Jaguar Land Rover - Case Study Example

Jaguar Land Rover Name Professor Institution Course Date Jaguar Land Rover Executive Summary Today, there are several vehicle manufacturers in Europe leading to drop in demand. In the process, many of such companies have considered expansion into emerging companies which looks promising to their growth. Therefore, this report will analyze Jaguar Land Rover expansion into foreign country, particularly moving parts of its production from the UK to emerging economy Brazil. The report will evaluate Brazil in term of economic, social, political and technology growth and demonstrate how the Jaguar Land Rover can achieve higher returns. The report will advise Jaguar Land Rover how country cultural differences may affect current organizational culture and its operation. In addition, the paper will discuss what Human Resource Management issues might the company face in opening and operating a new facility overseas. Motivation and leadership are key issues in operations at an international stage. Therefore, the report will also advise the company on the type of leader and leadership is required to successfully open and run effectively this new production facility. Lastly, the report will discuss the diversity issues that the company may encounter and how to overcome them. Despite the challenges the company might face, the report has found Brazil to be a potential emerging market with growing economy and middle income earners. Table of Contents Jaguar Land Rover 2 Executive Summary 2 Table of Contents 3 1.0 Introduction 4 2.0 Overview Brazilian automobile market 4 3.0 How country cultural differences may affect current organizational culture and its operation 5 4.0 Human Resource Management issues the company might face in opening and operating a new facility overseas 7 5.0 Motivational method issues 8 6.0 Type of leader and leadership required to successfully open and run effectively this new production facility 8 7.0 The diversity issues that the company may encounter 9 8.0 Conclusion and Recommendations 10 9.0 References 12 1.0 Introduction The last two decades the world has undergone an outstanding transformation and rapid growth especially in the emerging economies. World Investment Report of 2005 listed of the six leading and most attractive international business locations and in the six, five comprised of emerging markets including , Brazil, China, Russia, India and Mexico (UNCTAD 2005, p.34). Similarly, the reports also claim that demand of vehicles have drop significantly in last five years in the Europe, especially in the UK and Germany due to increase in number of vehicle manufactures and economic slowdown. Due to consistent falls in demand in Europe, Jaguar Land Rover is considering moving parts of its production from the UK to Brazil as potential options for achieving higher returns (Cauchi 2013). Therefore, the report will analyze Brazil in terms of economic, social, political and technology growth and demonstrate how the Jaguar Land Rover can achieve higher returns. The report will also advise Jaguar Land Rover how country cultural differences, Human Resource Management, diversity, motivating factors and leadership may affect current organizational culture and its operation. 2.0 Overview Brazilian automobile market Automobile is one of the largest industries in Brazil accounting for 5.3% of the country’s GDP (BBC News 2013). The Brazilian automobile industry is today the largest in the globe surpassing even France in 2008. According to Cauchi (2013) The Brazilian car sector started with the entry of Chevrolet which sets its production plant in 1925. More companies entered into Brazilian market and opened production plants in 1990s and they include Renault, Nissan, Peugeot, Honda, Citroën, Hyundai, Chrysler, Audi and Mitsubishi. Despite the being dominated by foreign companies, Brazil also has its local companies. Today, Troller is the most effective and successful local auto company with successful brands like of Pantanal and T4 models (BBC News 2013). These models are being sold to countries all through Latin America and even Africa. In the recent years, the Brazilian car sector has grown rapidly hence attracting investments and expansion from the major international automakers. The situation is attributed to demand of car from a Brazilian high population which also have high disposable income and drop of fuel prices both in international markets and Brazilian market (Cauchi 2013). 