have also been designing special incentives programs for keeping expats motivated. In the process a growing number of firms have dropped the ongoing premium for overseas assignment and replaced it with a one-time lump-sum premium. The lump sum payment has a number of benefits. One is that expat realize that they will be given this payment just once---when they move to the international locale. A second is that the cost to the company is less because there is only one payment and no future financial commitment. Third is that because it is a separate payment it is more readily available for saving or spending.
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Taxes: The other major component of expatriate compensation is tax equalization. An expat may have two tax bills, one from host country and one from home- country. Usually, MNCs pay the extra burden. The most common way is by determining the base salary and other extras that the expat would make if based in the home country. Taxes on this income then are computed and compared with the taxes due on expats income. Any taxes that exceed what would have been imposed in the home country are paid by the MNC, and any windfall is kept by the expat as a reward for taking the assignment.
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Tailoring the package:

Working within the five common elements just described, MNCs will tailor-make compensation packages to fir the specific situation. For example, senior-level managers in Japan are paid only around four times as much as junior staff members. This is in sharp contrast to the United States, where the multiple is much higher. In formulating the compensation package, a number of approaches can be used. The most common is the Balance sheet approach, which involves ensuring that the expat is made whole and does not lose money by taking the assignment. A second, and often complementary approach is, Negotiation, which involves working out a special, ad hoc arrangement that is acceptable to both the company and the expat. A third approach is called Localization and involves paying the expat a salary that is comparable t those of local nations. This approach most commonly used with individuals early in their careers and who are being given a long-term overseas assignment. A fourth approach the Lump Sum method, which involves giving the expat a predetermined amount of money and letting the individual make his or her own decisions regarding how to spend it. A fifth is the Cafeteria approach, which entails giving expats a series of options and them letting them decide how to spend the available funds. The sixth method is the Regional system, under which the MNC sets a compensation system for all expats who are assigned to a particular region. The most important thing to remember about global compensation is that the package must be cost effective and fair. If it meets these two characteristics, it likely will be acceptable to all parties.

7>INTERNATIONAL NEGOTIATIONS AND DIPLOMACY

At one time negotiations prevailed only for direct investments but now have been extended to operating arrangements such as licensing agreements, debt repayments, and large scale export sales. The skillful use of negotiation can advance a partys interests and help to avoid a less

attractive alternative, e.g., trade wars, litigation, or protracted dispute settlement procedures under the WTO.

The negotiations process leads to multitier bargaining:. CROSS CULTURAL NEGOTIATIONS: Negotiations across culture are far more complex. Negotiations styles that work at home generally do not work in other cultures. they are placed in the precarious position of negotiating profitable business relationships with these people or suffering the negative consequences of failure. Negotiations in foreign country fail because the local counterparts have taken more time to learn how to overcome the obstacle normally associated with international/cross cultural negotiations. Besides knowing enough not to fail they also need to know enough to win, for example: in negotiations between Japanese and American business people, Japanese negotiators have sometimes used their knowledge that Americans have a low tolerance for silence to their advantage. In other words for negotiations to take place ,the foreigner must at least recognize those ideas and behaviors that the local intentions put forward as part of the negotiation process and the locals must do the same for the foreigners. Strategic planning for international negotiations involves various steps: Preparation for face to face negotiations Determining the settlement range Selecting the form of negotiations Determining where the negotiations must take place Deciding whether to use individual or group in the negotiation Learning about the countrys view on the agreements/contracts.

Commercial Diplomacy Negotiations in commercial diplomacy cover business issues, policy issues, broad economic issues and political issues, as well as legal issues. The most visible negotiations carried out in the trade policy arena are the negotiations carried out between governments, either

bilaterally or multilaterally. While most day-to-day negotiations between governments on international

commercial issues focus on specific commercial problems created by specific policy measures, the negotiations that get the most attention are comprehensive government to government negotiations that cover a wide range of products and policy issues. Examples are bilateral free trade negotiations aimed at removing most barriers to trade and investment between countries, or the multilateral rounds of trade negotiations carried out under the auspices of the world trade negotiations.

Another type of negotiation in commercial diplomacy is one in which one government seeks to eliminate, or at a minimum to moderate, a restrictive trade policy action by another government. On its face, this kind of negotiation is set up as a zero sum game type of negotiation, and it takes extraordinary skill to convert it into a win-win negotiation. Assuming that the proposed measure has some degree of merit in light of the economic circumstances faced by the country involved, the trick is to show that negotiations can lead to a more balanced consideration of the interests of all parties involved. Terminology and descriptions of the various types of parties and form of negotiation follow: 1) Inter-governmental negotiations between governments the government of Pakistannegotiates with the government of India 2) Intra-governmental negotiations within and among one government, usually between government agencies, political parties, or with constituent groups. 3) Commercial negotiations between businesses, companies, corporations. This may include business negotiations related to contracts, sales agreements, investments, joint ventures, etc. Or, may involve negotiations within a business or trade association. 4) Internal business negotiations Within the business organization, company or corporation. Examples: management labor negotiations, human resources, inter-departmental, union negotiations, etc. 5) Nongovernmental Organizations (NGOs)-business associations, associations, environmental, labor, human rights, development, etc.) Intra-group (within the NGO ) a) b) c) d) Inter-group between and among other NGOs NGO-business organization NGO-governmental organization NGO-international governmental body (WTO, UN, WHO, ASEAN, etc) trade

