The Woolworths organization is an Australian supermarket or grocery chain which is owned by Woolworths Limited. Being a retail organization, Woolworths chiefly specializes in selling groceries that include fruit, vegetables, packaged foods, meat and others. Along with regular grocery, the mentioned supermarket chain also sells DVDs, magazines, health and beauty products, pet and baby supplies and other household items. The company is one of the most popular retail stores in Australia and has already expanded its branches in different parts of the world including New Zealand and Tasmania. Considering the fact that the retail market of the western countries is already saturated, the management of the company is planning to expand its market in the southeastern portion of Asia (Arli et al. 2013). The current target market of the Woolworths retail group is China. However, in order to establish its business successfully in the Chinese retail market, the human resource department of the organization must assess the cultural background of the host country and adopt the same in order to prevent organizational conflict as well as to gain, maintain and enhance the loyalty of the employees. In this report, the key macro and microenvironmental factors and issues that impose an impact on the Chinese retail market will be identified. Along with that, the cross-cultural and HRM issues that may arise between the host and the home countries will also be identified. Finally, recommendations to solve the issue and establish a stable market is chin will be provided in this report.
Microanalysis
In order to establish a successful business in China, Woolworths must identify the key factors that analyse the macro as well as the microenvironment of the Chinese retail industry. For identifying the microenvironmental factors and issues of the Chinese retail industry, Hofstede cultural dimension analysis has been performed below:
Figure 1: Hofstede Cultural Dimension in the Chinese Retail sector
Source (Hofstede Insights 2018)
Power Distance
Unlike western countries, the society of China believes that inequalities among individuals are acceptable. The relationship between superior and subordinate is polarised and there is a minimum defense against power abuse by superiors. Employees are found to be influenced by formal authority and are optimistic about the capacity of leadership in an individual (Minkov and Hofstede 2012).
Individualism
High individualism and low collectivist culture are one of the major features of the mentioned industry in China. Chinese employees are found to act for the own and in-group interest and not necessarily to serve the organization (Minkov and Hofstede 2012). The in-group consideration that involves families and friends gets preferential treatment in China. The relationship between employees in a retail organization is highly formal. As a result, the commitment of the employees to the organization is low. Personal relationships prevail over the task and company.
Masculinity
66 percent of China is a masculine society. Chinese employees give priority to their career over their families as well as leisure time. Employees in China are accustomed to providing service to the consumers till late at night. Moreover, it is quite casual for Chinese employees to travel abroad for a long duration leaving their families for work purposes.
Uncertain Avoidance
The Chinese people are comfortable with ambiguity. The Chinese language itself is full of ambiguous meaning which is difficult for western individuals to follow. When it comes to their cultural norms, Chinese people are highly conservative. However in recent years due to high exposure to the international market, Chinese employees are found to be developing adaptability and entrepreneurship (Hofstede Insights 2018).
Long-term Orientation
The long-term orientation of Chinese employees is higher compared that of the employees of the western countries. The company has a highly pragmatic culture. They demonstrate the ability to adapt easily to the changed condition.
Indulgence
When it comes to indulgence, the Chinese industry is found to demonstrate culture that has several dissimilarities with the western retail industry (Shinnar, Giacomin and Janssen 2012). Chinese employees are highly career oriented and prefer to invest a minimum amount of time for leisure and entertainment.
In order to analyse the macro environment of the mentioned industry, PESTLE analysis has been conducted below.
Political
Unlike the heavy industry sectors in China, the retail sector is not considered to be a prestigious industry by the government and hence is not sanctioned like other heavy industry sectors. Moreover, in order to expand the retail network of supermarket chain into western provinces of China, the government is implementing rules and regulations to convert the street markets to the supermarket. This attitude of government to expand the retail energy has also reduced trade barriers for foreign investors (Chand, Cummings and Patel 2012). This will impose a positive impact on the HRM of Woolworths since greater number of foreign companies will enhance the cultural acceptance of the Chinese consumers as well as employees.