3.0 How country cultural differences may affect current organizational culture and its operation Geert, Hofstede and Minkov (2010) claimed based on the Hosftede’s six dimensions of culture, countries cultural diversity can compared using power distance, individualism versus collectivism, indulgence, uncertainty avoidance, femininity versus masculinity and long-term versus short-term orientation. Jaguar Land Rover organization culture is major influenced by the United Kingdom culture which is the parent country. The UK culture highly promotes low power distance and the employees believe that inequalities between them should be minimized and allowed to be close to power (Korac-Kakabadse et al., 2001, p.6). This is the opposite of Brazil, which its culture is highly influenced by that of Latin America, which practices high power distance and believes that inequality should be maintained and people in power be allowed to enjoy (Geert, Hofstede and Minkov 2010, p. 40). The cultural differences mean organizational conflict may arise. For instance, a Brazilian employed Jaguar Land Rover in the Middle level management may want to be given distance and be respected due to his or her position whilst a British employed a lower level or the organization may want to consult with middle level manager hence creating conflict. Zhu, Nel and Bhat (2006, p.326) contended that British nationals often want to be close to managers for accessibility and liaising on various matters. Similarly, the countries differ in terms individualism versus collectivism. While Britain score very high (89) in terms of individualism, Brazil score low of 38; meaning has high collectivism. The result implies that Australian expatriates prefers to work alone and considers team work as a waste of time and also lack of self-discovery (Hosftede 2015). Britain employees dislike collectivism (teamwork) because it takes a lot of time for a decision to be made and a project to be finished. In addition, it makes individuals within the group lazy as they rely on the effort and success of others. On the contrary, Hofstede (2007, p.414) claimed that Brazil nationals favour collectivism since they believe teamwork help in bringing and implementing new ideas. Also, they think that teamwork speed up the pace of a project in the rapidly changing business environment. The cultural differences can between be analyzed based on High versus Low-Context Cultures model. Hall and Hall (1990) asserted that countries belonging to the two divides differ in terms of communication style, greetings, negotiations approaches and Attitudes about time. For instance, Britons are known to take time to make friendship first before engaging in business negotiations (Hall & Hall 1990, p.94). The situation is so different in Brazil where a person highly regards time to be an important factor hence they want straight forward answers. 4.0 Human Resource Management issues the company might face in opening and operating a new facility overseas According to Tuntimas (2007, p.14) human resource management is a role within the organization developed to increase the performance of the employees of strategic objectives of an employer. Human resource management normally concerns recruitment, training, performance rewards, team setting, managing pay, employee classification (generation) and appraisal. In Brazil where company Jaguar Land Rover is setting up part of its production plant, the company might face issues like recruitment, training and the pay systems. Best human resource practices dictates that when a company expands to a foreign country, it also employee nationals at the new outlet or plant (Hashim 2012, p.45). This is not just for political reason that the nearby community may reject the company but also for strategic reasons that locals understand the market needs better than the foreigners. Jaguar Land Rover will faces issues like high cost of recruitment where it is forced to set extra costs hire local from lower management positions to top management positions. The cost of recruitment will extend to training and development since the locals might not be familiar with Jaguar Land Rover organization culture which has been influence with United Kingdom national culture. Human resource management also involves setting and managing teams. Brazilian culture largely encourages individualism and the practices have also been incorporated in companies’ organization culture (Geert, Hofstede & Minkov 2010, p.123). It therefore means Jaguar Land Rover a United Kingdom company and practices collectivism (teamwork) may find it difficult with employees who prefer individual assignment. Motor vehicle production and assembling is a complex job which highly need teamwork. Brazilian compensation system is also different from that of UK. Burke and Cooper (2006, p.83) stated that Brazilian companies have adopted performance related pay while UK companies have majorly embraced basic pay for the standard hours. 