BARGAINING PROCESS: In the bargaining process agreements occur only if there are overlapping acceptable zones ACCEPTANCE ZONES: Before becoming involved in overseas negotiations, a manager usually will have some experience with the domestic bargaining process that is somewhat similar to the foreign sphere. Finally there are zones of acceptance and non acceptance for the proposal presented. if the acceptance zones overlap an agreement is possible, if zones have no overlap positive negotiations are not possible. RANGE OF PROVISIONS: The major difference between domestic and foreign negotiations is a matter of degree.international negotiations may take much longer and may involve many provisions unheard of in the home country, such as negotiated tax rates. further governments vary widely in their attitude towards foreign investors ,therefore their negotiating agendas also vary widely. example: French government contributed about $111 million ao about a quarter of the plants cost to attract a mercedez benz facility .Direct incentives that countries have offered foreign investors include tax holidays, employee training, R&D grants, accelerated depreciations, low interest loans ,loan guarantees, subsidized energies and transportation, exemptions of import duties and construction of rail spurs and roads. Countries also provide indirect incentives such as a trained labor force that is likely to accept employers work conditions tranquilly. RENEGOTIATIONS Agreements evolve after operations begin, the company position is usually but not always stronger before entry. The erosion of the MNE bargaining strength as countries gain assets from them is known as the THEORY OF THE OBSOLENCING BARGAIN. the company that is aware of and responsive to the changing needs and desires of the local economy can maintain or even improve its bargaining position by offering the infusion of additional resources the host country needs. One tactic is to promise to bring in the latest technology developed abroad ,another is to use plant exapansion or export markets as bargaining weapons .In addition the company and country may exchange benefits such as companies ceding part of its ownership to local interests in exchange for guarantees on remission of its earnings

Behavioral characteristics affecting outcome In international negotiations misunderstandings are a strong possibility because of cross country cultur differences ,language differences,nationalities,professions. Cultural factors

Some cultural differences among negotiators are evident:some negotiators are decision makers ,some are not Some take a pragmatic view,others take a holistic view,some expressions do not translate well.negotitions . Negotiations may be based on ones own culture ,the counterparts culture,some hybrid cultures. Professional conflicts: Governments and business negotiators may start with mutual mistrust due to historic animosity or to differences in the status of their professional positions .the businesspeople may come armed with business and economies data that are not well understood by government officials, who may counter with sovereignty considerations that are nearly incomprehensible to the businesspeople. PREPARATIONS FOR NEGOTIATIONS Role playing is a valuable technique for training negotiators for projects requiring approval by a foreign government or agreements with a foreign company. by practicing their own roles and those of the counterpart negotiators and by researching the countries culture and history to determine attitude towards foreign companies ,a companys negotiator may be much better able to anticipate responses and plan their own actions. EVOLUTION OF NEGOTIATION AND DIPLOMACY IN INTERNATIONALISATION PROCESS: It means dealing with host governments are more apt to occur with FDI than with trade ,unless the trading proposal has an unusually high potential impact on the host economy. early commitments are more apt to be in industrial than in developing countries and the former has taken a more laissez faire attitude towards FDI therefore companies have less need to justify their entries. this should not imply however that there is no need for diplomacy at the early stage of international commitments .because of the large market attractions of industrial countries they may sometimes be able to require complex barter or offset arrangements as a requisite for entry. EXAMPLES: THE PANAMA CANAL NEGOTIATIONS The completion of the Panama Canal is one of the worlds great engineering feats. The negotiations to complete and build this vital connector between two oceans spans decades. The cost in human lives, suffering, and capital staggers the imagination. It all began in 1847 when the United States entered in a treaty with New Granada (later to be know as Colombia), and which allowed the U.S. a transit passage over the Isthmus of Panama. The treaty guaranteed Panamas neutrality and recognized that Colombia would have sovereignty over the region.

Enrons Indian Negotiation Debacle In the early 1990s, the US energy giant Enron, decided it needed to diversify by expanding its growth abroad with emerging countries. In June of 1992, Enron engaged in negotiations with the government of India. Enron had identified the state of Maharashtra, the third largest state in India with a population of roughly 79 million, and containing Indias commercial capital of Mumbai, to negotiate a major energy project. Maharashtra was governed by the Congress Party. Negotiations began with both the state government and with the Maharashtra State Electricity Board (MSEB). Enrons mega project proposal was for the construction of a US$3 billion, 2015megawatt power plant. As a great deal of liquefied natural gas would be required to power the plant, Enron decided it would import this gas from a joint venture that Enron had with Qatar which was 1200 miles away. Being the largest project ever undertaken in India, Enron proposed that the project be broken down into 2 phases. Initially, in phase 1 they proposed to produce 695 megawatts and would use locally produced natural gas. Phase 2 would produce 1,320 megawatts and for this they would use the natural gas imported from Qatar. Enron chose the town Dabhol, situated on the Indian Ocean as the project site. Selling Water for China Acqua International (AQ) is a Europe-based multinational company that has interests in water and other environment-related businesses. In China, the company has joint ventures with medium-size and large municipalities to produce potable water. To increase its investments in China, the AQ Group arranged, through its local subsidiary Pacific Acqua International (PAQ), to enter into a strategic alliance with Tak Foy and Co., a Chinese conglomerate with strong roots in China and Hong Kong in the service industry (mainly leisure-related). The venture is called Haoyu China Limited (HCL).