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Case scenario – International expansion in a gaming software development company

VirtualGaming Ltd. is a growing UK-based gaming software company. The company was founded in the early 1990s by the current Managing Director. The company’s Head Office is currently located in the South West of England.

The company has grown rapidly since opening in the 1990s and now employs 200 employees. As with many organizations in the gaming industry, most of its employees are male even though some of its products are aimed at women. Over the next three to five years the company plans to expand the business, initially into Eastern Europe, then internationally, especially North Africa.

The company realises that to achieve its growth plans it will need to develop and retain its current employee base, whilst at the same time attracting new talent. The senior management team are concerned that as the company grows it will be difficult to deliver the same quality products unless they are able to attract and retain the best employees. Only a few of the current employees have any experience of working Internationally.

Whilst the Directors are open to new ideas and implementing leading-edge HR practices they are very nervous about expanding into new geographical locations. Above all the company is keen to retain its reputation of being innovative as it expands the business.

Some existing members of staff have expressed an interest in working overseas. They are attracted by the opportunity to travel and live overseas and thus enhance their careers. However, some employees have expressed concern about the implications for their work-life-balance should they be asked to work overseas.

One of the current Directors has recently been reading an article that refers to the high rates of expatriate failure, so he is keen to find a way for the company to avoid similar issues.

You have just been recruited as an HR specialist to help the company develop an HR resourcing strategy to support the company’s International growth plans. When producing your strategy you will need to ensure that existing talent is fully utilised, whist at the same time looking for new sources of talent.

Introduction: Virtual Gaming Ltd International Growth Plan

International investment is the process by which business organizations transfer their operations into foreign nations either to increase production at lower cost or market their products (Nurtniun 2016, p. 47).  Companies go global with expansion as the basic reason. Virtual Gaming Ltd is an international software development company founded in the early 1990s. The company has its headquarters in the South West of England. The company has grown tremendously and currently employs over 200 employees, with male staffs being the majority of the population. The company’s objective to venture into the international markets such as Eastern Europe and North Africa is feared to fail. The management claims of different international challenges such as recent high rate of expatriate that often leads to failures of growing international companies (Yang 2014, p. 27). The worry is resulting from the fear of losing the best employees who might find it difficult in working in the foreign countries or failing to find the best qualified personals in the foreign countries to spearhead the company’s mission of quality provision. Therefore, the paper focuses the resourcing strategy developed by the HR specialist to enable the Virtual Gaming Ltd Company to realize their international growth plan

Business organization’s powers are always determined by the percentage of the market control, whether locally or internationally (Sadler 2017, p. 78). The organizations that grow globally tend to thrive from the accessibility of  wider global market that sees quick and large revenue collection, however, a good number international companies tend to fail due to numerous reasons; such as stiff competition, political factors, socio-cultural, environmental factors and many others (Yang 2014). Such companies that fear failing tend to post expatriates and hire international employees, a process that requires proper global human resource strategy.  Virtual Gaming limited faces fears of going international that are brought about by the high rate of expertise failure as reported by international business reports, and having just a few employees who a number of them have expressed their fear of working away from home, the company is on the verge of losing the best.

Different International market entry strategies determine the success and stability of the international organizations, and the strategies are into two categories, which are the non- equity and equity mode. Non-equity mainly consists of export and contractual agreements while on the other hand, equity mode comprises joint venture and fully own the  subsidiaries ( de Souza et al.,2017).  Therefore, Virtual Gaming Ltd will successfully venture into the Eastern Europe, Northern Africa and other parts of the world through either of the following international market entry strategies:

Investment Strategies

Direct investment- Direct investment is an arrangement that allows the international firms to produce units in the foreign market directly. It is the most common approach by most of the organizations since there is a 100% ownership; though direct investors tend to face numerous challenges (Domeinguez et al., 2018, p.100).  The main two ways of direct investment, are direct acquisition and development of own facilities, a process known as Greenfield direct investment. Greenfield investment tends to be more expensive than direct acquisition; caused by the high cost of establishment. The choice of investment adopted by Virtual Gaming Ltd depends on the availability of capital to be invested in the foreign country.

Franchising strategy-Franchising is an arrangement whereby one business organizations grants another the rights to use the name, trademark to produce and sell goods and services under specific specifications (de Souza et al., 2017). The program offers broader advantages such as low political risk, low cost of initial investment, availability of expansions in other regions of the world and integrated managerial capabilities. With such benefits, franchising strategy offers a better entry option for the Virtual Gaming Ltd, in venturing into the global market, especially in the regions that are politically affected, such as countries in Northern part of Africa.

