Evaluating an International Human Resource Strategy - Essay Example

Evaluating an International Human Resource Strategy (Obb 0. Executive Summary The primary aim of this particular report is to evaluate the present market condition of Brazil with regard to forming the entry strategy for H&M through joint venture. The report will also provide a brief overview of the competitive scenario of the retail clothing industry of Brazil in order ensure effective entrance for H&M in the prospective market. Contextually, the report offers a comprehensive understanding about the present business condition of Brazil along with identifying the competitive scenario of the retail clothing industry of H&M. Post analysis; the report provides a set of human resource strategies for the company in order to assist it when it enters the market. The report has been concluded along with certain recommendations that might prove to be effective for the company in the future context. Table of Contents 1.0.Executive Summary 2 2.0. Introduction 4 2.1. Aim of this Report 4 3.0. Company Overview 5 3.1. History of the Company 5 3.2. Development Post Acquisition 6 3.3. Mission and Vision of the Company 6 3.4. Organisational Decision Making Structure 6 4.0. Economic Drivers 7 4.1. PESTEL Analysis of Brazil (The Host Nation) 7 4.2. Porter Five Forces Analysis of the Retail Clothing Sector of Brazil 10 5.0. HRM Strategies for the Joint Venture 13 5.1. Recruitment and Selection 13 5.1.1. Recruitment and Selection Process 13 13 5.1.2. Analysis of the Selection Process through Alec Rodger’s Seven-Point Plan 15 5.2. Training and Development of the Employees 16 5.2.1. Training and Development in Joint Venture 16 5.2.2. Training Needs of Employees in Joint Venture 16 5.3.3. Types of Training to be Provided 17 5.3. Rewards Management 18 18 5.4. Performance Management 19 5.5. Employee Involvement 20 6.0. Conclusion 22 7.0. Recommendations 22 References 24 2.0. Introduction The face of business has changed considerably over the last few decades owing to the advancement of technology and the aspect of globalisation that has shortened national and international barriers of business. Furthermore, the rise of competition in the global business scenario also worked towards the changing the nature of the business world altogether. These aspects further give rise to the need for companies to develop strategies to make a mark for themselves amid the potential customers and gain a competitive edge over the major competitors (Ivanko, 2013). There are various functions of any business that integrate together and form the foundation for conducting business in an effective and efficient manner altogether. Among the various functions that are associated with the operations of any business, the functions of human resource management are deemed to be quite vital. The human resource department of any business is directly responsible to deal with the various issues as well as operations that are relevant to human resource of the business. The role of an HR manager is deemed to be quite prominent with regard to modern day business operations and it is prevalent in every domain of the business (Martin, 2008). 2.1. Aim of this Report This particular report will mainly focus on evaluating a human resource strategy of an international organisation i.e. H&M. The report will primarily highlight the strategy of the company with regard to entering a new market through conducting joint venture with a particular company. The company that will be considered for joint venture in this report will be Cia Hering of Brazil. 3.0. Company Overview H & M Hennes & Mauritz AB is one of the foremost companies, which is operating in the retail clothing sector of the world. The company has an operational experience of more than 60 years as it was founded in the year 1947 in Sweden. The company has its headquarters situated in Stockholm, Sweden. Notably, the company is listed in the Helsinki Stock Exchange with the index code HM B. The company has a long-standing history associated with it which is described in details hereunder. 3.1. History of the Company The founder of the company i.e. Mr. Erling Persson came up with the idea of providing high quality fashionable clothing for the people with certain attractive or reasonable prices. Contextually, with that particular aim in mind, the first store of the company was inaugurated in Sweden in 1947 with the brand name ‘Hennes’ which only dealt with women’s clothing in the initial phases. In the year 1968, Hennes acquired Mauritz Widforss which was one of the most well-known retailers of the world during that period. After the merger, the company changed its operational name from Hennes to ‘Hennes & Mauritz’ (H & M) (H & M, 2012). 3.2. Development Post Acquisition H&M initially started operating with the name Hennes with the opening of its first store in Sweden. However, the company H&M was formed with the merger of once rival companies Hennes and Mauritz in the year 1968. This strategic move of the company had been a key constituent to establish as well as strengthen its position in the global clothing retail industry. Subsequent to this particular approach, the company went on to become one of the major players in the global retail industry with its operations spreading over more than 53 nations in the process of which it has employed approximately around 104,000 employees (H&M, 2012). 3.3. Mission and Vision of the Company The vision of the company is to develop its image as a global leader in the retail clothing sector. Notably, the company is mainly focused towards provided high quality fashionable products to its customers all over the world at quite a reasonable price altogether. The company keeps quality as the central facet of the business and directly or indirectly aims at exceeding the expectations of the customers from the company (H&M, 2012). 