Learning outcomes assessed:
- Identify and explore purpose and scope of international human resource management, evaluate different types of multinational companies, their structures and strategies, and its influence to the people management practices.
- Assess the impact of cultural differences in the management of people in multinational organisations and demonstrate knowledge of global issues that influence the international HRM practices.
- Analyse international staffing approaches, compensation strategies and management of virtual team
You are HR Consultant. In today’s competitive world, MNC’s adapt several strategies like merging or acquiring a firm or opening up a wholly owned subsidiary etc. to enter a global market.
- Identify and discuss the complexities involved in entering a global market.
- Propose international developmental strategies to your chosen MNC in any two countries of your choice. Evaluate the benefits & limitations of your proposed strategies and discuss how HR functions will be affected by implementing them in your proposal
Cross cultural training should be provided by MNC’s including general knowledge about the country and essential tips on behaviour and sensitive issues.
- Evaluate any country of your choice using ideas from Hofstede or other sources to prepare a short report on that country for future expatriates
- Highlight the issues of ‘cultural shock’ to discuss what measures should be taken to prepare and motivate an expatriate employee for a new overseas assignment. Support your discussion by evaluating different types of reward & compensation practices that could be offered to motivate an expatriate for a new overseas assignment.
Challenges associated with global market entry
International human resources management is to achieve the goals in the global market. It tends to outsource the employees from different regions and countries and making them learn the manner and culture of the native country and providing training in the context of tradition and values of the organisation and creating the environment of unity by developing its own culture (Saleeth, 2010). The challenges are to establish the business at the global level and make a wise market entry. There are various development strategies to commence entry in the international market, though there are certain issues attached with the overseas business but along with issues there are benefits attached as well. These strategies affect the working of human resources as well.
The report discusses the challenges that are been faced while making the entry in the international business along with describing the various modes of entry followed by the limitation and benefit of choosing the particular mode. Afterwards the effect of such strategies on HR has been examined. Thereafter the overseas culture has been investigated using the Hofstede’s six dimension theory and culture shock has been discussed followed by the issues and solutions for the defined situation.
Danone is originated in Barcelona, Spain and it is the multinational corporation that produces food stuffs in Paris. Danone deals in the nutritional activities; they basically focus on the baby care and later on progressed towards the healthcare and supporting the young parents, care takers and professionals in medical field be it a pedia nutritionist or physiotherapist that deals in the field of health care. For around 100 years it dealt in the stream of baby care and then took a step forward towards researching on the topic of breast milk and nutritional level of baby at their early ages. The company consists of a portion of Group Danone that holds the position in 500 Fortune company and studies the health care of human and thereby considered as the successful health food company of the world that concentrates on the dairy, water and medical nutritional product along with the early-life nutrition. In order to gain success and expand the business, awareness should be spread in favour of business thereby enlarging the field to establish the position in the international market (Danone, 2017). To set up business across the domestic border is a challenging activity and the challenges involved in establish international business has been quoted hereby:
Overseas organisational structure
In order to establish the business in the global market there is a need to design the team and set up the coordination among them. The entrepreneur need to study about the consumer behaviour by performing the full-fledged research so that the business plan could be designed accordingly and the flaws could be handled. At initiation level it could be made by establishing head office in the origin country and controlling the other outlets from there only. The major decisions come from head office only so that single handed management takes place and conflicts are resolved. The issue that is faced is selection of appropriate organisational structure, failing which might result in adverse effect and closure of the outlet (Kar, 2017).
International development strategies
Legal procedures of foreign countries
The legal proceedings differ from country to country and this is the major challenge that the companies faces when they groom up to grow in the international market. Every country has its set policies, business laws, labour laws and the taxation policies. For instance, in the European countries maternity leaves granted to the employees is 14 weeks whereas in US there is no such concept of maternity leave (Atkinson, 2017).
