International Human Resource Management For Raagu Company Case Study

Reasons for the Company to go Global

Discuss about the International Human Resource Management for Raagu Company Case Study.

Most successful organizations or small businesses are tending to go global due to rapid growth of technology. Entrepreneurs and most business owner’s especially successful firms are internationalizing their businesses beyond the borders from being local industries or firms to foreign markets. For example here in Maldives, the Raagu Company Pvt Ltd which was formed in 2004 to deal with the manufacture and sell of frozen and fresh seafood products is one of the companies going global. Raagu Company Limited was created to be a supplier to highly qualified consumers and increase seafood production for exports in Maldives as well as provide risk management for Maldivian producers. As a main company in Maldives which offers buyers with quality assured seafood products like Tuna fish, it highly commits itself to excellence and honesty as well as create good relationship with its buyers. In this discussion, the paper briefly looks into various effective reasons that will make an organisation to go global. The reasons will vividly show why small companies like Raagu Company Pvt Ltd venture into foreign markets or go global selling their products to other new foreign countries. For example, the paper will address why Raagu Company Pvt Ltd selling its canned seafood to foreign markets like China, Europe or Malaysia apart from selling to its initial locally customers in Maldives. Besides, the paper will investigate some of the international human resource challenges it may face. This will be accompanied by the recommendations to address the perceived problems.  

The Raagu Company Pvt Ltd will try to go global in order to increase sales and profitability of its products. Therefore, internationalizing the business makes it have new sources of revenue and yields. This is because most sales as well as profits will increase as the firm can reach the world and bring more benefits as compared to its previous earnings which were small.

 The company may find its domestic market more saturated and consider to look for new markets overseas where customers desire their unique products and services as described by Mejri & Umemoto (2010). The domestic market for example here in Maldives is small. The consumers of buying fresh seafood are not many as the Maldivian population is small and hence the need to extend beyond the borders and look for bigger markets for their products. The organization mostly wants to gain the first advantage move to the foreign markets to even curb competition from other firms in the market such as Hashim Heymaa Fishing Company. Therefore, shipping of its products abroad and services for a search of new markets will make the organization sustain its growth.   

Raagu Company Entry in China and International Human Resource Management Challenges

Outmanoeuvre competitors is also another major reason for an organization to go global. It’s also sometimes referred to as globalization of competitors where taking your business overseas or to foreign markets where your competitors have not yet entered. Therefore, by taking your company global to new markets makes you have the competitive advantage over your domestic rivalry competitors hence allowing better thriving of the business.  

Creation of jobs or employment opportunities is another reason that also makes business or firms like Raagu Company Pvt Ltd to go global. As the company extends its operations to other new markets in foreign countries for example Malaysia, China or Europe more job opportunities will be created to that country where the company is establishing itself. The firm will have to employ the country main citizens first since most of them are the majority job seekers as also supported by many governments. For example the going global of Raagu Company let say it opens a new branch in China, it will offer most jobs opportunities to most sectors like fishing, manufacturing to even transportation. Therefore, it will achieve most countries ability to create jobs according to Senik, Isa Scott-Ladd & Entrekin (2010). 

Globalization of customers or just enlarging the base of the client is another good reason why most organization go global (Baylis, Smith & Owens, 2013. Companies enter into foreign markets by the urge of growing their opportunities and offer their products and services as they expand their number of esteemed customers each day into the new foreign markets as stated by Fonfara (2011). Therefore, the urge to increase more and more customers to increase their customer’s base is what makes some organizations like Raagu Company to go global. As others tend to explore untapped customers in the market.

Companies also prefer distributing all their efforts in different regions to avoid concentration of their efforts in one place (Fonfara, 2011). Therefore, they tend to spread the risks in the various countries or regions since most countries growth rates and development is different. Companies tend to balance their investments in diverse areas to prevent inflation or recession hitting their only market which may make them collapse henceforth the need to spread the risks involved in various markets or regions. Revenues and profits will even be consistent instead of the companies risking their resources in one area and market which might collapse. 

Additionally, some companies are going international to broaden the workforce and get better skills and ideas that will assist in the running of the organization. Fresher concepts and ideas are brought in when employees from different cultures and countries work together. Therefore, this approach may help the firm in achieving its objectives appropriately. For example in Asian countries as seen in Lim & Kimura (2010).

International Human Resource Challenges the Company may face

Lastly, another major reason that makes firms go global is to create economies of scales in their production (Mejri & Umemoto, 2010). This is because as the more the company produces, the lower chances of lowering manufacturing costs incurred therefore increasing high chances of profits when it comes to sales. Unit costs reduction occurs when there are higher production volumes unlike when manufacturing few products thus extra costs saved, which promotes to the companies huge profits.

The Raagu Company Ltd may take the lead of extending its operations to China as a new foreign market for its business operations. As an Asian country China tends to be the best choice for Raagu Company Pvt Ltd to venture. This is due to the fact China has a large population that will provide ready market for Raagu company seafood products. Chinese people also love seafood as their meals therefore the fresh seafood products from a Maldivian company will get a ready market for its seafood unlike other Asians countries with small population as proven by (Zou, Liu & Ghauri 2010). For Raagu Company taking its business to China may not be easy as stated above since it’s likely to face many challenges when carrying out its operations in China. Since it is a new entry to the Chinese world of business the Raagu Company is likely to face several international human resource challenges when it comes to management. The following points will try to look deep into the main  international human resource challenges its likely to encounter in management of its operations in China. 