3.4. Organisational Decision Making Structure Figure 1: Organizational Decision Making Structure of H&M (H&M, 2006) 4.0. Economic Drivers Notably, Brazil is one of the emerging nations of the world in terms of its business markets. It is also regarded as one of the markets in the global industry where global companies desire to expand their operations. Contextually, it is important to analyse the present day condition of the country in order to introduce the business of H&M into the same. 4.1. PESTEL Analysis of Brazil (The Host Nation) Political Condition of Brazil The political condition of Brazil is deemed to be quite favourable for foreign companies’ upto a certain extent. Notably, the country follows a two party system which further reduces the complexity of the political system. The government of the national constantly changes its policies with regard to interest rates, taxation and foreign exchange which companies need to be aware of to ensure proper business operations. This might also depict negative outlooks for short-term start-up companies. H&M should be careful in this regard (IFC, 2014). Economic Condition of Brazil The economic condition of the nation has mainly showed a fluctuating trend over the years with periodic rise and fall in numbers. A major section of the economy is concentrated or dependent towards the industry sector and the service sector. This aspect might be encouraging for H&M. However, continuous threat of inflation within the economy might influence the business of H&M in the long run when it enters in the Brazilian market (The Heritage Foundation, 2014; IFC, 2014). Social Condition of Brazil A large percentage of the Brazilian society comprises lower income group while a considerable amount falls within the middle income group. This might influence the business plans of H&M both positively as well as negatively upto a certain extent. However, a large percentage of the population comprises the literate youth of the nation which will be the potential customers for the business of H&M (The Heritage Foundation, 2014; IFC, 2014). Technological Condition of Brazil The government of the nations and its policies largely focus on encouraging the implementation of advanced technologies in the business sector. Constant improvement has been witnessed in this particular domain in various sectors prevailing in the nation. A large section of the population is associated with the usage of the internet and other social media applications. This company i.e. H&M should consider this aspect while forming its marketing strategy in the Brazilian market (The Heritage Foundation, 2014; IFC, 2014). Environmental Condition The government of the nation is deemed to be quite strict towards the environmental performance of companies as it directly related with health and wellbeing of the people in the society. The government of the nation demands companies to be socially responsible and show maximum concern towards reducing negative impact towards the society in a comprehensive manner. This factor needs to be concentrated upon by H&M while entering into the market of Brazil (The Heritage Foundation, 2014; IFC, 2014). Legal Condition of Brazil Legally companies that intend to operate in Brazil need to be fully registered complying with all the legal norms persisting in the nation. The taxation policy of the nation is also deemed to be quite flexible for the companies operating in this particular nation which is again an encouraging factor for H&M to enter the market of Brazil through joint venture (The Heritage Foundation, 2014; IFC, 2014). Figure 2: Framework for PESTEL Analysis 4.2. Porter Five Forces Analysis of the Retail Clothing Sector of Brazil Bargaining Power of Customers Notably, the retail fashion industry of Brazil is booming considerably owing to the increasing number of players in this particular sector. Industry experts depict that the buying power of the customers in this particular sector is quite high which again puts them on the primary position. Apart from this, customers of this area are also deemed have multiple choices for themselves as the number of players in the apparel industry is increasing (Suleman, 2012; Anaya, 2010). This shows the bargaining power of the customers to be quite high. Bargaining Power of Suppliers Correspondingly, the number of suppliers of raw materials for clothing industry in Brazil is quite large in number. Apart from this aspect, there is also not much uniqueness in the raw materials provided by suppliers which makes each one of them similar to one another. This depicts low bargaining power of the suppliers (Suleman, 2012; Anaya, 2010). Threat of Substitutes It will be crucial to depict that there is no real substitute that exists for clothing. However, there are players in the Brazilian market who might come up with more attractive products for the customers which might act as a substitute for the product of H&M when it enters the Brazilian market. This shows the threat of substitution ranging in between moderate to high (Suleman, 2012; Anaya, 2010). Risk of New Entrants The barriers for entering the retail clothing industry of Brazil is quite low with only requirements of certain capital to enter into this particular business. Again, there is minimal to no switching cost amid customers when they desire to move to other brands owing to a lack of brand loyalty in the industry. These aspects depict the threat of new entrants in Brazil to be quite high for H&M (Suleman, 2012; Anaya, 2010). Intensity of Rivalry It will not be ambiguous to depict that intense competition is prevailing in most of the business sectors of the world. This aspect can also been witnessed in the retail clothing sector