International Human Resource Management in Marks and Spencer - Example

International Human Resource Management: Marks & Spencer Contents Sr. # Topic Pg Executive Summary 2 2. Introduction 2 2 Organizational context of IHRM 3 2.2. Cross border alliances 4 2.3. Culture and management 4 2.4 HRM in the host country context 6 2.5. Industrial relations 6 2.6. Managing international staff & Global performance reward 7 2.7. International HRM trends: Contemporary issues and ethical challenges 8 3. Recommendations 9 4. Conclusion 10 References 11 1. Executive Summary Marks and Spencer (M&S) is one of UKs leading retailers, headquartered in the City of Westminster, London. It has about 337 stores in 41 territories including in the UK and overseas and employs over 78,000 people worldwide (M&S, 2012). The company which was established as a partnership firm by Michael Marks and Thomas Spencer, in the year 1894, went on to become a public company by 1926 and ventured into international markets during early 1970s. The company first set shop in France during 1975 with the opening of its stores in Paris. However, although the venture proved to be significantly profitable in France, the rest of the companys operations in the rest of Western Europe failed to garner profitable returns. This fuelled the closure of its stores in France in March 2001, amidst wide scale protests against the corporate decision (BBC, 2001a). 2. Introduction The unprecedented success garnered by retail chains across the world in terms of profitability, particularly posts the globalization phenomenon has been very well documented in academic literature and scholarly researches alike. Although there is a certain degree of validity and authenticity to the hypothesis, that internalization of retail stores is bound to result in immense popularity and profitability; the recent cases of closures of huge multinational giants, such as the withdrawal of the clothing chain C&A from the UK markets in the year 2000 (BBC, 2000b); the closure of UK based retail giants Tesco and Boots and the France based Carrefour from the Japanese markets, as recent as 2011 (The Guardian, 2011), indicates otherwise. This study on the closure of Marks & Spencer stores in France, aims to highlight the various core issues related to the operations, functioning and performance of international retail stores overseas, and assess the manner in which M&S approached the closure of its stores in the country. 2.1. Organizational context of IHRM The business of retailing entails operating of firms in a global context and at the same time adjusting and adapting to the local needs. Over the years, various global retailers have invested in international ventures with varying degrees of outcomes in terms of profitability and success. As more and more companies join the quest of aggressively pursuing international expansion as a part of their core strategies, it is all the more vital for them to take into consideration various factors which may play a key role in shaping their success in the process (Kraft and Mantrala, 2010). This in turn requires IHRM to be organized and efficient in its functioning. The organizational structure is dependent on the HR strategies developed by the management which is often embedded as the companys corporate strategy and can be based on its international division structure (i.e. production, marketing, finance, personnel etc., see Figure 1 Appendix 1); or the Functional structure (See figure 2 Appendix 2); or the geographic location structure (see Figure 3, Appendix 1) or the product structure (See Figure 4, Appendix 1) (Aswathappa and Dash, 2007). 2.2. Cross border alliances: The new wave of globalization has brought along with a trend of accelerated investment in cross border alliances in varied forms ranging from conventional approaches such as international exports and foreign direct investments (FDI) to relatively more contemporary methods such as cross border acquisitions, mergers, and franchisee agreements (OECD, 2001; Markusen, 2002; Neary, 2004). The choice of entry strategy into foreign markets depends directly on the costs involved in each approach. Marks & Spencer have invested in various international ventures across the globe, over the years. Its international expansion strategy focuses on opening of numerous stores in key locations worldwide by various means such as through acquisitions and franchisee agreements (M&S Annual Report, 2011). The company has so far invested about £150 million in developing their international capabilities thus indicating their corporate strategy of increasing foreign investments (M&S Annual Report, 2011). 2.3. Culture and Management According to Milliken and Martins (1989) "the core of culture is composed of explicit and tacit assumptions or understandings commonly held by a group of people... these assumptions/understandings serve as guides to acceptable and unacceptable perceptions, thoughts, feelings and behaviors; ... culture is dynamic - it changes over time" (in Sparrow, 2009, pp. 77). Despite the pervasiveness of globalization and the subsequent internalization of firms across the globe, the manner of conducting business is still culture bound. According to Sharma and Sheth (1997) the factors such as individualism and masculinity tend to lessen the impact of relationship orientation and the rise in levels of factors such as uncertainty avoidance, long-term orientation, and power distance increase it. UK as a market