Joint Venture of Suning Commerce Group and Tesco and Its Impact on the HR Policies - Case Study Example

Table of Contents Executive Summary 2 Company Profile 4 Tesco 4 Suning commerce group 5 PESTEL analysis of China 5 Political factors 6 Economic factors 6 Social factors 7 Legal factors 7 Environmental factors 8 Main HRM theories and models in relation to economic drivers 8 HRM strategies for the Joint Venture 9 Recruitment and Selection 9 Rewards Management 10 Performance Management 14 Organisational, national and cultural specific issues that influence the development and implementation of HRM strategy  15 Management skills required in international business 16 Recommendations 17 References 19 Appendices 24 Executive Summary In this report the joint venture of Suning commerce group and Tesco and its impact on the HR policies of the organization have been discussed. The different HR functions such as recruitment and selection, training and development, reward management, performance management and employee involvement will have to be developed very carefully in the joint venture owing to the cultural, national and organizational differences. The employees should be hired from both China as well as UK. Similarly, appropriate methods of recruitment and selection should be adopted in order to hire the most suitable candidates. Furthermore, the training program should also be designed keeping in view the diverse needs of the new employees. The employees coming from UK to china should be provided training about the Chinese values, culture and language. Furthermore, the Chinese workers should also be encouraged to learn English in order to increase cooperation among the workers. The reward system should also be designed in an effective way in the joint venture keeping in view the individual differences of the employees. Moreover, the performance appraisal system should also be developed in order to evaluate and improve the performance of the employees. Introduction The retail sector has witnessed a tremendous growth and over the years and the number of retailers has increased significantly all around the world. There are not only large retailers operating in the major countries but there has also been a growth of many local retailers which are posing great competition for the large multinationals. Due to globalization, the retail industry has witnessed many changes as most of the retailers have outsourced some or most of their services to the third world countries. Similarly, the retailers have also tried to provide ease to its customers with the use of the advanced technologies. The customers can now place their orders online and get the desired products at their doorstep. Due to the economic downturn of 2008, the behaviour of most of the retailers changed and instead of focusing on quality they preferred those retailers which offered lower prices. This was particularly evident in the UK. In this report, the Human resource management strategies for the joint venture of Tesco and Suning Commerce group will be discussed. Tesco is the leading retailer of UK and third largest retailer of the world (Tesco, 2012). On the contrary, Suning commerce group is the largest retailer of China and also has strong presence in Japan and Hong Kong.There will be analysis of the retail industry in UK as well as in china. Similarly, with the help of the PESTEL analysis, the international business environment in China will also be analysed. Furthermore, there will be discussion of the main HRM models and theories in relation to the economic drivers. The important Human resource management strategies that will be selected for the joint venture include recruitment and selection, training and development, rewards management, performance management and employee involvement. There will also be identification of the link between the organizational performance and HRM. Additionally, there will also be identification of the national, organizational and cultural specific issues that might affect the implementation and development of the HRM strategy. The socio-economic conditions of each country are glaringly different from each other. Therefore, the HRM strategies adopted in the different countries are also different. However, with the analysis of the general mindset and working practices in the host country, the HRM strategies can be developed in an effective way for the joint venture. The analysis of the HRM strategies of the parent company is also essential for the welfare of the expatriates. The culture of the each country and of each organization is different from each other. Therefore, it is essential that the cultural factors between the employees and between the countries should be carefully analysed before developing the HRM strategies for the joint venture. Moreover, this report will also analyse the management skills which are considered to be important for an international business. In an international business, the needs and wants of the employees are different from each other. Therefore, the international manager must have the ability to understand and cater to the distinct needs of the employees. Company Profile Tesco Tesco is the leading food retailer of UK and the third largest retailer of UK. Tesco opened its first store in 1929 and by 1960 its stores were present in most of the UK high streets (Euromonitor, 2012). During the 1990’s Tesco gave the concept of the out of town supermarkets and developed many new store concepts such as Tesco Metro, Tesco Express and petrol station convenience stores. Tesco also introduced the loyalty cards in 1995 in order to win the loyalty of its customers and compel them to make repeated purchases. Tesco also established joint venture with the royal bank