Foreign joint venture-The foreign joint venture will allow the international companies to have equity position and management voice in the foreign firms such as Itransition, Apriorit and many others in Eastern Europe. Such partnership between host-and the home country firms always results into creation of a third firm that will give the Virtual Gaming Ltd a proper way of recruiting and managing the operations of the business.

The staffing in the international companies is always vital and challenging event to a great number of companies, as many are faced with the inadequate number of suitable and qualified personnel, inadequate management, and coordination process in the host country(Perozzi et al., 2016). There are four different staffing practices and categories for the international company: polycentric, geo-centric, ethno-centric, and region-centric (Ge  & Xu 2016, p.28). The multinational companies can opt to recruit from the host country, or from the parent country or the foreign subsidiary country. Virtual Gaming Ltd, having about 200 employee face difficulty in launching into the international market as part of the team is not with the idea of going to work in the foreign countries. This cause more dilemmas even fearing in losing the best employees, acquiring new staffs that will ensure the quality of the company both in the United States and the foreign countries.

International staffing

Expatriate failure is defined as the failure of an employee to achieve the expected performance that causes more damage to the organization (Blake 2017, p.99). Recent business reports show that about 10 to 20 of the United States expatriates had a premature return, while about 33% of the individuals that stayed had poor performance.  Such reports have cast fear among the VGL leaders. There are several reasons for expatriate failures, which are: the lack of cross-cultural adjustment, dissatisfaction with international modification, poor expatriate selection, increased responsibility, work stress, language inability, and many others.

During the global expatriate disposal, knowledge about foreign country recruitment policies and culture are essential aspects of the success of a business. To foster the business culture of quality, expat employees must always be available in the international markets, to oversee the launching of the home company’s objectives (Okeja 2017, p.69). The process of dispatching expatriate from the home countries is always expensive as compared to the process of selecting experts from the foreign countries. Virtual Gaming Ltd can avoid and minimize the expatriate failure through having proper international resource human management policies that will govern the selection and posting of existing employees into the foreign country.

The selection process of the expatriate should be based on the availability of managerial, interpersonal, and technical skills that are essential for the international assignments. Other factors include motivational state, family situations, language skills, and job factors. The expatriate should also be selected by the motivational state since such individuals tend to have a firm belief in the company’s mission and urge to succeed in their career, hence will reduce the chance of expertise failure(Blake 2017, p.102). Most of the employees in the list of selection are mostly in the supervisory position, and when posted in the Eastern Europe countries they become the respective Country managers. The new positions need an emotionally mature individual that is capable of meeting government officials and other potential customers and making decisions that will shape the organization’s success (Gupta et al., 2012, p.28).

The family situations dictate the willingness of a spouse of an expatriate to live abroad. For the individuals who are married, the company must assure them of family protection and compensation in case something happens to them, such as loss of life in the chaotic places such as North Africa, the company’s considerations should go to those couples that are stable, and the spouses are supportive (van Erp et al., 2011). The expatriate will be motivated to work harder when the family is stable than those individuals whose spouse keep on trailing on them, creating worry and despair.  Therefore, it will be very advantageous to the company to choose more males expatriates, as women tend to face more challenges in the foreign countries than men. However much masculinity has a deep root in our societies, Virtual Gaming Ltd, should embrace at least the few female individuals with the company to take up the mantle of leadership, within the home and foreign countries.

Expatriate

After the selection of the best expatriates, there should be proper preparation of the expatriates for the designated job in the foreign country to ensure the success of the mission. The preparation entails career counseling, cross-cultural adjustment, language adjustment, and many others (Vatidani et al., 2014). For example, the cultural aspects in the United States tend to differ from Northern Africa, whereby most of the countries contain nomad’s pastoralist who are always fighting among themselves. Therefore, it would be useful for the chosen expatriate to have full knowledge of the foreign language and way of living to enable mutual interaction with the community. The expatriate should also know that trying to influence the culture of the foreign staffs to conform to the culture of the home country will results in rejection by the international crews hence secure an opportunity of failing.