place, according to this theory, is least relationship oriented especially due to the high levels of masculinity and individualism and low levels of long-term orientation and uncertainty avoidance as integral aspects of their national culture (Reynolds, 2010). France on the other hand, has a strong uncertainty avoidance culture, which indicates that the people are not very welcoming in their approach with respect to the introduction of new products and services since there is a high degree of uncertainty associated with it. Thus organizations must take into consideration the national culture while introducing new products and services and develop and implement strategies accordingly to suit the local needs, tastes and preferences (Kleindl, 2006). Figure 1: Cultural dimensions indices of countries in Europe Source: Reynolds, (2010); pp. 51 2.4. HRM in the host country context HRM in the host country context can be discussed with respect to two key drivers i.e., the standardization drivers which includes the strategies and structures of firms; the corporate culture etc; and the Localization drivers which includes factors such as the host countrys cultural environment; the various applicable modes of operation etc. In order for firms to succeed in international markets as well as retain their competitive positioning globally, it is vital for them to ensure that they maintain globally acceptable standards of performance and yet at the same time, give adequate credence to local responsiveness to such policies. It is inevitable for multi-national companies today to maintain an almost perfect balance between the two and adopt a global as well as local approach depending on their corporate missions, and goals. This can be done through adoption of integrative HR practices which includes a mix of best of both global and local policies, which are applicable and appropriate for international as well as local markets. The key factors which influence the global standardization and / or localization of work practices include strategy and structure, corporate culture, size of the firm and level of maturity, cultural environment, and institutional environment, mode of operation and role of subsidiary among others. (Dowling, Festing and Engle, 2008). 2.5. Industrial relations According to Porter (1986) the industry in which multinational firms operate plays a key role in shaping the success of the firms, since the competition in the market place depends on the type of industry in which the firms function. In case of a multi-domestic industry the competition differs from country to country and the operations of a firm in one country has no impact /influence on that of a firm operating in another country. In case of a global industry however, the competitive positioning of the firm is dependent on its position in all countries, where it operates. Employers in industrialized market economies have faced stiff competition and new challenges in the wake of changing global environment over the years, thus even forcing some firms to restructure their corporate strategies. According to Bean (1994) "the link between industrial relations and macroeconomic outcomes is complex and we should be wary of prescribing any particular set of institutional arrangements within the spectrum of institutional arrangements and strategic choices available, as the simple key to success" (pp. 242) 2.6. Managing international staff & global performance reward Most of the MNEs (Multinational Enterprise) today hire local nationals for their foreign subsidiaries while employ home country nationals for various key positions at the company headquarters. In case of a regional office however, the MNEs maintain a fine balance by hiring expertise from both home country as well as those available locally. Such a strategy helps in obtaining a general and more neutral approach towards conducting business, since the mix of talents hired from both the countries offer a unique advantage to the firm, and help in endorsing its product / service strategy more effectively. In case of companies where the product expertise / knowledge is minimal hiring local employees works as an effective recruitment and selection strategy, while in case of products / services requiring high level of expertise and/or knowhow, foreign / home country personnel are usually employed at key strategic positions (Briscoe, Schuler and Claus, 2008). 2.7. International HRM trends: Contemporary issues and ethical challenges The contemporary business environment can be described as one which is highly aware and responsive to the changing global external environment. Marketers and firms today, hence, are dealing with an extremely knowledgeable and responsible group of consumers, as is reflected in the strategies adopted by them to cater to the needs and preferences of the global buyers. The application of questionable marketing practices by firms hence would be an extremely risky venture. The emergence of corporate social responsibility as an integral and inevitable part of corporate strategies of firms has further fuelled the movement towards ethical and responsible marketing. The sale and manufacturing of ethically questionable products such as tobacco and cigarettes; or operating of sweatshops; employing child labor etc., for instance, which are known to be fatal to human health, raises key questions regarding the ethical policies of firms involved in such business (Robertson and Crittenden, 2003; Brinkman & Brinkman, 2002). Ethical relativism refers to an approach which believes in no single / universal right or wrong and that the concept of ethics is dependent on the countrys national culture and environment, while ethical universalism refers to an approach whereby certain fundamental concepts of rights and wrongs are believed to be applicable regardless of geographical boundaries in the sense that they are universally applicable (Dowling, Festing and Engle, 2008). 