of Scotland and offered financial serviced to its customers (Datamonitor, 2011). Tesco started its online service with the name of the tesco.com which not only facilitated the customers but also proved to be very profitable for Tesco itself as well. Tesco started its international operations in the year 1994 and they contribute greatly in the total revenues of Tesco (Civi, 2013). Tesco has been focusing on increasing non-food sales since 2000 both in its stores as well as well as online as a result of which it is the leading CD retailer in the UK (Tesco, 2011). Suning commerce group Suning commerce group operates through its franchised retail stores in china. Some of the important products offered by the company include the colour televisions, audio and video players, washing machines, refrigerators, air conditioners, small household appliances, and telecommunication and information technology products. The company has a strong presence in China with 1600 chain stores in approximately 600 cities of china. The company was formerly known as Suning Appliance Company limited and changed its name to Suning commerce group co., Ltd in 2013. The company also operates in Japan as well as Hong Kong. PESTEL analysis of China The international business environment can be understood in an effective way with the help of the PESTEL analysis (Jiang et al., 2012). The host country in the joint venture is China. Therefore, it is important that the PESTEL analysis should be performed on China for the better understanding of the international business environment in this country. The important factors that are analysed in the PESTEL analysis include the political, social, economic, technological, legal and environmental. China is considered as the most attractive business location in the world. It has emerged as a strong power which has given boost to the international business in the country. The three important reasons due to which the foreign investors seek business in china include: Size of the market Very low cost of labour China’s growth potential The overall international business environment can be better understood with the help of the PESTEL analysis. Political factors The political factors are important and can affect the international business. The international organizations operating in China are required to abide by the government regulations set forth by the government. There are many political decisions which might affect the international business in china. Most of the government regulations of the country were strict for the international business. However, the country has offered leniency to the international business. This is the major reason that there has been influx of the foreign business in China in all the major industries (Fei, 2011). Economic factors The economy of china is showing a tremendous growth. China was the only country which was least affected by the economic recession of the 2008. The economy of china has experienced a significant GDP rate and if this growth continues china will soon surpass the GDP of US. Some of the important economic factors associated with China include availability of abundant and skilled labour and that too at affordable rates. Similarly, there is potential of urban growth in china. China has also high rate of savings and there are many export businesses in china (Zhu et al., 2010, p.256). Furthermore, the economic condition of china suggests that there has been increase purchasing power of the consumers. Moreover, the cost of labour is extremely lower in china. This is the very reason that the leading companies such as Apple also show the tendency to hire workers from China. Despite these positive factors, there are also some worrying trends in china which include high inflation rate and increase in the prices of the property. Social factors The social factors also play an important role in the success of the business. The demographics of China change constantly which can impact the business. For instance, population growth and age distribution fluctuate constantly which can affect the business (Buck et al., 2010, p.223). The size of the family and the social behaviours also determine that how the decisions are made. Some of the other social factors which might affect the business include lifestyle of the consumers, religion, education and emigration. According to the Geert Hofstede value dimensions, China is a collectivistic culture. Most of the population of China is literate and the literacy rate of china is approximately 90%. Furthermore, most of the Chinese people prefer to shop online as there are almost 20 million internet users in the country. Legal factors The international businesses operating in China have to abide by all the local laws and regulations. The legal requirements for the international businesses were very strict in the past. But during the recent years, there has been ease in the legal requirements and the international businesses can operate in china with relative ease (Jian et al., 2010). This is the very reason that china has become the favourite destination for most of the international businesses and many joint ventures are taking place in china. Environmental factors The Chinese government is very strict about the environmental issues and has formed very strict policies for the protection of the environment. It requires both the national as well as the international business to avoid engaging in any process or activity which affects environment (Jiao, 2014). Moreover, the Chinese government puts a fine on those industrial units which are involved in the pollution. Main HRM theories and models in relation to economic drivers The recruitment and selection is considered to be an essential function of