The major challenge that the company faces at the time of international expansion is the changes in foreign exchange. The rates of foreign currency fluctuates which affects the business to the great extent. The forecasting and predictions become difficult in such a situation where foreign exchanges are involved because a high and fast change directly affects the profit of the company and economic condition of the country (Perez-Reyna, 2017).
The international development is the global expansion of the company and successfully acquiring the higher standard in the foreign market. The development of country is bifurcated in three portions which is developed, developing and under developed country and accordingly the strategies are planned to improve or maintain the current position. The countries selected for proposing the international strategies in context of Danone are UK and Canada (Golubeva, 2016). These strategies are quoted below:
With concern to UK
- In order to grow and expand in the global market the foremost need is to step in the market taking a wise move through the appropriate selection of the entry mode. The simple and swift mode of entry into the international market is through exporting taking assistance of the agent (Canada business network, 2017).
- Another method to enter into the global market is the joint venture by shaking hands with the broker of native country. The 2 venture come together to start something unique, generally in such a concept the idea is from one country and processing takes place in another country. Traditions and culture of both countries get united to make out something fruitful (Ripolles & Blesa, 2017).
Benefits & Limitation of such strategies in UK
- The benefit attached with exporting is much investment is not needed. The outlet is not established in the foreign country only agent is to be selected who carries the entire knowledge of the other country and only the exchange takes place. The limitation attached with exporting is there are restrictions in the supply of quantity and also the quality standards differ from country to country, thus the appropriate quality check has to be made as per the exporting and importing countries norms (Schott, Chen & Li, 2017).
- Joint venture is beneficial in the situation where the resources of both the country gets merged up and the flexibility is there, both the parties are not bounded. In joint venture at the overseas there is the drawback that cultural differences are likely to appear and this creates imbalance in the working environment (Marsh, 2017).
With concern to Canada
- Danone could be expanded in the market of Canada through partnership with the foreign country. It helps in learning lot about the other country and two cultures get mixed up, such a fusion helps in creating wonders and uniqueness springs up.
- Another way to enter the Canadian market is through Franchising; Danone could opt for the franchising by establishing the outlets and following the policies demonstrated by the franchiser and accordingly developing the chain of such outlets and gaining fame in the foreign market (Fran Net, 2017).
Benefit & Limitation of such strategies in Canada
- Partnership is fruitful in the condition where the other partner is aware of the policies and procedure of the foreign country therefore chances of default decreases. The limitation that partnership carries is there is risk of liability where equal sharing is not made and the resources are also limited with them (Intertrust Corporation, 2016).
- The benefit of franchising is that the risk is lowered down as business policies and procedures followed are designed by the supreme authority. Also it could be winded up easily if the outlet is not running successfully. The drawback connected with franchising is that no amendments could be initiated even if it is beneficial for the progress of business, only the supremacy could pass on the changes and then only the required changes could be made.
- The effect of exporting on human resources is that they need to maintain the inventory. HR has to monitor on the availability of the resources and manage the shortage as per the priority and percentage of supply in different countries.
- In context of joint venture the HR should scrutinize the authenticity of the company and country where the joint venture has been planned. The allocation of resources and flexibility of process should be watched so that mismanagement in the policies is avoided and understanding of the different culture is developed.
- Partnership in the international market affects the organisational policies designed by the HR. the structure of organisation has to appropriate suiting the culture of both the countries so that employees could cope up with the internal environment.
- Franchising involves lot of paper work and HR need to verify each detail and policy regarding the terms and conditions of the franchising. Also they need to appoint the competent staffs that follow the phenomenon of the core company (Deresky, 2017).
Cross cultural training is the must have in the organisation heading towards the international market. To step in the global market the foremost thing that has to be learnt is to understand the culture that prevails in the country where the further establishment has been made. It starts within the company where various employees are involved who belong to different regions following distinct tradition and culture and the employer need to respect culture of every employee and to set the cooperation and promoting coordination among the employees the single organisational culture should be developed (Gelfand, Aycan, Erez & Leung, 2017).