5.0 Motivational method issues Motivation plays an important in performance of an employee. Motivated employees normally help the company perform beyond expectations (Armstrong 2006, p.58). However, Motivational method methods differ from country to country based on their national and organizational culture. Jaguar Land Rover has inculcated culture where employees are motivated by teamwork (collectivism). With Collectivism, the Jaguar Land Rover gets new ideas, encouragement and innovative concepts to work on tough projects. Hashim (2012, p.47) argued that Teamwork brings team spirit as member can consult on wide range of issues and remain persistent in their work. On the other hand, individualism culture Brazil has been considered to promote cold reception hence reducing their morale at the workplace. Others use gift giving methods to motivate employees (Bayor 2011). Gifts are hardly ever given as sign of motivation in UK because they are considered inappropriate. However, Gelfand, Erez and Aycan (2007, p.485) claimed that in Brazil which belongs to a low context culture hence giving of gift is regarded as conventional practice and is used to encourage employees to work hard. Jaguar Land Rover will be forced to implement such practice or risk posting a dismal performance from its staff. 6.0 Type of leader and leadership required to successfully open and run effectively this new production facility With intensification in competition in business world, organization is forced to look for new markets to increase their customer base and improve their profits (Luo & Tung 2007, p.484). Type of leader and leadership plays a critical role in the opening and effective management of new facility. Transformational leadership is suitable for operation in the new market. According to Murphy (2008, p.168) transformational leadership is described a form of leadership which revolves around a common principle of transforming, motivating, and enhancing the actions and organizational goals. Opening a new facility is faced with political, economic and socio-cultural challenges which need a leader who can define the company goals, give directions and influence employees to implement them (Luo & Tung 2007, p.485). This is where a transformational leader and leadership are because it is defined by such attributes. The transformational would define how the company is going gain position in the market and gain more returns transformational leadership normally brings employees together, impact interpersonal skills, cultural intelligence and motivate them to succeed in cultural diverse market (Lussier & Achua 2004, p. 47). 7.0 The diversity issues that the company may encounter Kamal and Ferdousi (2009, p.158) described workplace diversity as described as the difference among people who are working or interacting in an organization. Diversities can be in terms of languages, ethnicities, cultures, sexual orientations, social classes, abilities, ages, sects and religion. Rice (2010) opined that language is considered one of the differences which if not managed properly can affect the performance of the company expanding into new markets. Language diversity hampers effective and efficient communication. Some Jaguar Land Rover employees who are required to work as expatriates in Brazil are majorly Britons. United citizens most speak English which is different to Portuguese which is widely spoken in Brazil. Jaguar Land Rover employees who are not fluent in the Portuguese used Brazil during business transaction could have complexities in communicating their needs and answering the request of the colleagues (Williams, 2007, p.599). The company is likely to face cultural difference as discussed earlier which may cause organizational conflict between employees. Another diversity which Jaguar Land Rover may face in Brazil is one based on age. United Kingdom is currently most baby boomers while Brazil average age of workers is 33 (Bayor 2011). However, with change of time, baby boomers working at Jaguar Land Rover plant in Brazil will be compelled to retire to allow young people called generation Y or millennial to get into labour market. Wesolowski (2014, p.34) stated that these two generations have different interests, goals, culture, behavior and expectations hence may cause organizational conflict. 