the human resource management. The recruitment and selection of the both the companies that are Tesco and suning commerce group are different from each other. The recruitment process at Tesco starts with the identification of the vacant positions. After the analysis of the vacant positions, the advertisement for the vacancies is placed in the leading newspaper as well as on the website of the company. In the job advertisement the company mentions the detailed job description as well as the job specification. After the advertisement, the applications are received from the potential employees. The Human resource management department of Tesco shortlists the applicants on the basis of their qualification and experience. After that, the shortlisted candidates are called for a written test. The written test is usually designed according to check the critical and analytical skills of the employees. After the written test, the employees are called for the interview (Wright & McMahan, 2011). Those applicants who passed the written test are then called for the interview. After the interview the candidates are finally selected and placed on the relevant job. On the contrary, the recruitment and selection process of the Suning commerce group is different. In this company the advertisement of the job is not placed in the newspaper instead the vacancies are introduced on the website of the company are introduced. Similarly, in contrast to the Tesco, Suning commerce group prefers the referrals from the existing employees of the organization. Furthermore, the potential employees are directly called for interview instead of the written test. After the interview, the employees are hired for the period of three months and if the performance of the employees proves to be satisfactory then they are hired permanently. HRM strategies for the Joint Venture Recruitment and Selection The recruitment and selection of the joint venture will be done in a different way and both the strategies of the parent company as well as the host company will be included in the recruitment and selection of the joint venture (Guest, 2011, p.3). The workers will be hired from china as well as UK. This is because it will be too expensive to hire all the workers from UK. Furthermore, the hiring of the Chinese workers is very essential as they are more aware of the market as compare to the employees of the UK. All the workers cannot be hired from the china as well as it is joint venture and most of the workers of the UK particularly, those working at the managerial level are more skilled as compared to the workers of the china (Baker, 2014). Different methods will be employed for the hiring of the employees. The methods adopted for the recruitment and selection will be different for the Chinese workers and the UK workers. The jobs will be advertised in the newspaper for the UK workers. On the contrary, the jobs will be introduced online for the Chinese workers. Similarly, the workers of the UK will have to undergo a written test but there will be no such condition for the workers of China and they will be directly called for the interviews. Furthermore, Rodger’s model will be used for the selection of the new employees. It is a very effective model in which Rodger has suggested seven points which can be used for the selection of the employees. These points include Attainments Circumstances Disposition General intelligence Interests Physical make-up Special aptitudes (Scullion & Collings, 2010). The physical characteristics include the general health, eyesight, height, general appearance and voice. The attainments include the education, qualification and experience (Bratton & Gold, 2012). Furthermore, the intelligence include the general level, power of reasoning and analytical ability. The special aptitudes include the individual skills, presentation skills and the ability to be self motivated. The interests include which might prove to be helpful in the performance of the job. Besides, the personal disposition includes loyalty, personality and dependability (French & Rumbles, 2010). Moreover, the circumstances include the special circumstances. Thus, all the new employees will be hired for the joint venture keeping in view all these factors. The positions required for the new venture include both the managerial positions such as store manager as well as the workers who could handle the different tasks at the stores (Chaneta, 2014). Moreover, there will also be requirement of the supervisors who could manage the workers at the stores. Rewards Management The HRM strategies are considered to be very important in increasing the commitment of the employees. The employee relations are considered to be a complex set of the human resource practices. The goals of the employee commitment, flexibility, quality and strategic integration are achieved with effective communication, employee involvement, employees rights and the managerial disciplinary. By creating a culture of effective communication, the HR managers seek to obtain the commitment of the employees (Wilson, 2014). Similarly, with the help of the different HRM strategies the involvement of the employees is increased. Furthermore, the Human resource department of the organization develops appropriate managerial disciplinary action in order to increase the commitment and involvement of the employees. The rewards management is also considered to be very important for the motivation and commitment of the employees in the organization. The reward not only includes the monetary incentives but the non-monetary and psychological payments as well that the organization provides to employees in return of their work. The organization can either provide the intrinsic reward or