In order to understand the national culture of the particular country Gerard H. Hofstede invented the theory of cross-culture. The Hofstede’s cross culture represents the set of program which evaluates the organisational culture and differentiates the people of one team from that of other (Beugelsdijk, Kostova & Roth, 2017). Hofstede’s theory comprises of 6 cultures followed by conclusion:
Individualism/Collectivism depicts the level of bond among the team or the community. The group or country which has more individualism tends to lose the community early as the strength is not there in the relations. The less individualism states the good bond among the countrymen and company is likely to flourish more.
This depicts the values and beliefs that the society perceives in term of gender equality. It expresses the involvement of men and women in the professional and to what extent do they share the responsibility. The high rate of masculinity/femininity represents the high impact of men on the society as compared to women and the low rate of masculinity/femininity states the equal participation of women as the men and even the women are playing the strong role and working on the equal position (Hofstede-insight, 2017).
Effect of international strategies on functioning of Human Resources
The power depicts the position and level that the person holds within the society. It expresses the status of the person. Power is such thing that lies in the limited hands and causes the discrimination. The less power distance is the positive aspect whereas the more power distance argues over the increasing gap due to the unequal distribution of power.
It states the level of consciousness and anxiety that the person feels when there occurs any uncertain situation. The high level of uncertainty results in arguable situation whereas the low score depicts the values and norms of the society and the sincerity that they carry to resolve the uncertain situations.
Long/Short term Orientation
This culture argues over the continuation of societal values and beliefs to stay in the business for elongated period. Lesser values depict the short term progress of the company and the country.
The Hofstede’s six dimension culture assists in comparing the two sections of the society. The dimension helps in evaluating the characteristics of different countries so that the idea of overseas business could be clarified and the market entry decision becomes easier (Geert Hofstede, 2017).
Cultural shock is the change in the culture of a person when the country is changed. The difference in the cultural environment and values after migrating from one region to other regions said to be the cultural shock. It is the variation that an individual feels when they change the place for the employment purpose or any other reason. When the person works in country other than the native place is stated as expatriate for that particular country (Ieong & Leung, 2017).
Issues and resolution of cultural shock
Cultural shock is the common issue that follows when the employees of various regions are been employed. The different issues involved in the cultural shock are quoted below:
- Accommodation and location: The place where the expatriate has been accommodated plays an important role as they need to adjust with other person might be from different country and they had to live together for the ample amount of time. This situation could be resolved by communicating with them and also interacting with their families and friends to create an ease and increase the adaptability (Pearson, 2017).
- GP Insight: It is the isolated feeling and with the sudden change in environment, culture and weather leads to homesickness among the expatriates. The sleeping habits get changed and this results in drastic change in routine. It could be resolved by connecting the people with their native ones and providing the internet facility so that they could stay in touch with their near and dear ones through Skype and other online applications (Robertson, 2017).
- Effective Human Resource Management: Another issue that the employee is likely to face is the difference at the working place due to linguistic barrier and developing the understanding of new place. The Human resource management should thoroughly understand these issues by conducting the one-to-one session and analyse the situation and resolving it accordingly. Also the employees gathering and fun activities should be initiated to create bond among the natives and expatriates to gain the employee engagement (Rees & Smith, 2017).
Hence, from the above report it could be cultivated that international human resource management is the broader aspect that not only focuses on the recruitment and selection but also resisting the movement of employees and making them comfortable with the changing environment. The report has discussed about challenges that the entrepreneur faces while entering into the global market. These challenges could be revoked by beginning with the simple manner and analysing the culture, traditions and beliefs of the country where entry is been made and for initiating such a country should be chosen which share the approximate similarity so that adjustment becomes comparatively easier. The international development strategies have been discussed followed by the effect of these strategies on the activities of human resource department. The task 2 discusses about the condition of expatriate in UK by studying Hofstede’s six cultural dimensions in context of expatriates in UK. Furthermore, the cultural shock has been defined along with the issues that are likely to occur and resolution have been quoted as well for better clarification upon the situation of expatriates who travel for the concern of livelihood to the entirely different countries adopting the distinct culture.
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