8.0 Conclusion and Recommendations Jaguar Land Rover is a British automotive firm headquartered, Coventry, United Kingdom. However, Jaguar Land Rover sales and returns have declined in UK and Europe as demand has declined due to slow growth and presence of several motor vehicles companies. The company has been prompted to expand into foreign market to increase its market and returns. In its expansion strategy Brazil as an emerging economy has been chosen as country of choice. Despite the potential outlook of Brazil in term of automotive industry growth, there are several risks which Jaguar Land Rover may face including impacts of cultural differences, human resource management factors, leadership and motivating challenges and divert issues. Hence this report recommends the following as ways the company can overcome these challenges. Polycentric Staffing To reduce cultural difference and its effects in organizational culture polycentric staffing is highly recommended. Polycentric staffing as the best option calls for hiring nationals from host-nation (Brazil) for lower positions to the high top level managers with only a few slots for Britons. Since the company operates will set up production plant in Brazil, the company will have reduced the effects of cultural difference. Training The company requires investing on more training of employees both from United Kingdom and Brazil. Training has the capability of instilling cultural intelligence on workers hence making them global citizens. In that way, the staff will drop cultural diversities and concentrate on corporate culture. Balancing between teamwork and individual projects Jaguar Land Rover is British company which has been practicing collectivism (teamwork), while its target market culture encourages individualistic. Motor vehicle production is complex process which in most cases needs teamwork. To avoid organizational conflict in the new market, this report suggests the company should balance between teamwork and individual projects. 9.0 References Armstrong, M 2006, A Handbook of Human Resource Management Practice, Kogan Page Limited. BBC News 2013, Jaguar Land Rover confirms Brazil car factory plans, viewed 18th Nov 2015 http://www.wsj.com/news/articles/SB10001424052702303997604579240033481099004 Bayor, R. H 2011, Multicultural America: An Encyclopedia of the Newest Americans, Georgia Institute of Technology. Burke, R & Cooper, C 2006, The new world of work and organizations: Implications for human resource management, Human Resource Management Review, Vol.16, No.2, pp. 83-85. Cauchi, M 2013, Jaguar Land Rover to Start Making Cars in Brazil, viewed 18th Nov 2015 http://www.wsj.com/news/articles/SB10001424052702303997604579240033481099004 Crocitti, J.J & Vallance, M.M 2012, Brazil Today: An Encyclopedia of Life in the Republic, ABC-CLIO. Geert, H, Hofstede, G.J & Minkov, M 2010, Cultures and Organizations: Software of the Mind, 3rd ed, McGraw-Hill, New York. Gelfand, M. J, Erez, M & Aycan, Z. 2007, Cross-cultural organizational behavior, Annual Review of Psychology, Vol.58, pp.479-514. Hashim, M 2012, Human Resource Management in 21st Century: Issues & Challenges & Possible Solutions to Attain Competitiveness, International Journal of Academic Research in Business and Social Sciences, Vol. 2, No. 9, pp.44-52. Hall, E.T & Hall, M.R 1990, Understanding cultural differences, Chapters 1 and 3, Intercultural Press, Boston. Kamal, Y & Ferdousi, M 2009, Managing Diversity at Workplace: A Case Study of hp. ASA A. University Review, Vol.3, No.2, pp.158-170. Korac-Kakabadse, N, Kouzmin, A, Korac-Kakabadse, A, & Savery, L 2001, Low- and high- context communication patterns: Towards mapping cross-cultural encounters, Cross-Cultural Management, Vo.8, No,2, pp.3-24. Lussier, R & Achua, C 2004, Leadership Theory, Application, Skill Development, Southwestern, Minnesota. Luo, Y & Tung, R.L 2007, International expansion of emerging market enterprises: A Springboard perspective, Journal of International Business Studies Vol.38, pp. 481–498. Murphy, S 2008, The role of emotions and transformational leadership on police culture: an autoethnographic account, International Journal of Police Science & Management, Vol.10, No.2, pp.165-178. Rice, M. F 2010, Diversity and Public Administration: Theory, Issues, and Perspectives, M. E. Shape, New York. Tuntimas, A 2007, Factors impacting on the efficiency of HRM practices in Thai construction industry SMEs, University of South Australia. UNCTAD 2005, World Investment Report 2005, United Nations, Geneva. Wesolowski, P 2014, Melding a multi-generational workforce: Communication technology is part of the problem – and the solution, Human Resource Management International Digest Vol.22, No.2, pp.33–35. Williams, M 2007, Building genuine trust through interpersonal emotion management: A threat regulation model of trust and collaboration across boundaries. Academy of Management Review, Vol.32, No.2, pp.595-621. Zhu, Y, Nel, P & Bhat, R 2006, A cross cultural study of communication strategies for building business relationships, International Journal of Cross Cultural Management, Vol. 6, No.3, pp.319-341. Read More