of Brazil where the number of players is quite high. However, for H&M the competition might not be that intense as the companies operating at a similar scale of H&M are quite less in number in Brazil which further reduces the level of competition (Suleman, 2012; Anaya, 2010). Figure 3: Framework for Porter Competitive Analysis 5.0. HRM Strategies for the Joint Venture It is evident that in order to enter into a new market organsaitions would need to develop noteworthy strategies in order to enter into a new market. The strategies that need to be developed by organsaitions might be various domains of the business with the intention to gain major benefits in the new market. One of the most significant domains of modern day business operations includes the human resource section which is directly responsible for ensuring sustainability of business for a longer period of time. It is worth mentioning that proper management of human resource within any form of industry will certainly result in delivering positive outcomes for the overall business. Contextually, in order to ensure a successful entrance into the Brazilian market, H&M will need to develop certain key strategies which especially include the human resource department. These strategies are stated in details hereunder. 5.1. Recruitment and Selection 5.1.1. Recruitment and Selection Process Recruitment and selection is one of the most important steps, which is integrally associated with the operations of human resource management within any form of business operations. It is a particular approach where skilled and competent candidates are assembled by companies to execute the operations of the business. In this particular evaluation of H&M towards entering the market of Brazil through joint venture, the aspect of recruitment and selection will have a major role to play. It has been analysed that an effective and dedicated set off workforce is one of the prime strengths for the business of H&M over the years in the retail clothing sector. This particular strength of the company will need to be utilised when it enters into the market of Brazil through a joint venture. In the regard, the HR functions of recruitment and selection will have a prominent role to portray (Ingram & et. al., 2012). Notably, the company i.e. H&M believes in the formation of a diversified workforce. These aspects will also be considered while forming the workforce for the business in the Brazilian retail clothing industry. The company will take the approach of both internal and external recruitment. Through internal recruitment approach the company will hire employees for the top positions which will further form the senior management of the business. Since the higher posts in the business needs people with considerable experience, external selection can deemed to be the potential choice. The middle and lower level employees for the business in the Brazilian market will be recruited amid the local people. This will also enhance the image of the company in Brazil as this approach will contribute positively towards developing the employment sector of the nation. Consequently, it will also be crucial to mention that the company will focus on selecting candidates from various sections of the society irrespective of their race, nationality or cultural background. This will further fulfil the past trend of the company to employ a diversified workforce. Several systematic steps will be followed with regard to the selection of the employees for H&M’s operations in the market of Brazil. In the first stage, the company will ensure awareness amid the people of Brazil about the job opportunities by means of advertising with the assistance of both electronic and print media. The company will take extensive assistance from the local consultancy service providers to acquire promising candidates for the business. The recruitment and selection for the employees will be conducted in two stages. The first stage will include analysing the aptitude of the candidates regarding the fashion and the apparel sector. In this stage, the candidates will be judged based on their personality, their behaviour and their academic credentials. Candidates who successfully clear this particular stage will be called for a face-to-face interview with the recruitment personnel or head of the company. Though the recruitment and selection process, the company will intend to hire employees belonging from diverse age groups and cultures so that a complete set of workforce could be formed within the workplace. 5.1.2. Analysis of the Selection Process through Alec Rodger’s Seven-Point Plan The selection of the staff for the operations of H&M in Brazil will be analyzed based on the criteria mentioned in the “Alec Rodger’s Seven-Point Plan”. In keeping with the model, the candidates will first be judged on the basis of their physical make-up which includes analysing the heath and appearance of the candidate. In the next stage, the candidates will be judged on the basis of their attainments which include evaluating academic credentials and previous work experiences among others. Subsequently, the applied candidates for the job role will be judged on the basis of their general intelligence. The next criteria as per the model will be to evaluate special aptitudes relevant to the candidate. In the following stage, the interest intellectuals of the candidate which include physical and mental activeness and social behaviour of the employees will be judged. Apart from these, the recruitment team of the company will also analyse the disposition acceptability of the candidates where their probable influence over others in the workplace will be judged. In the final stage, the recruitment and selection team of the company will analyse the aspect of circumstances where any particular demand of the candidates will be ascertained (Nickson, 2007). This will conclude the recruitment and selection process for H&M in the Brazilian market. 