As a multinational company or organization in going global, it will have to face many human resource challenges when it comes to running the firm’s operations. For example, in a country like China, as stated by Budhwar & Debrah (2013), the challenges likely to be faced are;

Communications or cultural divides is an issue in China where human resource personnel may face when taking their businesses there as indicated by Feely (2003). The foreign company like Raagu Company Ltd is likely to face cultural misunderstanding from miscommunication with the Chinese people. Therefore, it may be rare to get a person who understands subtleties of the Maldivian language and possesses both Maldivian language and Chinese to run business negotiations as shown by (Warner, 2013). Therefore, cultural misunderstanding is likely to occur since it may be difficult to get a well-equipped international team which can bridge the two cultures appropriately without having any problems, especially meetings.

Legal and ethical issues is also a major problem when taking your business to China since human resource managers encounter complex legal issues when dealing with companies abroad as argued by( Haluk & Kettaneh, 2011).   Since Raagu Company is from Maldives where there are simplified administrative tasks unlike in China where there is inconsistent application of regulations such as opening bank accounts, and registering your company has to take a long time. China’s most transactions are done in paper work which may take too long time to commence the business. Therefore, the remote procedures in China and regulations may make it difficult for the business to start and operate.

Human resource differences are also challenging when conducting your global business in China. Most Chinese employees are used to the hierarchical structure whereby every person has a clearly defined role unlike in Maldives where responsibilities are delegated to each employee are flexible as seen in (Baruch, Altman & Bournois, 2013). Such differences may be a difficult challenge to managers who like employees to take their initiatives when working, unlike Chinese workers who take actions from their top leaders. Therefore, it will be difficult for Raagu Company Pvt Ltd to manage the Chinese employees who need regular training.

Business culture may also be a threat when it comes to taking your business to China or Asian markets since the same business model that worked for Raagu Company may not function as expected therefore it must be flexible. Most companies in China should conduct their businesses according to their Chinese traditions and characteristics. Therefore, they must have adhered which may sometimes be difficult to managers. Like most companies in China require close supervision and monitoring of the employees who need their considerations taken according to their cultures as discussed by (Schuette, 2016).

Management coordination costs is also another challenge business going global face since the company has to incur more on managers and workers in different countries as shown by (Collings, Scullion & Morley, 2007). Managers who are involved in the running of the organizations need to discuss briefly and travel regularly to various countries and explore how to tackle the issues. Frequently moving of managers from one country to another when coordinating the company policies may be too expensive and time-consuming. Therefore, the costs incurred in managerial levels for coordination’s may be too expensive when running the business thus becoming a major challenge when trying to calculate profits as also viewed from (Chen & Tan, 2012). 

It is also important to create a healthy relationship in China people not only in meetings but also taken them to dinners, restaurants, and places not only doing deals in formal areas unlike in the Maldives hence this may be a challenge to most managers who are used to Maldivian management tactics. Therefore, building the relationship to get customers in China may be a challenge to most business who don’t know how to do it in the Chinese country.

Lastly, the company may face the risk of high alerts like terrorism, natural disasters like earthquakes or even epidemic diseases such as Flu. Therefore, the employees must be protected at times from such issues which may be costly for business as demonstrated by (Panagopoulos, Lee & Peterson, 2011). At times safety and security issues make a big challenge to most global businesses when entering into new areas which may end up being an issue to human resource managers on how to tackle them in foreign countries for example China. Therefore, understanding the uncertain environments is best for managers to be able overcome the issue as stated by (Child & Rodrigues, 2012). 

First, to succeed in China market as a foreign market, the Raagu Company Pvt Ltd must take a realistic approach on how to conduct business in China. Managers should take ample time and patience to understand the business culture in China and have a better knowledge in cultural understanding of its human resource at large as shown by Hsu, W. T., Chen, H. L., & Cheng, C. Y. (2013). Through better understanding of Chinese Culture will lead to success prosperity of the business to thrive properly.

Secondly, for the company to be successful in China, it has to employ full-time administrative team which will assist in handling all the firms’ paperwork in China as written by (Contractor, 2013).Therefore, the company will have enough time for the working staff to promote the organization’s products and services without having to spend more time in government offices to get approval papers as indicated by Baylis, J., Smith, S., & Owens, P. (2013).Thirdly, to avoid miscommunications in China, it is essential to have the international team of members in the organization who can easily bridge Maldivian culture and the Chinese to avoid the cultural differences as indicated by (Deng, 2013).

It will also be important to have the clear set of procedures and measures regarding the performance of the employees involved as indicated by (Keen & Wu, 2011). The employees should be divided into small groups of individuals and also select them a clear leader who monitors them correctly and reports their needs to the supervisors involved as the Chinese people like hierarchical human resource structure. Therefore slowly by slowly they will get to be motivated as one tells them to be creative and work on their own as time goes by to overcome the differences of new markets as shown by (Schweizer, 2013).

Lastly, another way for a company to overcome relationship challenges when looking for customers in China is through necessary time and commitment as said by (Da Rocha, Cotta de Mello, Pacheco, & de Abreu Farias, 2012).Western people who are used to formal business dealings when handling clients but China patience and perseverance is required to build the relationship as deals take longer times to complete unlike in Maldives where transactions occur instantly. It is also expected to spend more time with your clients and counterpart firms and also government organizations for proper marketing of your business in China. 

Conclusion

Taking business globally is, therefore, important as it will have new opportunities to find new markets and increase it is revenues. Alternatively, it will have access to more customers apart from the local market. Superior competitive advantages are also likely to be experienced such provisions of cheap labour from the government’s home and also small reduced subsidies to encourage your business set up. However, it is vital to put into considerations the human resource management issues. This is because international markets operate totally in different environments. This calls for international companies to employ effective marketing strategies as well human resource management techniques. Therefore, it is important to weigh the challenges of taking your business global and its benefits before expanding it to avoid incurring losses from foreign markets. However, it beneficial to note that internationalizing your business comes along huge advantages than just dealing locally.

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