Mechanics of International HRM, Business Risk from Water Scarcity - Coca-Cola Company - Case Study Example

Mechanics of International HRM Name: Tutor: Subject: Date: Introduction Water shortage for multinational companies is a salient phenomenon. Consider, for example the Cola-Cola Company lost a lucrative operating license in India because of water shortage in the year 2004; about 10 years ago. Consider also other countries such as Qatar, Malta, Saudi Arabia, Jamaica, Cyprus, Kuwait and many others are facing serious water shortage. All these countries with water shortage have hurt many international companies (Dessler, 2014).  So the risk to multinational companies are clearly still there, as this paper will analyze. But the paper shows how the problem of water shortage can be dealt with and be solved for good. This water shortage has seriously affected the ability of companies such as Coca-Cola Company to invest in countries with water problems. In additions, investors are not sure in buying shares in companies with difficulties. The event is causing harm to international companies and foreign investors - the water scarcity varies greatly from one country to another. Water scarcity, I hold, is a multidimensional phenomenon. Most of the international companies will find it difficult to manage the problems that are caused by water scarcity. There are various issues that are proven to be more difficult than it could be expected; it is, therefore, essential to ensure that the company has engaged in civil society, public sector, and other companies in dealing with the complexity of the issues and the political and social importance of water. Executive Summary According to the research it is evident that economic growth, climate change, and population shift were and it is still the main contributor shortage of global water supplies. Especially in the countries that are still developing. Major countries that have faced water shortage include Southern Spain and California. Water is critical for every company because all the products require water in their production process. Much multinational companies are still facing water shortage and this as turn into global serious problem leading to a new regulatory and reputational consequences. International companies also need to consider how the government and the international community will manage water problem both in the short term and long term (Bamberger et al.,2014). They need to focus on issues such as new regulations, and to critically work with non-governmental sectors in looking for the lasting solutions. How does water shortage interfere with the company? Companies in the sector of beverages and agriculture have direct challenges in identifying sufficient and enough source water for their operations. This does not mean that other companies do not need water, in fact, manufacturing companies need water though the governments are prioritizing food production business than manufacturing industries. Body As human resource manager of the company, it is essential to ensure that all the process of the company is working well. Furthermore, the human resource manager in the parent company should ensure that all the subsidiary companies that are located in different countries are functioning effectively (Snell et al., 2015). International company companies are constantly facing diverse challenges and a human resource manager it is essential to design the lasting solution as a way of maintaining business and also keeping the employees from quitting their job. As this report focuses on problems that are arising due to the scarcity of water, it is essential for the managers to understand that water vary from place to place and that it is distinctive. The constant supply of water in the company is undoubtedly a story of increasing stress. Change is the answer to what will make it likely that the company’s water supply will become more stressed. It is, therefore, important for the management to ensure that constant supply of water is adequate. Water is a requisite resource for a company. It is not possible to run a company or business without the access to clean water. The company that is relying on the water for their operation are the most affected and most venerable. This has made human resource manager to be on pressure as they look for a solution on how to maintain clean water for the purposes of the operation of the company. All over the world, climate change, water scarcity, deforestation and the ever growing population are putting on organizations to understand how water issues can destabilize or halt company’s performances. Business needs to prioritise the conservation of water so that they can be able to carry out their programs that run on day to day basis and evaluate water risk across the social, geopolitical and the broad environmental contest (Mello, 2014). Water is an important resource for every company as it determines the productivity of the company. Business Risk from Water Scarcity Companies, especially those operating internationally, are facing various challenges and one of these challenges is water scarcity. Human resources managers are finding it hard to manage the operation of the company because of the water-related risks. When there was a water shortage in the year 2004, there were various risks and challenges that faced various companies. In Coca-Cola Company, it so risks because the shortage of water supply really affected the operations of the company. The supply of the company’s products to various customers was interfered. There was a high shortage of all kinds of drinks. Coca Cola being one of the biggest company specializing on beverages; the water scarcity is the biggest threat to the company. The challenges facing companies due to lack of enough water can be subdivided into number of inter-related dimensions of risk for business (Boselie, 2014).  