the extrinsic reward. The objective of the reward system is to support the organization’s strategy by recruiting the qualified employees. The organization can either offer reward to an individual, to a team or organizational rewards. The individual rewards include basic wages, overtime and paid leave. The team rewards include team bonuses and the organizational rewards include profit sharing and gain-sharing. The reward system that will be used in the joint venture will include the performance-related pay (PRP) (Costen & Salazar, 2011). The performance-related pay is very useful as it reinforces the control of the management. Similarly, with the help of PRP development objectives can be identified. Furthermore, with the help of the PRP the individuals can be rewarded without the need to promote them. However, one limitation of the performance-related pay is that it undermines team working. Therefore, along with the performance-related pay, the skill-based pay (SBP) will also be used in the joint venture. The SBP is cost effective and it helps the organization to respond more quickly to the needs of the customers. Training and Development The training and development of the new employees as well as the existing employees is considered to be very important (Purce, 2014). There are various methods with the help of which the employees can be provided training. However, before designing the training program the needs of the employees as well as the resources of the organization should be kept in mind. In order to provide training to the employees of the joint venture the ask model will be used. The important elements of the ASK model include changing attitude, developing skill and increasing knowledge. The important skills that will be taught to the employee include communication skills, responsiveness, objectivity, innovation and creation. Similarly, the attitudes which will be inculcated among the employees include hard work, commitment, maturity, positivity, enthusiasm and empathy (Grossman & Salas, 2011). Furthermore, the employees will be provided knowledge about their work as well as about the organizational goals and objectives so that they should align their work with the policies and goals of the organization. The training program that will be developed for the employees of the joint venture will have the following important elements. Identifying the training needs Setting the training objectives Developing the training program Implementing the program Evaluating the program In the first place, the training needs of the employees are identified. After the identification of the training needs, the training objectives are set for the employees. Similarly, after that a full training program will be developed keeping in view the training needs of the employees and the objectives of the training (Taylor, 2014). After the development of the training program, it will be implemented. Once the training program is fully implemented, it must be evaluated on a constant basis in order to ensure that the training objectives are carefully met. Moreover, the training program can also be evaluated in an effective way with the help of Kirkpatrick’s four levels of evaluation which consist of results, behaviour, learning and reaction (Iles et al., 2010). Performance Management There is a direct relationship between human resource management and the organizational performance (Budhwar & Debrah, 2013). The performance determines what is being done by the employee and what he does not do. The important features of the employee performance include quantity of output, quality of output, presence at work and cooperativeness (Van Dooren et al., 2015). An important function of the human resource department is the performance appraisal. With the help of the different tools, the HRM measures the performance of the employees on a constant basis. The performance appraisals are used for the promotion, compensation and dismissal of the employees. Similarly, with the help of the performance appraisal, the training and development needs of the employees can also be identified. There are different ways with the help of which the appraisal of the employees is conducted. These include rating by the supervisors of their subordinates, rating by team members to each other, outside sources rating the employees and 360 degree feedback in which the employees are appraised by different managers or supervisors in the organization (Van Buren et al., 2011). The performance of the employee in the joint venture will be measured by the monthly reports provided by their supervisors. Similarly, after every month, the information about the performance of the employees will also be shared with them so that they can improve their performance. Furthermore, the 360 degree feedback will also be used in order to evaluate the employees in an effective way (Harzing & Pinnington, 2010). The employees will also be told that what performance level does the organization requires of them. Additionally, with the help of the performance appraisal, the development needs of the employees will also be identified and they will provide adequate training in order to overcome their limitations. Organisational, national and cultural specific issues that influence the development and implementation of HRM strategy  There are many organizational, national and cultural issues that influence the development and the implementation of the HRM strategies. Different organizations use different reward systems in order to increase the motivation of their employees (Armstrong & Taylor, 2014). Similarly, the performance appraisals vary from one country to another country. The measurement of the individual performance is very essential for the success of the