Consequent International HRM Management Issues And Contingencies

General Company Setup Overview

Describe about the Consequent International HRM Management Issues and Contingencies.

As a soft drinks company, determination of strategic company’s primary home and a secondary host locations would be of great importance to ensure effective and efficient running of business operations with regards to production and marketing factors to ensure the achievement of organizational success and provide for business continuity.

The Production unit of the company would greatly determine the general selection of the most suitable location to setup the company’s home location with regards: to accessibility of the core manufacturing raw materials (especially sugar), human work-force, accessibility to the market and any consequent factors such as transportation, product standardization rules and regulation put up in the country among others.

Brazil, situated along the Eastern coast line of South America would greatly house the company’s industrial facilities and also provide for material and labor requirements. With its underlying population of about 200.4 Million citizens by the year 2013, labor would be greatly provided for. On the other hand, the country enjoys a sugar exportation income of around US$ 7.6 Billion each fiscal year from its rich sugar-cane plantations which produced around 560, 360 Million tons by the years 2011 and 2012 thus a direct access to the primary raw-material would be fully guaranteed.

Transportation network in Brazil is also quiet developed, with an actual railway network of 29, 303 Km across the country, 1, 751,868 Km of roads both paved and unpaved and around 50,000 Km of waterways. This would greatly favor the company when it came to matters of accessing the raw-materials directly from their produces and taking the product to market (i.e exportation or into local markets).

With the company’s overall start-up goal to improve its market share within the first 3 years, it would be greatly vital that determination of the host country be regarded to Marketing and Promotion needs of the company.

Employing a Global Information System would greatly help to analyze the population and socioeconomic factors of a given location which would be an underlying factor for determining the best markets.

Together with this, it would be advisable to employ a PESTEL framework which would help gather the various Political, Economic, Social cultural among other factors that would greatly influence cross-cultural diversity in this host location.

With a population of around 41.45 million, Argentina could be quite a suitable location to set up a market base for the company as it sees an annual soft drink consumption of around 155 liters per individual. Furthermore, in a World Economy rank, Argentina holds the 25^th position and the 2^nd position in South America. With the huge population and diverse industrial facilities in the country, consumer growth for the company’s product would gradually grow helping improve our overall market share and further encourage a move to expand to other global markets.

A general business makeup constitutes of two environments (the internal and external environments). The external environment to a company is generally comprised of the various entities that directly or indirectly interact with the company. It is of general importance to analyze these entities and determine exactly how they influence the company’s operations and the decision making process to ensure that consequent operational risks are minimal and to also help makeup a contingency plan to ensure business continuity. Business in Argentina is otherwise not so flexible but is associated with various external factors that could be termed into:

Home Location overview

Political Factors in Argentina: The move by Argentinian President Cristina Elisabet Fernandez to nationalize YPF (Oil Fields) by exproprating 51 percent of 57.43 percent stake in YPF, kicked the debate about Argentina’s worth as an investment destination (Mamta Badkar, 2012). Furthermore, the U.S assists Argentina by boosting regional stability and democracy, building a non-proliferation unity on export controls and border security.

Economic Factors in Argentina: The country has a high income economy being ranked the second largest in South America alone and the 25^th in the entire world. With a growing industrial and service sector, the company’s holds a high market expectation in the country furthermore regarded to the high consumer population within the next 3 fiscal years.

Social Factors in Argentina: Ranked 3rd in South America with a population density of 15 persons per square kilometer population growth by 2008 was forecast-ed to be 0.92% annually, with a birth rate of 16.32 per 1000 persons and a 7.54 deaths per 1000 persons mortality rate.

Technological Factors in Argentina: Although the country’s economy grows gradually, a divide exists between the rich and the poor. Marginalized regions across the nation are ignored and abandoned without any support and as they grow frustrated with the lack of resources and social programs, local NGO’s take the opportunity to confront these needs by issuing resources to authorize and give rise to sustainable solutions.

Environmental Factors in Argentina: As a developing nation, Argentina faces poor water and air sustainability due to increased deforestation and soil degradation. Failure to enforce existing laws plus internal conflicts during the 2001 economic crisis has proved to be the major reasons. Increased industrial waste disposal in the environment has also created quite a strain in the provision of safe drinking water. On the other hand, increased public awareness has pressurized the government to take action.

Legal Factors in Argentina: Argentina IRAM (Instituto Argentino de Normalización y Certificación), a non-profit and private organization was launched in the year 1935 as the country’s national standards body. By a Presidential decree on August 1994 it was embodied with the task of consumer product standardization, products, process and services certification with a close co-action with the government, industry, consumers, technology and research.

Consumption: Driven by Kirchner’s demand-oriented strategy, Argentinian soft drink industry has seen an improved impulse with the economy rebound in terms of consumption and industrial activity.

Suppliers: Being a world leading producer and exporter of both lemons and oranges, Argentina is a viable supplier point for necessary company raw-materials.