5.2. Training and Development of the Employees 5.2.1. Training and Development in Joint Venture Subsequent to the process of recruitment and selection, training and development of the candidate chosen is deemed to be a crucial step in the human resource management domain. Providing training and development in a joint venture is considered to be quite challenging and it will correspond in this scenario as well. The training and development approach of the company will also need to consider the consensus of the venturing partner. In simple terms, it can be depicted that the management of company after the joint venture aspect will need to employ proper planning as well as organising approach while delivering training to the employees. In this regard, the management of H&M will intend to conduct a company oriented training session for the employees. This implies that the company will analyse employees of both H&M recruited candidates as well as the prevailing employees of Cia Hering with which H&M will have the joint venture. This will ensure that employees unit formed jointly can work collaboratively by acquiring equal training and development (Rao, n.d.). 5.2.2. Training Needs of Employees in Joint Venture The training needs of the employees in the joint venture might relate with training regarding health & safety in the workplace, comprehending employees about the polices and process of working of both H&M along with Cia Hering, training regarding the languages practiced in Brazil, training regarding the approach of handling customers belonging to the Brazilian culture and other aspects associated with the business operations. Correspondingly, it will be crucial to mention that H&M must have to consider the interest of both the companies together while providing training as Brazilian business culture mainly believes in collaborative working (Akehurst & Alexander, 1995). The training needs of the employees in the workplace in the joint venture will be analysed with the assistance of the ASK model. The model stands for attitude, skills and knowledge. Analysing attitude of the employees as per the model will require evaluating the focus, determination and interest of the employees in the workplace. Analysing skills will involve evaluating the skills, proficiency, development and working experience of employees while scrutinising the knowledge of the employees will include depicting the intellectuality of the employees. The training program for the employees will be developed in accordance with that comprehension (Salaun & Schatz, 2011). 5.3.3. Types of Training to be Provided The training program for the employees will include the prospect of both on-the job training and off the job training. On-the job training is quite crucial in the retail sector as employees need to gathered practical understanding of the work they need to conduct. H&M will take the approach of in-house training and apprentice training within the on-the job training method. In the in-house training program, employees will be trained with regard to the practical implications of their job responsibility. On the other hand, in the apprentice training program enhancing the proficiency of the employees will be the prime focus. In the off the job training approach, H&M will enhance the theoretical skills of the employees about the retail sector and the work associated with it (Madaan, 2009). In precise, it can be stated that H&M will design a comprehensive and all-around training and development program for the employees. 5.3. Rewards Management Providing rewards to the employees is among the basic and the most important approaches towards motivating the employees in their work. Since it is the initial days for H&M in the market of Brazil, it would need to ensure effective and efficient performance in which the role of employees will be the prime. It will be important to mention that the rewards management of H&M will include the approach of both performance based appraisal as well as designation based basic remuneration. The basic remuneration packages for the employees will entirely be based on their designation, skills along with their job roles and responsibilities in the organsaitions workplace. Conversely, the human resource management of H&M will also adopt the approach of performance based rewards system where the employees will be paid rewards or compensations based on their performance (Performance Related Pay i.e. PRP) in the workplace (Tonge & et. al., n.d.). This approach will also work towards motivating the employees in the workplace through rewarding them for their good work. This can further be justified from the results of a survey conducted by Boachie-Mensah & Dogbe (2011) which depicts that 81% of the respondents (employees) accept that they get motivated from Performance Related Pay (PRP) approach. Figure 4: Motivation by PBP (Boachie-Mensah & Dogbe, 2011) It will also be critical to mention that the management of H&M will take into account the wage laws of Brazil and frame its rewards policies accordingly so that the aspect of discrimination can be eliminated while paying employees belonging from both the organsaitions. 