The management must not also try to forcefully or coerce the unwilling employees to work in the foreign countries as this will automatically call for expertise failure. In many cases, forced employees tend to acquire work-stress since they fail to balance their life and work (Gupta et al., 2012 ,p.29).  The imbalance will eventually lower the productivity rate, work quality of an employee, and eventually result in expatriate failure.

Continuous and effective communication between the home company and the foreign company ensures that the company’s culture is standardized. The feedback on the recruits also helps the organization to determine the strength and weakness of the international company, thereby offering possible support (Martex & Chen 2013). For example, it might be difficult for the expatriate to acquire favorable host recruits or may be faced with much violence among the host community that will eventually hinder his /her performance.

Employees are the basis of every organization, thus retaining high profile employees is v critical to business continuity, and most so to the companies that have a globalization agenda (Chuan et al., 2017, p.87). The international venture requires good number of the best employees to be dispatched to the new foreign countries since their jobs include the creation, distribution, and application of the knowledge in the foreign country (Ponting et al., 2016). The move has been well received by part of the employees while some fear from working away from home, these differences is very risky for the company as it may lose the best talents who don’t want to be posted in the international countries. It is paramount that the company find a way of retaining the best talents as it pursues the global objectives, therefore, as the HR specialist, the company must adapt to the following strategies.

Expatriate selection

Retention by motivation-It is apparent that most of the employees that may opt to leave the company fear the family and work-life balance in the international workplaces. The management of the Virtual Gaming Ltd must engage the employees to increase the retention, through effective communication that will expel away their fears ( Enroth et al.,2017,p.210). The administration must tell the employees that going global will not only benefit the company but also offer them the opportunity to enhance their careers and also offer them the chance to transverse across the world.

The employees also get motivated to improve on their performance or forget about the quitting thoughts through making them feel valuable to the company, a move which is achievable through various methods. Methods such as recognizing the best software developers, the best marketers and rewarding them with incentives such as job promotion use of cash payouts and so on. Salaries can also be increased to the individuals that have accepted to be posted in the foreign market, a move that will attract the attention of many employees; however, this should not be an opportunity to victimize individuals that are still reluctant to take up the opportunity in the foreign countries.

Retention by training-The Virtual Gaming Company must also embrace the coaching and feedback process, within the employees in the United States and those in foreign countries. The process of coaching ensures that all employees are updated to the current technological standards, to ensure that the quality of the products and services offered are standardized across the global market. The training can be done through both online and traditional methods spearhead by the leaders, and the best-skilled employees in the company, as this will also ensure the maintenance of the company’s culture (Albrecht et al., 2014,p.69). Both formal and informal feedback must also be frequent from all the workplace in the foreign countries to ensure that the newly posted are in alignment with the company’s goals.

Foreign operations always tend to be more expensive in terms of recruitment and staffing process. Therefore, many organizations always prefer to employee local workforce in those countries rather than dispatching from the mother country since the cost of living is lower than the latter (Se Ok 2016, p.29).

It is essential for the company to have proper knowledge of the foreign labor before starting the recruitment process of the international employees. The experience helps in deriving the maximum value of the new local employees and also helps in reducing legal tussles with recruitment marketing agencies (da Silva et al., 2017, p.20). In Eastern Europe, it will be easier to acquire local employees than northern Africa, a fact attributed to the difference in the level of technology, knowledge, and experience. Different foreign countries have different cultures and languages, and therefore, the management of the company will have to look up for various native-cross cultural trainers on African culture to train on various aspects such body language, facial gestures, and many others.

During the overseas recruitment, traditional recruitment methods are more preferred over the online approach for the company since the former will offer the hiring team to determine physically the level of software knowledge of the applicants, an attribute that is more difficult to gauge in an online interview.  The selected international manager must be an individual that have the following traits: the ability to identify own and other cultures in the foreign country, the ability to portray the nonjudgmental personality, the ability to have negotiation skills and the sense of humor.

The company can also acquire new able staffs through the job board and staffing agencies in the Eastern Europe and Northern Africa respectively. Various national job boards have staff listings that will provide the company with easy time in doing the recruiting of new international staffs (Ge & Xu 2016, p.27). As much as the local talent tends to be much behind of the company’s expectation regarding knowledge and experience, the local talent offers the best knowledge on the marketing, culture, government regulations, common communication styles, and languages that when adequately hired. This will provide the best and stable local business and personal networks that eventually help the development of the foreign investment.