Economical
In spite of the fact that the GDP growth is expected to drop by 8.2 percent by the year 2018, the domestic demand of the consumers will remain strong (Zalengera et al., 2014). Moreover, the consumptions of the consumers will rise due to overall wage growth. In order to offer the consumers fresh products, Woolworth has to maintain a positive relationship with the suppliers.
Social
The Chinese population is highly conservative when it comes to cultural norms. Several international companies have failed miserably while implementing foreign format onto Chinese consumers. In the majority of such cases, it has resulted in the rejection of the foreign super chain. Hence to gain consumer loyalty, the Woolworths organization should implement strategies to incorporate the Chinese culture in their product and services.
Technological
The technological infrastructure of China is not as well developed as that of the developed countries like the UK, US and Australia. Hence it is difficult for retail companies to find efficient suppliers with necessary capabilities (Chhabra and Kiran 2015). Hence Woolworths need to maintain a good communication and relationship with the local suppliers since their power is high in the Chinese retail industry.
Legal
The government’s policies of monopoly control and reduction of buyers’ power can limit entry to the sector with such controls as license requirement and limits on access to raw materials.This will definitely impose negative impact on Woolworths since it trying to expand its market in the Chinese retail sector.
Environmental
The government of China has recently abolished the usage of plastic bags in China and is introducing recycling programs through its National and Social Progress Plan. As a result of this, majority of organizations in China, specially the retail and fast fod compaies are using eco-friendly packaging materials. In order to enhance its consumer loyalty in the Chinese market, Woolworths needs to abide by the environmental rules and regulations.
From the microanalysis performed above, it can be understood that the Chinese culture is highly different from the culture of Australia. These differences in culture have the potential to bring about several cross-cultural issues between employees with origin in Australia and China.
Communication Misunderstanding: Considering the fact that China is a developing country, only 22 percent of the population can fluently speak English (Yek 2014). This is highly disadvantageous for the foreign retail organizations including Woolworths who want to establish their market in the Chinese retail sector. A high communication gap between the employees of the organization and between the consumers and the employees will take place. Communication gap leads to several HRM related Issues. One of the major consequences of communication gap is a misunderstanding between the employees of Woolworths.
Motivation: While the chief source of motivation for the Chinese employees is the extrinsic motivation that is raised in the remuneration, Australian employees are found be motivated by appreciation and job satisfaction (Zhang and Morris 2014). Since retail organization like Woolworths requires the cooperation of both the home country as well as the host country employees to effectively run business in a foreign land, it will be difficult for the company to keep all the employees motivated at the same time. If the remuneration of the employees is increased without giving importance to the workplace environment or job satisfaction of the employees, it will be difficult to retain Australian employees in the organization.
Leadership Style
As being discussed earlier, the Chinese employees are accustomed to the domination of the supervisors. Chinese organizations are followers of the Great man leadership theory. However, the Australian employees are highly resistant to domination by supervisors since organizations like Woolworths follows the Lassie-Faire Leadership style (Xiao and Cooke 2012). Hence, conflict may arise in cases where a Chinese professional is made the supervisor of Australian subordinates.
Conflict
Task-related conflict can arise between Chinese Australian employees working together in the Woolworth organization. The cultural differences among the employees along with misunderstanding due to communication can be pointed out as a major reason behind the conflict between employees. The frequent misunderstanding may lead to major conflict in the mentioned organization which in turn has the potential to reduce the overall productivity and revenue of the organization in the retail market of China. Moreover, the lack of communication will hinder the development of the effective relationship between the employees and supervisors of the organization. Effective employee to employee or employee to supervisor relation has the potential to enhance the loyalty of the employees towards the organization as well as work environment of Woolworths (Briscoe, Tarique and Schuler 2012). Besides that, the HR professionals of Woolworths will also face difficulties while providing necessary information to the employees. While information written in the English language will be difficult for Chinese employee to understand, Australian employees will not be able to understand information written in the Chinese language.
Leisure
From the Hofstede graph, it can be clearly understood that leisure and entertainment play a major role in motivating Australian employees, Chinese employees are totally reluctant to leisure and consider leisure period to be wastage of time. This can create issues in Woolworths. While it will be difficult to retain Australian employees if the number of holidays is reduced, Chinese employees may tend to start other part-time businesses if the number of holidays provided by the organization is more than their requirement.