5.4. Performance Management Performance management is one of the critical approaches and among the most important functions of HR managers in workplace. This is because of the aspects such as rewards management, employee motivation and performance appraisals are directly dependent on the accuracy and effectiveness of performance measurement or management of the employees. In this context, H&M will firstly convey the performance priorities and their importance in the workplace. Contextually, the management of the company will also develop certain key indicators or criteria on the basis of which the performance of the employees will be evaluated in the workplace. It is vital to mention that in any performance measurement system, gathering information about the working approach of employees is the most important aspect. Contextually, the management of H&M will acquire the data through a 3600 feedback approach. Through the 3600 feedback approach, the management of the business will accumulate the perceptions of the supervisors in the workplace with regard to working effectiveness and dedication of the employees and thereby the performance appraisal will be designed accordingly (Rao, 2004). This will be conducted twice a year on a half yearly basis. 5.5. Employee Involvement Maximum engagement of the employees in the workplace is quite crucial as it directly impacts the operational performance of any business. H&M is aware of the fact that employees are the most important asset of their business and their extensive involvement in the organisational operations is indeed a major requirement. Contextually, the management of H&M will motivate the employees towards depicting maximum dedication in accomplishing the goals and objectives of the business. They will also be encouraged to ensure a knowledge sharing working environment where they should work together as a unit irrespective of their cultural ethnic and racial background (Khattak & et. al., 2012). Additionally, the management of H&M should also evolve with plans where they encourage employees of both H&M as well as Cia Hering to engage themselves in the decision making process of the organisations through showing utmost level of participation in the same. The impact of maximum employee involvement in organisation’s performance can be better comprehended from the study of Jones & Kato (2005). The study revealed that performance of a firm enhances considerably owing to extensive involvement of employees in organisational operations (Jones & Kato, 2005). This aspect further enhances the importance of assuring employees engagement for H&M when they enter the Brazilian market. Furthermore, in order to deal with the cultural difference amid the local Brazilian employees and the employees of the parent company, an ethnocentric approach will be adopted by the company. As per this particular strategy, the company will send a team of employees from its parent company in its organisation formed through joint venture in Brazil. This will ensure that the present employees of the company are able to work as a unit with the local Brazilian employees towards accomplishing the business goals of H&M (Paul, 2008). The cultural difference amid the two nations i.e. Brazil and Sweden can further be comprehended from the comparison made by Geert Hofstede provided hereunder. Figure 5: Hofstede Cultural Difference Indicator (The Hofstede Centre, n.d.). The above table depicts the difference in culture amid the two nations. Observably, in terms of power distance, uncertainity avoidance and masculinity, the culture of Brazil scores greater than Sweden as compared to individualism, pragmatism and indulgence. This signifies that Swedish culture is more individualistic in nature whereas in Brazil people tend prefer avoiding uncertainties. Moreover, Briazilan culture is more masculine in nature i.e. male-dominated and driven by attainment, triumph and rivalry (The Hofstede Centre, n.d.). These aspects should be taken into concern while forming the employee involvement strategy of H&M. 6.0. Conclusion From the overall analysis of the report, it can be comprehended that business environment has changed considerably in the recent times owing to which companies possess the need to strategize their plans effectively as well as systematically in order to assure their long- term survival in the global business market. Contextually, in order to enter a new or unexplored market, companies have the need to introduce various reforms in its working process in accordance with the market they are entering in. In this regard, H&M also has the need to strategise its human resource management approaches in order to enter into the Brazil which is yet to be explored by the company. Consequently, certain strategies have been recommended throughout the report for H&M with regard to its HRM functions including recruitment and selection, training and development and rewards management among others. With this consideration, it can be concluded that effective execution of the strategies mentioned might paved the way for H&M to enter into the Brazilian market. 7.0. Recommendations From the above analysis, certain recommendations can be made to the management of H&M as part of their plan of entering into the Brazilian market. Observably, the company will need to recruit both the local candidates as well as assure a balance of experience through internal recruitment. However, it will be recommended that the company must also recruit candidates from the present set of workforce of Cia Hering to eliminate the probability of any kind of conflicts amid the interest of the two companies in the future context. Additionally, the report also suggested that H&M must need to provide proper training and development to the employees. In this context, the company should consider diverse types of training methods amid the local Brazilian employees and the employees acquired through internal recruitment in order to assure the effectiveness for the overall training process. Apart from this aspect, the company should also emerge with diverse plans to reward the local Brazilian employees as well as present internal employees of the company in an equal manner. 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