Globalization also creates a talent pool that a given organization can use to attract the best staff to run their operations. Through globalization, different companies are able to benchmark on best practices within a given industry besides aiding technological transfer.

The concept of globalization has introduced new challenges within IHRM. For instance, there has been continued integration of businesses across borders resulting into a merge of cultures and the loss of subtle characteristics of different national cultures. The cultural differences increasingly shape organizational behaviour particularly in ways of addressing communications, performance management and performance appraisal.
The business environment of an organization is shaped by the political, economic, social, technological and legal factors in the countries in which the business is operate.

The HR department in an international set up may experience challenges in analyzing the how the technological advancements are likely to affect consumers’ reactions, which in turn shape the decisions to be adopted by the HR.

One of the IHRM functions is conducting the international recruitment and selection process. Accordingly, there are three options in regard to sourcing for employees. First, the company may opt to send expatriates to the subsidiary offices. These employees’ needs have to be catered for by the HR department. Second, the firm may hire host country nationals who are natives of the ahost country to manage the offices. Third, it may hire third country nationals who are natives of a country other than the home country or the host country. The process of determining the most suitable option may be complex due to the varying environments of the different countries.