Individualism
Since favouritism workplace is common in Chinese retail organizations, the same thing will be expected in Woolworths. On the other hand, Australia employees are highly defensive towards favouritism (Warner 2014). This may give birth to conflicts in the organization. Apart from that, it will be difficult to retain Australian employees by the HR department of Woolworths if favouritism is practised by Chinese supervisors.
Working Culture
The working culture of Australia and China can be considered as another factor that can give birth to HRM related issues. For instance, Chinese employee is accustomed to arriving office at 11 or 12 o clock and work in the office till late night. However, this is completely unnatural for Australian employees since employees in Australia like to finish early and go back home to spend time with their family in the afternoon (Wang 2012).
Figure 2: Hofstede comparison of Australia and China
Source (Hofstede Insights 2018)
Reference list
Arli, V., Dylke, S., Burgess, R., Campus, R. and Soldo, E., 2013. Woolworths Australia and Walmart US: Best practices in supply chain collaboration. Journal of Economics, Business & Accountancy Ventura, 16(1).
Briscoe, D., Tarique, I. and Schuler, R., 2012. International human resource management: Policies and practices for multinational enterprises. Routledge.
Chand, P., Cummings, L. and Patel, C., 2012. The effect of accounting education and national culture on accounting judgments: A comparative study of Anglo-Celtic and Chinese culture. European accounting review, 21(1), pp.153-182.
Chen, R.X., Cheung, C. and Law, R., 2012. A review of the literature on culture in hotel management research: what is the future?. International Journal of Hospitality Management, 31(1), pp.52-65.
Chhabra, S. and Kiran, R., 2015. An Empirical Analysis of Total Factor Productivity in Food and Beverage Sector. Productivity, 56(2), p.121.
Hofstede Insights. (2018). Country Comparison – Hofstede Insights. [online] Available at: https://www.hofstede-insights.com/country-comparison/ [Accessed 20 May 2018].
Minkov, M. and Hofstede, G., 2012. Hofstede’s fifth dimension: New evidence from the World Values Survey. Journal of cross-cultural psychology, 43(1), pp.3-14.
Minkov, M. and Hofstede, G., 2012. Is national culture a meaningful concept? Cultural values delineate homogeneous national clusters of in-country regions. Cross-Cultural Research, 46(2), pp.133-159.
Shinnar, R.S., Giacomin, O. and Janssen, F., 2012. Entrepreneurial perceptions and intentions: The role of gender and culture. Entrepreneurship theory and practice, 36(3), pp.465-493.
Wang, G.G., 2012. Indigenous Chinese HRM research: phenomena, methods, and challenges. Journal of Chinese Human Resources Management, 3(2), pp.88-99.
Warner, M. ed., 2014. Confucian HRM in greater China: Theory and practice. Routledge.
Xiao, Y. and Cooke, F.L., 2012. Work–life balance in China? Social policy, employer strategy and individual coping mechanisms. Asia Pacific Journal of Human Resources, 50(1), pp.6-22.
Yek, H.K., 2014. The Effects of Macroenvironment and Sociocultural Factors on the Marketing Strategy of Retailers-A Case Study on AS Watson Pharmaceutical Stores in Malaysia and Taiwan.
Zalengera, C., Blanchard, R.E., Eames, P.C., Juma, A.M., Chicago, M.L. and Gondwe, K.T., 2014. Overview of the Malawi energy situation and A PESTLE analysis for the sustainable development of renewable energy. Renewable and Sustainable Energy Reviews, 38, pp.335-347.
Zhang, B. and Morris, J.L., 2014. High-performance work systems and organizational performance: Testing the mediation role of employee outcomes using evidence from PR China. The International Journal of Human Resource Management, 25(1), pp.68-90.
Zhu, C.J., Zhang, M. and Shen, J., 2012. Paternalistic and transactional HRM: the nature and transformation of HRM in contemporary China. The International Journal of Human Resource Management, 23(19), pp.3964-3982
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