3. Recommendation As discussed previously, the role of HR has changed dramatically over the years and the global HR managers need to be alert and attentive to the changing global external environment in order to be able to fully cater to the needs and demands of its consumers. The closure of Marks and Spenser in France was a tragic event, which led to unemployment and dissent among the workers and employees, while the firm itself faced huge losses. Today, after almost a decade the company stores have reopened in France, and the management must ensure that key HR areas such as the process of recruitment, selection, retention, and hiring of employees; the monitoring of employee performances and routine evaluations and assessments; staffing, training and development of employees; etc among others, are closely monitored. The management must focus on its resourcing and expansion policies in order to retain its competitive positioning in the industry. Furthermore, decision making must be based on emerging trends- both global as well local, and the firm must employ Hofstedes policy of "Think globally, act locally" in order to succeed and function effectively in the new market (Krafft, Mantrala, 2010). 4. Conclusion Marks and Spencer is known for its extremely high quality products and is a globally recognized brand, thus commanding immense goodwill in the industry. The firm must leverage its key strengths and through effective application of strategic HR policies, steer it towards attainment of its goals and develop into a profitable venture. The reopening of the firm’s stores in France is indicative of the receptiveness of its consumers and signals the existence of a large and loyal customer base. The company must bank on its strategic strengths and overcome its weaknesses by adapting a globally acceptable HR strategy in all aspects of its business. References: Aswathappa, K., Dash, S., (2007). International human resource management, McGraw Hill Publication, Pp. 75-80 Bean (1994) in Perkins and Shortland, (2006). Strategic international human resource management: Choices and consequences in multinational people, Kogan Page Publishers, Pp. 225-230 Brinkman, L. R. and Brinkman, J. E. (2002). Corporate power and the globalization process. International Journal of Social Economics, Vol. 29, No. 9: pp. 730-52. Briscoe, D. R., Schuler, R. S., Claus, L., (2008). International human resource management, Taylor & Francis Publication, pp. 191-194 Dowling, P., Festing, M., Engle, A. D., (2008). International human resource management: Managing people in a multinational context, Cengage Learning publications, Pp. 216-219 Kleindl, B., (2006). International marketing, Cengage Learning Publication, Pp. 282-284 Krafft, M., Mantrala, M. K., (2010). Retailing in the 21st century: Current and future trends, Springer Publication, pp.260-263 Markusen, J. R., (2002). Multinational frims and the theory of international trade, MIT Press. Milliken and Martins (1989) in Sparrow (2009). Handbook of international human resource management: Integrting people, process, and context, John Wiley and Sons Publications, Pp. 77 Neary, J. P., (2004). Cross border mergers as instruments of comparative advantages, Working Paper, University College Dublin. OECD (2001). New Patterns of Industrial Globalisation: Cross-border Mergers and Acquisitions and Strategic Alliances, Organisation for Economic Co-operation and Development, Paris. Porter, M. E., (1986). Changing patterns of international competition, California Management Review, 28(2), Pp. 9-40 Reynolds, N., (2010). Factors influencing business relationship in Agri-food chains: An analysis of selected German chains in European Comparison, BOD publications, pp. 50-55 Robertson, C. J. and Crittenden, W. F. (2003). Mapping Moral Philosophies: Strategic Implications for Multinational Firms. Strategic Management Journal, Vol. 24 No. 4: pp. 385-92. Primary Sources: BBC (2001a). M&S French closures on hold [Online] Available at: http://news.bbc.co.uk/2/hi/business/1455391.stm [Accessed: March 15, 2012] BBC (2000b). C&A quits UK [Online] Available at: http://news.bbc.co.uk/2/hi/business/792028.stm [Accessed: March 15, 2012] M&S (2012). Company Overview [Online] Available at: http://corporate.marksandspencer.com/aboutus/company_overview [Accessed: March 15, 2012] M&S Annual Report (2011). Annual Report [Online] Available at: http://corporate.marksandspencer.com/documents/publications/2011/annual%20report%202011 [Accessed: March 16, 2012] The Guardian (2011). Tesco admits defeat and pulls out of Japan [Online] Available at: http://www.guardian.co.uk/business/2011/aug/31/tesco-japan-pull-out-philip-clarke [Accessed: March 15, 2012] Appendix 1: Figure 1: International Division Structure Source: Aswathappa & Dash, (2007). Pp. 75 Figure 2: Functional Structure Source: Aswathappa & Dash, (2007). Pp. 76 Figure 3: Geographic area structure Source: Aswathappa & Dash, (2007). Pp. 76 Figure 4: Product Structure Source: Aswathappa & Dash, (2007) Pp. 77 Read More