MOLEX

Tejares, Aaron I. GM598

1. What multinational strategy is Molex pursuing: localization, international, global standardization, or transnational? 2. How would you characterize the approach to staffing used at Molex? Is this appropriate given the strategy? 3. Molex is successful in its use of expatriate managers. Why do you think this is the case? What can be learned from Molex approach? 4. How does the HRM function at Molex contribute to attaining its multinational strategy?

Molex is a leading one-source supplier of interconnect products. It is a 70-year-old manufacturer of electronic components based in Chicago. The company established an international division to coordinate exporting in 1967 and opened its first plant in Japan in 1970. Since then, Molexs international business generates 61% of its revenues outside the US. They operate in 21 countries with 50 manufacturing plants. Molexs competitive advantage is based on combination of lowcosts, excellent customer service and the mass production of standardized products that are sold worldwide. Manufacturing plants are located where major customers are close and cost of operation is favorable. Their goal is to build a global company that is at home wherever in the world it operates and that proactively shares valuable knowledge across operations in different countries. Their HRM function has always been one of their competitive advantages. They hire HRM professionals with experience from other company in the same country which it has operation is hired. Each facility has their own human resource policy which adopts their culture. Molex has a

staffing policy for managers and engineers where each should know at least 2 languages and willing to be relocated. They also move their managers and engineers around the world in order to learn different cultures and management style. Lastly, their in-house management development programs that educate them in the field like finance, strategy and operation.

The global standardization strategy focuses on increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects, and location economies. The strategic goal is to pursue a low-cost strategy on a global scale. Lacks responsiveness to local markets and decision-making are centralized in home country. The localization strategy focuses on increasing profitability by customizing the firms goods or services so that they provide a good match to tastes and preferences in different national markets. The transnational strategy tries to simultaneously: 1. Achieve low costs through location economies, economies of scale, and learning effects. 2. Differentiate the product offering across geographic markets to account for local differences. 3. Foster a multidirectional flow of skills between different subsidiaries in the firms global network of operations. Seek

both global and local responsiveness. Combination of globalization and localization strategy. The international strategy involves taking products first produced for the domestic market and then selling them internationally with only minimal local customization. Company is based in the home country and selling the product internationally. Countries with advanced or specialized factor condition most likely used this strategy. Ex Japan, Germany, US Molexs is an international business that is pursuing transnational strategy. They are building their manufacturing plant where customers are close achieving low costs, expatriates managers and engineers to achieve higher level of learning and understanding of cultures for management purposes. They are also mass producing a standardize product that is sold globally making it cheaper. These indicate that they have high pressure for cost reduction. Second, the norms and culture of a manufacturing facility is localized. This indicates that they have high pressure for local responsiveness. I think that staffing used by Molex is appropriate on their strategy. For them to be localized, they must hire local people because they understand their own culture better than anyone. Since they are an international business company, expatriating their managers and engineers will just make them better to better understand another culture and make better business decisions. I just dont like the idea of getting experienced HRM professionals from other companies. It is considered as employee piracy. I think they should train their own professionals considering they have the resources to do it. They train their managers and engineers so much but they are pirating their HRM people.

I think the reason that they are successful in their expatriate management is because they are investing in it. For an employee making $75,000 in base salary, the total cost of an expatriate assignment can run as high as $250,000. Given the numbers, I would say the people are well cared, that is why employees return the favor by doing what is expected to them, responsible employee and better decision-makers. If anything can be learned from this approach, I would say it is the investment and trust on people. Sometimes we say Customers first but I believe and what will benefit the company more is Employee first philosophy. The HRM function contributes to its success by knowing what their customers want and respond to it. It is said that customer service is one of their competitive advantage. Competitive advantage is very hard to imitate and therefore Molex clearly excels in that category. Hiring local HRM professionals is the key because they know their own needs and wants in work. They create a policy that every employee will be happy therefore making their customers happier. Making a positive impact locally will have a convincing impact in international stage.