Conclusion

Multinational companies tend to face high rate of expatriate’s failure and international staffing problems that are always costly , therefore require analyzed entry strategies such as direct investment, joint venture, and franchising. Proper expatriate selection, pre-departure preparedness, and constant communication tend to eliminate the percentage of failing. It is apparent that proper retention strategies are critical to any organization and especially the technical ones that are intending to go global. It is upon the human resource management together with the leadership to foster an environment that motivates and stimulates employees to have the company’s objectives at heart through various motivating practices such as proper work-life balance, making employees feel valued, training, and coaching and many others.

Employee recruitment in the foreign countries at times get challenging especially when the locals are not well versed with the required knowledge and skills, hence forcing such companies to have their experienced staffs relocated to those areas, a move that is very expensive. However, these international companies can easily acquire appropriate staffs through the international job boards and then offer them enough training to conform to the company’s culture. In essence, no specific solution is settled as the best in the global staffing; it only requires the understanding of the organization’s objectives, pros, and cons for each of the hiring options and the Human Resource Management makes the best choice.

References

Albrecht, A, Dilchert, S, Deller, J, & Paulus, F 2014, 'Openness in Cross-Cultural Work Settings: A Multicountry Study of Expatriates', Journal Of Personality Assessment, 96, 1, pp. 64-75.

Beerepoot, N, & Roodheuvel, I 2016, 'Internationalization strategies of emerging market-based multinationals: integration of Indian ICT-ITES companies on the Dutch service outsourcing market', European Planning Studies, 24, 7, pp. 1374-1391.

Blake, G 2017, 'The Expatriate', Literary Review, 60, 3, pp. 89-102.

Chuan, L, Christina Yu-Ping, W, Chen-Yu, W, & Jaw, B 2017, 'The Role Of Human Capital Management in Organizational Competitiveness', Social Behavior & Personality: An International Journal, 45, 1, pp. 81-92.

da Silva, R, Santos Salazar, V, & de Moraes, W 2017, 'Internationalization process and complex adaptive systems', Internext: Revista Electrônica De Negócios Internacionais Da ESPM, 12, 3, pp. 61-76.

de Souza Aguiar, H, Roberto Luppe, M, & de Souza Nascimento, P 2017, 'Brazilian franchisor: Entry and operation of internationalized franchise', Internext: Revista Electrônica De Negócios Internacionais Da ESPM, 12, 3, pp. 16-30.

Domínguez, B, Gómez, J, & Maícas, J 2018, 'Does distance matter in explaining international expansion? Evidence from the global mobile telecommunications industry', Universia Business Review, 57, pp. 92-143.

Eneroth, M, Gustafsson Sendén, M, Schenck Gustafsson, K, Wall, M, & Fridner, A 2017, 'Threats or violence from patients was associated with turnover intention among foreign-born GPs – a comparison of four workplace factors associated with attitudes of wanting to quit one’s job as a GP', Scandinavian Journal Of Primary Health Care, 35, 2, pp. 208-213.

Ge, Y, & Xu, B 2016, 'Dynamic Staffing and Rescheduling in Software Project Management: A Hybrid Approach', Plos ONE, 11, 6, pp. 1-28.

Gupta, R, Banerjee, P, & Gaur, J 2012, 'A Key Challenge in Global HRM: Adding New Insights to Existing Expatriate Spouse Adjustment Models', Qualitative Report, 17, 44, pp. 1-30.

Martek, I, & Chen, C 2013, 'Localization Typologies Evident among Foreign Enterprises Active in the Chinese Construction Market', Journal Of Construction Engineering & Management, 139, 10, p. -1.

Nartnirun, J 2016, 'Public Policy in International Investment Law: The Confluence of the Three Unruly Horses', Texas International Law Journal, 51, 1, pp. 45-117.

Okeja, U 2017, 'The moral challenge of expatriate employment in developing countries', Nordic Journal of Applied Ethics / Etikk i praksis, 11,2, pp. 65-77.

Perozzi, B, Seifert, T, & Al-Sharif, M 2016, 'Staffing for Success', New Directions For Higher Education, 2016, 175, pp. 93-102.

Ponting, S, Ponting, J, & Spilde, K 2016, 'Identifying Opportunities to Inform and Inspire: Tribal Casino Employee Perceptions of Tribal Self Sufficiency and Philanthropy', UNLV Gaming Research & Review Journal, 20, 2, pp. 85-103.

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