Marketing intermediaries: many retail points exist in the country’s capital, Buenos Aires among other towns which could be strategic local market points for the company.

Establishing the company in two different countries i.e two different cultural environments would give birth to the aspect of multiculturalism which would be quite remunerative and attractive for the company. It would prove difficult to maintain consistency in governance across the two cultural diversity due to the variance in the political, economical, social, technological, environmental and legal aspects of the two countries. Some of the resulting issues would generally comprise of:

Host Location overview

Organizational Structure: With the advent of multiculturalism, performance of the entire company in the two countries would greatly be determined by the overall company’s organizational structure. Having a bureaucratic structure across each culture would be highly unhealthy and limiting during operations that required mutual co-operation. It would be of great preference to delegate authority to country managers thus creating a decentralized organizational structure (Diwakar Singh, P. 46)

Co-operation: To achieve, the company’s overall objectives, team-work across both country’s would be highly required. It would rather be difficult to achieve business success if at all the two nations rivaled and consequently difficult, tedious and expensive for the company’s management to bring both group’s to an understanding.

Communication: Communication between two diverse cultures could generally pose as the greatest barrier limiting productivity and growth for the organization. Especially during the initial setup of the host country’s facilities, recruitment of employees from the local nation could generally pose a challenge since Spanish is Argentina’s national language. Communication between personnel from diverse backgrounds could greatly be conflicted due to the fact that each background has its mode of interpretation of languages, signs and other means of communications which would greatly affect how decisions are made. Multiculturalism should greatly inspire team work but instead, communication discrepancies could entirely lead to confusion of customer and business needs affecting employee morale and consequently resulting in a division between the employees (Shina Neo, 2015)

Resistance to change: Often, cultural diversity within the company could be met with resistance from some of its personnel a factor that is greatly determined by the variance in levels of cognition, awareness and information. Their exists a belief that good intercultural relations are ensured by everyone sticking to the home corporate culture. This is easily mistaken as corporate patriotism especially among personnel who haven’t visited the other global facilities or whose travels are restricted to short (Richard Cook, 2015).

Employee Recruitment and Retention while Lowering costs of labor: Over the next few years, as the adoption of technology and globalization increase, a challenge will pose proving difficult to retain skilled employees who feel that their stellar achievements are no longer adequately compensated. Recruiting new employees will also be hectic as labor investments decreases to focus on other factors beyond compensation.

Socio-Cultural Dimensions: Societies are generally comprised of various constellations of groups, all with their own cultural properties which include norms, customs and language. Societies can either be Paternalistic; whereby leaders are recognized and respected by their subjects while they provide for guidance, protection and nurturing care or they could be Fatalism whereby an underlying belief that it is impossible to delegate the consequence of an individuals actions and therefore, trying to achieve something and formulating long term plans and procedures are not worthwhile practices (Aycan et al, 2000 pg. 197-202).

Context: With the advent of multiculturalism, the sharing of knowledge is complex and vulnerable to multiculturalism variances and according. A superior culture with extensive information networks requires minimal to less context as compared to inferior cultures which requires an extensive background information before they can formulate any decisions (Shoji et al, 2008, pg. 784 – 786, quoted in Hall & Hall, 1980, pg. 6)

Environmental Factors Affecting The Host Location

It would be of great importance as a company to formulate various procedures to deal with these issues to ensure the maximum performance and effectiveness of multicultural operations by minimizing on the fore-mentioned drawbacks. Some of the various moves could include:

Encouraging cross-cultural training to personnel to create cross-cultural awareness

Introducing a ‘third-culture’ in multicultural activities to enhance cooperation.

Recognizing the importance of HRM management of cultural diversity and its necessity to determine the success or failure of Multiculturalism.

Employing outsourcing techniques between the two facilities to enhance idea exchange and cooperation among personnel.

Further to this, it is necessary to carry out a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) which encourages discussion around the company’s strategy and situation to ensure that every factor that could possibly impact the success of the overall objectives is accounted for. It is highly recommendable that accurate information be captured to ensure that real and reliable information is drawn from the analysis.

It is also advisable that a PESTEL framework be employed to determine the various macro-environmental factors involved to understand financial growth or decline, business position and the likely or suitable means of operations to help determine the most suitable geographical locations to setup international facilities.Conclusion

With the various business opportunities that Argentina has to offer, ranging from an extensive raw material source, skilled labor and the consumer ratio, setting up a global branch in the country will see quite a transformation in the company’s market and industrial ranking across South America. Although some minimal factors posing risk will need to be handled to ensure maximum capital utilization and profit pull.

It is highly recommendable that the board develop and put into phase a contingency plan to deal with some minor macro-environmental factors that could arise such as waste disposal and water handling to ensure that the company conforms to healthy and hygienic operating standards. Furthermore, the plan should also cover some of the various procedures that should help minimize resultant cross-cultural diversity effects especially matters of communication and co-operation between managerial heads and the personnel in a manner that maintains operational consistency between the two facilities to enhance efficiency and effectiveness in production and marketing.

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