These include: a) Physical – this is a risk that are directly related to water. In this risk, water can be in excess or shortage of water or even water that is unfit for use. Human resource manager should ensure that he strategies on how to handle such a risk in the best way possible. b) Regulatory - shortage of water can sometimes be experience due to legal factors. The government can revok4e the license to certain company because various reasons such as water shortage in the city, or maybe the country depends so much on agriculture and that a lot of water might be needed for the irrigation purpose. An example of this happened in Almeria, which is located in EU. c) Community risk and closely associated reputational risk might arise due to conflict around access ton water or degradation of local water. This can cause serious conflict between the company and the residents. This can easily affect the image of the company and affects its positioning d) Reputational risk this can arise if the operation of the company tends to interfere with the source of water for the community surrounding the company. The reputation of the company is extremely important because it determines the future of the business, and if reputation is poor it can affect the customers’ purchasing behavior. Coca-Cola Company once experiences this interplay of social perceptions, regulations and reputational concern in India. It was in 2002 when the resident demonstrated against the company for the deterioration of groundwater resources in the area. That year, the performance of the company was so poor. e) Geopolitical this are common disagreement that normally emerge between countries regarding the over transboundary river basins, or national political imperatives, such as trade restrictions on food crops with embedded water Any of the risks shown in the above are likely to affect the company’s operations despite the location of the company. It is, therefore, essential for the human resource manager to study them in detail so that they develop strategies to counter the risks. It is always essential for managers to learn from the past and develop effective strategies for the future. Recommendations for the CEO It is always a must that at a certain point, a company or business must face the water-related risks outlined above in their operation. In most cases, it affects agricultural, extraction, manufacturing, and construction industries. The main motivation for any company in operation to engage in water-related issues ranges from operational to the ethical issues. It also depends on the amount of water-related risk exposure to the company. Some of these risks include: i. The first one is the response to the operational crisis especially when there is shortage of water ii. The interference of normal operation or supply chain due to change in availability of water. iii. The third is the positioning of the company relative to the competitors in respond to the client or market perception around the importance of water stewardship or risk mitigation iv. The corporate social responsibility or the perception of the company looking for a front line in working with the community and providing services to the community. It is, therefore, essential for the managers to involve in risk assessment so that they can control losses that might occur as a result of water shortage. It is important to have a plan that will help in mitigating crisis that are likely to face the company. This is a strategy that will help the company to maintain its position as a market leader. The image in the market is all that the company is looking for. As a CEO it essential to ensure that all the possible solution to the water-related crisis are considered. The management should act in a crisis depending on the nature of that crisis facing the company. Before dealing with the problem it is vital to understand the nature of their water-related risk and then followed by the appropriate strategy, policy or the operational response. The most important message to the CEO is that water-related risk changes and therefore responses need to be flexible with scope for adaptation to changing circumstances. The CEO should be a good example especially when it comes to the implementation process. The management should also ensure that they develop some strategies depending on the nature of their water risks. Strategies need to be very effective in dealing with the risks (Langford et al., 2014). The other issue is that the CEO must ensure that they employ professional to design effective risk mitigation strategies that are within the budgeted. It is always important to ensure that all the process of dealing with water related risk are design within the budget to avoid misuses of company’s resources. It is very expensive to have strategies that are not effective. Human resource manager should, therefore, ensure the personnel who are employed to deal with the mitigation of risk are qualified. Finally, the CEO should analyze some key aspects of water use and resources. These are; i. How many liters does the company use and discharge and whether such an amount of water is allowed or legal in the location in question ii. To analyzed the future impact of demographic, economic and climate change. iii. Which other parties are depending on the same source of water with the company All these issue are very essential, and the CEO should considered them so as to lay down strategies that able to protect the company and at the same time protecting the entire environment. Conclusion From the above analysis and all the illustration that has been reflected in this report, it is clear that water-related risks are a very serious threat to the international companies. In addition, it appears that these risks are there to stay, and, therefore, strategic plans need to be established as a way of preventing future losses. This kind of water-related risks varies according to their disparate operations and different supply chains. It is also likely that every company will face this kind of water related risky and it should strategize on how to handle them in an effective manner. It is essential for the companies to include third parties such as stakeholders and government when addressing this water related risks (Young et al.,2014). Organization by its own cannot deal this risk using internal resources. References Dessler, G. (2014). Human resource management. Pearson Higher Ed. Snell, S., Morris, S., & Bohlander, G. (2015). Managing human resources. Cengage Learning. Mello, J. (2014). Strategic human resource management. Cengage Learning. Boselie, P. (2014). Strategic human resource management: A balanced approach. Tata McGraw-Hill Education. Langford, D., Hancock, M. R., Fellows, R., & Gale, A. W. (2014). Human resources management in construction. Routledge. Bamberger, P. A., Biron, M., & Meshoulam, I. (2014). Human resource strategy: Formulation, implementation, and impact. Routledge. Story, J. S., Barbuto, J. E., Luthans, F., & Bovaird, J. A. (2014). Meeting the challenges of effective international HRM: Analysis of the antecedents of global mindset. Human Resource Management, 53(1), 131-155. Young, R. A., & Loomis, J. B. (2014). Determing the Economic Value of Water: Concepts and Methods. Routledge. Read More