organization. Because the performance of the overall tram will diminish if the performance of the individuals is not up to the mark. The development and implementation of the different HRM strategies become difficult due to the national, cultural and organizational differences (Storey, 2014). For instance, Suning commerce group might be following a different strategy for rewarding its employees which might not be similar to the reward management strategy of Tesco. Similarly, there are many individual differences in the workers of china and UK. The culture of China too is very different from the culture of UK. The culture of China is collectivistic whereas the culture of UK is individualistic. The national issues that will arise in the development of the HR strategies is that the general mindset and working practices of China are very different from UK. Similarly, due to organizational differences, the host company will have to provide training about the beliefs of the locals (Giancola, 2010). Similarly, the workers from the UK will also have to provide some training about the language and culture of China. Moreover, the parent company will have to understand the individual differences in hiring the new staff from the host country (Mathis & Jackson, 2011). Additionally the HR managers working in china need to know that relationships are considered to be very important in china. Management skills required in international business The management skills required in the international business are different from the national business (Hendry, 2012). In the international business, the manager has to manage diversity in an effective way. Similarly, the manager will have to understand the diverse needs of the employees which are different from each other. In order to win support from the employees in the international business, the manager will have to understand the cultural and individual differences among the employees. Furthermore, the international manager will also have to reward the employees according to their expectations. For instance, some of the employees require monetary rewards while the other employees require the non-monetary rewards. Therefore, the rewards should be given to the employees on the basis of their expectation (Dessler, 2011). Additionally, the manager should also identify the training needs of the employees and provide them adequate training. For instance, most of the Chinese workers might not be adept in the new technology being used in the organization. Therefore, they should be provided training related to that technology. The international manager must also possess excellent communication skills in order to win the support of its employees (Bloom & Van Reenen, 2011). The manager in the international organization should also listen to the queries of the employees and try to resolve them. Moreover, the manager in the international organization should not discriminate among the employees and view them equally. Conclusion The performance of the important HR functions becomes difficult in the joint venture. In joint venture, there are cultural, organization and national differences which must be addressed by the HR manager. Similarly, the recruitment and selection policies of the two companies entering into a joint venture are also different from each other. The two companies discussed in this report entering into a joint venture include Tesco and Suning Commerce Group. The former is the leading retailer of the UK whereas the latter is the leading retailer of China. The employees will be hired for this new venture from china as well as from UK. The expatriates will be provided training about the culture, language and values of the host country. The PESTEL analysis of China reveals that the environment for the international businesses is favourable. The Human resource department will have to design an effective recruitment and selection procedure for the selection of the employees. Furthermore, the reward management and appraisal system should also be developed keeping in consideration the differences between the two countries. The retail industry is likely to grow in China and with the joint resources of Suning commerce group and Tesco this joint venture between them is likely to succeed in china. Recommendations The employees should be hired from both China and UK following appropriate recruitment and selection procedures. The retail sector in china is different from that of UK and the consumers like more to buy online instead of visiting the stores. Therefore, an online system of buying should also be developed by the joint venture. Furthermore, after hiring the new employees they should be provided appropriate training. The training should not only focus on providing them knowledge but it should also improve their skills and change their attitudes as well. Besides, there should also be an appropriate method of performance appraisal as well with the help of which the performance of the employees should be monitored on a constant basis. The joint venture should also establish an appropriate reward system which should increase the involvement and commitment of the employees. The managers and the supervisors should also maintain diversity in the organization and respect the individual differences among the employees. The individual characteristics of the Chinese and UK employees are also different from each other and the managers must develop the reward system keeping in consideration these differences. Additionally, the cultural and national differences should also be properly analysed by the international managers running this joint venture in order to make this business successful and profitable. 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